Intl Trade 1

8/15/2019 Intl Trade 1

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Developing A

Global Vision


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Globalization

Global marketers often faceunique problems in theexternal environmentcompared to domesticmarketers.

Dierent cultural valuesand ideas, for example can

present unique challenges.


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Globalization

arket buildings of all kindsincluding !ranian "rms #hosedetergent bears the name

$%arf& 'means $sno#& in(ersia) is struggling for thesame goal along the old silk

*oad to +hina building abrand name in *ussia until-- #ere domains of the

/oviet 0nion.


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Globalization

1ed b2 +oke, (epsi, (rocter 3Gamble, +olgate, etc. these "rmsbrave bureaucracies and novice

consumers to gain in a region#here huge oil and gas reservesare fueling a rapid gro#ing

consumer market.

(epsi had a hard time struggle toshake o the stigma of having

been the main cola of the old


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4he #ord $Global” has assumed a ne#meaning, referring to a boundless mobilit2and competition in social, business and

intellectual #orld) arenas.

“Global Marketing” 'marketing to targetmarkets throughout the #orld) has become an

imperative for businesses.

anagers must develop a global vision notonl2 to recognize and react to internationalmarketing opportunities but also to remaincompetitive at home


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In summary, “Global Vision” –means recognizing andreacting to internationalmarketing opportunities ,

being aware of threats fromforeign competitors in allmarkets, and eectively using

international distribution


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!mportance of Global arketing

!n the 0./. man2 countries depend more on

international commerce than for example the5uropean unions.

0/ exports about a "fth of its industrialproduction and a third of its farm products.

6ne of ever2 -7 8obs in the 0./. is directl2 orindirectl2 supported b2 exports.

0./. businesses exports over 9:;; billion ingoods to foreign countries ever2 2ear.

0./. also is the #orldce machiner2 and computers,automobiles, aircraft and electrical and

industrial machiner2 make up almost half of


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A company that is heavily engaged in internationaltrade, beyond exporting and importing is call a“multinational corporation” - (MNC)

ultinational corporation move resources, goods,

services and skills across national boundarieswithout regard to the country in which thehead!uarters is locate.

"ome of these #rms can be seen as follows$

Multinational Firms

%"A and the &uropean %nionhas a large number of #rmsthat are global marketers


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- General otors 0/ -C,-CE 7;,;;;

= Ford otors 0/ -:,7=C 7,=

itsui Hapan -E=,7 E;,;;;

E itsubishi Hapan -=,== 7,;;;

: *o2al Dutch '/hell) %ritain -=,-E- -;:,;;;

7 !tochu Hapan -=7,7- 7,7C:

C 5xxon 0/ -==,=C ;,;;;

Ial?art /tores 0/ --,= =:,;;;

arubeni Hapan ---,-=- 7E,;;;

-; /umitomo Hapan -;=,: =,:;;

014!@A4!6@A1 +6*(6*A4!6@/ ? '-)


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1arge multinationals have severaladvantages over other companies.4hese "rms can overcome tradeproblems.

5xample-) 4ai#an and /outh oreans have long had an

embargo ! against Hapanese cars forpolitical reasons J 2et Konda 0/A a

Hapanese o#ned compan2 based in 0/sends their products to 4ai#an and orea.

=) %A/F, a ma8or drug and chemicalmanufacturer its product is al#a2s

challenged b2 the environmentalist in itshome based. /o %A/F moved its cancer and


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Global arketing /tandardization

“This means that production o uniorm products that can be sold the same!a" all o#er the !orld$”

4his presumes that the marketsthroughout the #orld are becomingmore alike.

0niform production should enablecompanies to lo#er production andmarketing costs and increase pro"t.

Ko#ever, research indicates that

superior sales pro"ts do not


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Global arketing /tandardization

%&ample') Macdonalds changes its salad

dressings or French tastes and sellsbeers and mineral !ater

) Macdo does not sell bee burger inndia because o its religious beliesbut #eggie hamburgers

*) Coke+s sprite has a di,erentormulation in apan$

.) Colgate toothpaste is marketed thesame !a" globall"/ although its

ad#anced Gum 0rotection Formula is


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'()ulture

*(&conomic+echnological-evelopment

(/olitical "tructure

0(-emographic /ro#le1(2atural 3esources


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'( )ulture – )entral to any society is the commonset of values share by its citizens thatdetermine what is socially acceptable.

hese values and roles have a tremendouseect on people4s preferences and thus onmarketers4 options.

&xample$NC4 8ola a fruity greenish5yellow carbonated

drink is the largest selling soft drink in /eru. he drink has become a symbol of nationalpride and heritage. he drink contains onlyfruits indigenous to that country.

/eople states that they drink 6Inca 7ola8 because it6 8


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=) 1evel of 5conomicL4echnologicalDevelopment

!n general, complex and sophisticatedindustries are found in developed

countries. Kigher average famil2incomes are common in the moredeveloped countries.

