1. International and Global Business
Transcript of 1. International and Global Business
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International & Global Business:
Principles, Insights & Challenges
Syed Ferhat Anwar
Professor, IBA
University of Dhaka
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Insights
In Hong Kong, a German businessperson
is driving a Lexus made in Brazil;
wearing Bruno Magli shoes made in India; wearing Irish cashmere socks made in Cambodia;
With Calvin Klein undergarment made in China;
an Armani suit, with a Gucci belt made in Italy;
he has a Mont Blanc pen made in Thailand;
in his Italian shirt made in Bangladesh. Hes going to meet an American investor at a McDonald
restaurant, working on a Samsung Note Pad made in Korea.
--- OK, thats a stretch.
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Challenges
Huge Foreign indebtedness
Unstable governments
Foreign-exchange problems
Foreign entry and government bureaucracy
Tariffs and other trade barriers Corruption
E-commerce inefficiencies
Technological pirating
High cost of product and communication adaptations
Political and economic power brokerage Human and other capital scarcity or under productivity
Lack of knowledge and innovation management
Etc. etc
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International Business
International business is a term used to collectively
describe all commercial transactions (private and
governmental, sales, investments, logistics,and
transportation) that take place between two or morenations.
Usual ly, pr ivate companies undertake suc h transact ion s for
prof i t ; governments under take them for prof i t and for
po l i t ical reasons .
Internat ional marketing is th e act of m arketing in more thanone so ciety across boarders by keeping th e spir i t of
internat ional bus iness intact
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International Business
Means Modes: importing and exporting, tourism and
transportation, licensing and franchising, management
contracts, production contracts, direct investment,
outsourcing etc.
Functions: marketing, global manufacturing and value
chain management, accounting, finance, human resources
Overlaying alternatives: choice of countries, organizationand control mechanisms
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International Business 1
Objectives:
sales expansion, resource acquisition,
risk minimization
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International Business 2
Physical and societal factors
Political policies and legal practices
Cultural & social factors
Economic forces
Geographical influences Global Climate factors
Technology issues
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International Business 3
Resource Allocation
Market Command
Private
Resource
Ownership
State
MarketCapitalism
MarketSocialism
CentrallyPlannedCapitalism
CentrallyPlannedSocialism
Economic System
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International Business 4
Rankings of economic freedom among countries free mostly free mostly unfree repressed
Variables considered include such things as:
Trade policy
Taxation policy
Capital flows and foreign investment
Banking policy
Wage and price controls
Property rights
Black market
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International Business 5
Competitive factors
Major advantage in price, marketing,
innovation, or other factors.
Number and comparative capabilities
of competitors
Competitive differences by country
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International Operations 6
The conduct of international operations
depends on companies' objectives and
the means with which they carry them out. The operations affect and are affected by
the physical and societal factors and the
competitive environment.
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Standardization and Adaptation 1
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Standardization and Adaptation 2
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Global Business Outlook 1
Mistaken assumptions about LDC1. The poor have no money.
2. The poor will not waste money on non-
essential goods.3. Entering developing markets is fruitless
because goods there are too cheap to make aprofit.
4. People in BOP (bottom of the pyramid)
countries cannot use technology.5. Global companies doing business in BOP
countries will be seen as exploiting the poor.
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Global Business Outlook 2
Exporting
Importing
USA (initiating country)
Other advanced nationsLDCs
1 2 3 40
Source: Sak Onkvist and John J, Shaw, An Examination of the International Product LifeCycle and Its Application within Marketing, Columbia Journal of World Business 18 (Fall,1983)
(0) Local innovation, (1) Overseas innovation, (2) Maturity,(3) Worldwide imitation, (4) - Reversal
Theory of International Product Life Cycle (IPLC)
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Global Business Outlook 3
Acquisition of Wealththe ultimate
Show AV 1. Rise of new global rich
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Globalization 1
Growth to a global or worldwide
scale due to "the globalization of the
communication industry. The tendency of world investment
and business to move from national
and domestic markets to a worldwideenvironment.
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Globalization 2
Worldwide economic integration of
many formerly separate national
economies into one global economy,mainly through free trade and free
movement of capital as by
multinational companies, but also byeasy or uncontrolled migration and
single technology frame.
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Globalization 3
Show AV 2. One World One Company
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Globalization 4
Technology is expanding, especially in transportation andcommunications.
Governments are removing international businessrestrictions.
Institutions provide services to ease the conduct ofinternational business.
Consumers know about global goods and services.
Competition has become more global.
Political relationships have improved among some majoreconomic powers.
Countries cooperate more on transnational issues.
Cross-national cooperation and agreements.
