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University of Central Punjab, Lahore


 



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TOPICAL OUTLINE
ï INTRODUCTION TO GLOBAL MARKETING
ï PLANNING IN GLOBAL MARKETING AND ITS SIGNIFICANCE
ï STUDY OF GLOBAL ECONOMIC ENVIRONMENT
ï STUDY OF GLOBAL SOCIAL AND CULTURAL ENVIRONMENT
ï STUDY OF GLOBAL LEGAL AND REGULATORY
ENVIRONMENT
ï STUDY OF GLOBAL FOREIGN EXCHANGE ENVIRONMENT
ï SOURCING DECISIONS AND VALUE CHAIN
ï GLOBAL PRODUCT DECISIONS
ï GLOBAL PRICING DECISIONS
ï EXPORTING AND IMPORTING
ï FUTURE OF GLOBAL ENVIRONMENT
ï GRADE DISTRIBUTOIN
ï ASSIGNMENTS 20% (TWO ASSINGS)
ï QUIZ 10% (TWO QUIZ )
ï MIDTERM 30%
ï END TERM 40

ï TOTAL 100 %

ï CLASS PROCTOR
ï Will assist the Professor

ï RECOMMENDED BOOK

ï GLOBAL MARKETING MANAGEMENT BY


WARREN J. KEEGAN of Pace University
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ï Domestic Marketing
When marketing was done within a
city of province or even on national
scale. It depend on the product and
its transportation
ï ExportMarketing
When the product moved to places
beyond the political frontiers due to
surplus or price advantage
ï MULTINATIONAL MARKETING
When the exports started to many
countries, but the focus remained on
Product and Profits
ï GLOBAL MARKETING
When the focus shifted from Product
to environment and product was
amended to suit the environment
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ELEMENTS PCT OF STANDARDIZED

ï PRODUCT CHARACTER 29%


ï PACKAGING 9%
ï BRAND NAME 51%
ï RETAIL PRICING 20%
ï ADVERTISING MESSAGE 20%
ï SALES PROMOTION 33%
ï ROLE OF SALES FORCE 15%
ï MGT OF SALES FORCE 17%
ï TYPE OF RETAIL OUTLET 52%

