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International Marketing
Perspectives & Paradigms
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Borders Have Become Meaningless
& there’s no place to hide…Borders Have Become Meaningless
& there’s no place to hide…
Trans-National* Cross-Cultural
High Speed/ Low Cost
Transportation & Communication
The entire globe is now tied
together as a single
community operating 24/7/365
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After more than a century of electric technology, we have extended our central nervous system in a global embrace, abolishing both space & time”
-Marshall McLuhan, Understanding Media- 1955
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The Global Village DriverThe Global Village Driver
The further & faster people are able to
travel & communicate… the greater the
amount of interaction & influence
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Cable TelevisionPay Television ServicesDirect Broadcast Satellite [DBS]MMDS and LMDSDigital TelevisionStreaming MediaDigital RadioMultimedia Computers and Video GamesThe Internet and World Wide WebInternet CommerceOffice TechnologiesVirtual RealityHome VideoDigital AudioDistance LearningLocal and Long Distance TelephonyWireless TelephonyBroadband NetworksResidential Gateways and Home NetworksSatellite Communications
source >> Future Technologies Inc. [www.fti.com]
Digital agecommunication
technologies
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Rise of the “Global Village”Rise of the “Global Village”Rise of the “Global Village”Rise of the “Global Village”
…… not just the “shrinking” of time & space
The new electronic media have transcended time & space w/ “virtual mobility”
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Time, Mobility & Economic Growth
http://www.flexibility.co.uk/issues/transport/time-mobility.htm
Time, Mobility & Economic Growth
http://www.flexibility.co.uk/issues/transport/time-mobility.htm
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Birth of the Global VillageBirth of the Global Village
COMPUTERSHOSTS IN INTERNET (MILLONS)
5.000.000
20.000.000
25.000.000
25
20
15
10
5
01969 JUL.
1989SEP.1991
JUL.1992
OCT.1993
ENER.1995
ABR1996
FEB.1997
NOV.1997
MAR.1994
JUL.1995
SEP.1996
JUL.1997
130.0004
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Growth Global Data Exchange
97 98 99 0 1 2 3 4 5 6 7 8
4
5
6
Total telephone traffic
International telephone traffic
Data traffic
Tbit/s
Source: Arthur D. Little, 1999
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0
25
50
75
100
’72 ’78 ’84 ’90 ’96 ’02 ’08
U.S. GDP
%%
IndustrialIndustrialEconomyEconomy
The eEconomy projected to dominate GDP of United States w/in 3 years
New New “E”conomy“E”conomy
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The Global Village
The Global Economy
DismalScientist
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One Big World Market: One Big World Market: The Global EconomyThe Global Economy
One Big World Market: One Big World Market: The Global EconomyThe Global Economy
…… the increasing tendency of economies around the world to interact w/ one another as one market instead of many national markets
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Along w/ collapse of Time & Space …the collapse of Communism
Along w/ collapse of Time & Space …the collapse of Communism
the GLOBALIZATION OF MARKETS AND ECONOMIES accelerated by acceptance of free enterprise/market system….
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Other Driversof Evolution of Global Economy
Other Driversof Evolution of Global Economy
• Gov’t Liberalization / Deregulation
• Explosion in International Trade Agreements / Regional Economic Intergration
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Economic Integration thru 130+ Trade Agreements Ranging From:
Economic Integration thru 130+ Trade Agreements Ranging From:
Free Free Trade Trade AreasAreas
Economic UnionsEconomic Unions
Customs UnionsCustoms Unions
Common MarketsCommon Markets
Total Political-Total Political-Economic IntegrationEconomic Integration
$ /Labor Mobility /Labor Mobility
Common External Common External Trade PolicyTrade Policy
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US Trade Agreements
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World Market Connections
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INTERNATIONAL LINKAGES
Trade Flows
Resource Flows
Goods & Services
Capital & Labor
Information &Technology
Money
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One Big World Market: One Big World Market: The Global EconomyThe Global Economy
One Big World Market: One Big World Market: The Global EconomyThe Global Economy
The weekly volume of international trade in currencies
exceeds the annual value of trade in goods & services.
