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INTERNATIONAL MARKETING
Mr. RUPESH DAHAKE (LECTURER)SCHOOL OF MANAGEMENT STUDIES NAGPUR
What is International Marketing? Is a carrying on marketing outside the national boundaries.
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 one nation for a profit.
Marketing is the process of determining the consumer needs, converting them into products or services to satisfy the user needs and earning profit there from.
The essentials of modern marketing:- Consumer orientation Optimum use of resources More desired profitability Society oriented
Global Marketing IntegrationGlobal Marketing Integration
Fords made in Mexico with Japanese parts, Fords made in Mexico with Japanese parts, Honda, Toyota, BMW, and Mercedes Benz Honda, Toyota, BMW, and Mercedes Benz open USA plants.open USA plants.
Honda manufacturing cars in USA, TI Honda manufacturing cars in USA, TI manufacturing semiconductors in Japan.manufacturing semiconductors in Japan.
Macintosh’s PowerBook 100 designed and Macintosh’s PowerBook 100 designed and manufactured by Sony.manufactured by Sony.
International Marketing Concept:-
In international marketing activities performed international level. This activities involved as follows:
Purchases or manufacturing and selling to foreign customers
Marketing specialized activates is product planning, packing, branding, pricing, advertising, distribution and providing after sales services.
Country market C
environment(uncontrollable)
Country market B
environment(uncontrollable
)
Country market Aenvironment
(uncontrollable)
The International Marketing Task
Political/legalforces
Economicforces
1
2
Competitivestructure
CompetitiveForces
Level of Technology
Price Product
Promotion Channels of distribution
Geography and
Infrastructure
Foreign environment(uncontrollable)
Structure ofdistribution
Economic climate
Cultural forces
3
45
6
7Political/
legalforces
Domestic environment(uncontrollable)
(controllable)
Main Functions in International Marketing
Choosing the basic route for international marketing
Market selection and product selection
Selection of distribution channels
Developing pricing strategy
International marketing communication
Organizational adaptations
Handling business ethics
Why International Marketing?
Market saturation Rise of new markets Foreign competition Opportunities through foreign aid programmes. To utilized full capacity To off set the business down-turns. To save cost To take advantage of tax concessions To develop and test new products To have access to international technology.
International Trade
Diversity Patriotism Heterogeneity Varied economic climate Role of policies Government intervention Transport cost Business risks Remittances Mobility of factors Multiple chain of intermediaries
ECONOMIC ENVIRONMENT OF INTERNATIONAL MARKETING
a. Gross National Product.
b. Per Capita Income.
c. Purchasing power of the consumers.
d. Rate of Economic Growth.
e. Level and degree of industrialization.
f. The form of marketing channels and related infrastructure
INTERNATIONAL INSTITUTIONS
11
Case: Agricultural subsidies and development
Rich nations spend more than $300 billion a year to subsidize their farmers
Subsidies create surplus production Surplus production leads to dumping and
depressed prices UN estimates producers in developing
nations lose $50 billion export revenue because of depressed prices
12
Agricultural subsidies and development
Rich countries of the developed world subsidize farm products Reasons
To keep commodity prices low To favor politically active farmers
Consequences Surplus production Depressed world prices (a result of
surplus)
Instruments of trade policy
Tariffs - oldest form of trade policy
Good for government Protects domestic producers
Reduces efficiency Bad for consumers
Increases cost of goods
Instruments of trade policy-subsidies
Government payment to a domestic producer Cash grants Low-interest loans Tax breaks Government equity participation in the
company Subsidy revenues are generated from taxes Subsidies encourage over-production,
inefficiency and reduced trade
Instruments of trade policy - Quota
Import quota Restriction on the quantity of some
good imported into a country Voluntary export restraint (VER)
Quota on trade imposed by exporting country, typically at the request of the importing country
1947: General Agreement on Tariffs and Trade (GATT): an international agreement among member countries that is a
code of conduct dealing with Tariffs among members (called “contracting parties”)
•Objective is to liberalize trade by eliminating tariffs, subsidies, Objective is to liberalize trade by eliminating tariffs, subsidies, & import quotas& import quotas
• Goal was to remove international trade barriers through:
• reduce tariffs
• preventing trade advantages of specific countries, i.e. a country must give the same consideration to all contracting parties
• limits the use of import quotas
• grants special trade privileges to developing nations
GATT
Other Considerations:
• General Agreement on Tariffs and Trade (GATT):
• International law did not recognize GATT as an organization since it was a negotiation forum among agreeing parties
• Headquartered in Geneva, Switzerland with a “secretariat” office at the UN in New York
• Items considered by a “council of Representatives” elected by GATT members and a meeting (generally called a
Round of GATT) held once a year.
• GATT was the primary guiding document dealing with trade/tariffs until the creation of the World Trade
Organization (WTO) in 1994, and the GATS and TRIPS. GATT rolled into WTO.
