Bases of International

Marketing
CHAPTER 2
 Potential benefits from export
marketing
 The effects of imports
a. Increased supply and variety of goods, and lower
prices, for consumers.
b. Lower domestic production costs through import
of raw materials and capital equipment
c. access to technological advances through imports
d. licensing
e. Foreign direct investment.
 The effect of exports
a. Economics of scale in production processes with
resulting lower costs
b. Diversification of risks.
 Increasing productivity and efficiency
a. Increased productivity through better utilization of
resources.
b. Increased productivity through technology
transfer.
c. Increased productivity through learning of better
ways of organizing and doing business.
 International trade theories
 The classical theory of international trade
a. Absolute advantage
b. Comparative advantage
 The factor proportion theory
a. Resources are distributed unevenly
internationally.
b. export products that use a large amount of the
factors of production of which it has an
abundance
c. import products that use large amounts of factors
of production which are scarce
 The product life cycle theory of international
trade
a. innovation/introduction stage (new product)
b. a growth and expansion stage (maturing product)
c. a mass production stage (standardized product)
 Export behavior theories and
motives
 Basic goals
a. basic objective is to earn profit; required for
survival
b. pursuit of non-profit-oriented goals.
c. foreign operations provide a substantial portion
of total revenue and total profit
 Specific reasons
a. Managerial urge
b. Unique product/technology
c. Risk diversification
d. Foreign market opportunities
e. Change agents: organizations promoting export activities
f. Economies of scale in production, advertising, distribution, or other areas
g. Foreign market advantages
h. Extend sales of seasonal product(s)
i. Excess capacity or resources
j. Unsolicited foreign orders
k. Small domestic market
l. Stagnant or declining home market
m. Resources
n. Multinational, global, world companies
o. Other goals: development of people; ‘offshore’ plants to supply home
markets.
 The development of export in the
firm: internationalization stages
 Requires increasing information, willingness to
commit resources, and risk-taking.
 Degree of internationalization may be expressed
quantitatively (in absolute or relative figures) or
by qualitative measures.
 Stages are: Export operation stage; foreign sales
subsidiary stage; licensing and contracting
alliances; and foreign production subsidiary or
alliance stage.
 Exporting and the network
model
 individual firm is dependent upon resources
controlled by other firms.
 relationships may be strengthened by
international extension, penetration, and
international integration.
 Ethical/Moral issues
 International marketers often must deal with:
(a) different sets of ethics;
(b) different views of what constitutes socially
acceptable behavior; and
(c) different legal requirements.
 Defining ethics
 Ethics is what most people in a society view as
being moral, good, right.
 Possible bases for ethical decision making
 Principle of utilitarianism: correctness
determined by results.
 Principle of rights: overall benefits to society do
not justify overriding rights of some people.
 Principle of justice: fair treatment.
 Applying ethics in international marketing
 Social responsibility and the
business environment
 The stakeholder concept

 Changing views of social responsibility

 Effects on the political/legal environment