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“We don’t merely think as an American Company with extensions overseas, we think in terms of a global enterprise, a company of the world rather than any one country,” (Kaiser’s Global Empire – Forbes Magazine). This is an apt description of International Business as the concept has come to prevail in the current global environment. Introduction: Current interest in International Marketing/business can be explained in terms of competitive structures, coupled with shifts in demand characteristics in markets throughout the world. Companies that never ventured abroad until recently are now seeking foreign markets, to become more competitive, and more profitable.
Primary types of international businesses are: • International Trade (Marketing) • Investment Flows • Other Capital Flows The Marketing Concept: During the past three decades the concept of marketing has changed dramatically. International Business Defined International business consists of transactions that are devised and carried out across national borders to satisfy the objectives of individuals. the requirement is generally the same – a thorough commitment and new ways of operating. International business activity focuses on transactions. companies. and organizations. which take various forms. 2 .For the firm venturing into international business for the first time and for those already experienced.
This concept of marketing relies on three principles of marketing • Customer value and the value equation • Competitive or the differential advantage • Focus or concentration on Attention.It has evolved from a focus on product – to a better product – to the customer. There is a growing recognition that profits are a reward for performance. the basic objective being profit. The Strategic Concept of marketing. defined as satisfying customers in a socially responsible or acceptable way. The strategic management focuses on managing strategic partnerships between vendors and customers in the value chain with the aim of creating value for customers. and has shifted the focus of marketing from the customer or product or customer in the context of a wider external environment. The objective of marketing has now shifted from profit to stakeholder benefits. 3 . achieved through variations in the marketing mix. has brought in a major revolution in the history of marketing thought. which is being practiced since the 1990s.
to create exchanges that satisfy individual and organizational goals.” American Marketing Association 4 . Evolution of Definition of Marketing “Marketing is a human activity directed at satisfaction of needs and wants through an exchange process.” Kotler “Marketing has been described as the art of selling products.” Kotler “Marketing is the process of focusing the resources and objectives of an organization on environment opportunities and needs. Kotler “Marketing is the process of planning and executing the conception.” Warren Keegan “Marketing is a societal process by which individuals and groups obtain what they need and want through creating.A managerial definition. goods and services.” . offering. and freely exchanging products and services of value with others. promotion. and distribution of ideas. pricing.A clear focus on customer needs and wants and on competitive offer is needed to mobilize the effort to maintain a differential advantage.
domestic and International marketing are similar. is concerned. branding etc. But the social aspects of marketing. Like in domestic marketing. but these exchanges take place across national boundaries. comprising the human factors. The International Marketing Environment 5 . comprising the product. are distinct in each marketing environment as these involve consumer behavior patterns depending on customs.International Marketing is “the performance of business activities that direct the flow of goods and services to consumers or users in more than one nation (for profit). international marketing is also directed towards satisfaction of human needs and wants through an exchange process. In so far as technical process. pricing.” Cateora & Graham The Process Marketing can be conceived as an integral of two processes – technical and social. values and attitudes.
Marketing concepts. 6 . and principles are universally applicable and the marketer’s task lies in implementing marketing programs with respect to the environment within which he must operate. class structure. The marketing environment comprises two components – Controllable and Uncontrollable factors. processes. Becoming International Depends on • Mode of entry in a foreign market • Degree of foreign involvement • Degree of commitment. economic climate – which are critical elements in business decisions. the International marketer’s task is more complicated since he must deal with two levels of uncontrollables: • Domestic uncontrollables • Foreign uncontrollables A business operating in a number of foreign countries might find polar extremes in political stability. The International Marketing Task However.
Phases of International Marketing Involvement A business can be placed in one of five distinct. Production capacity is devoted to Exports on a regular basis. No direct foreign Marketing. 3. 7 . but overlapping phases of International marketing: 1. International Marketing. Regular Foreign Marketing. Infrequent Foreign Marketing. in contrast to an International company that views the world as a series of country markets. Characterized by Export marketing. Global Marketing. Temporary surpluses are disposed in foreign markets. 5. Companies treat the whole world as one market. Companies in this phase are fully committed and involved in International marketing activities. 4. 2.
