Marketing in the “New” Economy Service Marketing CRM International Marketing Internet Marketing

Critical Questions Why is international marketing an important consideration for a purely domestic business? If you were hired as the marketing consultant by a local/national company that is considering going international- what “factors” would you tell them they need to consider when formulating their international/global marketing strategy?

Levi’s “Global” Marketing Strategy Global in Concept Local in Execution

The Marketing concepts, processes & considerations – essentially the same…. Company Consumers Competitors Conditions PEST WM TGT E D C N G F Service Growth, Competitive & Positioning Strategies Company Consumers Competitors Conditions PEST WM TGT E D C N G F Service Growth, Competitive & Positioning Strategies Company Consumers Competitors Conditions PEST WM TGT E D C N G F Service Growth, Competitive & Positioning Strategies Company Consumers Competitors Conditions PEST WM TGT E D C N G F Service Growth, Competitive & Positioning Strategies Company Consumers Competitors Conditions PEST WM TGT E D C N G F Service Growth, Competitive & Positioning Strategies Just more layers…. w/ Controllables— less controllable & Uncontrollables-- more perplexing

Challenges in Conducting Int’l Marketing Same as Domestic just more Challenging Challenges in Planning Gathering of data & conducting situation analysis Lack of availability, validity, reliability and/or familiarity w/ international data sources Actual --but limited-- business experience w/ country may be used as substitute for organized research Interpreting results Lack sensitivity to differences in market conditions &/or consumer behavior caused by Ethnocentricity (AKA: the “Self-Reference Criterion” Challenges in Conducting Difficult to control & coordinate marketing programs across countries w/ different media & distribution systems

In order to avoid simple but costly Mistakes Need to fully account for any & all differences in every new market

The name Coca-Cola in China was first rendered as Ke-kou-ke-la Unfortunately, the Coke company did not discover until after thousands of signs had been printed that the phrase means 'bite the wax tadpole' or 'female horse stuffed with wax,' depending on the dialect. Coke then researched 40,000 Chinese characters and found a close phonetic equivalent, 'ko-kou-ko-le,' which can be loosely translated as 'happiness in the mouth.' http://www.relojournal.com/sept96/tadpole.htm

Pepsi’s slogan, “Come alive with the Pepsi Generation,” read as “Pepsi will bring your ancestors back from the dead,” in Taiwan. The Kentucky Fried Chicken slogan, “finger- lickin’ good,” was translated as “eat your fingers off, ” in Chinese. Clairol introduced the “Mist Stick” curling iron in Germany where mist is slang for manure. Not too many people had use for a manure stick.

Subtle & Not So Subtle factors accounted for Marketing Failures Cake mixes initially failed in both Britain and Japan Subtle-Pictures on boxes were just too perfect for Britons--must be hard to make Not so subtle- Few Japanese households had ovens

unaware that Spanish in no va means it won’t go. In Italy, an ad for “Schweppes Tonic Water” translated as “Schweppes Toilet Water.” General Motors introduced the Chevy Nova in South America and was unaware that Spanish in no va means it won’t go. When Ford’s Pinto flopped in Brazil, Ford learned pinto was Brazilian slang for tiny male genitals. All the nameplates were changed to Corcel, which means horse. Widely circulated, but on Feb. 15, 2003 taken from: http://www.library.ubc.ca/patscan/funny_trade.html

Colgate introduced a toothpaste in France called CUE, the name of a notorious porno magazine

US Marketers aren't the only ones making mistakes- English Translations made by Japanese firm added to labels to increase prestige for their products being sold in China. Product English Translation Japanese Spam Liver Putty Toilet Paper My Fanny Brand Ready to Eat Pancakes Strawberry Crap Antifreeze Spray Hot Piss Brand Pediatrician’s Slogan Specialist in Deceased Children SOURCE: “Some Strawberry Crap Dessert, dear?” South China Morning Post, December 9, 1996 p. 12.

