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2011-11-30 21:46:47
Chapter Global International Marketing

Global/International Marketing
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  1. Objectives
    • •Understand the big picture of international marketing
    • •Explain the World Trade Organization, economic communities, and how countries protect local industries
    • •Understand how factors in the external business environment influence marketing strategies and outcomes
    • •Explain the strategies that a firm can use to enter global markets
    • •Understand the arguments for standardization vs.
    • localization of marketing mix strategies in global markets
  2. World Trade
    The flow of goods and services among different countries—the value of all the exports and imports of the world’s nations
  3. Countertrade
    A type of trade in which goods are paid for with other items instead of with cash
  4. Offset Countertrade
    • Commonly used in the purchase of military goods by governments.
    • Direct offset countertrade occurs when the supplier uses materials or parts obtained from the importing country when manufacturing the goods (e.g. airplanes).
    • Indirect offset countertrade agreements force the suppliers of imported goods to invest in some type of industrial relationship unrelated to the items being imported.
  5. Counter-purchase Agreements
    In order to obtain an order, foreign suppliers must first agree to buy products from the importing country. This helps the importing country to generate exports, which in turn reduces the payment deficit that results from importing goods from another country.
  6. Tolling
    • Sometimes manufacturers lack the financial capital to buy raw materials from other countries suppliers.
    • Tolling occurs when the supplier provides the manufacturer with the raw material necessary to create goods and essentially rents out the factory facility to produce some type of finished good using the raw materials supplied.
    • The produced goods are in turn sold to the final user who pays cash back to the supplier (not the manufacturer).
  7. Barter
    • Barter is a form of countertrade in which products change hands—not money. For example, country A trades goods to country B, that uses the services, products, raw materials, etc. to pay for the purchase.
    • Barter is most common in undeveloped countries.
  8. Buyback
    This form of countertrade occurs when providers of equipment or capital agree to provide their goods or services in exchange for a portion of the goods that will be produced using the equipment.
  9. Switch Trading
    When countries engage in bilateral trading agreements over long periods of time, imbalances often accumulate, in that one partner may build up a large credit surplus over the other country. Switch trading occurs when the country with the credit surplus imports goods from a third country, and uses the credit surplus from their trading partner to pay for the newly imported goods
  10. Deciding to go Global
    • • Is it in the best interest of the firm to remain in home market or to go where foreign business opportunities exist?
    • •Which global markets are most attractive?
    • •Must consider market conditions and competitive advantage when making a decision
  11. Road Blocks at the Borders
    • •Protectionism
    • •Quotas, embargoes, and tariffs
    • •Initiatives in international regulation and cooperation help trade
    • •General Agreement on Tariffs and Trade (GATT)
    • •World Trade Organization (WTO)
    • •Economic communities help to promote trade
  12. Analyzing the Global Marketing Environment
    • •A company going global must understand local conditions in the targeted country, including the:
    • •Economic environment
    • •Competitive environment
    • •Technological environment
    • •Political/legal environment
    • •Sociocultural environment
  13. The Economic Environment:
    Indicators of Economic Health
    • •Gross domestic product (GDP): Total dollar value of goods/services a country produces within its borders in
    • a year
    • •Gross national product (GNP): Value of all goods and services produced by a country’s citizens or organizations
    • •Economic infrastructure: Quality of country’s distribution, financial, and communications systems
  14. The Economic Environment: Level of Economic Development
    • •Least developed country (LDC): Economic base is often agricultural
    • •Developing countries: Economy shifts emphasis from agriculture to industry
    • •Developed countries: Offer wide range of opportunities for international marketers
  15. The Economic Environment:
    The Business Cycle
    • •All economies go through periods of:
    • •Prosperity
    • •Recession
    • •Recovery
    • •Depression
    • •Inflation
  16. The Competitive Environment:
    Competition in the Macroenvironment
    • •Competition in the macroenvironment (overall structure of industry)
    • •Monopoly
    • •Oligopoly
    • •Monopolistic competition
    • •Perfect competition
  17. The Competitive Environment:
    Competition in the Microenvironment
    • •Competition in the microenvironment
    • •Competition for consumer’s discretionary income
    • •Competition among products to satisfy the same consumer’s needs/wants
    • •Competition among brands offering similar goods/services on the basis of brand reputation or perceived benefits
  18. The Technological Environment
    • •Technology:
    • •Provides firms with important competitive advantages
    • •Profoundly affects marketing activities
    • •Can transform industries
    • Patent: Legal document giving inventors exclusive rights to produce/sell a particular invention in that country
  19. The Political and Legal Environment: Legal Influences on Business
    • •Local, state, national,
    • and global laws and regulations affect businesses
    • •Purpose of American law:
    • •To make sure businesses compete fairly with each other
    • •To make sure that businesses don’t take advantage of consumers
  20. The Political and Legal Environment:
    • •Retaliatory actions against American businesses sometimes occur as a result of political activity or war
    • •Political constraints on trade are commonly imposed:
    • •Economic sanctions
    • •Nationalization
    • •Expropriation
  21. The Political and Legal
    Environment: Political Influences on Business
    • •Retaliatory actions againstAmerican businesses sometimes occur as a result of political activity or war
    • •Political constraints on trade are commonly imposed:
    • •Economic sanctions
    • •Nationalization
    • •Expropriation
  22. The Political and Legal Environment: Legal Influences on Business
    • •Regulatory constraints on trade often restrict the marketing of goods
    • •Also common—local content rules
    • •A portion of a product must consist of components supplied by industries in the host country or economic community

    • •Human rights issues may limit foreign countries business
    • opportunities
  23. The Sociocultural Environment
    • •Key sociocultural considerations:
    • •Demographics
    • •Cultural values
    • •Collectivist vs. individualistic cultures
    • •Norms, customs, mores, and conventions
    • •Language
    • •Ethnocentrism: The tendency to prefer products from one’s own culture
  24. Ethical Issues in Global Business
    • •Truthfulness in business dealings varies by country
    • •Bribery: When someone voluntarily offers payment to get an illegal advantage
    • •Extortion: When someone in authority extracts payment under duress
  25. How “Global” Should a Global Marketing Strategy Be?
    • •Choose a marketing-mix strategy:
    • •Standardization vs. localization
    • •Standardization: Offer the same products in all markets
    • •Localization: Offer a customized marketing mix for each country
    • •Once standardization or localization is chosen, it’s time to tweak the marketing mix
  26. Tweaking the marketing mix
    Product decisions
    • •Straight extension strategy: Market existing product in foreign market
    • •Product adaptation strategy: Modifies product for foreign market
    • •Product invention strategy: Develops new product for foreign market
  27. Tweaking the marketing mix
    •Whether or not to modify
  28. Price Decisions
    • –Products are often more expensive to produce for foreign markets.
    • •Free trade zones
    • •Gray market goods
    • •Dumping
  29. Distribution Decisions
    Getting the product to remote locations is often difficult