Chapter 4.2

Bell Ringer  Complete the Cultural Sensitivity Quiz

Objectives  Analyze how cultural, economic and political factors impact businesses engaged in international trade.

Doing Business Internationally  Growing with increased acceptance of capitalism around world  Advances in technology (Internet)  Reduction of Trade Barriers  Instantaneous global news coverage

Ways to Get Involved in International Trade  Importing  Exporting  Licensing  Contract Manufacturing  Joint Ventures  Foreign Direct Investment  Multinationals  Mini-nationals

Ways to Get Involved in International Trade  Importing – purchasing goods from a foreign country  Meet same standards as domestic products  Quota’s can limit entry of some products  Hire Customs Broker – specialists licensed by US Treasury Department  Know laws, procedures and tariffs  Handle 90% of all imports

Ways to Get Involved in International Trade  Exporting – selling domestic goods in a foreign country  Minimal risk and control  Help from government through BuyUSA site

Ways to Get Involved in International Trade  Licensing – letting another company us a trademark, patent, special formula, company name or other intellectual property for a fee or royalty  Franchising

Intellectual property is divided into two categories:  Industrial property, which includes inventions (patents), trademarks, industrial designs, and geographic indications of source  Copyright, which includes literary and artistic works such as novels, poems and plays, films, musical works, artistic works such as drawings, paintings, photographs and sculptures, and architectural designs

Ways to Get Involved in International Trade  Contract Manufacturing – hiring a foreign manufacturer to make your products according to your specifications  Pay lower wages  Proprietary information must be given to foreign companies  Golf club head molds stolen in China and copies of knockoff made

Ways to Get Involved in International Trade  Joint Venture – business enterprise that companies set up together  Some countries do not allow foreign investors to own 100% of a business  Companies must find a “local” business partner

Ways to Get Involved in International Trade  Foreign Direct Investment – establishment of a business in a foreign country  Sony – Japanese company  $8 billion in China  11 manufacturing plants in United States

Ways to Get Involved in International Trade  Multinationals – large corporations that have operations in several countries  Proctor & Gamble  Nike  PepsiCo  Coca-Cola

Ways to Get Involved in International Trade  Mini-Nationals – midsize or smaller companies that have operations in foreign countries  Difference in investment in factories, offices, other facilities

Graphic Organizer  Prepare a graphic organizer that lists the factors that are used to evaluate a countries marketing opportunities and threats.  Political Factors  Trade Regulations and Laws  Economic Factors  Socio-Cultural Factors  Technical Factors

Global Environmental Scan Political Factors  Government Stability  Type of Government  Trade Agreements  Foreign Investment Opportunities

Global Environmental Scan Trade Regulations & Laws  Percentage of Business Ownership Allowed  Laws to protect Intellectual Property

Global Environmental Scan Economic Factors  Infrastructure  Labor Force  Employee Benefits  Taxes  Standard of Living  Foreign Exchange Rate

Global Environmental Scan Socio-Cultural Factors  Language & Symbols  Holidays & Religious Observances  Social & Business Etiquette

Global Environmental Scan Technological Factors  Measurement System  Electrical Voltage Standards  Telephone/Internet Access  Computers/Faxes/Voice Mail/Cellular Phones  Radio/Television  CIA's World Fact Book web site CIA's World Fact Book web site

Global Marketing Strategies  Globalization  Adaptation  Customization

Global Marketing Strategies  Globalization – selling the same product and using the same promotion methods in all countries  Common need that transcends different cultures  Coca-Cola  Microsoft

Global Marketing Strategies  Adaptation – using an existing product and/or promotion with changes made to better suite the characteristics of a country or region  Product Adaption – change some aspect of actual product for different markets  Promotion Adaption – change some part of promotional message for different markets  Chevy Nova means “no go” in Spanish

Global Marketing Strategies  Customization – creating specially designed products or promotions for certain countries or regions

Global Marketing Strategies Activity  Textbook page 88 Global Marketing Strategies  Read the examples listed.  What is your first impression of each product advertisement?

Review Assignment  Textbook page 89 After You Read Questions #1, 2, & 3  Answer questions in complete sentences on the back of the global scan graphic  Textbook page 91 Review Facts and Ideas Questions # 6, 8, 9, & 10  Answer questions in complete sentences

Assignment  Chapter 4 Vocabulary Review and Fact and Idea Review – workbook pages 29 & 30

Writing Review Assignment  Explain the difference between customization, globalization and adaptation.

Mini-Quiz  1. _____ refers to the fact that all countries depend on each other for resources that they themselves lack.  2. Two types of advantages in international trade are comparative and ____.  3. A trade deficit occurs when a country’s ____ are greater than its ____.

Mini-Quiz  4. The business activity in the global market that carries the lowest risk is _____.  5. Offering a product for sale world-wide without making any changes or modifications to the product is called ____.

Mini-Quiz  1. Interdependence refers to the fact that all countries depend on each other for resources that they themselves lack.  2. Two types of advantages in international trade are comparative and absolute.  3. A trade deficit occurs when a country’s imports are greater than its exports.

Mini-Quiz  4. The business activity in the global market that carries the lowest risk is exporting.  5. Offering a product for sale world-wide without making any changes or modifications to the product is called globalization.