Global Marketing Session 1(1)

8/3/2019 Global Marketing Session 1(1)

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GLOBAL MARKETINGSESSION 1

Introduction to Global Marketing



Learning Outcomes

Session 1

At the end of the session you will be able to

Identify and analyses opportunities in the globaltrading environment

Recognise types of markets and changing patternsof trade globally

Identify and explain the strategies and contextualelements of global operations

Discuss the strategic choice of global ormultinational marketing



Global Marketing

Export Marketing

- marketing mix decisions across national/politicalboundaries

I nternational Marketing (or multinational) ² operating across a number of foreign countrieswhich differ significantly

Global Marketing

² marketing programmes integrated to exploitglobal opportunities Global Companies





Characteristics of Global Marketing -

Environmental

Diverse Culture

Widespread and fragmented markets

Data expensive and difficult to obtain Politics and associated risk

Government business regulations

Stages of Economic Development

Financial Systems & Regulatory Bodies



Characteristics of Global Marketing ²

Environmental 2

Financial Systems * Regulatory Bodies

Currency risks

Diverse business rules and customs Control and coordination difficult across markets



Ricardo·s Theory of

Comparative Advantage

´«trade between countries takes place because

one country is able to produce a product at a lower

price than is possible elsewhere.µ



Ricardo·s Theory of

Comparative Advantage 2

Achieved through

Sustained period of investment

Lower labour cost Proximity to raw materials

Subsidies to help native industries

Building expertise in certain key areas



Porter·s prescription for global

competitiveness

Create the climate for upgrading advantage

Sell to the most demanding customers

Find the right location Do not overdo globalisation



Porter·s prescription for global

competitiveness 2

Get involved in factor creating, including training

Consider a base move

Competition and alliance assure growth Role of leaders is important





How companies ¶go global·

Product maturity in home market

Competition in home market

Excess capacity utilisation Geographically diversification

Potential purchasing power





Global Customer Segment

A global customer emerges with similar or identical

set of needs and opportunities for a global business

needs for Fashion items and accessories

needs for IT, communication and entertainment

needs for Fast Food

needs for Cars, etc

The important question to a global marketeer is how similar are these needs and the segments· behaviour.

Standardisation Versus Adaptation

Culture



Global Business

Identifies a global set of needs and approaches all

of its global markets in a standardised way.

It offers the same products and services and its

marketing and advertising tends to be the

same/integrated in all of its markets.

Standardisation Versus Adaptation

Theodore Levitt



Failure of Global Marketing Strategies 2

Inability to manage local stakeholders

Mutual distrust, lack of respect between HQ and

locasl management

Inability to leverage ideas to all countries



Factors for Success of

Global Strategies

Clear global competitive focus

Effective relationship strategy

Well managed organisation with a culture oflearning



Key Economic & Trade Indicators

World Exports

Balance of Payments current account

Burden of Debt World Institutions fostering trade

Regional Trading Areas

Major elements form blocks for a Company to examine

the attractiveness to ¶do business· in a particular

country




Balance of Payments

Current Account 2003

(US $ bn)

Australia -24.4

Brazil 22.9

Germany 53.6

Japan 115.9

UK -5.8

USA -528.7

EU 42.9

World Exports in Merchandise

(%)

US 12.4

Germany 9.6Japan 7.5

France 5.3

Britain 4.8

Italy 4.1

Canada 4.2

Netherlands 3.6

Hong Kong 3.1

China 3.5




The Burden of Debt

Debt US $bn %GDP

Mauritania 2.5 148

Mexico 160.0 39

Nicaragua 6.0 262

Russia 183.0 62

Sierra Leone 1.2 126

Syria 22.4 136

Tariff Barriers Non-Tariff Barriers

Specific

country

Government

participation

Purpose Customs/entry

procedures

Time length Product

requirements

Import

restraints

Quotas/

Embargoes

Tariff rates Financial

control

Production,

distribution &

consumption

Other policies

& requirements



Arguments for & against protectionism

Retaliation

To counter dumping

Retaliation

Infant industries

Restructuring

Apply pressure

Strategically Important

industries

Volume of trade reduced

Retaliation

Ill-will

Living standards fall



World Institutions to foster Trade

W orld Bank ² used for international capital

I nternational Monetary Fund ² used for international

liquidity

GAT E/W TO ² liberalisation of trade and tariffs



Forms of Market Agreement

Free Trade Area - NAFTA

Customs Union ² MERCOSUR

Common Market ² common external tariff Economic Union ² harmonisation of economic policy,

economic monetary union 1999

Political Union ² economic union and political

harmony



Region Trading Areas

NAFTA US, Canada & Mexico

FTAA 34 north and south American countries

Mercosur Brazil, Paraguay, Uraguay & Argentina

EU European countries

APEC 23 Asia Pacific nations including Japan

ASEAN Thailand, Indonesia, Singapore, Brunei,Malaysia & Phillipines

CEA China, Hong Kong & Taiwan



Triad Theory

3 big regions US, Europe & Asia Pacific

= NAFTA, EU and APEC/ASEAN

= 80% world trade

But note

Investment flows

Largest developing markets China & India



Major Changes in the single European

Market

Removal of tariff barriers

Removal of technical barriers

Public procurement

Free movement of labour and workers· rights

Opening up of professions

Financial services

Transport, haulage and coastal cabotage



Legal Environment & Issues

Legal Environment

Local domestic law

International law

Domestic law in the home

country

Legal I ssues

Export & Import controls

Favourable trade status

Monopolies & Mergers

Law of ownership

Taxation

Trademarks, copyrights,

patente

Technical standards



Risk Appreciation

Political Risk

Economic Risk

Commercial Risk

Taxes & legislation relating to company

incorporation



Political Risk

´ A risk due to a sudden or gradual change in a

local political environment that is disadfvantageous

or counter-productive to foreign firms and marketsµ

Stability of government



Political Risk

Stability of government

International relations

Ideology

Expropriation ±

suspicion of foreign

ownership &

nationalisation

³ A risk due to a sudden

or gradual change in a

local political

environment that isdisadfvantageous or

counter-productive to

foreign firms and

markets´





The ¶C· Factors

Countries (PESTLE)

Currency ² fixed and floating

Competitors ² perfect competition or monopoly

Culture ² buyer behaviour



Porter·s 5 Forces

Potential

Entrants

Industry

Competitive Rivalry

Substitutes

BuyersSuppliers

Threat of rivalry

Threat of substitutes

Bargaining

power

Bargaining

power

Documents

Global Marketing Session 1(1)