Transcript Notes for chapters 1

INTERNATIONAL
MARKETING CHAPTER 1
THE
SCOPE AND CHALLENGE OF
INTERNATIONAL MAKRKETING
Events and Trends
Affecting Global Business
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The rapid growth of the World Trade Organization
(WTO) and NAFTA and EU
The trend toward the acceptance of the free market
system among developing countries in Latin America,
Asia, and Eastern Europe
The burgeoning impact of the Internet, mobile phones,
and other global media on the dissolution of national
borders
The mandate to properly manage the resources and
global environment for the generations to come
Internationalization of
U.S. Business
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Foreign companies are here to stay in the U.S.
and compete with U. S. companies
The great worldwide acquisitions both by U. S.
and foreign companies
Global markets are a necessity
– Foreign earnings a higher percentage of profits
– Multinationals outperform domestic firms
– Global value increased through global
diversification
– Intensifying domestic competition
Exhibit 1.2 Selected U.S.
Companies and Their International
Sales
Source: Compied from annual reports of listed firms, 2012
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Internationalization of
U.S.
Business
Current interest in international marketing can be explained by
changing competitive and demand situations in markets
worldwide.
For example, McDonald’s is pulling out of international markets
in Latin America and the Middle East due to poor economies,
increasing competition and anti-Americanism.
We have foreign competition in our own county. Many foreign
companies have acquired American interests.
Also, a significant proportion of all CD players, computers,
apparel, and dinnerware sold in the US is foreign made. (Sony,
Laura Ashley, Norelco, Samsung, Toyota, Nescafe).
Some foreign interests have built manufacturing plants here
(Fuji Photo, Honda, Mercedes). We also buy foreign interests
as well (Ford bought Jaguar, PacifiCorp bought
Energy Group).
US Multinationals abroad are nothing new. They have been out
there since the end of WWII.
The Internationalization of U.S.
Businesses
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Definition of International Marketing
• The performance of business activities
designed to plan, price, promote, and
direct the flow of a company’s goods and
services to consumers or users in more
than one nation for a profit.
• The major difference between international
and domestic marketing is that domestic
marketing occurs in one country.
The International Marketing Task
• The major issue in international vs
domestic marketing is that in international
marketing, there are additional layers of
uncontrollable elements to deal with.
Additional
Layers of
Uncontrollable
Events
Uncontrollable
Events
Controllable
Events
The International Marketing Task
Continued
Foreign
Economic
Political/Legal
Domestic
Price
Product
Political/Legal
Culture
Place
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Promotion
Competitive
Competitive
Research
Geography and
Infrastructure
Economic
Distribution
Technology
The International Marketing Task
Continued
• To adjust and adapt a marketing program to
foreign markets, marketers must be able to
effectively interpret the influence and impact of
each of the uncontrollable environmental
elements on the marketing plan for each foreign
market in which they hope to do business.
• This is hard since we do not know the culture.
We take our culture for granted.
• How do we overcome this ethnocentric view of
the world?
The Self-Reference Criterion
• The primary obstacles to success in international
marketing are a person’s self-reference criterion.
• The SRC is an unconscious reference to one’s
own cultural values, experience and knowledge
as a basis for everyday decision making.
• We can encounter problems if we do not
understand the SRC of other countries (animal
treatment in Fiji, the way biscuits should be
packaged in Japan, the acceptable distance
between two people).
How to Avoid Errors in International
Business Decisions
• Define the business problem or goal in homecountry cultural traits, habits, or norms.
• Define the business problem or goal in foreigncountry cultural traits, habits, norms through
consultation with natives of the target country.
Make no value judgments.
• Isolate the SRC influence in the problem and
examine it carefully to see how it complicates
the problem.
• Redefine the problem without the SRC influence
and solve for the optimum business goal
situation.
Global Awareness
• Tolerance for cultural differences
• Knowledge of cultures, history, world
market potential, and global economic,
social, and political trends.
What Degree of International
Marketing Involvement?
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No direct foreign marketing.
Infrequent foreign marketing.
Regular foreign marketing.
International marketing.
Global marketing.