Development of the world trading system
Used ‘Rounds of talks’ to gradually reduce trade barriers
Uruguay Round GATT 1986-93 Mutual tariff reductions negotiated Dispute resolution only if complaints
were received
World Trade Organization
Location: Geneva, SwitzerlandEstablished: 1 January 1995Created by: Uruguay Round negotiations (1986-94) Membership: 146 countries (as of 4 April 2003)Budget: 154 million Swiss francs for 2003Secretariat staff: 550Head: Supachai Panitchpakdi (director-general) (2003)
Functions:• Administering WTO trade agreements• Forum for trade negotiations• Handling trade disputes• Monitoring national trade policies• Technical assistance and training for developing countries• Cooperation with other international organizations
The World Trade Organization
The WTO was created during the Uruguay Round of GATT to police and enforce GATT rules
Most comprehensive trade agreement in history Formation of WTO had an impact on
Agriculture subsidies (stumbling block: US/EU) Applied GATT rules to services and intellectual
property (TRIPS) Strengthened GATT monitoring and
enforcement
The WTO
145 members in 2003 Represents 90% of world trade 9 of 10 disputes satisfactorily
settled Tariff reduction from 40% to 5% Trade volume of manufactured
goods has increased 20 times
The WTO
Policing organization for: GATT Services Intellectual property
Responsibility for trade arbitration: Reports adopted unless specifically rejected After appeal, failure to comply can result in
compensation to injured country or trade sanctions
WTO at work
280 disputes brought to WTO between 1995 and 2003
196 handled by GATT during its 50 year history
US is biggest WTO user Big wins - beef - bananas Big loss - Kodak
The WTO -achievements
Telecommunications (1997) 68 countries (90%) of world
telecommunications revenues Pledged to open their market to fair
competition Financial Services (1997)
95% of financial services market 102 countries will open, their markets to
varying degrees
WTO in Seattle
Millennium round was aimed at further reduction of trade barriers in agriculture and services
WTO meeting disrupted by Human rights groups Trade unions Environmentalists Anti globalization groups
UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT
Was established in 1964 as permanent inter Govt. body.
Objective:-
Dealing with Trade, Investment and Development issue.
Maximizing the Trade, Investment and Development opportunities in Developing nations.
To assist developing nations.
Conducting a conferences related on international market, multinational Co-operation, remove the disparity between developing and developed nations.
UNCTED provide the forum.
Primary Objective:-
Formulate policies relating to aspect of development.
Meeting or conference meets once in four year.
1st meeting was held in 1964 at Geneva.
UNCTED make GSP (Generalized system of preference)
INTERNATIONAL MONETORY FUND
Headquarters Washington, D.C., USA
Managing Director Dominique Strauss-Kahn
Central Bank of
Currency Special Drawing Rights
Base borrowing rate 3.49% for SDRs[1]
Website http://www.imf.org/
The International Monetary Fund (IMF) is an international organization that oversees the global financial system
History
The International Monetary Fund was created in July 1944, originally with 45 members
The IMF was formally organised on December 27, 1945, when the first 29 countries signed its Articles of Agreement.
The IMF describes itself as "an organization of 186 countries
Objective:-
To promote international monetary co-operation. Foster global monetary cooperation secure financial stability promote high employment and sustainable economic growth, and
reduce poverty
Functions:-
Short term credit institutions.
Acts as a mediator and referee.
Dispensation of justice
Technical Assistance
Publication
ORGANIZATION AND MANAGEMENT
Every member country is required to subscribed to the capital of the fund at fixed quota.
Contribution collected in the form of gold as well as currency(domastic)
Most are represented by other member states on a 24-member Executive Board but all member countries belong to the IMF's Board of Governors
Data dissemination systems
For those member countries having or seeking access to international capital markets.
General Data Dissemination System (GDDS)
Special Data Dissemination Standard (SDDS).
Members' quotas and voting power, and Board of Governors
IMF member country
Quota: millions of
SDRs
Quota: percentage
of total GovernorAlternate Governor
Votes: number
Votes: percentage of
total
37149.3 17.09Timothy F. Geithner Ben Bernanke 371743 16.79
13312.8 6.13 Kaoru YosanoMasaaki Shirakawa 133378 6.02
13008.2 5.99 Axel A. Weber Peer Steinbrück 130332 5.88
10738.5 4.94Christine Lagarde Christian Noyer 107635 4.86
10738.5 4.94 Alistair Darling Mervyn King 107635 4.86
China 8090.1 3.72 Zhou Xiaochuan Hu Xiaolian 81151 3.66
United States
Japan
Germany
France
United Kingdom
4158.2 1.91Pranab Mukherjee D. Subbarao 41832 1.89
India
WORLD BANK (INTERNATIONAL BANK OF RECONSTRUCITON AND DEVELOPMENT)
World BankFormation 27 December 1945
Type International organization
Legal status Treaty
Purpose/focus Crediting
Membership 186 countries
President Robert B. Zoellick
Main organ Board of Directors[1]
Parent organization World Bank Group
Website http://www.worldbank.org/
The World Bank is an international financial institution that provides leveraged loans[2] to poorer countries for capital programs with a goal of reducing poverty.
