Transcript Global/International Marketing MR1100 Chapter 7

Global/International
Marketing
MR1100
Chapter 7
What is International Marketing?

International Marketing is the Marketing across international
boundaries.
Examples

When OCI sells shrimp in Japan or Germany that is an aspect of
international marketing.

When BRP sets up a company in Europe to market snowmobiles that too
is an aspect of international marketing.
Dynamics of Word Trade

World trade is increasing at a rapid pace

Trade is critical for Canada’s economic health
http://www.statcan.gc.ca/dailyquotidien/140506/dq140506a-eng.htm
Balance of Trade

The Balance of trade is the difference between the value of imports
and the value of exports

a positive balance of trade exists if there is a higher value of exports
over imports
http://www.statcan.gc.ca/dailyquotidien/140506/dq140506a-eng.htm
Why is International Marketing so
Important to Canadians?

Canada exports 25-30% of its total Gross Domestic Product (GDP is
the value of all goods and services produced in Canada.) Our
largest trading partner is the USA. (see Statistics Canada
http://www.statcan.gc.ca/dai-quo/ )

Emergence of first the Free Trade Agreement (FTA) and then the
North American Free Trade Agreement (NAFTA) uOpening up of
Eastern Europe.

International Firms ->Multi-National Corporations (MNC’s)>Transnational firms

Global Brands
Competitive Advantage
(Porter’s Model)
The four different components
of the framework are:
1.
2.
3.
4.
Factor Endowment
Related And Supporting Industries
Demand Conditions
Strategy, Structure, And Rivalry
Protectionism
Protectionism is the practice of shielding one or more industries within a country’s
economy from foreign competition through tariffs or quotas
Protectionism is on decline across the world
Tariff: Tax on imports that artificially
raise the price of imports making
them less attractive to buy.
Quota: A government imposed
limit on imports of a given item.
Economic Integration

European Union

North American FTA

Asia-Pacific Economic Cooperation
Why Go International?
Reasons for going International:
 –Exploit a business opportunity - profits
 –Increased growth potential - extend product life.
 –Economic environment may be better abroad
 –Less competition
 –Less taxes
 –Less regulations
 –Lower salaries abroad
 –Spread fixed costs
 –Increased economies of scale and scope
 –To sell inventory that will not sell at home
Difficulties of International
Marketing

Often a time & money consuming effort

Differences in language, culture and values

Hard to get executives to go abroad

Local ways of doing business may be different than at home.
uPolitical, Social, & Economic uncertainty.

Different (poor) infrastructure.
A GLOBAL ECONOMIC SCAN
Key Factors to Assess in the Host
Country Prior to Going International
Cultural Conditions / Cultural Diversity

Do you and you company understand the cultural conditions in the
host country?

Be aware of and respect Customs

Be aware of and respect Cultural Symbols

Be aware of language differences

You cannot respect them if you do not know them.

Be aware of the lessons learned by companies operating abroad.
Key Factors to Assess in the Host
Country Prior to Going
International
Economic Conditions

What stage of economic development is the host country in?

How much infrastructure exists -- what is its condition?

What is consumer income? -- high or low

Is there a stable currency exchange rate?
Key Factors to Assess in the Host
Country Prior to Going International
Political Conditions / Regulatory Climate

Stability of the government

The existence of Trade Barriers

The potential of Expropriation

Trade/Tax incentives that may be offered

Is the host a part of a multinational trade group such as NAFTA or
the EC?

See Political Risk Assessment @ http://www.prsgroup.com/
Alternative Approaches to Going
International

Exporting - lowest risk, lowest involvement

Licensing - still low involvement but more risk

Joint Venture - Multinational joins with a local company in the host
country - Higher involvement and risk. (See http://www.offshoretechnology.com/projects/exxon_hebron/)

Direct Ownership - most involvement, most risk and most potential
reward.
Key Terminology
Selling Products Abroad

Extension - sell same product in other countries (eg. The Ford Escort is
the same basic car all over the world)

Adaptation - Modify a product to meet the needs of the host
country ( eg. Honda markets a different version of the Accord in
Japan and Europe than in North America (it’s bigger)

Invention - Sell a new product in the host country (The battery-less
radio in Africa)
Key Terminology
Pricing

Dumping - selling a product in a host country below its domestic
cost.

Counter-trade - A form of barter

Bribery - Giving something in exchange for a promise of a deal.
Common in underdeveloped countries - but ethically wrong.

Grey Market – products are sold through unauthorized channels
Watch: A Taste of the West:
McDonald’s in Russia (Click Here)

What were some of the Challenges McDonalds experienced in
setting up in Russia?

Consider: Cultural/Economic/Political/Regulatory differences

What type of business entry strategy did McDonald’s use? Why?

Comment on McDonald’s Product, Promotion, Distribution and
Pricing strategies in Russia

Why did they set up in Russia?