INTERNATIONAL MARKETING

Mr. RUPESH DAHAKE (LECTURER)SCHOOL OF MANAGEMENT STUDIES NAGPUR

What is International Marketing? Is a carrying on marketing outside the national boundaries.

International marketing: the performance of business activities that direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit.

Marketing is the process of determining the consumer needs, converting them into products or services to satisfy the user needs and earning profit there from.

The essentials of modern marketing:- Consumer orientation Optimum use of resources More desired profitability Society oriented

Global Marketing IntegrationGlobal Marketing Integration

Fords made in Mexico with Japanese parts, Fords made in Mexico with Japanese parts, Honda, Toyota, BMW, and Mercedes Benz Honda, Toyota, BMW, and Mercedes Benz open USA plants.open USA plants.

Honda manufacturing cars in USA, TI Honda manufacturing cars in USA, TI manufacturing semiconductors in Japan.manufacturing semiconductors in Japan.

Macintosh’s PowerBook 100 designed and Macintosh’s PowerBook 100 designed and manufactured by Sony.manufactured by Sony.

International Marketing Concept:-

In international marketing activities performed international level. This activities involved as follows:

Purchases or manufacturing and selling to foreign customers

Marketing specialized activates is product planning, packing, branding, pricing, advertising, distribution and providing after sales services.

Country market C

environment(uncontrollable)

Country market B

environment(uncontrollable

)

Country market Aenvironment

(uncontrollable)

The International Marketing Task

Political/legalforces

Economicforces

1

2

Competitivestructure

CompetitiveForces

Level of Technology

Price Product

Promotion Channels of distribution

Geography and

Infrastructure

Foreign environment(uncontrollable)

Structure ofdistribution

Economic climate

Cultural forces

3

45

6

7Political/

legalforces

Domestic environment(uncontrollable)

(controllable)

Main Functions in International Marketing

Choosing the basic route for international marketing

Market selection and product selection

Selection of distribution channels

Developing pricing strategy

International marketing communication

Organizational adaptations

Handling business ethics

Why International Marketing?

Market saturation Rise of new markets Foreign competition Opportunities through foreign aid programmes. To utilized full capacity To off set the business down-turns. To save cost To take advantage of tax concessions To develop and test new products To have access to international technology.

International Trade

Diversity Patriotism Heterogeneity Varied economic climate Role of policies Government intervention Transport cost Business risks Remittances Mobility of factors Multiple chain of intermediaries

ECONOMIC ENVIRONMENT OF INTERNATIONAL MARKETING

a. Gross National Product.

b. Per Capita Income.

c. Purchasing power of the consumers.

d. Rate of Economic Growth.

e. Level and degree of industrialization.

f. The form of marketing channels and related infrastructure

INTERNATIONAL INSTITUTIONS

11

Case: Agricultural subsidies and development

Rich nations spend more than $300 billion a year to subsidize their farmers

Subsidies create surplus production Surplus production leads to dumping and

depressed prices UN estimates producers in developing

nations lose $50 billion export revenue because of depressed prices

12

Agricultural subsidies and development

Rich countries of the developed world subsidize farm products Reasons

To keep commodity prices low To favor politically active farmers

Consequences Surplus production Depressed world prices (a result of

surplus)

Instruments of trade policy

Tariffs - oldest form of trade policy

Good for government Protects domestic producers

Reduces efficiency Bad for consumers

Increases cost of goods

Instruments of trade policy-subsidies

Government payment to a domestic producer Cash grants Low-interest loans Tax breaks Government equity participation in the

company Subsidy revenues are generated from taxes Subsidies encourage over-production,

inefficiency and reduced trade

Instruments of trade policy - Quota

Import quota Restriction on the quantity of some

good imported into a country Voluntary export restraint (VER)

Quota on trade imposed by exporting country, typically at the request of the importing country

1947: General Agreement on Tariffs and Trade (GATT): an international agreement among member countries that is a

code of conduct dealing with Tariffs among members (called “contracting parties”)

•Objective is to liberalize trade by eliminating tariffs, subsidies, Objective is to liberalize trade by eliminating tariffs, subsidies, & import quotas& import quotas

• Goal was to remove international trade barriers through:

• reduce tariffs

• preventing trade advantages of specific countries, i.e. a country must give the same consideration to all contracting parties

• limits the use of import quotas

• grants special trade privileges to developing nations

GATT

Other Considerations:

• General Agreement on Tariffs and Trade (GATT):

• International law did not recognize GATT as an organization since it was a negotiation forum among agreeing parties

• Headquartered in Geneva, Switzerland with a “secretariat” office at the UN in New York

• Items considered by a “council of Representatives” elected by GATT members and a meeting (generally called a

Round of GATT) held once a year.

• GATT was the primary guiding document dealing with trade/tariffs until the creation of the World Trade

Organization (WTO) in 1994, and the GATS and TRIPS. GATT rolled into WTO.