Memberships:- 2% gold and rest in dollars
The World Bank headquarters in Washington, D.C.
OBJECTIVES
• Build capacity
• Infrastructure creation:
• Development of Financial Systems:• • Combating corruption:
• Research, Consultancy and Training:
Functions:
To conduct the survey mission in members country.
To established economic development institute.
To provide a co-finance.
To established machinery to settlement of disputes.
World focus on urban development and population planning and tourism of members country.
Clean Technology Fund management
WORLD BANK OFFER:-
LOAN
GRANT
TECHINICAL ASSISTANT
Areas of operation Agriculture and Rural Development Conflict and Development Development Operations and Activities Economic Policy Education Energy Environment Financial Sector Gender Governance Health, Nutrition and Population Industry Information and Communication
Technologies Information, Computing and
Telecommunications International Economics and Trade Labor and Social Protections Law and Justice Macroeconomic and Economic Growth Mining
Poverty Reduction Poverty Reduction Poverty Poverty Private Sector Private Sector Public Sector Governance Public Sector Governance Rural Development Rural Development Social Development Social Development Social Protection Social Protection Trade Trade Transport Transport Urban Development Urban Development Water Resources Water Resources Water Supply and SanitationWater Supply and Sanitation
Free Trade Zone, popularly known as FTZ, is an area where goods may be traded without any barriers imposed by customs authorities like quotas and tariffs.
Free Trade Zone, popularly known as FTZ, is an area where goods may be traded without any barriers imposed by customs authorities like quotas and tariffs
The Free Trade Zone can be defined as a labor-intensive manufacturing hub, which involves the import of components and raw materials, and the produced goods are exported to different countries.
FREE TRADE ZONE
FACTS ABOUT THE FTZ
There were around 3000 free trade zones across 116 countries in the year 1999.
where nearly 43 million people were working.
These FTZs produce various goods such as shoes, clothes, sneakers, toys, convenient foods items, electronic goods, etc.
UAE Free Trade Zone
Dalian Free Trade Zone
Orlando Free Trade Zone
Tianjin Port Free Trade Zone
HISTORY OF FTZ
Free Trade Zones in the world are found in South America in 1920.
During the 60s and the 70s there was a rapid surge in the development of FTZs across the world.
FREE TRADE ZONE DEVELOPMENT PLACE
Geographically advantageous for trade.
Places near international airports, sea-port, Railway network.
Most FTZ developed in developing nations.
WHY FTZ?
LOW TRADE BARRIERS .
TAX CONCESSION.
LOW COST OF PRODUCTION.
LOW BUREAUCRACY .
PURPOSE FTZ
Development of export oriented units.
Foreign exchange earnings.
Generation of employment.
FTZ IN INDIA
Free Trade Zones ( Under Ministry of Commerce )
Special Economic Zones
Director General of Foreign Trade
Central Board of Excise & Customs
Falta Export Processing Zone Santa Cruz Electronics Export Processing Zone
Madras Export Processing Zone Visakhapatnam Export Processing Zone
NOIDA Export Processing Zone Cochin Export Processing Zone
Navi Mumbai Special Economic Zone AP Special Economic Zone
Kandla Free Trade Zone Surat Special Economic Zone
Common Market
Definition Group formed by countries within a geographical area to promote duty
free trade and free movement of labor and capital among its members. European community (as a legal entity within the framework of European Union) is the best known example. Common markets impose common external tariff (CET) on imports from non-member countries.
Bilateral trade agreement (BTA)
A Bilateral trade agreement (BTA) is a trade agreement between any two countries, usually in order to reduce tariffs and quotas on items traded between themselves. A BTA may be either preferential, wherein benefits and obligations apply only to the two signatories, or most-favored, which applies terms that are already given to other nations under similar agreements.
Bilateral trade agreement (BTA)
EXAMPLE
India has bilateral agreements with the following countries and blocs: ASEAN[3] Sri Lanka[4] Thailand (separate from FTA agreement
with ASEAN)[5] Malaysia (separate from FTA
agreement with ASEAN)
COMMODITY AGREEMENTS
Commodity agreements are international agreements designed to stabilize commodity prices in the interest of producers and consumers. They can include mechanisms to influence market prices by adjusting export quotas and production when market prices reach certain trigger price levels. They sometimes employ buffer stocks which release stocks of commodities onto the market when prices rise to a certain level and build them up when they fall.
Non-tariff barriers
Non-tariff barriers to trade (NTB's) are trade barriers that restrict imports but are not in the usual form of a tariff.
EXAMPLE
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