2. Dynamics of World Trade
Global Perspective
• Countertrade
the practice of using barter rather than money for making
global sales
• Trade Feedback Effect
Asian Perspective
• Gross Domestic Product (GDP)
the total market value of all final goods and services produced
in a country in a given year.
• Balance of Trade
difference between the monetary value of a nations exports
and imports.
Trade Flows
3. Porter’s Diamond
• Factor Conditions
• Demand Conditions
• Related and Supporting Industries
• Company Strategy, Structure, and Rivalry
Dynamic & Trade Flows
Dynamics of World Trade
4. Figure 1.
Porter’s diamond of national competitive advantage:
4 key elements on why some countries become
World leaders.
5. Factor Condition
reflect a nations ability to turn its natural resources, education, and
infrastructure into a competitive advantage.
Demand Condition
includes both the number and sophistication of domestic customers for
an industry’s product.
Related and Supporting Industries
firms and industries seeking leadership in global markets need clusters
of world-class suppliers that accelerate innovation.
Company Strategy, Structure and Rivalry
the conditions governing the way a nation’s business are organized and
managed, along with the intensity of domestic competition.
6. 1
• Gradual decline of economic protectionism by individual countries
2
• Formal economic integration and free trade among nations
3
• Global competition among global companies for global customers
4
• Emergence of a networked global marketspace
Four Global Marketing Trends
7. Protectionism
is the practice of shielding one or more industries within a country’s economy
from foreign competition through the use of tariffs and quotas.
Tariffs
is a government tax on good or services entering a country, primarily serving to
raise prices on imports.
Quota
is a restriction place on the amount of a product allowed to enter or leave a
country.
• General Agreement on Tariffs and Trade (GATT)
World Trade Organization (WTO)
is a permanent institutions that sets rules governing trade between its
members through panel of trade experts who decide on trade disputes
between members and issue binding decision.
• Decline of Economic Protectionism1
8. Figure 2.
Protectionism hinders world trade through tariffs and quotas policies
of countries, raising prices and limiting supply
9. • European Union
is a group of 28 countries that operates as a cohesive economic
and political block.
• North American Free Trade Agreement (NAFTA)
is an agreement among the United States, Canada and Mexico
designed to remove tariff barriers between the three countries.
• Asian Free Trade Agreements
is a trade bloc agreement by the Association of Southeast Asian
Nations supporting local manufacturing in all ASEAN countries.
• Rise of Economic Integration2
10. Figure 3.
The European Union in 2007 consists of 27 countries with more than
500 million consumers.
11. • Global Competition
is the services or products provided by competing companies
that serve international customers.
• Strategic Alliances
is an agreement between two or more parties to pursue a
set of agreed upon objectives needed while remaining
independent organizations.
• Global Competition, Companies & Consumers
3
Global Competition
12. Divisions VS Subsidiaries
owned by the primary business,
Parent Company
is a legal entity that is majority
owned by a parent company.
14. • International Firms
is an organization that has business operations in several markets
across the globe.
• Multinational Firms
it’s a company that has business activities in more than one
country.
Multidomestic Marketing Strategy
• Transnational Firms
A commercial enterprise that operates substantial facilities,
does business in more than one country and does not
consider any particular country its national home.
Global Marketing Strategy
Global Brand
Global Companies
15. Global Consumers
Global Consumers
Global consumers consist of customer groups
living in many different countries or regions of
the world who have similar needs or seek similar
features and benefits from products or services.
16. Emergence of a Networked Global
Marketspace
Global Marketspace
is a relatively new concept in marketing which is a
virtual market place
It is an electronic information exchange environment
in which the constraints of physical boundaries are
eliminated.
17. A Global Environmental Scan
Cross Cultural Analysis
it involves the study of similarities and differences among consumers in two
or more nations or societies.
Values
is a society’s personally or socially preferable modes of conduct or states of
existence that tend to persist over time.
Customs
considered normal and expected about the way people do things in a
specific country.
Foreign Corrupt Practices Act (1977)
International Anti-Dumping and Fair Competition Act (1998)
Cultural Diversity
18. A Global Environmental Scan
Cultural Symbol
are things that represent ideas and concepts.
Semiotics
study of role of symbols and examines the correspondence between symbols and their
role in the assignment of meaning for people.
Language
languages that are spoken in different countries
Unintended Meanings
Back Translations
Consumer Ethnocentricity
the tendency for people to view their own values, customs, symbols, and
language favorably is well-known.
Consumer Ethnocentrism
Cultural Diversity
19. A Global Environmental Scan
Global Market is affected by economic consideration. Therefore, a scan of
global marketplace should include:
Economic Consideration
Comparative analysis of the economic development
in different countries
Assessment of the economic infrastructure in these
countries
Measurement of consumer income in different
countries
Recognition of a country’s currency exchange rates
20. A Global Environmental Scan
Stage of Economic Development
Developed Countries
Developing Countries
Bottom of the Pyramid
Economic Infrastructure
A country’s communications, transportations, financial, and
distribution systems
Economic Consideration
21. A Global Environmental Scan
Consumer Income and Purchasing Power
Microfinance
is the practice of offering small, collateral free loans to
individuals who otherwise would not have access to the
capital necessary to begin small business or other incoming-
generating activities.
Currency Exchange Rate
the price of one country’s currency expressed in terms of
another country’s currency.
Economic Consideration
22. A Global Environmental Scan
Political Regulatory Climate
defined as rules and principles that states and nations
consider binding upon themselves.
