Mr. RUPESH DAHAKE (LECTURER) SCHOOL OF MANAGEMENT STUDIES NAGPU
Is a carrying on marketing outside the national boundaries.
What is International Marketing?
International marketing: the performance of business activities that direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit. Marketing is the process of determining the consumer needs, converting them into products or services to satisfy the user needs and earning profit there from. The essentials of modern marketing:Consumer orientation Optimum use of resources More desired profitability Society oriented
Global Marketing Integration
Fords made in Mexico with Japanese parts, Honda, Toyota, BMW, and Mercedes Benz open USA plants. Honda manufacturing cars in USA, TI manufacturing semiconductors in Japan. Macintosh’s PowerBook 100 designed and manufactured by Sony.
International Marketing Concept:
In international marketing activities performed international level. This activities involved as follows: Purchases or manufacturing and selling to foreign customers Marketing specialized activates is product planning, packing, branding, pricing, advertising, distribution and providing after sales services.
The International Marketing Task
Foreign environment (uncontrollable) Political/legal forces
Domestic environment (uncontrollable)
Cultural forces Political/ legal forces
Country market C environment (uncontrollable)
Competitive Competitive Forces structure
Geography and Infrastructure Promotion Channels of distribution
Country market A environment (uncontrollable)
Level of Technology
Structure of distribution
Country market B environment (uncontrollable )
Main Functions in International Marketing
Choosing the basic route for international marketing Market selection and product selection Selection of distribution channels Developing pricing strategy International marketing communication Organizational adaptations Handling business ethics
Why International Marketing?
Market saturation Rise of new markets Foreign competition Opportunities through foreign aid programmes. To utilized full capacity To off set the business down-turns. To save cost To take advantage of tax concessions To develop and test new products To have access to international technology.
Diversity Patriotism Heterogeneity Varied economic climate Role of policies Government intervention Transport cost Business risks Remittances Mobility of factors Multiple chain of intermediaries
ECONOMIC ENVIRONMENT OF INTERNATIONAL MARKETING
a. Gross National Product. b. Per Capita Income. c. Purchasing power of the consumers. d. Rate of Economic Growth. e. Level and degree of industrialization. f. The form of marketing channels and related infrastructure
Case: Agricultural subsidies and development
Rich nations spend more than $300 billion a year to subsidize their farmers Subsidies create surplus production Surplus production leads to dumping and depressed prices UN estimates producers in developing nations lose $50 billion export revenue because of depressed prices
Agricultural subsidies and development
Rich countries of the developed world subsidize farm products
To keep commodity prices low To favor politically active farmers
production Depressed world prices (a result of surplus)
Instruments of trade policy
Tariffs - oldest form of trade policy Good for government Protects domestic producers
efficiency cost of goods
Bad for consumers
Instruments of trade policy-subsidies
Government payment to a domestic producer
grants Low-interest loans Tax breaks Government equity participation in the company
Subsidy revenues are generated from taxes Subsidies encourage over-production, inefficiency and reduced trade
Instruments of trade policy - Quota
on the quantity of some good imported into a country on trade imposed by exporting country, typically at the request of the importing country
Voluntary export restraint (VER)
1947: General Agreement on Tariffs and Trade (GATT): an international agreement among member countries that is a code of conduct dealing with Tariffs among members (called “contracting parties”)
•Objective is to liberalize trade by eliminating tariffs, subsidies, & import quotas • Goal was to remove international trade barriers through: • reduce tariffs • preventing trade advantages of specific countries, i.e. a country must give the same consideration to all contracting parties • limits the use of import quotas • grants special trade privileges to developing nations
Other Considerations: • General Agreement on Tariffs and Trade (GATT): • International law did not recognize GATT as an organization since it was a negotiation forum among agreeing parties • Headquartered in Geneva, Switzerland with a “secretariat” office at the UN in New York • Items considered by a “council of Representatives” elected by GATT members and a meeting (generally called a Round of GATT) held once a year. • GATT was the primary guiding document dealing with trade/tariffs until the creation of the World Trade Organization (WTO) in 1994, and the GATS and TRIPS. GATT rolled into WTO.