International Marketing Blunders The Scandinavian vacum manufacturer Electrolux used the following in an American campaign: Nothing Sucks like an Electrolux

Some Unique Brand names Fockink – liqueur: Netherlands Green Piles – lawn fertilizer: Japan Homo Sausage – Japan Krapp – toilet paper: Sweden Last Climax – paper tissues: Japan Pansy – men’s underwear: China Pschitt – soft drink: France Zit – soft drink: Greece

France: Salad component U.K.: Sandwich filler; pasta topping How you sell a product must equate with how the consumer sees the product: U.S.: Hot dish France: Salad component U.K.: Sandwich filler; pasta topping Korea: Sprinkled over ice cream (sweet) Japan: After school snack

Hallmark cards failed when introduced in France- French dislike syrupy sentiment and prefer writing their own cards. Philips began to earn a profit in Japan only after reduced the size of its coffeemakers to fit into smaller Japanese kitchens and its shavers to fit smaller Japanese hands. Coca-Cola had to withdraw its two-liter bottle in Spain after discovering that few Spaniards owned refrigerators large enough compartments to accommodate it. General Foods’ Tang initially failed in France because it was positioned as a substitute for orange juice at breakfast. The French drink little orange juice and almost none at breakfast. Kellogg’s Pop-Tarts failed in Britain because the percentage of British homes with toasters was significantly lower than in the United States and the product was too sweet for British tastes.

Do Your Home work:

Every new country and every new market one enters brings with it- Political-Legal & Regulatory Variables: Must be constantly monitored as gov’ts constantly alter their countries trade policies, commercial laws & business regulations Every new country and every new market one enters brings with it- it’s own set of laws, rules, regulations, standards, requirements, policies, procedures, guidelines, documents, stamps, taxes, fees, licenses, etc., etc. etc.

Everything is regulated… What you can sell, how much you can sell When you can sell How & to whom you can sell And how much you can sell it for…

Products you can advertise? Appeals that can be used? Before you begin to formulate your promotional strategy you need to know for every country & market What . . . Products you can advertise? Appeals that can be used? Times products may be promoted? Rules regarding foreign language use? Taxes levied against advertising?

Can you use: Ads directed to children? Foreign words in ads? National symbols in ads?

Belgium no references to dieting. France no child endorsements. United Kingdom no candy as meals. no Snickers for lunch! Germany no comparative advertising.

Examples of Differences in Regulation Of Children’s Ads across Europe Austria No advertising of war toys. Belgium Ads for candy on TV must show a stylized toothbrush. Denmark No advertising of prizes for children. Finland No ads during children’s programs. France No deceptive packaging or contents & No Child endorsements Germany No ads that encourage children to beg parents to buy product. Greece All toy ads banned on TV from 7a.m.-1p.m. Ireland Ads should not encourage the consumption of alcohol. Italy Ads aimed at adults not allowed in children’s programming. Netherlands No candy ads before 7:55p.m. Portugal Ads must not exploit the inexperience of children. Source: Lucy Rouse, Dilip Subramanian, Ia Wadendall, and Fiona McHugh, "A Question of Child Care," Marketing & Media Europe 1996, March 1996, 34-35.

Regulatory Challenges In the U.K., all advertising is allowed if not specifically forbidden… In Germany, everything is forbidden if not specifically allowed… In Italy, everything is allowed, even if forbidden… In Belgium, nobody knows what’s forbidden…

Other Political- Legal & Regulatory Concerns Political Stability Respect for “Rule-of-Law” Favorable Trade & Investment Environment Nondiscrimination Access To Markets # Regulatory Hurdles Nationalism & Nationalization View of Profits

Governmental Methods of Trade Regulation Promotion Restriction

Govt’l Methods Promoting & Restricting Trade Trade Promotion Trade Restriction Subsidies Tariffs Export Financing Quotas Foreign Trade Zones Special Agencies Embargoes Local Content Requirements Admin Policies Currency Controls

Trade Restriction Local Content Requirements Laws stipulating that producers in the domestic market must supply a specified amount of a good or service. Purpose - force companies from other nations to employ local resources in their production processes—particularly labor

We’re taught to Play by the Rules…. Problem is--No Universal Rules— No International Law/Courts specializing in Commercial disputes Our Rules (English-Common Law System) – more the exception than the rule EVERYONE

Common law The United Kingdom and its former colonies all follow a legal system based on common law. .. law based on the cumulative wisdom of judges' decisions on individual cases through history. Thus each country's legal system evolves as individual cases set precedents.

