1. 1 Chapter 5: Developing a Global Vision Copyright Cengage Learning 2013 All Rights Reserved Designed & Prepared by Laura Rush B-books, Ltd. Introduction to

2. 2 Learning Outcomes Discuss the importance of global marketing Discuss the impact of multinational firms on the world economy Describe the external environment facing global marketers LO 1 LO 2 LO 3 Copyright Cengage Learning 2013 All Rights Reserved

3. 3 Learning Outcomes Identify the various ways of entering the global marketplace List the basic elements involved in developing a global marketing mix Discover how the Internet is affecting global marketing LO 4 LO 5 LO 6 Copyright Cengage Learning 2013 All Rights Reserved

4. 4 Importance of Global Marketing to the U. S. U.S. exports a fifth of industrial production. Exports create jobs for 10 million Americans. Exports represent 13 percent of U.S. GDP. The United States exports over $1.7 trillion in goods. LO 1 Copyright Cengage Learning 2013 All Rights Reserved

5. 5 The Fear of Trade and Globalization Millions of Americans have lost jobs Millions fear losing jobs Threat of outsourcing if workers do not accept pay cuts Vulnerability to operations moving offshore LO 1 Copyright Cengage Learning 2013 All Rights Reserved

6. 6 Benefits of Globalization Expands economic freedom Spurs competition Raises productivity and living standards Offers access to foreign capital, global export markets, and advanced technology Promotes higher labor and environmental standards Acts as a check on government power LO 1 Copyright Cengage Learning 2013 All Rights Reserved

7. 7 Global Marketing Standardization 1.Operate somewhat differently in each country Different product features, packaging, and advertising. 2.Communication and technology have made the world smaller Eliminated segmented foreign markets with different products. 3.Success is based on variation, not on offering the same product everywhere. LO 2 Copyright Cengage Learning 2013 All Rights Reserved

8. 8 Culture 1.Underlies family, education, religion, and social class 2.Influences product preferences and the marketing mix 3.Country specific customs and traditions Language Business Practices LO 3 Copyright Cengage Learning 2013 All Rights Reserved

9. 9 Economic and Technological Development Developed Country Less Developed Country Complex, sophisticated industries Basic industries LO 3 Copyright Cengage Learning 2013 All Rights Reserved

10. 10 Legal Considerations Tariff Quota Boycott Exchange Control Market Grouping Trade Agreement A tax levied on goods entering a country Limit on the amount of a product entering a country Exclusion of products from a country Foreign exchange must be sold to a control agency Common trade alliance An agreement to stimulate international trade Copyright Cengage Learning 2013 All Rights Reserved

11. 11 The Uruguay Round Entertainment, pharmaceuticals, integrated circuits, and software Financial, legal, and accounting services Agriculture Textiles and Apparel Created the World Trade Organization (WTO) LO 3 Copyright Cengage Learning 2013 All Rights Reserved

12. 12 Demographic Makeup Marketing Considerations: Population density Urban or rural Personal income Age LO 3 Copyright Cengage Learning 2013 All Rights Reserved

13. 13 Shortages in Natural Resources Create… International dependencies Shifts of wealth Inflation and recession Export opportunities if resources are abundant Stimulus for military intervention LO 3 Copyright Cengage Learning 2013 All Rights Reserved

14. 14 Global Marketing Questions What are our options in selling abroad? How difficult is global marketing? What are the potential risks and returns? LO 4 Copyright Cengage Learning 2013 All Rights Reserved

15. 15 Why “Go Global”? Earn additional profits Leverage a unique product or technological advantage Possess exclusive market information Saturated domestic markets Excess capacity Utilize “economies of scale” LO 4 Copyright Cengage Learning 2013 All Rights Reserved

16. Entering the Global Marketplace Licensing Legal process allowing use of manufacturing/patents/knowledge Contract Manufacturing Private-label manufacturing by a foreign country Joint Venture Domestic firm buys/joins a foreign company to create new entity Export Sell domestically produced products to buyers in other countries Direct Investment Active ownership of a foreign company/manufacturing facility Copyright Cengage Learning 2013 All Rights Reserved

17. 17 Place (Distribution) Adequate distribution is necessary for success in global markets –Some countries have complicated systems –Lack of distribution infrastructure and cultural differences create problems Innovative distribution systems can create competitive advantage LO 5 Copyright Cengage Learning 2013 All Rights Reserved

18. 18 Pricing Must consider transportation and insurance costs, taxes, and tariffs Determine what customers will spend Ensure that foreign buyers will pay price May need to simplify a product to lower price Don’t assume that low-income countries are willing to accept lower quality LO 5 Copyright Cengage Learning 2013 All Rights Reserved

19. 19 Dumping 1.Trying to increase an overseas market share 2.Temporarily distributing products to overseas markets to offset slack demand at home 3.Lowering unit costs by exploiting large-scale production 4.Attempting to maintain stable prices during periods of exchange rate fluctuations LO 5 Copyright Cengage Learning 2013 All Rights Reserved

20. 20 Countertrade Countertrade- A form of trade in which all or part of the payment for goods and services is in the form of other goods or services. LO 5 Copyright Cengage Learning 2013 All Rights Reserved