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REACHINGGLOBAL

MARKETS77CHAPTER

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• Describe the nature and scope of world trade from a global perspective and its implications for the United States

• Explain the effects of economic protectionism and the implications of economic integration for global marketing practices.

AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

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• Understand the importance of environmental factors (cultural, economic, and political) for global marketing efforts

• Describe alternative approaches firms use to enter and compete in global markets

AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

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• Identify specific challenges marketers face when crafting worldwide marketing programs.

AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

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NOW THE WORLD CAN BREATH EASIER…ONE NOSE AT A TIME

REACHING GLOBAL MARKETS

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• World Trade Flows• Global perspective

DYNAMICS OF WORLD TRADE

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FIGURE 7-1FIGURE 7-1 Illustrative world trade flows for manufactured goods and commodities (billions of dollars)

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• Global perspective (cont) Countertrade Trade feedback effect

• United States perspective Gross domestic product Balance of trade

• Competitive Advantage of Nations

DYNAMICS OF WORLD TRADE

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• Competitive Advantage of Nations Factor conditions Demand conditions Related supporting industries Company strategy, structure, and rivalry Economic Espionage

DYNAMICS OF WORLD TRADE

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Concept Check

1. What is the trade feedback effect?

A: The phenomenon in which a country’s imports affect its exports and vice versa.

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Concept Check

2. What variables influence why some companies and industries in a country succeed globally while others lose ground or fail?

A: Factor conditions; demand conditions; related and supporting industries; and company strategy, structure, and rivalry.

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• Decline of Economic Protectionism

EMERGENCE OF A BORDERLESS ECONOMIC WORLD

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• Decline of Economic Protectionism (cont)

Tariffs Quota World Trade Organization

• Rise of Economic Integration• European Union

EMERGENCE OF A BORDERLESS ECONOMIC WORLD

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• Rise of Economic Integration (cont)• North American Free Trade Agreement

• Asian Free Trade Agreements

EMERGENCE OF A BORDERLESS ECONOMIC WORLD

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• A New Reality: Global Competition among Global Companies for Global Customers• Global Competition

Strategic alliances

EMERGENCE OF A BORDERLESS ECONOMIC WORLD

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• A New Reality: Global Competition(cont)• Global Companies

Multidomestic marketing strategy Global marketing strategy

• Global Consumers

• Emergence of Networked Global Marketplace

EMERGENCE OF A BORDERLESS ECONOMIC WORLD

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Concept Check

1. What is protectionism?

A: It is the practice of shielding one or more sectors of a country’s economy from foreign competition through the use of tariffs or quotas.

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Concept Check

2. The North American Free Trade Agreement was designed to promote free trade among which countries?

A: United States, Canada, and Mexico

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Concept Check

3. What is the difference between a multidomestic marketing strategy an a global marketing strategy?

A: A multidomestic marketing strategy means that firms have as many different product variations, brand names, and advertising programs as countries in which they do business. A global marketing strategy standardizes marketing activities when there are cultural similarities and adapts them when cultures differ.

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• Cultural Diversity Cross-cultural analysis

• Values

• Customs Foreign Corrupt Practices Act

• Cultural Symbols Semiotics

A GLOBAL ENVIRONMENTAL SCAN

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• Cultural Diversity (cont)• Language

Back translation

• Cultural ethnocentricity Consumer ethnocentrism

A GLOBAL ENVIRONMENTAL SCAN

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• Economic Considerations• Stage of Economic Development

• Economic Infrastructure

• Consumer Income and Purchasing Power

A GLOBAL ENVIRONMENTAL SCAN

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• Economic Considerations (cont)• Currency exchange rates

A GLOBAL ENVIRONMENTAL SCAN

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• Political-Regulatory Climate• Political Stability

• Trade Regulations

A GLOBAL ENVIRONMENTAL SCAN

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1.Semiotics involves the study of ___________________________________________________________________________ .

cultural symbols and their role in the assignment of meaning for people

Concept Check

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Concept Check

2. When foreign currencies can by more U.S. dollars, are U.S. products more or less expensive for a foreign consumer?

A: Less expensive.

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• Exporting

• Licensing

• Joint Venture

• Direct Investment

GLOBAL MARKET-ENTRY STRATEGIES

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Concept Check

1. What mode of entry could a company follow if it has no previous experience in global marketing?

A: Indirect exporting through intermediaries.

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Concept Check

2. How does licensing differ from a joint venture?

A: In licensing, the firm offers the right to a trademark, patent or trade secret, in return for a fee or royalty. In a joint venture, a foreign and a local firm to produce some product or service. The two companies share ownership, control, and profits of the new entity.

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• Product and Promotion Strategies Product extension Product adaptation Product invention

CRAFTING A WORLDWIDE MARKETING EFFORT

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• Distribution Strategy

CRAFTING A WORLDWIDE MARKETING EFFORT

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• Pricing Strategy Dumping Gray market

CRAFTING A WORLDWIDE MARKETING EFFORT

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Concept Check

1. Products may be sold globally in three ways. What are they?

A: Product extension, product adaptation, and product invention.

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Concept Check

2. What is dumping?

A: Dumping is when a firm sells a product in a country below its domestic price or below its actual cost.