1 lamb, hair, mcdaniel chapter 5 developing a global vision 2010-2011

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Lamb, Hair, McDaniel

CHAPTER 5

Developing a Global Vision

2010-2011

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LO 1 Discuss the importance of global marketing

LO 2 Discuss the impact of multinational firms on the world economy

LO 3 Describe the external environment facing global marketers

Learning OutcomesLearning Outcomes

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LO 4 Identify the various ways of entering the global marketplace

LO 5 List the basic elements involved in developing a global marketing mix

LO 6 Discover how the Internet is affecting global marketing

Learning OutcomesLearning Outcomes

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Discuss the importance of

global marketing

Rewards of Global MarketingRewards of Global Marketing

LO1

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Rewards of Global Marketing

Recognizing and reacting to international marketing opportunities

Using effective global marketing strategies

Being aware of threats from foreign competitors

Having a global vision means…

LO1

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Beyond

the

Book

Emerging Markets

Source: Deloitte's Global Manufacturing Industry Practice, Deloitte Touche Tohmatsu, May 1, 2007

0

10

20

30

40

50

60

70

80

90

Expect to Expand or Locate (%)

ChinaIndiaSoutheastAsia

LatinAmerica

EasternEurope

Market

Executives' Five-Year Plans for Emerging Markets

All Companies

$1B+ Companies

LO1

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Importance of Global Marketing to the U. S.

U.S. exports a fifth of industrial production. One of every 10 jobs in U.S. is supported by

exports. U.S. businesses export over $800 billion in

goods. Exports account for 25 percent of U.S. economic

growth. U.S. is world’s leading exporter of farm products.

LO1

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The Fear of Trade and Globalization

Millions of Americans have lost jobs

Millions fear losing jobs Threat of outsourcing

if workers do not accept pay cuts

Vulnerability to operations moving offshore

LO1

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Benefits of Globalization

Expands economic freedom Spurs competition Raises productivity and living standards Offers access to foreign capital, global

export markets, and advanced technology Promotes higher labor and environmental

standards Acts as a check on government power

LO1

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Discuss the impact of

multinational firms on the world economy

Multinational FirmsMultinational Firms

LO2

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Stages of Global Business Development

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22

44

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Companies operate in one country and sell into othersCompanies operate in one country and sell into others

Set up foreign subsidiaries to handle salesSet up foreign subsidiaries to handle sales

Virtual operationVirtual operation

Operate an entire line of business in another countryOperate an entire line of business in another country

LO2

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Global Marketing Standardization

Production of uniform products that can be sold the same way all over the world.

Global MarketingStandardization

Global MarketingStandardization

LO2

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Describe the external environment facing

global marketers

External Environment Facing External Environment Facing Global Marketers Global Marketers

LO3

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External Environment Facing Global Marketers

Natural Resources

Natural Resources

Demographic Makeup

Demographic Makeup

Economic and Technological Development

Economic and Technological Development

CultureCulture

Political StructurePolitical

Structure

LO3

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Culture

CultureCulture The common set of values shared by its citizens that determine what is socially acceptable.

LO3

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Economic and Technological Development

Developed Country

Developed Country

Less DevelopedCountry

Less DevelopedCountry

Complex, sophisticated industries

Complex, sophisticated industries

Basic industriesBasic industries

LO3

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Political Structure and ActionsNo private ownership

Minimal individual freedom

Little central governmentMaximum personal freedom

LO3

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Legal Considerations

Tariff

Quota

Boycott

Exchange Control

Market Grouping

Trade Agreement

A tax levied on goods entering a country

Limit on the amount of a product entering a country

Exclusion of products from a country

Foreign exchange must be sold to a control agency

Common trade alliance

An agreement to stimulateinternational trade

LO3

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Political and Legal Considerations

The Uruguay Round made changes in world trading practices

Entertainment, pharmaceuticals, integrated circuits, and software

Financial, legal, and accounting services

Agriculture

Textiles and apparel

And created a new trade organization: The World Trade Organization

LO3

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Doha Round

• Began in 2001

• Highly contentious from the beginning

• Failed in summer, 2008

• First multilateral free trade act failure since WWI

• Cost of Failure: $100 billion annually

LO3

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Political and Legal Considerations