Civil law .. the world's most common form of legal system. It is based on a detailed listing, or codification, of what is, and is not, permissible. -civil law system judge takes on many of investigative & inquisitorial tasks that would be completed by lawyers in a common law system.

Islamic law Law is based on the Koran & rules governing the faith and practice of Muslims

http://www.droitcivil.uottawa.ca/world-legal-systems/eng-monde.html

With no Global law– Legal Issues & Disputes in International Business Resolved thru: Contracts Arbitration WTO

Contract- Determine Legal Jurisdiction Disputes settled— By Jurisdictional Clauses Included In Contract Where Contract entered into Where provisions of Contract Performed

International Arbitration In order to avoid Courts in settling international trading disputes…Ensure that Contracts have arbitration clause inserted that specifies: Country of arbitration The arbitrator & Rules of arbitration

In past 10 years WTO emerged as principle arbiter of Int’l trade Formed in 1995 - GATT-Uruguay Round - Most comprehensive trade agreement in history- “ (WTO) is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.” (Extract from WTO website)

WTO -World Trade Policeman? 104 disputes brought to WTO in 1st three years. 196 handled by GATT during its 50 year history. US is biggest WTO user - 34 disputes.

Do Your Home work

Fish Where the Fish are… Economic Variables Counties level & rate of economic development Per capita income & income distribution Expenditure patterns for goods & services

WORKING TIME REQUIRED TO BUY A BIG MAC 0 20 40 60 80 100 120 Minutes Caracas Moscow Manila Shanghai Mexico City Bogota Warsaw Bangkok Sao Paolo Johannesburg Singapore Paris Kuala Lumpur London Frankfurt New York Tokyo

Evolving Middle Income Households- Buying Boom for Asia, 1995-2000 What the added Between 1993 and middle class 1995 2000 buy (In millions) 73.3 Millions of households approaching $18,000 per year buying power Indexed to Singapore prices Bedrooms 32 116 Living Rooms 16 58 Kitchens 16 58 Bathrooms 32 116 Living space (sq.m.) 1,200 4,350 Large appliances 16 58 Televisions 24 87 Telephones 24 87 Cars 16 58 32.5 14.4 1991 1995 2000

Emerging - NIC’s & BEM’s* 75% growth in world trade coming from 130 Newly Industrialized Countries ---but ½ of that from: Big Emerging Market’s Have more than ½ of the world’s population Account for 25% world’s GDP (@$2Trillion) 2010- China = world’s largest economy

BEMs: Big Emerging Markets Mexico Argentina South Africa Poland Turkey China India Indonesia South Korea Brazil

Low Income Countries GNP per capita of $785 or less Characteristics Limited industrialization High percentage of population involved in farming High birth rates Low literacy rates Heavy reliance on foreign aid Political instability and unrest Of these, only China and India are BEMs

Lower Middle Income Countries GNP per capita between $786 and $3,125 Sometimes called less-developed countries (LDCs) Characteristics Early stages of industrialization Cheap labor markets Factories supply items such as clothing, tires, building materials, and packaged foods 3 BEMs: Poland, Turkey, Indonesia

Upper Middle Income Countries GNP per capita between $3,126 to $9,655 Characteristics Rapidly industrializing Rising wages High rates of literacy and advanced education Lower wage costs than advanced countries Sometimes called newly industrializing economies (NIEs) 3 BEMs: Argentina, Brazil, Mexico, South Africa

High Income Countries GNP per capita above $9,656 Sometimes referred to as post-industrial countries Characteristics Importance of service sector, information processing and exchange, and intellectual technology Knowledge as key strategic resource Orientation toward the future

Do Your Homework

The Int’l Marketer’s Quandary “I BELIEVE I UNDERSTAND WHAT YOU THINK YOU WANT * BUT I AM NOT SURE YOU REALIZE THAT WHAT YOU WANT IS WHAT I SELL”

Perhaps no other set of variables more daunting & complex Communication & language (inc. non-verbal) Dress & appearance Food & eating habits Time & time consciousness Rewards & recognitions Relationships Values & norms Sense of self & space Mental process & learning Beliefs & attitudes

