Chapter 17 – Global Marketing
Globalization – The process by which goods, services, capital, information and ideas flow across
national borders. Caused by and leads to a number of global changes affecting marketers
Competition is no longer local
Most items even with made in Canada tags are produced in other parts of the World(China etc.)
Eliminations of trade barriers by governments, decreasing concern for transportation of goods
over time and distance, standardization of laws and globally integrated production process.
Growth of the Global Economy: Globalization of Marketing and Production:
changes in technology , especially communications have been the driving force for growth in the global
Globalization of Production – Refers to the manufacturers procurement of goods and services
from around the world to take advantage of national differences in the cost and quality of
various factors of production
o By globalizing production firms can lower their total production costs and improve their
overall competitive position because they are able to offer higher quality product for
General Agreement on Tariffs and Trade (GAAT) – Organization established to lower trade
barriers, such as high tariffs on imported goods and restrictions on the number and types of
imported products that inhibited the free flow of goods across borders
International Monetary Fund (IMF) – primary purpose is to promote international monetary
cooperation and facilitate the expansion and growth of international trade
World Trade Organization (WTO) – Replaced GATT in 1994; represents the only international
organization that deals with the global rules of trade among countries
World Bank – A development bank that provides loans , policy advice, technical assistance and
knowledge-sharing services to low and middle income countries in an attempt to reduce poverty
in the developing world.
Assessing Global Markets – PEST is considered together in order to obtain a complete picture of
a country’s marketing potential.
Analyzing the Political and Legal Environment – Governmental and non-governmental actions often
result in laws or other regulations that either promote the growth of the global market (liberalization) or
close off the country and inhibit growth (protectionism).
Trade Agreements – Intergovernmental Agreements designed to manage and promote trade
activities for specific regions.
Trade Sanctions – Penalties or restrictions imposed by one country over another for importing
and exporting goods, services and investments
Tariffs- Tax levied on a good imported into a country also called a duty; intended to make
imported goods more expensive and thus less attractive or competitive in domestic markets.
Dumping – The practice of selling a good in a foreign market at a price lower than its domestic
price or below its cost. Quota- Designates the maximum quantity of a product that may be brought into a country
during a specific time period; reduce the availability of imported merchandise, reduce foreign
Boycott- A groups refusal to deal commercially with some organization to protest against its
Exchange Control – refers to the regulation of a countries currency exchange rate, which is the
measure of how much one currency is worth in relation to another.
o Countertrade – method of avoiding unfavourable exchange rates; it is Trade between
two countries where goods are traded for other goods rather than hard currency.
Trade Agreements – Intergovernmental agreement designed to manage and promote trade
activities for a specific region
o Trading Bloc – Consists of those countries that have signed a particular trade agreement
o European Union (EU) – economic and monetary union between 25 European countries.
Dramatically lowered trade barriers between member nations within the union
o North American Free trade Agreement (NAFTA) – Limited to trade-related issues such
as tariffs, quotas among the US, Canadda and Mexico
o Central American Free Trade Agreement
o Mercosur – Covers most of Southern America
o Association of Southeast Asian Nations (ASEAN)
Political Risk Analysis: Assessing the level of political, socioeconomic, and security risks of doing
business is a country, Analysis may involve weighing the likelihood of violence or change in government
Analyzing the Economic Environment
Evaluating the General Economy- healthy economies provide better opportunities for profit and
global marketing expansions. To asses marketing potential firms analyze a countries, all provide
a snapshot of a particular country at any point in time:
o Trade Deficits – Results when a country imports more goods than it exports
o Trade Surplus- Results when a country exports more goods then it imports
o Gross Domestic Product (GDP) - Defined as the market value of the goods and services
produced by a country in a year; the most widely used and standardized measure of
o Purchasing Power Parity (PPP)- The theory that states that if the exchange rates of two
countries are in equilibrium, a product purchased in one country will cost the same in
the other, expressed in the same currency.
o Human Development Index - A composite measure of three indicators of the quality of
life in different countries: Life expectancy, educational attainment, and whether the
average incomes are sufficient to meet the basic needs of life in that country
Evaluating Market Size and Growth Population growth Rate – Population has been growing
rapidly since turn of 20 century, Less developed nations are experiencing rapid population
growth while many developed nations are experiencing zero or negative population growth
Evaluating Real Income – real income is income adjusted for inflation. This affects consumers
buying power and influences a firms marketing mix when entering d