Transcript Chapter 1
Lamb, Hair, McDaniel 2010-2011 CHAPTER 5 Developing a Global Vision 1 Learning Outcomes LO 1 Discuss the importance of global marketing LO 2 Discuss the impact of multinational firms on the world economy LO 3 Describe the external environment facing global marketers 2 Learning Outcomes LO 4 Identify the various ways of entering the global marketplace LO 5 List the basic elements involved in developing a global marketing mix LO 6 Discover how the Internet is affecting global marketing 3 Rewards of Global Marketing Discuss the importance of global marketing LO1 4 Rewards of Global Marketing Having a global vision means… Recognizing and reacting to international marketing opportunities Using effective global marketing strategies LO1 Being aware of threats from foreign competitors 5 Beyond the Bo Emerging Markets Executives' Five-Year Plans for Emerging Markets 90 80 70 60 Expect to 50 Expand or Locate (%) 40 30 20 10 0 Eastern Europe Latin Southeast America Asia India China All Companies Market LO1 $1B+ Companies Source: Deloitte's Global Manufacturing Industry Practice, Deloitte Touche Tohmatsu, May 1, 2007 6 Importance of Global Marketing to the U. S. U.S. exports a fifth of industrial production. One of every 10 jobs in U.S. is supported by exports. U.S. businesses export over $800 billion in goods. Exports account for 25 percent of U.S. economic growth. U.S. is world’s leading exporter of farm products. LO1 7 The Fear of Trade and Globalization Millions of Americans have lost jobs Millions fear losing jobs Threat of outsourcing if workers do not accept pay cuts Vulnerability to operations moving offshore LO1 8 Benefits of Globalization Expands economic freedom Spurs competition Raises productivity and living standards Offers access to foreign capital, global export markets, and advanced technology Promotes higher labor and environmental standards Acts as a check on government power LO1 9 Multinational Firms Discuss the impact of multinational firms on the world economy LO2 10 Stages of Global Business Development 1 Companies operate in one country and sell into others 2 Set up foreign subsidiaries to handle sales 3 Operate an entire line of business in another country 4 Virtual operation LO2 11 Global Marketing Standardization Global Marketing Standardization Production of uniform products that can be sold the same way all over the world. LO2 12 External Environment Facing Global Marketers Describe the external environment facing global marketers LO3 13 External Environment Facing Global Marketers Culture Natural Resources Economic and Technological Development Political Structure Demographic Makeup LO3 14 Culture Culture LO3 The common set of values shared by its citizens that determine what is socially acceptable. 15 Economic and Technological Development LO3 Developed Country Complex, sophisticated industries Less Developed Country Basic industries 16 Political Structure and Actions No private ownership Minimal individual freedom LO3 Little central government Maximum personal freedom 17 Legal Considerations Tariff A tax levied on goods entering a country Quota Limit on the amount of a product entering a country Boycott Exclusion of products from a country Exchange Control Foreign exchange must be sold to a control agency Market Grouping Common trade alliance Trade Agreement An agreement to stimulate international trade LO3 18 Political and Legal Considerations The Uruguay Round made changes in world trading practices Entertainment, pharmaceuticals, integrated circuits, and software Financial, legal, and accounting services Agriculture Textiles and apparel LO3 And created a new trade organization: The World Trade Organization 19 Doha Round • Began in 2001 • Highly contentious from the beginning • Failed in summer, 2008 • First multilateral free trade act failure since WWI • Cost of Failure: $100 billion annually LO3 20 Political and Legal Considerations Agreements and Organizations CAFTA LO3 NAFTA European Union http://www.wto.org Online 21 Demographic Makeup Marketing Considerations: Population density Urban or rural Personal income Age LO3 22 Shortages in Natural Resources… …Create: International dependencies Shifts of wealth Inflation and recession Export opportunities if resources are abundant Stimulus for military intervention LO3 23 Natural Resources Petroleum Foodstuffs Precious metal Timber Water LO3 24 External Environment Facing Global Marketers Natural Resources • dependence • independence Cultural • values • language • customs • traditions Demography • urban v. rural • young v. old • purchasing power Global Marketing Mix Economic Development Political Structure • tariffs Technological • quotas Development LO3 • boycotts • exchange controls • market controls • trade agreements 25 Global Marketing by the Individual Firm Identify the various ways of entering the global marketplace LO4 26 Global Marketing Questions What are our options in selling abroad? How difficult is global marketing? What are the potential risks and returns? http://www.cat.com Online LO4 27 Why “Go Global”? LO4 Earn additional profits Leverage a unique product or technological advantage Possess exclusive market information Saturated domestic markets Excess capacity Utilize “economies of scale” 28 Risk Levels for Global Entry Risk Joint Venture Export Low risk/low return LO4 Direct Investment High risk/ high return Licensing Return 29 Entering the Global Marketplace Export Sell domestically produced products to buyers in other countries Licensing Legal process allowing use of manufacturing/patents/knowledge Contract Manufacturing Private-label manufacturing by a foreign country Joint Venture Domestic firm buys/joins a foreign company to create new entity Direct Investment Active ownership of a foreign company/manufacturing facility LO4 30 Export Intermediaries Buyer for Export Assumes all ownership risks and sells globally for its own account. Export Broker Plays the traditional broker’s role by bringing buyer and seller together. Export Agent Acts like a manufacturer’s agent for the exporter in the foreign market. LO4 31 The Global Marketing Mix List the basic elements involved in developing a global marketing mix LO5 32 Product and Promotion Same Message Change Message LO5 Same Product Change Product One Product One Message Product Adaptation Message Adaptation Product Invention http://www.disney.go.com Online 33 Place (Distribution) Adequate distribution is necessary for success in global markets – Some countries have complicated systems – Lack of distribution infrastructure and cultural differences create problems Innovative distribution systems can create competitive advantage LO5 34 Pricing Must consider transportation and insurance costs, taxes and tariffs Determine what customers will spend Ensure that foreign buyers will pay price May need to simplify a product to lower price Don’t assume that low-income countries are willing to accept lower quality 5 LO 35 Exchange Rates Exchange Rates The price of one’s currency in terms of another country’s currency. LO5 36 Dumping 1. Trying to increase an overseas market share 2. Temporarily distributing products to overseas markets to offset slack demand at home 3. Lowering unit costs by exploiting large-scale production 4. Attempting to maintain stable prices during periods of exchange rate fluctuations LO5 37 Countertrade Countertrade A form of trade in which all or part of the payment for goods or services is in the form of other goods or services. LO5 38 The Impact of the Internet Discover how the Internet is affecting global marketing LO6 39 The Impact of the Internet • Opening an e-commerce site puts a company in the international marketplace • Internet Economy remains hindered by brick and mortar rules, regulations, and habits LO6 40 International Marketing • Coca-Cola is the best global brand in 2009 – Five Creative Coca-Cola Commercials from 2009 • Toyota, also one of the top Global Brands in 2009, offers different ads for different markets: – Australian ad for dual drivetrains LO6 41