Definition of Culture The integrated sum total of learned behavioral traits that are manifest & shared by members of a society” the man-made part of our environment… the distinctive life style of a people acquired thru learned behavior …

Just as 9/10 of iceberg is out of sight, Iceberg Theory Just as 9/10 of iceberg is out of sight, so is 9/10 of culture out of conscious awareness of the members of that culture. Evident and Deep Culture

Elements of Culture: - Language - Aesthetics  Graphic & Structural Arts  Folklore  Music, Drama, Dance - Material Culture  Technology  Economics - Belief Systems  Humans and The Universe - Social Institutions  Political Structures  Education  Social Organization

Definitions Evident Culture Deep Culture .. customs, language, art, artifacts & behavior the first cultural phenomena you recognize as a foreigner. ie “siesta“ in Mexico, being punctual in Germany, “job hopping“ in the U.S., driving on the left in UK, bull fights in Spain. Deep Culture .. the underlying aspects of a culture, i.e. values, norms, cause -effect relationships, views of the world, -- very difficult to change

literature drama classical music popular music folk-dancing fine arts literature drama classical music popular music folk-dancing games cooking dress language rituals techniques laws customs EVIDENT CULTURE notions of modesty concept of beauty ideals governing child-rearing rules of descent cosmology relationship to animals patterns of superiority relations definition of sin courtship practices concept of justice incentives to work notions of leadership tempo of work patterns of group decision making concept of cleanliness attitudes toward the dependent theory of disease approaches to problem solving concept of status mobility eye behavior nature of friendship concept of self ordering of time Roles in relation to status by age, sex, class, occupation, kinship, and so forth. conversational patterns in various social contexts concept of past and future definition of insanity patterns of visual perception preference for competition or cooperation body language Social interaction rate notions of adolescence notions about logic and validity patterns of handling emotions facial expressions arrangement of physical space community sense myths values assumptions …etc!… DEEP CULTURE

Cultural Research(ers) w/ Marketing Applications HALL Hofstede Trompenaars

Edward T. Hall The Silent Language, - 1959 The Hidden Dimension, -1966 Beyond Culture, - 1976 The Dance of Life, The Other Dimension of Time, - 1983 Hidden Differences: Studies in International Communication-, 1983, 1984, 1985 Hidden Differences: Doing Business with the Japanese, - 1987 Understanding Cultural Differences, Germans, French and Americans - 1990

MONOCHRONIC vs. POLYCHRONIC TIME M-time is one-thing-at-a-time Monochronic cultures stress a high degree of scheduling and an elaborate code of behavior built around promptness in meeting obligations and appointments Americans are mostly monochronic P-time is many-things-at-a-time human relationships and interactions are valued over arbitrary schedules and appointments. Many things may occur at once (since many people are involved in everything), and interruptions are frequent. P-time is common in Mediterranean and Colonial-Iberian-Indian cultures.

HIGH vs. LOW-CONTEXT CULTURES …terms refer to the fact that when people communicate, they take for granted how much the listener knows about the subject under discussion. In low-context communication, listener knows very little & must be told practically everything In high-context communication listener is already 'contexted' - does not need much background information

Contextual Background of Various Countries High Context Implicit Japanese Arabian Latin American Spanish Italian English (UK) French Low Context Explicit North American (US) Scandinavian German Swiss

Geert Hofstede Power distance Uncertainty Avoidance Individualism Masculinity Time Horizon organizational psychologist In 1991 surveyed IBM employees & managers in 53 countries— Identified 5 dimensions that national culture and explained 50% of the differences in respondents’ attitudes… especially significant because the type of organization is held constant

Power distance Geert Hofstede or the degree to which members of a society automatically accept a hierarchical or unequal distribution of power in organizations and the society

Uncertainty avoidance Geert Hofstede Uncertainty avoidance or the degree to which members of a given society deal with the uncertainty & risk of everyday life and prefer to work with long-term acquaintances and friends rather than with strangers

Individualism Geert Hofstede or the degree to which an individual perceives him- or her-self to be separate from a group and free from group pressure to conform