1arger incomes mean greaterpurchase po#er and demand notonl2 for consumer goods andservices but also for the machiner2

and #orkers required to produce


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The Case o 7ig Mac+60@4*!5/ (*!+5

0./.A. 9=.E=

%ei8ing? 'cheapest) 9-.-7

Geneva ? 'most

expensive)

9E.;=

Denmark 9.:

ala2sia 9-.::

To appreciate the marketing opportunities letus e&amine the : stages o economic ;technological de#elopment < traditionalsociet"/ pre-industrial societ"/ take-o,

econom"/ industriali=ed societ" and ull"industriali=ed societ $


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: stages o %conomic ;Technological>e#elopment

a) 4raditional societ2,

b)(re?industrial societ2c) 4ake?o econom2

d) !ndustrialized societ2e) Full2 industrialized

societ2.


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: stages o %conomic ; Technological>e#elopment

a) Traditional societ" ? +ountries in thetraditional stage are the earliest phaseof development. “Traditional 9ociet"” is largel"agricultural/ !ith a social structure ?#alue s"stem that pro#ide littleopportunit" or up!ard mobilit"”$

4o introduce units of technolog2 is

probabl2 a #asted eort.5xample.!n Ghana, for instance, a toll#a2 -7 miles

long and 7 lanes #ide, intended to

modernized distribution, does notconnect to an2 cit2 or village or other


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b) 0re-ndustrial societ" ? involves economicand social change and the emergence ofa middle class #ith an entrepreneurialspirit.

5ective marketing in these countries isver2 di>cult because the2 lack themodern distribution and communications2stem.

5xamplea) adagascar and 0ganda are in this

stage

b) (eru J did not establish a televisionnet#ork until -C:


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c) Take-6, %conom" ? !t is a period oftransition from developing to developednation. @e# industries arise and agenerall2 health2 social and politicalclimate emerges

5xamplea) en2a although not politicall2 inclined,

oil exploration is increasing and is set tobecome the #orld


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d) ndustriali=ing 9ociet" ? !t is in thisperiod that technolog2 spreads fromseveral sectors of the econom2 andpo#ered the takeo to the rest of thenation. +ountries begin to producecapital and durable consumer goods. !tfoster economic gro#th as a result largemiddle class begins to emerge and thereis a demand for luxur2 and services

goods.

5xamplea) +hina J fastest gro#ing econom2 in the

#orld '-;M per 2ear)

b) (hilippines, Vietnam, ala2sia and


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e) Full" ndustriali=ed 9ociet" ?!n this stage, the2 areexporters of manufactured

goods, man2 of #hich arebased on technolog2 J likeautomobile, computers,airplanes, oil explorationequipment andtelecommunicationequipments.


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) (olitical /tructure JGovernment policiesrun the countr2 from no private o#nershipand minimal individual freedom to littlecentral government and maximumpersonal freedom.

an2 countries are changing from a centrall" planned econom2 to a market orientedone like Kungar2 and (oland.

an2 of the reforms have increased foreigntrade and investment. 5xample in (oland,foreigners are no# allo#ed to invest in allareas of industr2, including agriculture,manufacturing and trade.

ore than : ;;; *ussian mana ers are


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E) 1egal +onsiderations ?an2 legal structures aredesigned to either

encourage or limit trade,like

'a) 4ari 'b) Nuotas'c) %o2cotts'd) 5xchange +ontrole arketin Grou in


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E) 1egal +onsiderations ? an2 legalstructures are designed to eitherencourage or limit trade, like

'a)4ari J tax levied on the goods entering a

countr2. For example trucks imported intothe 0/ faces a =:M tari. 4hese taristend to decrease barrier to trade butoften are replaced b2 quotas, bo2cotts

and other restrictions.'b) Nuotas J 1imit on the amount of a speci"cproduct that can enter a countr2. 0/A hasstrict quotas for imported textiles, sugarand man2 dair2 products. 4his #as set as

a means of protection from foreign


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O'c) %o2cott J 5xclusions of all products fromcertain countries or companies.Government use bo2cotts to exclude "rmsfrom countries #ith #hom the2 have apolitical dispute.

5xample

/everal Arab countries bo2cotted +oca?+ola because it maintained distributions

in !srael.

'd) 5xchange +ontrol J !t is a la# compellinga compan2 earning foreign exchange fromits exports to sell it to a control agenc2. A

compan2 #ho #ishes to bu2 goods abroad


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'e)arket Groupings J Also commonl2kno#n as 4rade Alliances. 4hisoccurs #hen several countries agreeto #ork together to form a common

trade area that enhances tradeopportunities.