Development of the world trading system

Used ‘Rounds of talks’ to gradually reduce trade barriers

Uruguay Round GATT 1986-93 Mutual tariff reductions negotiated Dispute resolution only if complaints

were received

World Trade Organization

Location: Geneva, SwitzerlandEstablished: 1 January 1995Created by: Uruguay Round negotiations (1986-94)   Membership: 146 countries (as of 4 April 2003)Budget: 154 million Swiss francs for 2003Secretariat staff: 550Head: Supachai Panitchpakdi (director-general) (2003)

Functions:• Administering WTO trade agreements• Forum for trade negotiations• Handling trade disputes• Monitoring national trade policies• Technical assistance and training for developing countries• Cooperation with other international organizations 

The World Trade Organization

The WTO was created during the Uruguay Round of GATT to police and enforce GATT rules

Most comprehensive trade agreement in history Formation of WTO had an impact on

Agriculture subsidies (stumbling block: US/EU) Applied GATT rules to services and intellectual

property (TRIPS) Strengthened GATT monitoring and

enforcement

The WTO

145 members in 2003 Represents 90% of world trade 9 of 10 disputes satisfactorily

settled Tariff reduction from 40% to 5% Trade volume of manufactured

goods has increased 20 times

The WTO

Policing organization for: GATT Services Intellectual property

Responsibility for trade arbitration: Reports adopted unless specifically rejected After appeal, failure to comply can result in

compensation to injured country or trade sanctions

WTO at work

280 disputes brought to WTO between 1995 and 2003

196 handled by GATT during its 50 year history

US is biggest WTO user Big wins - beef - bananas Big loss - Kodak

The WTO -achievements

Telecommunications (1997) 68 countries (90%) of world

telecommunications revenues Pledged to open their market to fair

competition Financial Services (1997)

95% of financial services market 102 countries will open, their markets to

varying degrees

WTO in Seattle

Millennium round was aimed at further reduction of trade barriers in agriculture and services

WTO meeting disrupted by Human rights groups Trade unions Environmentalists Anti globalization groups

UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT

Was established in 1964 as permanent inter Govt. body.

Objective:-

Dealing with Trade, Investment and Development issue.

Maximizing the Trade, Investment and Development opportunities in Developing nations.

To assist developing nations.

Conducting a conferences related on international market, multinational Co-operation, remove the disparity between developing and developed nations.

UNCTED provide the forum.

Primary Objective:-

Formulate policies relating to aspect of development.

Meeting or conference meets once in four year.

1st meeting was held in 1964 at Geneva.

UNCTED make GSP (Generalized system of preference)

INTERNATIONAL MONETORY FUND

Headquarters Washington, D.C., USA

Managing Director Dominique Strauss-Kahn

Central Bank of

Currency Special Drawing Rights

Base borrowing rate 3.49% for SDRs[1]

Website http://www.imf.org/

The International Monetary Fund (IMF) is an international organization that oversees the global financial system

History

The International Monetary Fund was created in July 1944, originally with 45 members

The IMF was formally organised on December 27, 1945, when the first 29 countries signed its Articles of Agreement.

The IMF describes itself as "an organization of 186 countries

Objective:-

To promote international monetary co-operation. Foster global monetary cooperation secure financial stability promote high employment and sustainable economic growth, and

reduce poverty

Functions:-

Short term credit institutions.

Acts as a mediator and referee.

Dispensation of justice

Technical Assistance

Publication

ORGANIZATION AND MANAGEMENT

Every member country is required to subscribed to the capital of the fund at fixed quota.

Contribution collected in the form of gold as well as currency(domastic)

Most are represented by other member states on a 24-member Executive Board but all member countries belong to the IMF's Board of Governors

Data dissemination systems

For those member countries having or seeking access to international capital markets.

General Data Dissemination System (GDDS)

Special Data Dissemination Standard (SDDS).

Members' quotas and voting power, and Board of Governors

IMF member country

Quota: millions of

SDRs

Quota: percentage

of total GovernorAlternate Governor

Votes: number

Votes: percentage of

total

37149.3 17.09Timothy F. Geithner Ben Bernanke 371743 16.79

13312.8 6.13 Kaoru YosanoMasaaki Shirakawa 133378 6.02

13008.2 5.99 Axel A. Weber Peer Steinbrück 130332 5.88

10738.5 4.94Christine Lagarde Christian Noyer 107635 4.86

10738.5 4.94 Alistair Darling Mervyn King 107635 4.86

China 8090.1 3.72 Zhou Xiaochuan Hu Xiaolian 81151 3.66

United States

Japan

Germany

France

United Kingdom

4158.2 1.91Pranab Mukherjee D. Subbarao 41832 1.89

India

WORLD BANK (INTERNATIONAL BANK OF RECONSTRUCITON AND DEVELOPMENT)

World BankFormation 27 December 1945

Type International organization

Legal status Treaty

Purpose/focus Crediting

Membership 186 countries

President Robert B. Zoellick

Main organ Board of Directors[1]

Parent organization World Bank Group

Website http://www.worldbank.org/

The World Bank is an international financial institution that provides leveraged loans[2] to poorer countries for capital programs with a goal of reducing poverty.