Political Stability
is the durability and integrity of a current
government regime.
Trade Regulations
are laws enacted by both federal and state
governments to promote unrestrained competition
amongst businesses.
Political- Regulatory Climate
24. Global Market-Entry Strategies
Exporting
is producing goods in one country and selling them in another
country.
• Indirect Exporting
when a firm sells its domestically produced goods in a
foreign country through an intermediary.
• Direct Exporting
when a firm sells its domestically produced goods in a
foreign country without intermediary.
Exporting
25. Licensing
A business arrangement in which one company gives another company
permission to manufacture its product for a specified payment .
• Contract Manufacturing
a company may contract with a foreign firm to manufacture products
according to stated specifications.
• Contract Assembly
the company may contract with a foreign firm to assemble (not
manufacture) pats and components that have been shipped to that
country.
• Franchising
the method of practicing and using another's perfected business concept.
Licensing
26. Global Market-Entry Strategies
Joint Venture
when a foreign company and a local
firm invest together to create a local
business.
Direct Investments
entails a domestic firm actually
investing in and owning a foreign
subsidiary or division.
Joint Venture & Direct Investments
28. Crafting a Worldwide Marketing Program
Product Extension
the use of an established product brand name for a new item in
the same product category.
Product Adaptation
the process of modifying an existing product so it is suitable for
different customers or markets.
Product Invention
any new product idea which comes to your mind and leads to a
new product.
Product Strategies
29. Crafting a Worldwide Marketing Program
Promotion Message
A marketing strategy developed by a business to promote a
product or service.
• Communication Adaptation Strategy
means changing the communication for a product due to
change in strategy, line extension etc.
• Dual Adaptation Strategy
is the adaption of both the product and the communications
to a local market.
Promotion Strategies
30. Crafting a Worldwide Marketing Program
Distribution Strategy
Figure 6 .
Channels of distribution in Global Marketing
31. Crafting a Worldwide Marketing Program
Dumping
when a firm sells a product in a foreign country below its
domestic price or below its actual price.
Gray Market (Parallel Importing)
a situation where products are sold through unauthorized
channels of distribution.
Pricing Strategy
Global Perspective- experts and imports as complementary economic flows.
Countertrade- The practice of using barter rather than money for making global sales
GDP- is the total market value of all final goods and services produced in a country in a given year.
Balance of Trade- diffrence between the monetary value of a nations exports and imports.
Trade Flows- the activity of buying, selling, or exchanging goods or services between people, firms, or countries.
TFE- increased in demand for exports of other nations energizes the economic activty, resulting in higher national income, which stimulates their demand for imports. Imports affect exports and vice versa.
Protectionism- is the practice of shielding one or more industries within a country’s economy from foreign competition through the use of tariffs and quotas.
Tariffs- is a government tax on good or services entering a country, primarily serving to raise prices on imports.
Quota- is a restriction place on the amount of a product allowed to enter or leave a country.
WTO- is a permanent institutions that sets rules governing trade between its members through panel of trade experts who decide on trade disputes between members and issue binding decision.
EU- eliminated most barriers to the free flow of goods and servies. Adopted euro as their currency. Imposes fewer regulatory strictions, removal of tariffs that affect pricing practices.
Strategic Alliances- occurs when two or more organizations join together to pursue mutual benefits.
Division- owned by the primary business, Parent Company
Subsidiaries- As stated above, a “subsidiary” is a legal entity that is majority owned by a parent company
Multidomestic marketing strategy- means that firms have as many different product variations, brand names, and advertising programs as countries in which they do business.
global marketing strategy- standardizes marketing activities when there are cultural similarities and adapts them when cultures differ.
Multidomestic marketing strategy- is used by multinational firms that have as many different product variations, brand names, and advertising programs as countries in which they do business.
Global marketing strategy- is used by transnational firms that employ the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ.
Global Brand- is a brand marketed under the same name in multiple countries with similar and centrally coordinated marketing programs.
International- Avon,,,,,Multinational- Unilever,,different product variation, brand names and advertising programs
Transnational-
FCP- is a United States federal law known primarily for two of its main provisions, one that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another concerning bribery of foreign officials.
IAFC- that makes it a crime for U.S. corporations to bribe an official of a foreign government or political party to obtain or retain business in a foreign country
Customs- France, men wear cosmetics than women. Japanese women gives chocolate to japanese men on Vday
Values- Mcdonals beef burgers in its restaurants. Instead they use muttons. German they don’t use visa or ms and installments debt…german word schuld means guilt
Back translation- is when a translated word or phrase is retranslated into the original language by a different interpreter to catch errors.
Semiotics- 4 in japanese means death…Tiffany and Company sells glassware and china in sets of five..Thumbs up sign has an offensive meaning in Russia and Poland
CE- tendency to believe that it is unappropriate to buy imported products because its unpatriotic which can harm domestic industries and cause domestic Unemployment
Develop Countries- is a sovereign state that has a highly developed economy and advanced technological infrastructure relative to other less industrialized nations. Japan, United States
Developing Countries- are in the process of moving from an agricultural to an industrial economy.
Bottom of the Pyramid- the largest, but poorest, socioeconomic group of people in the world
Political Stability- can be determined based on the amount of violence and terrorism expressed in the nation and by citizens associated with the state.
Trade Regulations- example of this laws are anti-trust law, which prohibits anti-competitive acts like price fixing, monopolistic conduct, and deceptive practices.