Masculinity Geert Hofstede or the degree to which a society looks favorably on aggressive and materialistic behavior

Time horizon Geert Hofstede (short term to long term) or the degree to which members of a culture are willing to defer present gratification in order to achieve long-term goals

Geert Hofstede’s - Cultural Values Index IDV -HI=Individualist MAS Macho-Man Low= equality/knowledge is power HI= Dogmatic Low=Tolerant of diff./deviance/dissent UAI PDI LO=Gender Equity HI=power hierarchical/inherited Low--Group/Collective

4 1 2 3 5 6 Individualism Index Power Distance Index 112 10 110 Small Power Distance Collectivist Large Power Distance Collectivist Small Power Distance Individualist Distance Individualist 4 1 2 3 5 6 Individualism Index 1. Costa Rica 2. Korea & Mexico 3. Brazil & India 4. Israel & Ireland 5. Australia & U.S.A. 6. France & Italy Power Distance and Individualism-Collectivism

Uncertainty Avoidance Index Weak Uncertainty Avoidance Feminine Avoidance Masculine Strong Uncertainty Uncertainty Avoidance Index 112 10 100 Masculinity Index 4 1 2 5 6 10 9 8 7 3 1. Norway 2. Malaysia 3. Jamaica 4. U.S.A. 5. Taiwan 6. Costa Rica 7. Australia 8. Mexico 9. Japan 10. Greece Masculinity/Femininity and Uncertainty Avoidance

http://www.geert-hofstede.com/index.shtml

US Cultural Indices

Fons Trompenaars 7 dimensions of culture     Universalism vs. Particularism What is more important - rules or relationships?   Individualism vs. Communitarianism Do we function in a group or as an individual?   Specific vs. Diffuse cultures How far do we get involved? Affective vs. Neutral cultures Do we display our emotions? Achievement vs. Ascription Do we have to prove ourselves to receive status or is it given to us?   Sequential vs synchronic cultures Do we do things one at a time or several things at once? Internal vs External control Do we control our environment or work with it ?

both consumer & business… …cultural traditions, norms beliefs & behaviors need to be thoroughly understood & accounted for to fully succeed in any marketing endeavor

What’s your Int’l Business IQ? 12 Questions

Q1 In Taiwan, giving what fruit is a good omen for a businessperson?

Q2 What number in Chinese-speaking countries (also in Japan) is as ominous as the number 13 in Western culture? A: 4 B: 7 C: 3 D: 5

Q3 A: a silk tie B: a silver Mont Blanc pen C: a gold clock The executive of a Chinese company is celebrating their 65th birthday. Which of the following is not a appropriate gift? A: a silk tie B: a silver Mont Blanc pen C: a gold clock D: a crystal paperweight E: gold and jade cufflinks

Q4 A: Australia B: Brazil C: Finland D: France E: Ireland During a TV commercial, the announcer gives the OK sign on camera. In which country does this mean something entirely different? A: Australia B: Brazil C: Finland D: France E: Ireland

Q5 In England, it is inappropriate to discuss business after work over drinks. A: true B: false

Q6 A: at dinner B: over lunch C: on the golf course You’re creating a sales training manual for employees doing business in Japan. When would you tell them NOT to discuss business? A: at dinner B: over lunch C: on the golf course D: at the start of a business meeting E: in your superior’s office

Q7 The influence that a country’s image/ stereotype has on consumer perceptions of the product A. The Ethnocentric Effect B. The Self-reference criterion C. The Country of Origin Effect D. The Euro-factor

Q8 A: Italy and France B: Ireland and Sweden C: Japan and China Your company would like to send its top sales representative aboard to meet with its distributors in August. In which country is this most likely to become a problem? A: Italy and France B: Ireland and Sweden C: Japan and China D: Australia and New Zealand E: Hungary and Romania Q8

Q9 A: refill her glass immediately At a business dinner in Korea, your counterpart’s wine glass is half-empty. What should you do? A: refill her glass immediately B: sit back and let her refill her own glass C: wait until her glass is empty and then refill it D: fill your own glass and replace it with hers

Q10 A: blue B: red C: black D: none of the above When writing names in Korea, what color is not appropriate to use? A: blue B: red C: black D: none of the above