5xamples

-) 55+ J 5uropean 5conomic +ommunit2

=) A/5A@ J Association of /outh 5astAsian

@ations) @AF4A J @orth American Free 4rade

AgreementJ


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'f)4rade Agreements J Areorganizations, #hich intends tolo#er trade barriers #orld#ide. 4he$0rugua2 *ound & of trade

negotiation, created the Iorld4rade 6rganization 'I46) adoptedin -E, signed b2 --C nations inarrakesh, orocco.

For the "rst time, there is anagreement covering services,

intellectual propert2 rights and


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:) @atural *esources J 4his is the "nal factorin the external environment that hasbecome more evident in the past decadeis the shortage of natural resources.

) (etroleum shortages have created hugeamount of #ealth for oil producingcountries, such as @or#a2, /audi Arabia,!ndonesia, exico and Venezuela.

) Iarm climate and lack of #ater meansthat man2 African countries #ill remainimporters of foodstus.

) 0/ rel2 heavil2 on Africa for precious

metals


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: ethods of entering the globalmarket place Jin order of risks

*isk

*eturn1o#*iskL

1o#return

5xport

1icensing

+ontract

anuf acturin

g

HointVentur

e

Direct!nvestment

Kigh *iskLKighreturn


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: Methods o entering the globalmarket place


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Global arketing ix

4o succeed, "rm seeking to enter foreigntrade must adhere to the principles of

marketing mix. !nformation gathered onforeign markets through research is thebasis for the . 0+s o marketing (product/ place (distribution)/ promotion and price$)$ 4he follo#ing marketing mix canbe developed for a global target market

0roduct ? 0romotion? 6ne (roduct one message? (roduct !nvention? essage Adaptation? (roduct Adaptation? (ricing? Dumping

? +ountertrade


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Global arketing ix

0roduct ? 0romotion

? 6ne (roduct one message marketJone

important decision is #hether toalter the

product or the promotion for theglobal

marketplace. 6ther options areto radicall2

change the product or to ad8usteither the

promotional message.


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Global arketing ix

6ne 0roduct/ 6ne Message

? 4he strateg2 for global marketing standardization is developing a

singleproduct for all markets and

promoting itthe same #a2 all over the #orld.

5xample

- (rocter 3 Gamble uses the sameproduct and promotional themes forKead 3 /houlders in +hina as it

does in the 0./.


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Global arketing ix

0roduct n#ention

? (roduct invention can be taken tomean

either creating a ne# productfor a market

or drasticall2 change an existingproduct.

5xample

? Hapanese market, @abisco had toremove the cream "lling from its6reo because Hapanese childrenthough the2 #ere too s#eet.

-Frito 1a2


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Global arketing ix

Message 4daptation

? 4he concept here is to maintainthe same

basic product but alter thepromotional

strateg2.

%&ample- Karle2 Davison ads reads $one stead2

constant in an increasingl2 scre#ed?up#orld& #ould not appeal to Hapanese. 4he Hapanese ads combine American imageshas been eective.

-

American riders passing a geisha in a


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Global arketing ix

0roduct 4daptation

? 4he idea is to slightl2 alter a basicproduct to meet local conditions.

%&amples@

? Hapanese house#ives could not "tAmerican?size Ho2 dish soap on theirshelves J (rocter 3 the bottle to acompan2 c2linder that took less

space.? 4he brand “8iddi!inks” is a #ord for

%ritish babies J in the 0./. the name#as changed to “7ink"” because of

positive parental reactions in a


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Global arketing ix

0ricing

? 6nce marketing managers havedetermined

a global product andpromotional strateg2,

the2 can select on pricing.

5xporters most not onl2 cover theircosts on production, insurance,

transportation, taxes, taris as#ell as #hat customers are #illingto spend on particular product.

/ometimes products are simpli"ed inorder to lo#er the rice.


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Global arketing ix

>umping

? is considered the sale of anexported

product at a price lo#er than thatcharge

for the same or like product in$home&

market of the exporter.

>umping ma" occur as a result o e&porterbusiness strateg"Aa) 4r2 to increase an overseas market shareb) 4emporar2 distribute product in overseas

market to oset slack demand in homemarket


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Global arketing ix

Countertrade

? is a form of trade in #hich all orpart of the

pa2ment for goods or services isin the form

of other goods or services.

!t is a form of %arter 's#apping goodsfor goods).

%&ample@- (epsi+o sends (epsi s2rup to *ussian

bottling plants in pa2ment gets/tolichna2a vodka, #hich is then marketed

in the #est.- ?


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Global arketing ix

>istribution

? /olving promotional, price andproduct

problems does not guaranteeglobal

marketing success. 4he productstill has to

get adequate distribution.

%&ample@? 5uropeans don


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A//!G@5@4

'5xplain more of the follo#ing) J

minimum ?: sentences each

-) %u2er for export=) Global Vision

) 5xportingE) Global vision:) eiretsu7) aastricht 4reat2

C) ercosur) (re?!ndustrial societ2) 5ntrepreneurial insights-;) ultinational +orporations

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