Global/International MarketingMR1100 Chapter 7

What is International Marketing?

International Marketing is the Marketing across international boundaries.

Examples

When OCI sells shrimp in Japan or Germany that is an aspect of international marketing.

When BRP sets up a company in Europe to market snowmobiles that too is an aspect of international marketing.

Dynamics of Word Trade World trade is increasing at a rapid pace

Trade is critical for Canada’s economic health

http://www.statcan.gc.ca/daily-quotidien/140506/dq140506a-eng.htm

Balance of Trade The Balance of trade is the difference between the value of

imports and the value of exports

a positive balance of trade exists if there is a higher value of exports over imports

http://www.statcan.gc.ca/daily-quotidien/140506/dq140506a-eng.htm

Why is International Marketing so Important to Canadians?

Canada exports 25-30% of its total Gross Domestic Product (GDP is the value of all goods and services produced in Canada.) Our largest trading partner is the USA. (see Statistics Canada http://www.statcan.gc.ca/dai-quo/ )

Emergence of first the Free Trade Agreement (FTA) and then the North American Free Trade Agreement (NAFTA) uOpening up of Eastern Europe.

International Firms ->Multi-National Corporations (MNC’s)->Transnational firms

Global Brands

Competitive Advantage(Porter’s Model)

The four different components of the framework are:

1. Factor Endowment2. Related And Supporting Industries3. Demand Conditions4. Strategy, Structure, And Rivalry

Protectionism Protectionism is the practice of shielding one or more industries within a country’s economy from foreign competition through tariffs or quotas

Protectionism is on decline across the world

Tariff: Tax on imports that artificially raise the price of imports making them less attractive to buy.

Quota: A government imposed limit on imports of a given item.

Economic Integration

European Union

North American FTA

Asia-Pacific Economic Cooperation

Why Go International?

Reasons for going International:

–Exploit a business opportunity - profits

–Increased growth potential - extend product life.

–Economic environment may be better abroad

–Less competition

–Less taxes

–Less regulations

–Lower salaries abroad

–Spread fixed costs

–Increased economies of scale and scope

–To sell inventory that will not sell at home

Difficulties of International Marketing

Often a time & money consuming effort

Differences in language, culture and values

Hard to get executives to go abroad

Local ways of doing business may be different than at home. uPolitical, Social, & Economic uncertainty.

Different (poor) infrastructure.

A GLOBAL ECONOMIC SCAN

Key Factors to Assess in the Host Country Prior to Going International

Cultural Conditions / Cultural Diversity

Do you and you company understand the cultural conditions in the host country?

Be aware of and respect Customs

Be aware of and respect Cultural Symbols

Be aware of language differences

You cannot respect them if you do not know them.

Be aware of the lessons learned by companies operating abroad.

Key Factors to Assess in the Host Country Prior to Going International

Economic Conditions

What stage of economic development is the host country in?

How much infrastructure exists -- what is its condition?

What is consumer income? -- high or low

Is there a stable currency exchange rate?

Key Factors to Assess in the Host Country Prior to Going International

Political Conditions / Regulatory Climate

Stability of the government

The existence of Trade Barriers

The potential of Expropriation

Trade/Tax incentives that may be offered

Is the host a part of a multinational trade group such as NAFTA or the EC?

See Political Risk Assessment @ http://www.prsgroup.com/

Alternative Approaches to Going International

Exporting - lowest risk, lowest involvement

Licensing - still low involvement but more risk

Joint Venture - Multinational joins with a local company in the host country - Higher involvement and risk. (See http://www.offshore-technology.com/projects/exxon_hebron/)

Direct Ownership - most involvement, most risk and most potential reward.

Key Terminology

Selling Products Abroad

Extension - sell same product in other countries (eg. The Ford Escort is the same basic car all over the world)

Adaptation - Modify a product to meet the needs of the host country ( eg. Honda markets a different version of the Accord in Japan and Europe than in North America (it’s bigger)

Invention - Sell a new product in the host country (The battery-less radio in Africa)

Key Terminology

Pricing

Dumping - selling a product in a host country below its domestic cost.

Counter-trade - A form of barter

Bribery - Giving something in exchange for a promise of a deal. Common in underdeveloped countries - but ethically wrong.

Grey Market – products are sold through unauthorized channels

Watch: A Taste of the West: McDonald’s in Russia (Click Here)

What were some of the Challenges McDonalds experienced in setting up in Russia? Consider: Cultural/Economic/Political/Regulatory differences

What type of business entry strategy did McDonald’s use? Why?

Comment on McDonald’s Product, Promotion, Distribution and Pricing strategies in Russia

Why did they set up in Russia?