Development of the world trading system
Used ‘Rounds of talks’ to gradually reduce trade barriers Uruguay Round GATT 1986-93
tariff reductions negotiated Dispute resolution only if complaints were received
World Trade Organization Location: Geneva, Switzerland Established: 1 January 1995 Created by: Uruguay Round negotiations (1986-94) Membership: 146 countries (as of 4 April 2003) Budget: 154 million Swiss francs for 2003 Secretariat staff: 550 Head: Supachai Panitchpakdi (director-general) (2003)
Functions: • Administering WTO trade agreements • Forum for trade negotiations • Handling trade disputes • Monitoring national trade policies • Technical assistance and training for developing countries • Cooperation with other international organizations
The World Trade Organization
The WTO was created during the Uruguay Round of GATT to police and enforce GATT rules Most comprehensive trade agreement in history Formation of WTO had an impact on Agriculture subsidies (stumbling block: US/EU) Applied GATT rules to services and intellectual property (TRIPS) Strengthened GATT monitoring and enforcement
145 members in 2003 Represents 90% of world trade 9 of 10 disputes satisfactorily settled Tariff reduction from 40% to 5% Trade volume of manufactured goods has increased 20 times
Policing organization for:
GATT Services Intellectual
Responsibility for trade arbitration:
adopted unless specifically rejected After appeal, failure to comply can result in compensation to injured country or trade sanctions
WTO at work
280 disputes brought to WTO between 1995 and 2003 196 handled by GATT during its 50 year history US is biggest WTO user
wins - beef - bananas Big loss - Kodak
The WTO -achievements
countries (90%) of world telecommunications revenues Pledged to open their market to fair competition
Financial Services (1997)
of financial services market 102 countries will open, their markets to varying degrees
WTO in Seattle
Millennium round was aimed at further reduction of trade barriers in agriculture and services WTO meeting disrupted by
rights groups Trade unions Environmentalists Anti globalization groups
UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT
Was established in 1964 as permanent inter Govt. body.
Dealing with Trade, Investment and Development issue. Maximizing the Trade, Investment and Development opportunities in Developing nations. To assist developing nations. Conducting a conferences related on international market, multinational Co-operation, remove the disparity between developing and developed nations. UNCTED provide the forum.
Formulate policies relating to aspect of development. Meeting or conference meets once in four year. 1st meeting was held in 1964 at Geneva. UNCTED make GSP (Generalized system of preference)
INTERNATIONAL MONETORY FUND
The International Monetary Fund (IMF) is an international organization that oversees the global financial system
Washington, D.C., USA Dominique Strauss-Kahn Special Drawing Rights 3.49% for SDRs http://www.imf.org/
Managing Director Central Bank of Currency Base borrowing rate Website
The International Monetary Fund was created in July 1944, originally with 45 members
The IMF was formally organised on December 27, 1945, when the first 29 countries signed its Articles of Agreement.
The IMF describes itself as "an organization of 186 countries
To promote international monetary co-operation. Foster global monetary cooperation secure financial stability promote high employment and sustainable economic growth, an reduce poverty
Short term credit institutions. Acts as a mediator and referee. Dispensation of justice Technical Assistance Publication
ORGANIZATION AND MANAGEMENT
Every member country is required to subscribed to the capital of the fund at fixed quota. Contribution collected in the form of gold as well as
Most are represented by other member states on a 24member Executive Board but all member countries belong to the IMF's Board of Governors
Data dissemination systems
For those member countries having or seeking access to international capital markets. General Data Dissemination System (GDDS) Special Data Dissemination Standard (SDDS).
Members' quotas and voting power, and Board of Governors
IMF member country
Quota: millions of Quota: SDRs percentage of total
Votes: percentage of total
17.09Timothy F. Geithner Ben Bernanke
5.99Axel A. Weber
10738.5 France 10738.5 United Kingdom China India 8090.1 4158.2
3.72Zhou Xiaochuan 1.91Pranab Mukherjee
Hu Xiaolian D. Subbarao
(INTERNATIONAL BANK OF RECONSTRUCITON AND DEVELOPMENT)
Formation Type Legal status Purpose/focus Membership President Main organ Parent organization Website 27 December 1945 International organization Treaty Crediting 186 countries Robert B. Zoellick Board of Directors World Bank Group http://www.worldbank.org/
The World Bank headquarters in Washington, D.C.