CAFTACAFTA NAFTANAFTA European Union

European Union

Agreementsand Organizations

Agreementsand Organizations

http://www.wto.org

Online

LO3

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Demographic Makeup

Marketing Considerations:Population densityUrban or ruralPersonal income Age

LO3

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Shortages in Natural Resources…

…Create: International

dependencies Shifts of wealth Inflation and recession Export opportunities if

resources are abundant

Stimulus for military intervention

LO3

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Natural Resources

PetroleumFoodstuffsPrecious

metalTimberWater

LO3

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Cultural

EconomicDevelopment

• values• language• customs• traditions

TechnologicalDevelopment

Political Structure• tariffs• quotas• boycotts• exchange controls• market controls• trade agreements

Demography• urban v. rural• young v. old• purchasing power

NaturalResources• dependence• independence

GlobalMarketing

Mix

External Environment Facing Global Marketers

LO3

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Identify the various ways of entering theglobal marketplace

Global Marketing byGlobal Marketing bythe Individual Firmthe Individual Firm

LO4

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Global Marketing Questions

http://www.cat.com

Online

What are our options in selling abroad?

How difficult is global marketing?

What are the potential risks and returns?

LO4

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Why “Go Global”?

Earn additional profits Leverage a unique product

or technological advantage Possess exclusive market

information Saturated domestic

markets Excess capacity Utilize “economies of scale”

LO4

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Risk Levels for Global Entry

Low risk/low return

Highrisk/highreturn

Risk

Return

ExportLicensing

ContractManu-

facturing

JointVenture

DirectInvest-ment

LO4

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Entering the Global Marketplace

Licensing Legal process allowing use of manufacturing/patents/knowledge

ContractManufacturing

Private-label manufacturing by a foreign country

Joint Venture Domestic firm buys/joins a foreign company to create new entity

Export Sell domestically produced products to buyers in other countries

Direct Investment Active ownership of a foreign company/manufacturing facility

LO4

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Export Intermediaries

Buyer for ExportBuyer for Export Assumes all ownership risks and sells globally for its own account.

Assumes all ownership risks and sells globally for its own account.

Export BrokerExport Broker Plays the traditional broker’s role by bringing buyer and seller together.

Plays the traditional broker’s role by bringing buyer and seller together.

Export AgentExport Agent Acts like a manufacturer’s agent for the exporter in the foreign market.

Acts like a manufacturer’s agent for the exporter in the foreign market.

LO4

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List the basic elements

involved in developing a global marketing mix

The Global Marketing MixThe Global Marketing Mix

LO5

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Product and Promotion

One ProductOne Message

Product Adaptation

MessageAdaptation

Product Invention

SameSameProductProduct

SameSameMessageMessage

ChangeChangeMessageMessage

ChangeChangeProductProduct

http://www.disney.go.com

Online

LO5

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Place (Distribution)

Adequate distribution is necessary for success in global markets– Some countries have complicated systems– Lack of distribution infrastructure and cultural

differences create problems

Innovative distribution systems can create competitive advantage

LO5

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Pricing

Must consider transportation and insurance costs, taxes and tariffs

Determine what customers will spend

Ensure that foreign buyers will pay price

May need to simplify a product to lower price

Don’t assume that low-income countries are willing to accept lower quality

LO5

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Exchange Rates

The price of one’s currency in terms of another country’s currency.

Exchange Rates

Exchange Rates

LO5

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Dumping1. Trying to increase an overseas market share

2. Temporarily distributing products to overseas markets to offset slack demand at home

3. Lowering unit costs by exploiting large-scale production

4. Attempting to maintain stable prices during periods of exchange rate fluctuations

LO5

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Countertrade

A form of trade in which all or part of the payment for goods or services is in the form of other goods or services.

CountertradeCountertrade

LO5

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Discover how the Internet is affecting

global marketing

The Impact of the InternetThe Impact of the Internet

LO6

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The Impact of the Internet

• Opening an e-commerce site puts a company in the international marketplace

• Internet Economy remains hindered by brick and mortar rules, regulations, and habits

LO6

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International Marketing

• Coca-Cola is the best global brand in 2009 – Five Creative Coca-Cola Commercials from 2009

• Toyota, also one of the top Global Brands in 2009, offers different ads for different markets:– Australian ad for dual drivetrains

LO6