International Mkting

8/2/2019 International Mkting

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GLOBAL


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Why Firms Go International:

Internationalization Drivers

To take advantage of global market opportunitiesand reach a larger market

To keep pace with the competition

To increase sales and market share

To prolong the product life cycle


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Drivers of International Expansion

Competition

Regional Economic and Political Integration

Technology

Improvements in Transportation and

Telecommunication

Economic Growth and Emerging Market Economies

Converging Consumer Needs


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Facilitators of International Trade:

The World Trade Organization

Largest and most influential international tradeorganization

Ensures free flow of trade

Functions: Provides assistance to developing and transition

economies

Offers help for export promotion

Promotes regional trade agreements and economiccooperation

Reviews members trade policies and engages in routinenotification of new trade measures


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The World Trade Organization

WTO agreements represent trade rules andregulations and act as contracts guaranteeingcountries trade rights and binding governments tofree trade policies.


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Group of Seven (Eight)G7 (G8)

Members from the most industrialized countries:Canada, France, Germany, Italy, Japan, United

Kingdom, United States, and Russia Yearly meetings involve heads of state, government

ministers, and directors of central banks.

Addresses: Biotechnology, food safety, economicdevelopment, disarmament, arms control, organizedcrime, drug trafficking, terrorism, environmental issues,and trade


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The Development Banks

The World Bank

Largest international bank that

sponsors economic development

Employs international specialistsin economics, finance, sectoral development

Focus on health and information technology

African Development BankAsian Development Bank

European Bank for Reconstruction and Devt

Inter-American Development Bank


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Regional Economic and Political Integration

Determinants of Integration

Shared culture

Shared history

Regional proximity

Similarity in level of

economic development


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Types of Integration

Bilateral Agreements, Multilateral Forums and Agreements

General agreements between two or more countries, typically industryspecific

OPEC, NATO, Commonwealth of Independent States

Customs Union

Trade association that eliminates or greatly reduces all trade restrictions formember countries, also adopts common external tariffs on productsimported from outside the area: NAFTA

Common Market

Eliminate all tariff and barriers to trade, adopt common external tariffs, and

allow for free movement of capital and labor within the common market:Andean Common Market, Southern Cone Common Market (MERCOSUR)


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Types of Integration (cont.)

Monetary Union

Involves a common monetary policy, the creation of a

unified central bank, and the use of a single currency:Euroland

Political Union Common governing and legislative bodies, and enforcement

powers: example: European Union


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Religion

Defined as societys relationship to the supernatural and determines dominant

values and attitudes

Firms must adapt their offering to the local religion.

Culture

Culture influences consumption.Elements of culture vary greatly across countries.

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Government Barriers

Local governments control international market entrants using arguments forprotectionism:

Excess productive capacity

Excess labor

Infant industry argument and industrialization

Natural resources conservation and environmental protection

Consumer protection National defense

Tariffs, Quotas, Licenses

Discourage imports of particular goods

Penalize countries that are not politically aligned with the importingcountry

Generate revenues

Nontariff barriers are used by countries in the WTO, NAFTA, and EU.

and other obstacles:


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International Competition

Competitors can erect entry barriers to entry.

Effective entry barriers include:

Price cuts

Blocking distribution channels

Binding retailers to exclusive contracts


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Levels of

International Marketing Involvement

Domestic marketing

Export Marketing

International marketing

Global marketing


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International Entry Mode Selection

Exporting: Either direct or indirect, low risk but low control

Licensing: More risks, greater control. Involves a licensor who offers the know-

how or brand name, and a licensee, who pays royalties.

Franchising:Is service industrys equivalent of licensing.

Joint Ventures: Involve a foreign company joining with a local company to set up

a new corporate entity Wholly Owned Subsidiaries:Assumes long-term commitment and has a high

level of risks, but can be extremely profitable

Branch Offices:Not separate entities, but part of the international company.High level of control and lower risk than subsidiary

Strategic Alliance: All joint ventures, licensing, and franchising agreements, aswell as low-commitment agreements


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The International Marketing Mix

Standardization versus adaptation

Product

Country of Origin Effects

Place (Distribution)

Established vs. New Channels

Promotion

Use of English

Restrictions

Price

Dumping

Parallel imports (gray marketing)


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Introductionand Growth

MNCmanufacturesin developed

countries,exports todevelopingcountries

EarlyMaturity

MNC movesproduction todeveloping

countries,beginsimporting to

home country

LateMaturity

Competitorfrom

developingcountryexports

product toMNC home

country.

Decline

Developingcountries

remain viabletarget

markets;Home-country

market isdiminishing.

Sales

Time

The International Product Lifecycle

International Mkting

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