Q11 A: forefingers B: mouths & accompanying head movement C: feet In the Philippines, people indicate directions with their… A: forefingers B: mouths & accompanying head movement C: feet D: none of the above

Q12 (the last one) A: bow deeply at the waist When you meet an Indonesian businessperson for the first time, you should: A: bow deeply at the waist B: nod your head slightly w/ your hand in a praying position in front of your chest C: shake hands loosely and state your name D: kiss her on both cheeks

What’s your Int’l Business EQ? POP-Quiz Answers

Q1 In Taiwan, receiving a pineapple for a gift is a good omen for a businessperson

Cultural Give & Take-Do’s & Don’ts Japan—Do not open in front of giver/ no bows, ribbons Europe: avoid red & white /don’t wrap flowers; don’t spend too much Arabia: Don’t give at outset Latin Am.: Give after informal meetings China: present privately; don’t make a big deal of it

Q2 What number in Chinese-speaking countries and also in Japan is as ominous as the number 13 in Western culture? A: 4

Other Numbers Other Countries The number 7 is considered bad luck in Kenya, good luck in the Czech Republic and has a magical connotation in Benin, Africa.  The number 10 is bad luck in Korea.  The number 4 means death in Japan.

Q3 The executive of a Chinese company is celebrating her 65th birthday. Which of the following is not appropriate? C: a gold clock

Q4 During a TV commercial, the announcer gives the OK sign on camera. In which country does this mean something entirely different? B: Brazil How about this in Australia?

Q5 In England, it is inappropriate to discuss business after work over drinks. A: true

Q6 D: at the start of a business meeting You’re creating a sales training manual for employees doing business in Japan. When would you tell them NOT to discuss business? D: at the start of a business meeting

Q7 The influence that a country’s image/ stereotype has on consumer perceptions of the product C. The Country of Origin Effect Any influence that “Country of Manufacturer” has on consumers positive or negative perception of product

Stereotypes English________ French_________ Italian__________ Japanese_______ American_______ Jamaican_______ Australian_______ Iranian____________ Cuban_________ German________ Swiss__________ Russian________ Scottish________ Irish___________ Mexican________ Canadian_______ Alaskan_________

Q8 Your company would like to send its top sales representative aboard to meet with distributors in August. In which country is this most likely to become a problem? A: Italy and France

Q9 C: wait until her glass is empty and then refill it At a business dinner in Korea, your counterpart’s wine glass is half-empty. What should you do? C: wait until her glass is empty and then refill it

Q10 When writing names in Korea, what color is not appropriate to use? B: red Red represents witchcraft and death in many African countries. Red is a positive color in Denmark.

Red China - symbol of celebration and luck, used in many cultural ceremonies that range from funerals to weddings India - color of purity (used in wedding outfits

Yellow Yellow Asia - sacred, imperial Western cultures - joy, happiness.

Blue China - associated w/immortality. Hindus - the color of Krishna Middle East - protective color * Note: Blue is often considered to be the safest global color.

Green China - studies indicate this is not a good color choice for packaging, green hats mean a man's wife is cheating Arab world- the color of Islam Ireland - religious significance Some tropical countries - associated with danger Western cultures - indicates environmental awareness

Q11 B: mouths and accompanying head movement In the Philippines, people indicate directions with their… B: mouths and accompanying head movement

Q12 (the last one) C: shake hands loosely and state your name When you meet an Indonesian businessperson for the first time, you should: C: shake hands loosely and state your name

How did You do? 10-12: 3-6: 1-2: 0 : Cultural CEO Sr. Management 7-9: 3-6: 1-2: 0 : Cultural CEO Sr. Management Mgt. Trainee Corp. Toilet Cleaner Your Fired!

A High International Business IQ is mandatory for anyone involved in International Advertising…. Cultural Hot Spots humor prestige romance music colors visual imagery Verbal/ Non-Verbal

The Creative Challenge Translation difficulties Culture-bound assumptions & inferences-SRC Identifying cross-cultural icons

Crafting an AD Even if get the words right… Every other element of AD needs to be questioned

Questions about Aesthetics? Production techniques used in commercials. Color Sound, Music, SFX Lighting Angles

Question about People & Personalities The characters in commercials?