Memberships:- 2% gold and rest in dollars

The World Bank headquarters in Washington, D.C.

OBJECTIVES

• Build capacity

• Infrastructure creation:

• Development of Financial Systems:• • Combating corruption:

• Research, Consultancy and Training:

Functions:

To conduct the survey mission in members country.

To established economic development institute.

To provide a co-finance.

To established machinery to settlement of disputes.

World focus on urban development and population planning and tourism of members country.

Clean Technology Fund management

WORLD BANK OFFER:-

LOAN

GRANT

TECHINICAL ASSISTANT

Areas of operation Agriculture and Rural Development Conflict and Development Development Operations and Activities Economic Policy Education Energy Environment Financial Sector Gender Governance Health, Nutrition and Population Industry Information and Communication

Technologies Information, Computing and

Telecommunications International Economics and Trade Labor and Social Protections Law and Justice Macroeconomic and Economic Growth Mining

Poverty Reduction Poverty Reduction Poverty Poverty Private Sector Private Sector Public Sector Governance Public Sector Governance Rural Development Rural Development Social Development Social Development Social Protection Social Protection Trade Trade Transport Transport Urban Development Urban Development Water Resources Water Resources Water Supply and SanitationWater Supply and Sanitation

Free Trade Zone, popularly known as FTZ, is an area where goods may be traded without any barriers imposed by customs authorities like quotas and tariffs.

Free Trade Zone, popularly known as FTZ, is an area where goods may be traded without any barriers imposed by customs authorities like quotas and tariffs

The Free Trade Zone can be defined as a labor-intensive manufacturing hub, which involves the import of components and raw materials, and the produced goods are exported to different countries.

FREE TRADE ZONE

FACTS ABOUT THE FTZ

There were around 3000 free trade zones across 116 countries in the year 1999.

where nearly 43 million people were working.

These FTZs produce various goods such as shoes, clothes, sneakers, toys, convenient foods items, electronic goods, etc.

UAE Free Trade Zone

Dalian Free Trade Zone

Orlando Free Trade Zone

Tianjin Port Free Trade Zone

HISTORY OF FTZ

Free Trade Zones in the world are found in South America in 1920.

During the 60s and the 70s there was a rapid surge in the development of FTZs across the world.

FREE TRADE ZONE DEVELOPMENT PLACE

Geographically advantageous for trade.

Places near international airports, sea-port, Railway network.

Most FTZ developed in developing nations.

WHY FTZ?

LOW TRADE BARRIERS .

TAX CONCESSION.

LOW COST OF PRODUCTION.

LOW BUREAUCRACY .

PURPOSE FTZ

Development of export oriented units.

Foreign exchange earnings.

Generation of employment.

FTZ IN INDIA

Free Trade Zones ( Under Ministry of Commerce )

Special Economic Zones

Director General of Foreign Trade

Central Board of Excise & Customs

Falta Export Processing Zone Santa Cruz Electronics Export Processing Zone

Madras Export Processing Zone Visakhapatnam Export Processing Zone

NOIDA Export Processing Zone Cochin Export Processing Zone

Navi Mumbai Special Economic Zone AP Special Economic Zone

Kandla Free Trade Zone  Surat Special Economic Zone

Common Market

Definition Group formed by countries within a geographical area to promote duty

free trade and free movement of labor and capital among its members. European community (as a legal entity within the framework of European Union) is the best known example. Common markets impose common external tariff (CET) on imports from non-member countries.

Bilateral trade agreement (BTA)

A Bilateral trade agreement (BTA) is a trade agreement between any two countries, usually in order to reduce tariffs and quotas on items traded between themselves. A BTA may be either preferential, wherein benefits and obligations apply only to the two signatories, or most-favored, which applies terms that are already given to other nations under similar agreements.

Bilateral trade agreement (BTA)

EXAMPLE

India has bilateral agreements with the following countries and blocs: ASEAN[3] Sri Lanka[4] Thailand (separate from FTA agreement

with ASEAN)[5] Malaysia (separate from FTA

agreement with ASEAN)

COMMODITY AGREEMENTS

Commodity agreements are international agreements designed to stabilize commodity prices in the interest of producers and consumers. They can include mechanisms to influence market prices by adjusting export quotas and production when market prices reach certain trigger price levels. They sometimes employ buffer stocks which release stocks of commodities onto the market when prices rise to a certain level and build them up when they fall.

Non-tariff barriers

Non-tariff barriers to trade (NTB's) are trade barriers that restrict imports but are not in the usual form of a tariff.

EXAMPLE