Presentation on theme: "Ms. Smith. 1. First, businesses need to figure out what products and services to introduce and in which countries. 2. Then, they must decide how much."— Presentation transcript:
1. First, businesses need to figure out what products and services to introduce and in which countries. 2. Then, they must decide how much to standardize and/ or adapt their products for world markets.
Globalization is the selling of the same product and using the same promotion methods in all countries. Helps to develop a consistent worldwide image Lowers manufacturing costs Eliminates duplication of R&D, advertising, and product design efforts
Adaptation involves a company’s use of an existing product and/or promotion to which changes are made to better suit the characteristics of a country or region. Consumers around the world differ in their cultures, attitudes, and buying behaviors. Markets vary in their economic conditions, competition, legal requirements, and physical environments.`
Yes! Customization involves creating specially designed products or promotions for certain countries or regions. Each geographical area where a product is sold becomes a unique market segment.
You must be aware of: Political factors Socio-cultural factors Economic factors Trade regulations & laws Technology factors
A government’s stability is an important factor when considering international business operations. Language and Symbols Holidays and Religious Observances Social and Business Etiquette
Infrastructure Labor Force Employee Benefits Taxes Standard of Living Foreign Exchange Rate Businesses must keep abreast of new trade regulations. Changes include reduced tariffs, an increase in the % of business ownership allowed by foreign investors, etc. Domestic laws must be followed as well. ▪ Ex.) Toys cannot be advertised in Greece.
Since technology is changing, studying a country’s use of computers, faxes, voice mail, cellular phones, and the Internet is crucial.
A lot of countries have laws that do not allow individual set-up of a business. Therefore, businesses need to decide between setting up a contract manufacturer or joint venture.
A business enterprise that companies set up together. In some countries, foreign investors are not allowed to own 100% of a business. Thus, you must find a local business partner, creating a joint venture. Ex.) Viacom Inc. (MTV) has a minority share in a joint venture with Shanghai Media Group in China. Involves hiring a foreign manufacturer to make your products, according to your specifications. The products are then either sold in that country or exported. Benefits: Lower wages, which allow companies to be more competitive in their pricing. Pitfalls: Proprietary info. Must be given to companies making products.
Foreign Direct Investment: Establishment of a business in a foreign country. May not involve any more than setting up an office with a staff to maintain a presence in that country. Multinationals & Mini Nationals: Large or smaller companies that have operations in foreign countries.