Questions about Non-Verbals gestures expressions make-up body language

Are values being associated w/ product important; appropriate Questions about Are values being associated w/ product important; appropriate

Individual determinism plays major role in American advertisements Status appeals are stressed in Japanese advertisements Hong et al. (1987) Individual determinism plays major role in American advertisements

Is proper appeal being Utilized – Rational vs Emotional? Mueller (1987) found Japanese magazines often use less rational appeals

Examples of International Advertising http://www.summitawards.com/winners.html http://www.adeater.com/ http://www.magindia.com/international/

Macro-Environmental Conditions

Advancements in Communication & Distribution technologies are the Precipitating Drivers of Globalization Increased speed, efficiency, capacity & Decreased cost Compunications: Computer Hard/Software interfaced w/ Satellite, Internet, Fiber-optics… Distribution: Jet travel, Containerization, Cross-docking, Global tracking, JIT delivery systems…

Increased Speed & Decreased Costs Average ocean freight / port charges per short ton cargo. Average air transport $$$ per passenger mile. Three-minute New York-London call. Source: HufBauer, 1991 Falling Transport and Communication Costs 1930-1990 (constant 1990 US$)

The Shrinking Globe Internet= Instant Best average speed of horse-drawn coaches and sailing ships, 10mph. 1500-1840 Steam locomotives average 65mph. Steamships average 36mph. 1850-1930 Propeller aircraft 300-400 mph. 1950s Jet passenger aircraft 500-700mph. The Shrinking Globe 1960s Internet= Instant

Time, Mobility & Economic Growth http://www.flexibility.co.uk/issues/transport/time-mobility.htm February 08, 2005 Lax Natarajan & Sully Romero Ordonez

Just in Time Manufacturing supply chain has shrunk over the past 20 years.

Evolving Now into Just One Big Market: The Global Economy … the increasing tendency of economies around the world to interact w/ one another as one market instead of many national markets For US- Presently about 1/3 of profits and 1/5 of economic growth are related to global business February 08, 2005 Lax Natarajan & Sully Romero Ordonez

World Market Connections International trade International Production International & Global Marketing International Finance International Development

Information &Technology INTERNATIONAL LINKAGES Goods & Services Trade Flows Capital & Labor Resource Flows Information &Technology Money February 08, 2005 Lax Natarajan & Sully Romero Ordonez

One Big World Market: The Global Economy The weekly volume of international trade in currencies exceeds the annual value of trade in goods & services. February 08, 2005 Lax Natarajan & Sully Romero Ordonez

One Big World Market: The Global Economy Daily international financial flows now exceed $1.2 trillion. From 1990 to 2000, world GDP grew ~ 30% Total world exports of merchandise & services increased by 80 %. This year- World exports of goods & services predicted to reach $11.4 trillion (24% of world GDP). February 08, 2005 Lax Natarajan & Sully Romero Ordonez World Bank

Borders Have Become Meaningless & there’s no place to hide… The entire globe is now tied together as a single community operating 24/7/365 Trans-National Cross-Cultural High Speed/ Low Cost Transportation & Communication “KNOWLEDGE KNOWS NO BOUNDARIES” WORK PERFORMED GLOBALLY 24-HOUR PER DAY SERVICE AS CUSTOMER REQUESTS ARE TRANSFERRED FROM ONE TIME ZONE TO THE NEXT THE OFFICE NO LOONGER A PLACE, IT IS A GLOBAL SYSTEM CITICORP IN THE 1960S - TELEPHONE CALLS TO BRAZIL IF THEY GOT AN INTERNATIONAL LINE, THEY KEPT IT OPEN “JUST IN CASE” NOW MORE THAN 100M CALLS EVERY HOUR USING 300M ACCESS LINES WILL TRIPLE BY 2000 “THE ENTIRE GLOBE IS NOW TIED TOGETHER IN A SINGLE ELECTRONIUC MARKET MOVING AT THE SPEED OF LIGHT. THERE IS NO PLACE TO HIDE” CITICORP CHAIRMAN WALTER WRISTON February 08, 2005 Lax Natarajan & Sully Romero Ordonez

