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Name of Institution

AMITY BUSINESS SCHOOL


Global Business Operations

Dr. Namrata Pancholi

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Stages of Going Global

Domestic Marketing

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Market Focus

Domestic

Orientation

Ethnocentric

Marketing Mix Decisions

Focused on Domestic
Customers

Export Marketing
Market Focus

Market Focus

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Overseas (Targeting and Entering


Foreign Markets)

Orientation

Ethnocentric

Marketing Mix Decisions

Focused on Domestic Customers


Overseas Marketing-Generally
extension of Domestic Marketing
Decisions made at Headquarters

International Marketing

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Market Focus

Caters to specific needs of a


few overseas market

Orientation

Polycentric Orientation

Marketing Mix Decisions

Products manufactured in home


country with separate product
adaptations for different markets
Product Decisions made by
individual subsidiaries
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Multinational Marketing

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Market Focus

Consolidation of operations on
regional basis
Gains from Economies of Scale

Orientation

Regiocentric

Marketing Mix Decisions

Product Standardization within


regions but not beyond them
On regional basis

Market Focus

Domestic

Global

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Market Focus

Consolidating firms operations on


Global Basis

Orientation

Geocentric

Marketing Mix Decisions

Globalization of marketing mix


decisions with local variations
Joint decision making across firms
global operations
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Trade Theories

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- Trade would create migration of jobs overseas and higher


unemployment and lower living standards.
- International Trade Theory has shaped the economic policy
of many nations for last 50 years and are drivers of formation
of WTO, EU, NAFTA etc.
- Free Trade

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Benefits of Trade:
1. Theories of Smith, Ricardo, H.O.
- Common sense--Easy to understand.
-Difficult to understand
Why buy products which a country is able to produce
for itself
(US exports of space craft and import of textiles.)
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Pattern of Trade
-Some aspects of trade are easy to understand
Climate and natural resources endowment explain why
Ghana exports cocoa
Brazil coffee
S.A. ---oil

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Others are difficult to understand

-Japan exports automobile, consumer electronics,


machines.
Switzerland--- Chemicals, Pharma Products, watches
etc.

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Theories of International Trade

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Theory of Mercantilism (Gianni Vaggi)*


-Measures wealth of a nation by the accumulated
treasures.
-Wealth in the form of gold.
-Promoting exports discouraging imports
-East India company to India
(Concise history of economic thought-mercantilism to
monetarism)
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Theory of Absolute Advantage


Adam Smith
Real wealth of a nation is measured by the level of
improvement in the quality of living
Per capita income
It is the ability of a nation to produce goods more
efficiently and cost effectively than others.

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Theory of Comparative Advantage(David


Ricardo)
Inability of a nation to produce a good more
efficiently than others , but ability to produce
that good more efficiently than it does any
other goods.

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Ricardo and Comparative Advantage


A relative concept: countries gain if they specialize
and trade the good that they produce most efficiently,
relative to other goods they produce.
A comparative advantage means that no matter how
good (or bad) you are at producing stuff, there's
always something that you're best (or least worst) at
doing.
All countries have a comparative advantage in
something.
No country can have a comparative advantage in
everything

.
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The Heckscher-Ohlin (H-O) theory


The H-O theorem
A nation will export the commodity whose production
requires the intensive use of the nations relatively
abundant (and therefore, cheap) factor and import the
commodity whose production requires the intensive use
of the nations relatively scarce (and therefore,
expensive) factor.
In other words, relative factor abundance drives
comparative advantage and the pattern of trade

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Theory of International Product Life Cycle


(Raymond Vernon)
Pattern of International Product Life Cycle depends upon
the market size of innovating firm.
Large Size market- mass production and economies of
scale.
Small size- establishment, marketing and production in
other cost effective countries.
(Int. Investment and Int. Trade in PLC, Quarterly journal of
Economics)
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IPLC Concept

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Innovation
Overseas Innovation
Maturity
World-wide imitation
Decline
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Theory of Competitive Advantage


(Competitive Advantage of Nations, Michael Porter)

Porters Diamond Model


-Factor Conditions (Input)
-Demand Conditions
-Related and Supporting Activities.(IT Hub
Bangalore, gems and jewellery (Jaipur), Metal
Handicrafts- Moradabad)
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-Firm Strategy, Structure,Rivalry


2 other factors
-Chance
- Govt.

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Implications for Managers


--Helps a firm to understand and decide where to locate its
various production activities
----- Firms involved in international trade can and do exert
influence on the govt. policy and vice versa.
By lobbying govt., business firms can promote free trade or trade
restrictions.

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