The weekly volume of international trade in currencies
exceeds the annual value of trade in goods & services.
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• Daily international financial flows now exceed $1.2 trillion.
• From 1990 to 2000, world GDP grew ~ 30%– Total world exports of merchandise &
services increased by 80 %.
• This year- World exports of goods & services predicted to reach $11.4 trillion (24% of world GDP).
One Big World Market: One Big World Market: The Global EconomyThe Global Economy
One Big World Market: One Big World Market: The Global EconomyThe Global Economy
World Bank
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Principal U.S. Exports & ImportsPrincipal U.S. Exports & Imports
THE UNITED STATES & WORLD TRADE
Chemicals $49.8
Semiconductors 42.3
Consumer Durables 40.1
Computers 38.6
Generating Equipment 27.6
Aircraft 26.7
Telecommunications 22.2
Automobiles 20.5
Grains 14.4
Nonferrous Metals 12.2
Chemicals $49.8
Semiconductors 42.3
Consumer Durables 40.1
Computers 38.6
Generating Equipment 27.6
Aircraft 26.7
Telecommunications 22.2
Automobiles 20.5
Grains 14.4
Nonferrous Metals 12.2
Automobiles $114.1
Petroleum 103.6
Computers 75.3
Household Appliances 66.4
Clothing 64.3
Chemicals 33.1
Consumer Electronics 32.8
Semiconductors 26.0
Telecommunications 23.2
Iron and Steel 17.7
Automobiles $114.1
Petroleum 103.6
Computers 75.3
Household Appliances 66.4
Clothing 64.3
Chemicals 33.1
Consumer Electronics 32.8
Semiconductors 26.0
Telecommunications 23.2
Iron and Steel 17.7
Exports Amount Imports Amount
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Exports to:
Imports from:
Industrial Countries $38BDeveloping Countries 302Total $683
Industrial Countries $38BDeveloping Countries 302Total $683
Industrial Countries $594BDeveloping Countries 573Total $1167
Industrial Countries $594BDeveloping Countries 573Total $1167
U.S. Exports & Imports of GoodsU.S. Exports & Imports of Goods
THE UNITED STATES & WORLD TRADE
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Industrial Countries $381Developing Countries 301Total $683
Industrial Countries $594Developing Countries 573Total $1167
U.S. Exports & Imports of Goods U.S. Exports & Imports of Goods
THE UNITED STATES & WORLD TRADE
Imports Exceed Exports By
$484 Billion (2002)That’s over 9,680,000 Jobs at $50,000 Each!
Imports Exceeded Exports by$346 Billion in 1999
Imports Exceeded Exports by$346 Billion in 1999
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ChinaChina
• In 2003, China accounted for more than 60% of growth in world trade
• Every week, more than $1 billion in FDI flows into China
• ~15%b annual growth in foreign trade since 1978
• 2003 - world’s 4th largest exporter: $438b after US, Germany and Japan
• 2003 - world’s 6th largest importer: $412b
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The Global Village
The Global Economy
The Global Corporation
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Evolution of MNC’s & Management StrategiesEvolution of MNC’s & Management Strategies
• Multinational corporations (MNCs)
Companies that maintain significant operations in two or more countries simultaneously but are based in one home country
UN databases
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ACHIEVING GLOBAL SYNERGIES
LEVERAGING ASSETS
AND POSITION
Scale Efficiencies
Coordination and Integration
Transfer of Ideas, Experience and Know-how
Scale Efficiencies
Coordination and Integration
Transfer of Ideas, Experience and Know-how
Global Strategy
STRATEGIC
FLEXIBILITY
Production Shifting
Multiple Sourcing
Transfer Pricing
Managing Cash Flow
Production Shifting
Multiple Sourcing
Transfer Pricing
Managing Cash Flow
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Multinational CorporationsMultinational Corporations
•In 1970, of the 7,000 multinationals identified by the United Nations, more than 1/2 were from -- the United States & Britain.