The World Bank is an international financial institution that provides leveraged loans to poorer countries for capital programs with a goal of reducing poverty. Memberships:- 2% gold and rest in dollars
Build capacity Infrastructure creation: Development of Financial Systems: Combating corruption: Research, Consultancy and Training:
• • •
To conduct the survey mission in members country. To established economic development institute. To provide a co-finance. To established machinery to settlement of disputes. World focus on urban development and population planning and tourism of members country. Clean Technology Fund management
WORLD BANK OFFER:
LOAN GRANT TECHINICAL ASSISTANT
Areas of operation
Agriculture and Rural Development Conflict and Development Development Operations and Activities Economic Policy Education Energy Environment Financial Sector Gender Governance Health, Nutrition and Population Industry Information and Communication Technologies Information, Computing and Telecommunications International Economics and Trade Labor and Social Protections Law and Justice Macroeconomic and Economic Growth Mining
Poverty Reduction Poverty Private Sector Public Sector Governance Rural Development Social Development Social Protection Trade Transport Urban Development Water Resources Water Supply and Sanitation
FREE TRADE ZONE
Free Trade Zone, popularly known as FTZ, is an area where goods may be traded without any barriers imposed by customs authorities like quotas and tariffs. Free Trade Zone, popularly known as FTZ, is an area where goods may be traded without any barriers imposed by customs authorities like quotas and tariffs
The Free Trade Zone can be defined as a labor-intensive manufacturing hub, which involves the import of components and raw materials, and the produced goods are exported to different countries.
FACTS ABOUT THE FTZ
There were around 3000 free trade zones across 116 countries in the year 1999. where nearly 43 million people were working. These FTZs produce various goods such as shoes, clothes, sneakers, toys, convenient foods items, electronic goods, etc.
UAE Free Trade Zone
Dalian Free Trade Zone
Orlando Free Trade Zone Tianjin Port Free Trade Zone
HISTORY OF FTZ
Free Trade Zones in the world are found in South America in 1920.
During the 60s and the 70s there was a rapid surge in the development of FTZs across the world.
FREE TRADE ZONE DEVELOPMENT PLACE
Geographically advantageous for trade.
Places near international airports, sea-port, Railway network.
Most FTZ developed in developing nations.
LOW TRADE BARRIERS . TAX CONCESSION. LOW COST OF PRODUCTION. LOW BUREAUCRACY .
Development of export oriented units. Foreign exchange earnings. Generation of employment.
FTZ IN INDIA
Free Trade Zones ( Under Ministry of Commerce ) Special Economic Zones Director General of Foreign Trade Central Board of Excise & Customs Falta Export Processing Zone Madras Export Processing Zone NOIDA Export Processing Zone Navi Mumbai Special Economic Zone Kandla Free Trade Zone Santa Cruz Electronics Export Processing Zone Visakhapatnam Export Processing Zone Cochin Export Processing Zone AP Special Economic Zone Surat Special Economic Zone
Group formed by countries within a geographical area to promote duty free trade and free movement of labor and capital among its members. European community (as a legal entity within the framework of European Union) is the best known example. Common markets impose common external tariff (CET) on imports from non-member countries.
Bilateral trade agreement (BTA)
A Bilateral trade agreement (BTA) is a trade agreement between any two countries, usually in order to reduce tariffs and quotas on items traded between themselves. A BTA may be either preferential, wherein benefits and obligations apply only to the two signatories, or most-favored, which applies terms that are already given to other nations under similar agreements.
Bilateral trade agreement (BTA)
India has bilateral agreements with the following countries and blocs:
Lanka Thailand (separate from FTA agreement with ASEAN) Malaysia (separate from FTA agreement with ASEAN)
Commodity agreements are international agreements designed to stabilize commodity prices in the interest of producers and consumers. They can include mechanisms to influence market prices by adjusting export quotas and production when market prices reach certain trigger price levels. They sometimes employ buffer stocks which release stocks of commodities onto the market when prices rise to a certain level and build them up when they fall.
Non-tariff barriers to trade (NTB's) are trade barriers that restrict imports but are not in the usual form of a tariff.