International MarketingInternational Marketing

-Prof. Uddeepan Chatterjee-Prof. Uddeepan Chatterjee

Expansion of International TradeExpansion of International Trade In the past 30 years, the In the past 30 years, the

volume of international trade volume of international trade has expanded from $200 has expanded from $200 billion to over $7.5 trillion.billion to over $7.5 trillion.

The sales of foreign affiliates The sales of foreign affiliates of multinational corporations of multinational corporations are now twice as high as are now twice as high as global exports.global exports.

International business has International business has created a network of global created a network of global links that bind countries, links that bind countries, institutions, and individuals institutions, and individuals with trade, financial markets, with trade, financial markets, technology, and living technology, and living standards.standards.• For example, a reduction For example, a reduction

in coffee production in in coffee production in Brazil would affect Brazil would affect individuals and economies individuals and economies worldwide.worldwide.

Recent Changes in International Recent Changes in International BusinessBusiness

The rate of globalization is The rate of globalization is accelerating.accelerating.

Regionalization is taking Regionalization is taking place, resulting in trading place, resulting in trading blocs.blocs.

The participation of countries The participation of countries in world trade is shifting.in world trade is shifting.

More recently, there has been More recently, there has been a shift of manufacturing to a shift of manufacturing to countries with emerging countries with emerging economies.economies.

There has been an increase in There has been an increase in the area of services trade in the area of services trade in recent years.recent years.

International MarketingInternational Marketing

‘‘The process of focusing the resources The process of focusing the resources (people, money, and physical assets) (people, money, and physical assets) and objectives of an organisation on and objectives of an organisation on

global market opportunities and global market opportunities and threats’threats’

The Three Principles of MarketingThe Three Principles of Marketing Customer value and the Customer value and the

value equationvalue equation• i.e. value greater than i.e. value greater than

competitorscompetitors• Value equation is:Value equation is: VALUE = PERCEIVED VALUE = PERCEIVED

BENEFITS / PRICEBENEFITS / PRICE

Competitive or differential Competitive or differential advantageadvantage• advantage vis-à-vis competitionadvantage vis-à-vis competition

FocusFocus• i.e. the concentration of attentioni.e. the concentration of attention• IBM ‘was’ focused on customer IBM ‘was’ focused on customer

needs and wants for data needs and wants for data processingprocessing

Driving forcesDriving forces

Market needs Market needs Technology Technology Cost - low cost production Cost - low cost production Quality Quality Communications and TransportationCommunications and Transportation LPGLPG Leverage (i.e. advantages of operating Leverage (i.e. advantages of operating

in numerous markets simultaneously)in numerous markets simultaneously)

• experience transfersexperience transfers• systems transferssystems transfers• scale economiesscale economies• resource utilisationresource utilisation• global strategy. Scanning the globe!global strategy. Scanning the globe!

Restraining forcesRestraining forces Market differences – diversityMarket differences – diversity

History – GuanxiHistory – Guanxi

Management myopia as a barrierManagement myopia as a barrier

Organisational culture as a barrierOrganisational culture as a barrier

National controls/Barriers to entry e.g National controls/Barriers to entry e.g tariffs and Quotas.tariffs and Quotas.

Types of International BusinessTypes of International Business

Export-import trade

Foreign direct investment

Licensing

Franchising

Management contracts