Bases for

International
Marketing
Session learning objectives
• The economic benefits of trade
• The reasons why individual companies import and export
• Development of exporting in the firm
• Growing impact of social responsibility concerns on business
Potential benefits from export
marketing
• General premise of export market is that it benefits all and
harms none (Other than the competition)
• The benefit of international trade is determined by its impact
on consumption and production
• Consumption being the more significant area, as that is the end
for all trade activity while production is only a means to the end
• Active trade also create employment that gives consumers the
money to buy goods
Effects of imports

• Real benefit of trade lie in importing rather than exporting:

• James Mill – “The benefit which is derived from exchanging one
commodity for another, arises, in all cases, from the commodity
received, not the commodity given”
Effects of imports

• Benefits of importing consumer goods:

•Lower price
•More supply
•Greater variety
•Ability to enjoy latest technology
Effects of imports

• Benefits of importing industrial goods:

•These benefits are the same as consumer goods but are more
indirect
•Better/efficient sourcing of raw materials and equipment
•Acquisition of latest technology in the form of:
• Importing technology
• Licensing
• Foreign direct investment
Effects of imports

• Challenges from importing

•Foreign exchange outflow
•Competition to local industries
•Impacts of import to the government will vary country by country
Effects of exports

• Earns foreign exchange and gives an ability to import

• Higher volumes and economies of scale result in consumer
benefit at home
• Balancing the effect of any internal economic downturn
• Devaluation of currency does not guarantee higher exports as
labor cost and cost of indigenous raw material go down but
cost of imported contents go up
• A challenge of export is to ensure supply of goods to local
consumers while industries find higher potential abroad
Effects on productivity and efficiency
• Improvements in production techniques in existing industries
• Creation of new industries to fill the market gaps
• Displacement of some old industries
• Technology transfer
• Employment opportunities for citizens
International trade theories

• Answering what determines the nature and amount of

goods and services that a country trade?
International trade theories

• Classical theory of international trade – ‘What a country

exports and imports is not determined by its own
character in isolation but in relation to its trading
partners’
• Concept of economic advantage
• Look at 2 country, 2 product model
• Produce what you can produce best
• Producing things with inefficiency have opportunity costs in
addition to loss of productivity
• Isolate supply price from, marketing, logistics and individual firm
profits
International trade theories

• Classical theory of international trade

• Absolute advantage
• Natural advantage
• Acquired advantage
• Comparative advantage
• Equal advantage
International trade theories

• The factor proportion theory – Offer reasons for

discrepancies in comparative costs
• Tastes and demands of trading partners are similar
• A nation will export that product for which a large amount of the
relatively abundant input is used, and it will import that product
in the production of which scarce and expensive input is used
International trade theories

• The product life-cycle theory

• Innovator of a product can later become an importer
• First stage innovation and marketing
• Second stage increased export
• Third stage foreign production
• Import as the foreign market and foreign production units
become more significant
Concerns over free trade

• Are reduced barriers to trade really beneficial to all

countries?
• Are they needed to protect particular industries or
groups of people?
• Are open markets really politically feasible?
Export behavior theories and motives

• Explain why and how an individual firm is engaged in

export activities and, how the dynamic nature of these
activities be conceptualized
• Basic goal for exporting is derived from long-term
objectives and strategies
Export behavior theories and motives

• Specific reasons for export

Development of export in the firm:
internationalization stages
Possible bases for ethical decision
making related to international
marketing
• Principle of utilitarianism; correction of an action is
determined by the correctness of its result
• Principle of rights; individual or group rights should not
be overridden simply because overall benefit to society
occurs
• Principle of justice; Both distributive and compensatory
justice
• Additional approaches; Principle of Caring, Virtue Ethics
Applying ethics in international
marketing

• The product
• In activities
• Advertising & promotion
• Prices
• Treatment of stakeholders
Effects on the political/legal
environment
• Environmental issues
• Outsourcing of jobs
• Unsafe products
• Discrimination
• Corruption
• Executive compensation
• Personal security
• Problems in education
• Standards of treatment of labor