Chapter 19.docx

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15 Apr 2012

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Chapter 19 the global marketplace
Global marketing today
- Multinationals grown from 30k -> 60k
- As global trade grows, global competition does also
- Look @ global marketing enviro -> deciding whether to go global-> decide which markets to
enter -> decide how to enter market -> decide on the global marketing prgm->decide on the
global marketing org
o Major marketing decisions model
- Delaying taking steps to internationalizing = risk of being shut out of growing markets
- Companies that decide to go global may face highly unstable governments & currencies,
restrictive gov’t policies & regulations, and HIGH trade barriers
- Global firm: a firm that, by operating in mto country, gains R&D, production, marketing, and
financial adv in its costs and reputation that are not available to purely domestic competitors
o Minimizes national boundaries
o Develops “transnational” brands
- Small-med size firms can practise GLOBAL NICHING
Looking at the global marketing environment
The international trade system
- When selling… could have restrictions on trade btwn nations LIKE…..
o Tariffs: taxes on certain imported products designed to raise revenue/protect domestic
o Quotas: limits on the amnt of foreign imports that they will accept in certain product
To converse on foreign exchange and to protect local industry and employment
o Exchange controls: limits the amnt of foreign exchange and the exchange rate against
other currencies
o Nontariff trade barriers: biases against x company bids, restrictive product standards,
excessive regulations
The world trade organization and GATT
o GATT: a treaty designed to promote world trade by reducing tariffs and other
international trade barriers
Sets new rules for international trade
A negotiating forum
Oversees legal ground rules for international trade
Mediates global trade disputes
Imposes trade sanctions when necessary
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Regional free trade zones
- Economic communities (aka free trade zones): a group of nations organized to work toward
common goals in the regulation of international trade
o Ex EU
o Unification will lead to
The company growing bigger and more competitive
More trade opportunities
- NAFTA (north American free trade agreement) : established a free trade zone among Canada,
the US and Mexico
o Eliminates all trade barriers & investment restrictions
Economic environment
- TWO economic factors that reflect the country’s attractiveness as a market
o Country’s industrial structure: shapes product and service needs, income lvls, and
employment lvls
FOUR types
Subsistence economics: majority of ppl engage in simple agriculture and
consume most of their output and barter the rest for simple g&s, offers
FEW market opportunities
Raw material exporting economics: rich in 1+ natural resources but
POOR in other ways…. Revenue comes from exporting these resources
o Ex Chile (tin & copper) , Saudi Arabia (oil)
o Markets that are good for LARGe eq, tools, supplies and trucks
o A market for luxury good (if many foreign resident & wealth
Industrializing economics: manufacturing is key (10-20% of country’s
Industrial economics: major exporters of manufactured g&s and
investment funds, trade among themselves and export to other types of
economies for raw materials/semifinished goods
o Country’s income distribution
Low, med, high
Political legal environment
- Monetary regulations
o Blocked currency: one whose removal from country is restricted by the buyer’s gov’t
- Changing exchange rates = high risk for sellers
- Most international trades = CASH transactions
- Countertrade: international trade involving the direct/indirect exchange of goods for other
goods instead of cash
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o In the form of…
Barter: involves the direct exchange of g&s
Compensation (aka buy-back): the seller sells a plant, eq, or technology to
another country and agrees to take payment in the resulting products
Counterpurchase: seller receives full payment in cash but agreed to spend some
of the money in the other country
Most common form*
Ex Boeing sells aircraft to India and agreed to buy Indian coffee rice,
castor oil and sell them elsewhere
Cultural environment
The impact of culture on marketing strategy
- Understanding cultural traditions, preferences, and behaviours can help companies avoid
mistakes & take adv of cross-cultural opportunities
The impact of marketing strategy on cultures
- American cultural imperialism leading to demise of individual cultures
- Well known north American brands = boycotts and protests in some international markets
- Ex how before nobody drank coffee before starbucks was introduced in china -> a symbol of a
new kind of lifestyle
- Learn to adapt to local cultural values and tradition instead of forcing on own
Deciding whether to go global
- Determine if youre able to learn to understand the preferences and buyer behaviour of
consumers in other countries
- Will it offer competitive attractive products?
- Can it adapt to other countries?
Deciding which markets to enter
- First define international marketing objectives and policies
- Determine the volume of foreign sales and how many countries you want to market
- Determine the type of country you want to enter
- Country attractiveness depends on…
o Product
o Geographical factors
o Income and popn
o Political climate
o Etc
- Global markets to be ranked on…
o Market size
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