WHY GO GLOBAL?. REASONS FOR GLOBAL MARKETING/BUSINESS Need for sales-growth. Need to reduce costs by...
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Transcript of WHY GO GLOBAL?. REASONS FOR GLOBAL MARKETING/BUSINESS Need for sales-growth. Need to reduce costs by...
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WHY GO GLOBAL?
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REASONS FOR GLOBAL MARKETING/BUSINESS
• Need for sales-growth.
• Need to reduce costs by sourcing raw materials, inputs, or final products.
• Need to gain competitive edge--economies of scale or strategic posturing.
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SEEKING MARKETS
• The largest single domestic market--the U.S.--is only 25% of the total world market. 75% is outside.
–Coca Cola derives over 70% sales and 80% profits from overseas markets.
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• Second largest market is Japan at 15% of the total world market.
• Among the European markets, Germany is the largest at only 6% of the total world market.
• Other countries have even smaller markets.
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SEEKING INPUTS
• Minerals
• Farm Produce
• Forest Products
• Labor
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STRATEGIC POSTURING
CAT versus KOMATSU
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WHAT ARE THE DRIVERS OF GLOBALIZATION
• TECHNOLOGICAL FACTORS– TRAVEL & TRANSPORT– TELE-COMMUNICATIONS– MEDIA
• SOCIO-POLITICAL FACTORS– REDUCTION OF TRADE BARRIERS– MARKET LIBERALIZATION– INTERDEPENDENCE
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“A JET GOES SO FAR--IT BRINGS PEOPLE TOGETHER.”--BOEING.
• JET TRAVEL IS ONE OF THE MOST EXCITING DEVELOPMENTS OF OUR TIMES.
• THE FIRST U.S. PASSENGER JET WAS BUILT BY BOEING IN 1958. B-707 COULD CARRY 181 PASSENGERS AT A SPEED OF 550 M/HR.
• THE JUMBO (B-747) SHOWN HERE DEBUTED IN 1969.
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AIRCRAFTSTYPE SEATS SPEED RANGE nm
B-747-400 416 565nm/hr 7330 (14 Hr)
B-777-300 365 565 7250 (14 Hr)
B-777-200 301 565 8820 (18 Hr)
B-737-800 162 530 2942
A-340-200 239 578 8000
A-330-200 253 578 6400
DC-10-40 250 600 5000
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WORLD TRAVEL FIGURES• IN 2000, NUMBER OF PASSENGERS
ON SCHEDULED DOMESTIC AIRLINES WAS 1.1 B AND INTERNATIONAL AIRLINES WAS 0.5 B.
• IN 1988, THE CORRESPONDING FIGURES WERE 0.8 B AND 0.3 B.
• GROWTH IS EXPECTED TO REMAIN AT ABOUT 5% PER YEAR.
• Source; ICAO (May 2001)
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TRAVEL FIGURES FOR U.S.
• NUMBER OF INTERNATIONAL TRAVERLERS HAS INCREASED FROM 5.5M IN 1960 TO 55.5M IN 2000.
• AVERAGE DISTANCE TRAVELED HAS INCREASED FROM 1,510 MILES IN 1960 TO 3,322 MILES IN 2000.
• NUMBER OF DOMESTIC TRAVELERS INCREASED FROM 52.4 M IN 1960 TO 610 M IN 2000, REPRESENTING OVER HALF OF DOMESTIC WORLD TRAVEL.
• Source: air-transport.org
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MEGA AIRCRAFTS
• A3XX-100 IS DESIGNED TO CARRY 481-656 PASSENGERS AND FLY 8000 NM.
• BOEING IS CONTEMPLATING A 800-1000 PASSENGER PLANE
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TRANSPORTATION
• CONTAINERIZATION HAS BEEN THE BIGGEST SINGLE TECHNOLOGICAL INNOVATION IN SHIPPING.
• OTHERS INCLUDE:– SIZE– SPEED– HANDLING
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CONTAINER SHIPS
• A 40’ CONTAINER CAN CARRY 4403 VCRs OR 10,000 PAIRS OF SHOES.
• NEWER SHIPS CAN CARRY 3,300 40’ CONTAINERS. USUAL IS 500-1000.
• A 100 CAR DOUBLE-DECK FREIGHT TRAIN CAN CARRY 200 40’ CONTAINERS.
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SPEED
• SINGAPORE-NEW YORK JOURNEY TAKES 21 DAYS WHILE SINGAPORE TO LOS ANGELES TAKES 23 DAYS.
• AVERAGE TIME TAKEN TO HANDLE AND CLEAR A SHIPMENT IS LESS THAN 1 DAY IN SINGAPORE, 3 DAYS IN THE U.S. AND 15 DAYS IN JAPAN.
