1. Global/International Marketing MR1100 Chapter 7

2. What is International Marketing?  International Marketing is the Marketing across international boundaries. Examples  When OCI sells shrimp in Japan or Germany that is an aspect of international marketing.  When BRP sets up a company in Europe to market snowmobiles that too is an aspect of international marketing.

3. Dynamics of Word Trade  World trade is increasing at a rapid pace  Trade is critical for Canada’s economic health http://www.statcan.gc.ca/daily- quotidien/140506/dq140506a-eng.htm

4. Balance of Trade  The Balance of trade is the difference between the value of imports and the value of exports  a positive balance of trade exists if there is a higher value of exports over imports http://www.statcan.gc.ca/daily- quotidien/140506/dq140506a-eng.htm

5. Why is International Marketing so Important to Canadians?  Canada exports 25-30% of its total Gross Domestic Product (GDP is the value of all goods and services produced in Canada.) Our largest trading partner is the USA. (see Statistics Canada http://www.statcan.gc.ca/dai-quo/ ) http://www.statcan.gc.ca/dai-quo/  Emergence of first the Free Trade Agreement (FTA) and then the North American Free Trade Agreement (NAFTA) uOpening up of Eastern Europe.  International Firms ->Multi-National Corporations (MNC’s)- >Transnational firms  Global Brands

6. Competitive Advantage (Porter’s Model) The four different components of the framework are: 1. Factor Endowment 2. Related And Supporting Industries 3. Demand Conditions 4. Strategy, Structure, And Rivalry

7. Protectionism Protectionism is the practice of shielding one or more industries within a country’s economy from foreign competition through tariffs or quotas Protectionism is on decline across the world Tariff: Tax on imports that artificially raise the price of imports making them less attractive to buy. Quota: A government imposed limit on imports of a given item.

8. Economic Integration  European Union  North American FTA  Asia-Pacific Economic Cooperation

9. Why Go International? Reasons for going International:  –Exploit a business opportunity - profits  –Increased growth potential - extend product life.  –Economic environment may be better abroad  –Less competition  –Less taxes  –Less regulations  –Lower salaries abroad  –Spread fixed costs  –Increased economies of scale and scope  –To sell inventory that will not sell at home

10. Difficulties of International Marketing  Often a time & money consuming effort  Differences in language, culture and values  Hard to get executives to go abroad  Local ways of doing business may be different than at home. uPolitical, Social, & Economic uncertainty.  Different (poor) infrastructure.

11. A GLOBAL ECONOMIC SCAN

12. Key Factors to Assess in the Host Country Prior to Going International Cultural Conditions / Cultural Diversity  Do you and you company understand the cultural conditions in the host country?  Be aware of and respect Customs  Be aware of and respect Cultural Symbols  Be aware of language differences  You cannot respect them if you do not know them.  Be aware of the lessons learned by companies operating abroad.

13. Key Factors to Assess in the Host Country Prior to Going International Economic Conditions  What stage of economic development is the host country in?  How much infrastructure exists -- what is its condition?  What is consumer income? -- high or low  Is there a stable currency exchange rate?

14. Key Factors to Assess in the Host Country Prior to Going International Political Conditions / Regulatory Climate  Stability of the government  The existence of Trade Barriers  The potential of Expropriation  Trade/Tax incentives that may be offered  Is the host a part of a multinational trade group such as NAFTA or the EC?  See Political Risk Assessment @ http://www.prsgroup.com/http://www.prsgroup.com/

15. Alternative Approaches to Going International  Exporting - lowest risk, lowest involvement  Licensing - still low involvement but more risk  Joint Venture - Multinational joins with a local company in the host country - Higher involvement and risk. ( See http://www.offshore- technology.com/projects/exxon_hebron/)http://www.offshore- technology.com/projects/exxon_hebron/  Direct Ownership - most involvement, most risk and most potential reward.

16. Key Terminology Selling Products Abroad  Extension - sell same product in other countries (eg. The Ford Escort is the same basic car all over the world)  Adaptation - Modify a product to meet the needs of the host country ( eg. Honda markets a different version of the Accord in Japan and Europe than in North America (it’s bigger)  Invention - Sell a new product in the host country (The battery-less radio in Africa)

17. Key Terminology Pricing  Dumping - selling a product in a host country below its domestic cost.  Counter-trade - A form of barter  Bribery - Giving something in exchange for a promise of a deal. Common in underdeveloped countries - but ethically wrong.  Grey Market – products are sold through unauthorized channels

18. Watch: A Taste of the West: McDonald’s in Russia (Click Here)(Click Here)  What were some of the Challenges McDonalds experienced in setting up in Russia?  Consider: Cultural/Economic/Political/Regulatory differences  What type of business entry strategy did McDonald’s use? Why?  Comment on McDonald’s Product, Promotion, Distribution and Pricing strategies in Russia  Why did they set up in Russia?