The Journey to the Global Village After more than a century of electric technology, we have extended our central nervous system in a global embrace, abolishing both space & time” -Marshall McLuhan, Understanding Media- 1955 February 08, 2005 Lax Natarajan & Sully Romero Ordonez

The Global Village Driver The further & faster people are able to travel & communicate… the greater the amount of interaction & influence February 08, 2005 Lax Natarajan & Sully Romero Ordonez

Rise of the “Global Village” … not just the “shrinking” of time & space The new electronic media have transcended time & space w/ “virtual mobility” February 08, 2005 Lax Natarajan & Sully Romero Ordonez

Digital age communication technologies Cable Television Pay Television Services Direct Broadcast Satellite [DBS] MMDS and LMDS Digital Television Streaming Media Digital Radio Multimedia Computers and Video Games The Internet and World Wide Web Internet Commerce Office Technologies Virtual Reality Home Video Digital Audio Distance Learning Wireless Telephony Broadband Networks Residential Gateways and Home Networks Satellite Communications source >> Future Technologies Inc. [www.fti.com] Digital age communication technologies

The Global Corporation The Global Economy The Global Village The Global Corporation

Evolution of the International Firm Exporter Multi-National Trans-National Global February 08, 2005 Lax Natarajan & Sully Romero Ordonez

Make no special provisions Exporting Mindless Approach to International Markets Make no special provisions Domestic- Extension February 08, 2005 Lax Natarajan & Sully Romero Ordonez

International Marketing Multinational corporations (MNCs) Companies that maintain significant operations in two or more countries simultaneously but are based in one home country Transnational (TNC) corporation A company that maintains significant operations in more than one country simultaneously and decentralizes decision making in each operation to the local country Adapt to local conditions in each foreign market Multi-Domestic approach February 08, 2005 Lax Natarajan & Sully Romero Ordonez

Multinational Corporations 2/3s of world trade in goods and services is controlled by multinational companies. Of the 100 largest economies in the world, 51 are corporations. The sovereignty of nations will perhaps continue to weaken due to multinationals & increasing integration of world economies. February 08, 2005 Lax Natarajan & Sully Romero Ordonez

Multinational Corporations In 1970, of the 7,000 multinationals identified by the United Nations, more than 1/2 were from -- the United States & Britain. By 1995, less than half of the 36,000 multinationals identified by the United Nations came from four countries: the United States, Japan, Germany, and Switzerland. February 08, 2005 Lax Natarajan & Sully Romero Ordonez

Multinational Corporations At present, there are 65,000 MNCs* w/ 850,000 affiliates in foreign countries MNCs’ total sales amount to almost $19 trillion. http://www.nationmaster.com/ http://www.nationmaster.com/graph-T/eco_tra_cor_par# February 08, 2005 Lax Natarajan & Sully Romero Ordonez

Global Marketing Is a “Mind-set” of how to approach Int’l Markets Company takes an integrated approach across countries & regions -- Manages for worldwide business leverage & competitive advantage … Is a “Mind-set” of how to approach Int’l Markets Not a matter of how big company is Or- whether or not have a “global product” Or- how many counties you operate in Leverage Commonalities into a global strategy (but where necessary- allow for local implementation) Global (Glocal) Marketing February 08, 2005 Lax Natarajan & Sully Romero Ordonez

Lax Natarajan & Sully Romero Ordonez Global Campaigns Message Market A B C Adopted Campaigns Message 1 Message 2 Message 3 February 08, 2005 Lax Natarajan & Sully Romero Ordonez

ACHIEVING GLOBAL SYNERGIES LEVERAGING ASSETS AND POSITION STRATEGIC FLEXIBILITY Scale Efficiencies Coordination and Integration Transfer of Ideas, Experience and Know-how Production Shifting Multiple Sourcing Transfer Pricing Managing Cash Flow Global Strategy February 08, 2005 Lax Natarajan & Sully Romero Ordonez

The Global Corporation Global Vision Global Leverage Global Sourcing Global Competitive Moves Global Partnerships February 08, 2005 Lax Natarajan & Sully Romero Ordonez

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