•By 1995, less than half of the 36,000 multinationals identified by the United Nations came from four countries: the United States, Japan, Germany, and Switzerland.
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Multinational Corporations
•At present, there are 65,000 MNCs* w/ 850,000 affiliates in foreign countries
•MNCs’ total sales amount to almost $19 trillion.
*The U.S. government defines a multinational corporations (MNC) …
as a company that owns or controls 10% .. of at least one foreign business enterprise.
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Multinational Corporations
•2/3s of world trade in goods and services is controlled by multinational companies.•Of the 100 largest economies in the world, 51 are corporations.•The sovereignty of nations will perhaps continue to weaken due to multinationals & increasing integration of world economies.
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Exporter Exporter
Multi-NationalMulti-National
Trans-NationalTrans-National
GlobalGlobal
Evolution of the International FirmEvolution of the International Firm
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• Multinational corporations (MNCs) Companies that maintain significant operations in
two or more countries simultaneously but are based in one home country
• Transnational (TNC) corporation A company that maintains significant operations in
more than one country simultaneously and decentralizes decision making in each operation to the local country
• Global corporations… take an integrated approach across countries and regions and manage for worldwide business leverage & competitive advantage …
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The Global CorporationThe Global Corporation
Global Vision Global Leverage Global Sourcing Global Competitive Moves Global Partnerships
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The Global Corporation- A Global Mindset
The Global Corporation- A Global Mindset
• Global Identity• Single Corporate
Language• Global Ethical
Standards• Multi-Country Careers
• Cross-Cultural Training• Cross National
employment .. especially management at all levels
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The Global Village
The Global Economy
The Global Corporation
Global Marketing Strategy
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Global Marketing Strategy DriversGlobal Marketing Strategy Drivers
• Common customer needs• Global customers• Global Distribution &
Communication channels
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Core Concepts & Values
CountryA
CountryB
CountryC
CountryD
Develop CoreBusiness Strategy
Translate/Executestrategy in selected countries..
Integrate &leverage global assets & alliances
Global Marketing EvolutionGlobal Marketing Evolution
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Requisite Global Marketer Expertise
Cross-BorderTransactionsKnowledge
Country/ MarketKnowledge
Cross-CulturalKnowledge
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COUNTRY / MARKET KNOWLEDGECOUNTRY / MARKET KNOWLEDGE
Research & Intelligence• Global Marketing Opportunity &
Target Market Assessment• Market Entry Planning & Strategy
Risk
Return/Control
ExportLicensing
ContractManu-facturing
JointVenture
DirectInvest-ment
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CROSS-BORDERTRANSACTIONS NOWLEDGE
CROSS-BORDERTRANSACTIONS NOWLEDGE
• Standards, Regulations & Product Liability
• Currency Risk/ Pricing/ Getting Paid
Risk to Exporter
Least Risk Highest Risk
Confirmed Irrevocable Bank BankCash in Irrevocable Letter of Collection Collection OpenAdvance Letter of Credit Credit Sight Draft Time Draft Account
Cost to Buyer
Highest Cost Least Cost
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CROSS CULTURAL KNOWLEDGECROSS CULTURAL KNOWLEDGE
Cross-Cultural
NegotiationSkills
SocialResponsibility
&Government
Relations
Cross-CulturalUnderstanding,
Sensitivity
LanguageProficiency
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The Global Economy
The Global Corporation
Global Marketing Strategy
The Global Village
Globalization: + & -Cultural Impacts
NEXT WEEK: Globalization:
As a Business & Marketing Strategy
Global Pricing & Distribution
Considerations
International Marketing
Communication
Political * Legal & Regulatory
Considerations Regional Economic
Integration
Culture * Customs & Business Practices