Firms with this approach are Ethnocentric in EPRG schema. and consider the home country as superior to the rest of the world. Level of commitment is explained by the EPRG schema: • Domestic market extension concept: The primary motive is to dispose of excess domestic production.EVOLUTION IN INTERNATIONAL ORIENTATION Significant change in international orientation occurs when the company relies on foreign markets to absorb permanent production surpluses and comes to depend on foreign profits. International Marketing concepts: Three orientations exist. and international operations are secondary. International operations of businesses reflect the changing competitiveness brought about by globalization of markets. thus enabling the company to sell its products everywhere without any adaptation. 8 . Global markets exist for some products but not yet for all products.
or Multinational companies. or a European company developing strategies for the European market (E. company focusing on Canada.U.• Multi-domestic market concept: Firms with this orientation market on a country-bycountry basis. and its market coverage is the world. with separate marketing strategies for each country. a U.S. Mexico & American Market (Nafta arrangement). arrangement). and are classified as Polycentric. • Global marketing concept: A company guided by this philosophy is referred to as a Global company. Geocentric approach focuses attention of the company on the entire world as a potential market and calls for development of integrated market strategies. Such companies are classified as Regiocentric or Geocentric under the EPRG schema. I.e. Regiocentric approach calls for development of an integrated regional strategy. 9 .
A global company develops a strategy to reflect the existing commonalities of market needs among many countries to maximize returns through global standardization of its business activities. companies treat the whole world. including the home market. The concept was first mooted by Prof Theodore Levitt (HBR 1983) on the basis of homogenizing effect of mass communication that reduced the cultural differences among markets. • Knowledge – of cultures. wherever it is cost effective and culturally possible. as your own.GLOBAL MARKETING At the global level. the cultural ways of another. global economic. • Tolerance – toward cultural differences. world market potential. You do not have to accept. social and political trends. history. companies must have • Objectivity – in assessing opportunities. as one market. Global Awareness: To be globally aware. 10 . but you must allow others to be different and equal. evaluating potential and responding to problems.
A globally aware person must continuously monitor markets around the world. • Leverage – which has resulted in Experience transfers Economies of scale Resource utilization Development of global strategy based on standardization 11 . • Regional economic groupings. China and India have already ushered in a new world economic order. as economic and social trends in emerging markets like Eastern Europe. Latin America. • Transnational company – is a global company with a regiocentric or geocentric orientation. Driving Forces: • • • • • • • Technology and innovation Market needs and wants Transportation and communication improvements Product development costs Quality standardization Development of WWW and the Internet. World economic trends – towards deregulation & privatization.
For 12 .
several restraining forces have slowed down the impact of global marketing: • Management Myopia – when corporate managements try to impose their policies and culture. 13 . Concerns have been expressed in areas of worker exploitation. domestic job losses. diminished sovereignty. • Organizational culture – when global companies fail to integrate global vision and perspective with local initiative and inputs. resulting in violent protests on several occasions. • Regional & National controls and barriers – implies protection to local enterprise and interests and emergence of Regional Economic Groups. cultural extinction. recent trends have slowed the process to some extent. Unintended consequences of globalization: Although the drivers of globalization are overwhelming.Globalization of Markets Globalization of Production Restraining Forces Despite the impact of driving forces. and environmental dangers.
An alternate definition emphasizes the ownership – not the operation of the company. production and distribution. companies with a global vision are adopting more diversified orientation than mere standardization of products or markets and may be pursuing a global strategy in some markets and a multi-domestic strategy in other markets.” Charles Hill This definition emphasizes the structural element. Multinational Enterprises The multinational corporation represents the highest level of overseas involvement.Future of Globalization: Economic power and marketing potential having become more evenly distributed among countries than at the outset of globalization. 14 . “A multinational enterprise is any enterprise that has productive activities in two or more countries. and is characterized by a global strategy of investment. A third definition describes a multinational whose top management is composed of nationals of various countries.
15 .A final definition of multinationality is to look at the organizational structure of the company. • International: Ability to exploit the parent company’s knowledge and capabilities through worldwide diffusion of products. particularly Japanese. This should imply commitment of substantial resources in terms of financial.S. Recent Trends Two notable trends in demographics of multinationals are: • Rise in Non-U. technological and human resources. • Multinational: A company’s flexibility to respond to national differences. An absolute measure would be commitment of certain amount of resources to foreign operations. Basis of Distinction Companies may be classified on the basis of strengths they possess at each level. multinationals. • Rise of Mini-multinationals.
********** 16 .• Global: Exploiting cost advantage through centralized operations. which leverages worldwide knowledge and experience. • Transnational: A company combines strengths of each of the preceding stages in an integrated network.
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