Transcript The Value Chain

The Scope of
International Marketing
Chapter 1
"Our vision has been described to
you for a decade. We believed
that only businesses that were
number-one or number-two in
their markets could win in the
increasingly competitive global
arena. Those that could not were
to be fixed, closed or sold."
John F. Welch, Jr.
Chairman and CEO, General Electric
Globalization of Business and
Markets
 Until
recently, competition for U.S.
markets was only among U.S. businesses
with the same relative cost of money, labor
and product
 U.S market now includes competitors
from all over the world
Why internationalization?
 Saturation
of U.S. markets
Foreign Acquisitions of
U.S. Companies
U.S. Company
Foreign Owner
Keebler (Cookies and other foods)
Britain
J. Walter Thompson (Advertising)
Britain
Spiegal (Catalog retailing)
Germany
Mack Trucks (Automotive)
France
Giant Food Stores (Supermarkets)
Netherlands
Pillsbury, Burger King, Pearle Vision
Britain
CBS Records (Music and Entertainment)
Japan
Carnation (Coffee-Mate, Friskies pet food)
Switzerland
Chesebrough-Pond’s (Vaseline)
Netherlands
SOURCE: Adapted from “The 100 Largest Foreign Investments
in the U.S.,” Forbes, July 18, 1994, pp. 266-270.
Why internationalization?
 Saturation
 Higher
of U.S. markets
ROI in foreign markets
Some Big U.S. Players
in the Global Game*
Foreign Revenues
% of Total
Foreign Profits
% of Total
Foreign Assets
% of Total
Ei du Pont de Nemours
51.4
99.8
37.3
Proctor & Gamble
Coca-Cola
Eastman Kodak
Motorola
Johnson & Johnson
Sara Lee
Colgate-Palmolive
Gillette
Compaq Computer
McDonald’s
Avon Products
52.1
67.0
48.8
43.9
49.1
35.5
64.5
67.5
49.0
46.9
32.0
65.1
67.8
41.5
84.8
54.6
41.3
67.0
61.4
63.6
45.1
59.9
40.7
48.6
32.4
34.6
43.9
45.0
46.9
65.7
40.5
46.9
48.3
Company
*1993 data.
SOURCE: Adapted from “The 100 largest Multinationals: Getting the Welcome Carpet,”
Forbes, July 18, 1994, pp. 276-279.
Why internationalization?
 Saturation
 Higher
of U.S. markets
ROI in foreign markets
 Establish
early position in world markets
Share of Global Sales (1987-92)
Industry
U.S.
Energy Equipment & Services
93%
Aerospace & Military Technology
76
Data Processing & Reproduction
73
Electronic Components & instruments
62
Beverages & Tobacco
63
Health & Personal Care
49
Leisure & Tourism
46
Forest Products & Paper
51
Energy Source
46
Metals-Nonferrous
30
Recreation & other Consumer Goods
33
Food & hh Products
33
Electrical & Electronics
21
Chemicals
28
Industrial Components
24
Automobiles
37
Machinery & Engineering
19
Appliances & hh Durables
8
Metals-Steel
10
ALL INDUSTRIES (SALES)
37%
ALL INDUSTRIES (PROFITS)
48%
Japan Europe
1%
15
22
36
16
20
16
17
13
31
61
22
51
30
45
35
46
67
57
32%
16%
6%
23
5
2
20
31
38
32
41
39
6
46
28
42
31
28
35
26
33
31%
37%
Invented Here, Made Elsewhere
U.S. Invented Technology
Phonographs
9 0%
1%
9 0%
Color TVs
1 0%
1970
4 0%
Audiotape Recorders
0%
NOW
1 0%
Videotape Recorders
1%
9 9%
Machine Tools
3 5%
Telephones
9 9%
2 5%
8 9%
Semiconductors
6 4%
9 8%
Computers
7 4%
0
20
40
60
80
100
“Every American company is
international, at least to the extent
that its business performance is
conditioned in part by events that
occur abroad”
Definition of International
Marketing
 The
performance of business activities that
direct the flow of a company’s goods and
services to consumers or users in more than
nation for profit.
What’s the difference between international
marketing and domestic marketing?
 The
environment in which marketing
strategies have to be implemented
The International Marketing Task
Foreign environment
(uncontrollable)
1
Political/legal
forces
7
Cultural
forces
Domestic environment
(uncontrollable)
Political/
legal
forces
(controllable)
Price
Promotion
6
Geography
and
Infrastructure
Economic
forces
2
Competitive
structure Competitive
Forces
Product
Channels of
distribution
7
Environmental
uncontrollables
country
market B
Level of
Technology
Economic climate
5
4
Structure of
distribution
3
Environmental
uncontrollables
country market A
Environmental
uncontrollables
country
market C