Governance and legal issues are being standardized
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Global Integration Forces 1
Driving Forces Technology
Culture
Market Needs Costs
Free Markets
Economic Integration
Peace
Strategic Intent Management Vision, Strategy and Action
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Challenges 1
Markets can present higher profitopportunities than present markets.
Markets can offer size but not profits. Company needs a larger customer base
for economies of scale.
Present customers are needing service
and products as they go international.
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Challenges 2
Global Standardization or Adaptation
Toyota built the Corolla on a world platform. Ford
with its Focus. McDonalds uses chili sauce(salsa) on its hamburgers in Mexico. Coca-Cola is
can be sweeter, or less carbonated.
Adaptation elements: Product features, brandname, labeling, packaging, colors, materials,
prices, sales promotion, advertising themes,media, execution.
Marketing programs do work best when they aretailored to each target group.
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Challenges 3
Principle of Anticipation and Being Proactive. NotReactive.
Are you ready for change? Being adaptive to the
marketplace. Macro environment Changes. The high income
growth country has shifted from Japan to US.Low to medium has been concentrated inSoutheast Asia and southern Asia with China andIndia to a certain extent as a unique, high-growth,large country in the region and the world.
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Challenges 4
Principle of the Growth of Internet andInformation Technology.
Principles of:
Marketing Mix
11Ps
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Challenges 5
11 Ps of Global marketing
Consumers
Purpose
Positioning
Product
Price
Place
Promotion
Packaging
People
Process
PhysicalEvidence
Planet
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Challenges 6
The old trade model is just old.
It stated that as a product matures, productionwould shift to low-wage countries.
Today, must look at transportation costs,availability of skilled labor, marketresponsiveness, market access and innovation inproduct design and manufacturing. Especially of
products with less than 15%of labor in total cost.
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Challenges 7
Principle of Service:
Service before, during and after sale.
Create long-term value and connect withcustomer.
Both products and services. Its creating more
value.
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Challenges 8
Principle of Future:
Manage todays products by managing a profit
and by servicing customers of today and
tomorrow.
Develop tomorrows products.
There is no such thing as permanent advantage.
Governance in societal norms leads to totalsustainability.
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Challenges 9
Principle of Global Experience
Counts for companies
Counts in the job market for employees.
Marketing Audits.
Marketing is not a destination, or a goal. Its a
process. A moving target.
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Political Window 1
World economic development and well being are
linked to freedom and democracy.
This correlation is the key that explains our world society:
Freedom => Knowledge => Technical progress =
Economic development
This trilogy is the basic equation for development.
Global leaders have to repeat again and again this golden rule.
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Political Window 2
We have 10 criteria by which to measureknowledge:
Education rate,
Number of scientists,
Illiteracy rate,
Number of internet users,
Proportion of exports,
Population parameters,
Health status,
Purchasing and spending powers, Geopolitical maturity,
International relations.
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The People in Global Business 1
Most companies are either international orcompete with international companies.
Modes of operation may differ from those used
domestically. The best way of conducting business may differ
by country.
An understanding helps you make better careerdecisions.
An understanding helps you decide whatgovernmental policies to support.
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The People in Global Business 2
Factors contributing to the need for
international managers Increased internationalization of operations
Recognition that poor overseas performance can be
costly
Perceived shortage of international managers
Recognition of differing national culture/institutional
arrangements within which firms operate Firms operate in increasingly internationally regulated
business environments
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The People in Global Business 3
The Ideal International Manager
Four major variables:
1. technical competence
2. personal traits or relational abilities
3. ability to cope with environmental variables
4. family situation
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The People in Global Business 4
The Ideal International Manager (Continued)
Technical ability
Managerial skills
Cultural empathy and cross-
cultural communication
skills
Adaptability and an active
desire to adjust to living and
learning in the local culture
Nonjudgemental
Diplomacy and tolerance
Language ability
Positive attitude
Emotional stability and
maturity
Adaptability of family
Negotiating ability
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Wrap-up 1
Companies cannot stay domestic and expect to
maintain their markets.
Companies need to define their global policies
and objectives.
Companies need to decide on how much to adapt
marketing mix.
Companies must be manned properly
There is no such thing as cheap labor!
Selection of types of markets and countries are
interlinked
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Wrap-up 2
Market entry and market control costs can behigh which could be politically motivated.
Product and communication adaptation costs can
be high. Dominant foreign firms can establish high
barriers of entry.
Technology has created a big shift of themarkets.
Growth in Asia and Africa is a reality
End dictates the means
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Wrap-up 3
Ultimate goal of project Relationship to other projects
High-level timing goals
Attractiveness influenced by the product,geography, income, population, politicalclimate and more factors.
Key Strategic Outlook:
---Driving and Stabilizing
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