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TRIVIA TIME
• WHICH PORT HANDLES THE LARGEST VOLUME OF CARGO? (‘99: 326 M MT)
• WHICH PORT HANDLES THE SECOND LARGEST VOLUME OF CARGO? (‘99: 304 M MT)
• SOUTH LOUISIANA IS #3 AT 194 M MT• Source: infoplease.com/ipa
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TRIVIA TIME
• WHICH PORT HANDLES THE LARGEST CONTAINER TRAFFIC?
(‘99: 8.10 M 40’ CONTAINERS)
• WHICH PORT HANDLES THE SECOND LARGEST CONTAINER TRAFFIC?
(‘99: 7.97 M 40’ CONTAINERS)
• LA IS #6 AT 2.2 M 40’ CONTAINERS• Source: infoplease.com/ipa
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WORLD AIR CARGO
• IN 1999, THE WORLD AIR CARGO WAS ABOUT 28.2 m mt (67.5 b ton-mile), OF WHICH 17.2 m mt (57.9 b ton-mile) COMPRISED OF INTERNATIONAL FREIGHT.
• A JUMBO SHOWN HERE CAN CARRY UP TO 124 mt OF CARGO OR ABOUT 5 40’ CONTAINERS.
• Source: icao.int/icao/en/nr/pio200106..htm
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AIR TRANSPORT IN THE U.S.
• U.S. INTERNATIONAL AIRCARGO INCREASED FROM 1.30 b ton-miles IN 1970 TO 13.2 b ton-miles IN 2000.
• U.S. DOMESTIC AIRCARGO INCREASED FROM 2.2 b ton-miles IN 1970 TO 7.9 b ton-miles IN 2000.
• WHILE ONLY 5% OF U.S. TRADE BY WEIGHT IS HANDLED BY AIR, IT CONSTITUTES 25% OF TRADED VALUE.
•Source: air-transport.org
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TRUCKING• CONTAINERIZATION HAS
REVOLUTIONALIZED TRUCKING TOO.• U.S. IMPORTS FROM MEXICO 20.7 M MT
(2000) BY TRUCK VALUED AT $88.7 B• U.S. IMPORTS FROM CANADA 65.7 M MT
(2000) BY TRUCK VALUED AT $127.8 B• Source: bts.gov/ntda/tbscd/reports/nat_m2000.html & 2000.html• Source: bts.gov/transborder/reports/weight/new_mlb20001.html & clb2001.html
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RAIL
• U.S. IMPORTS FROM MEXICO 6.6 M MT (2000) BY RAIL VALUED AT $21.1 B
• U.S. IMPORTS FROM CANADA 60 M MT (2000) BY RAIL VALUED AT $49.7 B.
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CAPACITY
• EVEN IN 1960, TRANSATLANTIC CABLE COULD CARRY ONLY 138 CONVERSATIONS SIMULTANEOUSLY.
• NOW A FIBER OPTIC CABLE CAN CARRY UP TO 1.5M CONVERSATIONS.
• WHAT DO YOU THINK HAPPENED TO COST??
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MEDIA
• THE REACH OF TELEVISION AND PRINT MEDIA HAS BECOME GLOBAL.
• ADVERTISING COMPANIES HAVE BECOME GLOBAL.
• IT IS EASY TO REACH PEOPLE IN DIFFERENT COUNTRIES MORE COST EFFECTIVELY.
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SOCIO-POLITICAL FACTORS
• REDUCTION OF TRADE BARRIERS
• MARKET LIBERALIZATION
• INTERDEPENDENCE
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TRADE LIBERALIZATION
• EXPORT VOLUME HAS INCREASED OVER 17 TIMES SINCE 1950 (FROM $420B IN 1950 TO $7300B IN 1999)
• INVESTMENT HAS INCREASED OVER 25 TIMES SINCE 1950 (FROM $14B IN 1950 TO $350B NOW).
• TARIFFS AND RESTRICTIONS HAVE FALLEN WORLDWIDE. GATT/ WTO
• Source: worldbank.org/data/databytopic/databytopic.html#INTERNATIONAL%20ECONOMICS
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Emerging Market Access IndexOpenness to Trade
• Singapore• Chile• Hong Kong• Estonia• Peru• Slovenia• South Africa
Lithuania
Venezuela
Taiwan
Kuwait
Latvia
Romania
Israel
Mexico
Zimbabwe
Hungary
Argentina
Colombia
Turkey
Czech Rep.
Egypt
Philippines
Poland
South Korea
Bulgaria
Thailand
Slovakia
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BENEFITS OF FREE TRADE• SPECIALIZATION LEADS TO
EXPLOITATION OF COMPARATIVE ADVANTAGE.
• CONSUMERS HAVE GREATER CHOICE.
• AN OPEN DOMESTIC MARKET IS A SOURCE OF COMEPTITIVE STRENGTH.
• COUNTRIES WITH OPEN TRADE HAVE DEVELOPED MUCH FASTER.
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INTERDEPENDENCE
TRADE AND INVESTMENT LIBERALIZATION HAS LED TO DEEPER FORMS OF ECONOMIC INTERDEPENDENCE AMONG
NATIONS.