THE BALANCE OF THE PERCENTAGE IS DECENTRALISED WITH A


SMALL ELEMENT OF INTERACTIVE PLANNING
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ï Assignment ƊNO 1
Write a note on Global Village. What
is this concept? The write up should
be of minimum two computer pages
of font 12 size
ï STUDY OF ECONOMIC ENVIRONMENT
ï make a detailed study of Global Segments,
Economic Blocks and make their needs well
known
ï carry out extensive survey on people and other
environmental factors
ï identify products and your capability of
production
ï make bi-
bi-lateral trade agreements
ï develop infrastructure to boost trade and its
development
ï improve means of transport and communication
ï Assignment
ï Suppose your is a well developed
country. What kinds of bilateral trade
agreements can you make with
countries like
ï PAKISTAN, INDIA, BANGLADESH,
SRILANKA AND JAPAN
ANALYTICAL APPROACH TO
CULTURE FACTOR
Two footwear Salesmen went to a remote
island in Pacific. The islands total
population was some 500 people. they
were not wearing any footwear. One
salesman reported:
Ə we cant sell a piece, people are not used to
wearing footwearƐ. The other salesman
reported, Əwe have a potential to sell 1000
pairs at least, if we make them aware of
footwearƐ
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ï We should understand the wisdom that we
do not understand people even within
ourselves, not even ourselves. There is no
element of misunderstanding; there ought
to be understanding only
ï Our perpetual system is extremely limited
ï If we want to make ourselves effective,
then we should not make foreign culture
as a joke or a matter of bizarre. We must
learn to draw our business advantage out
of this.
LEGAL & REGULATORY
ENVIRONMENT
ï Though globally we are one and call
ourselves a global village, yet there
are laws and rules which differ. We
are all Sovereign States. There are
several kinds of laws:
ï INTERNATIONAL LAWS
ï NATIONAL LAWS
ï LEGAL FRAMEWORK
ï LOCAL AND REGULATORY LAWS
ï TAX LAWS
ï POLICIES AND RUGULATIONS
INTERNATIONAL LAWS
ï THESE ARE THESE LAWS AND BINDING
FORCES, IN WHICH ALL NATIONS ARE
BOUND TOGETHER. SUCH ARE
ENVIRONMENTAL LAWS, SHIPPING LAWS,
HUMAN RIGHTS LAWS, TRADE AND
COMMERCIAL PRACTICES. THESE LAWS
ARE IN THE SHAPE OF ENACTMENTS,
CONVENTIONS, COVENANTS,
AGREEMENTS ETC AND RATIFIED BY
U.N.O
NATIONAL LAWS
ï THESE LAWS ARE ENACTED BY THE
GOVERNMENTS OF THESE COUNTRIES. THEY ARE
MADE UNDER THE UMBRELLA OF SOVERIGNITY
THEY ENJOY AS INDEPENDENT COUNTRIES.
PRIOR TO 1990, THESE LAWS COULD BE
DIFFERENT IN MANY RESPECTS. BUT AFTER THE
BREAKUP OF SOCIET UNION AND DOWN FALL OF
COMMUNISM, THEY CANNOT FRAME LAWS
SO-CALLED
REPUGNENT TO WORLD ORDER. THE SO-
IRON CURTAIN WAS BROKEN IN CHINA AND
SOVIET UNION.
LAWS ARE BROADLY OF TWO KINDS:
ï BRITISH ORIENTED
ï AMERCIAN ORIENTED
ï THESE TWO NATURES OF LAWS DIFFER IN
WORDS AND APPROACH. BUT THE SPIRIT OF
THESE LAWS ARE THE SAME. MERCANTILE LAWS
ARE ALL OVER MORE OR LESS THE SAME
ï CONTRACT ACT, SALES OF GOODS ACT,
NEGOTIABLE INSTRUMENTS ACT, COMPANYS
LAW, PARTNERSHIP ACT, LAWS RELATED TO
AGENY, BROKERAGE, PAYMENTS, LOANS,
BANKING AND BANK PRACTICES,
TRANSACTIONAL LAWS ETC. THEY ARE ALL
BINDING ON LOCALS AND FOREIGNERS ALIKE.
THEN THERE ARE ARBITRATION
LAWS AND CONFLICT RESOLUTION,
LABOUR LAWS UNDER GENEVA
CONVENTIONS AND ILO OF UN
REGULATIONS
THEN THERE ARE POLICIES
ï FINANCE POLICIES
ï TRADE POLICIES
ï COMMERCIAL POLICIES AND LAWS
ï AGRICUTLTURAL POLICIES AND LAWS
ï INDUSTIRIAL POLICIES
ï VALIDATION POLICIES
ï FOREIGN INVESTMENT POLICIES
THEN THERE ARE TAX LAWS
ï CORPORATE TAX REGULATIONS
ï REPATRIATION OF INVESTMENTS
AND PROFITS
ï INDIVIDUAL TAXES
ï LOCAL TAXES
ï WHEN BUILDING GLOBAL BUSINESS,
WE HAVE TO ABIDE BY THESE
NATIONAL AND INTERNATIONAL
LAWS
ï WE CALL THEM REGULATORY
FRAMEWORK
ï WE MUST LEARN TO ACCEPT THEM
AS THEY ARE AND CANNOT IMPOSE
OUR LAWS
A GOOD PART OF THE WORLD IS
REGULATED BY SHARIAH AND
ISLAMIC LAWS
LAWSƋƋHENCE THESE LAWS
ARE TO BE STRICTLY ADHERED TO
REGARDLESS OF ONES BELEIF AND
DOCTRINE
ï ACCORDING TO INTERNATIONAL
JURISPRUDENCE, EVERY BODY IS
UNDER THE LAW OF THE LAND AND
NOT HIS OR HER LAWS AND BELIEFS
OR CONSENT. INTERNATIONAL
LAWS ARE APPLICABLE TO ALL
NATIONS WITH OR WITHOUT
CONSENT
CONSENT---
---IT
IT IS A PART OF UNO
CHARTER.
SOME OF THE INTERNATIONAL
BUSINESS ISSUES
ï PATENT LAW
ï BRIBERY AND COMMERCIAL
CORRUPTION AND CORRUPY
PRACTICES
ï LIBELLING LAWS
ï FOREIGN EXCHAGE PRACTICES
ï MONEY LAUNDERING
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FINANCIAL ENVIRONMENT
Finance is like a lubricant in a machine.
Without these liquid we cannot transact
trade. We are far from barter system
Finance involves:
ï understanding means of exchange
ï certain financial decision
ï creating parity on exchange
ï certain repercussions and complications
involved in rate of exchange fluctuation
ï Each country has its own currency, with a
lot different back ground and policies. The
transaction cannot be made or even parity
cannot be attained unless both the
currencies are translated into gold or
another stable currency. GOLD it cannot be
as there is no assurance of gold; hence
foreign currency. In globe we have dollar
basket which is a common denominator.
ï On the basis of this common denominator,
we financial agreements because US
Dollar itself fluctuates. And there is what
we call International currency market
There are spot rates---
rates---means
means immediate
rate of exchange and there are forward
transactions, which means exchange in
terms of dollar is fixed in advance. This
currency market is governed by the rule of
supply and demand. This establishes
Purchasing Power Parity (PPP).
of England works as a centre of
ï Bank
WORLD financial market
IMPLICATIONS ON BUSINESS
DUE TO EXCHANGE RATE
FLUCTUATIONS
ï EXCHANGE RATE FLUCTUATIONS
ï Makes import and export rate
cheaper or expensive
ï EXCHANGE RATE EXPOSURE
ï The company profit or loss depends
upon not only in terms of local
currency but also its ability to stand
in the world markets. That is in terms
of US Dollars
ï We must learn to adjust our costs and
profits and there fore prices according to
exchange rates. We determine our prices
according to:
ï FOREIGN STOCK INVESTMENTS
ï REPATRIATION OF FOREIGN EXCHANGE
BY EXPATS
ï IMPORT BILL
ï EXPORT EARNINGS
ï COSTS OF INFRASTRUCTURAL PROJECTS
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ï Market segmentation is one of the


most difficult task in global
marketing. It dates back to ancient
traders as well. Depending on the
nature of your product, segmentation
is done today on variety of ways and
methods
ï DEMOGRAPHIC METHOD
ï Means segmentation is done on age, gender,
income level, buying power, ecuation and
occupation

ï PSYCHOGRAPHIC
ï Segmentation si done on the basis of attitude,
lifestyles and values

ï BEHAVIORIAL
ï On the basis of how people use or consume
product and how do they react to it?
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GLOBAL TARGETING
ï It
means focusing your attention to
specific markets and concentration
once it has been done. It means to
identifying and evaluating consumers
on a predetermined basis. There are
three methods:
1 CONSUMER TARGETING
ï This targeting is done on the size and potential growth in
the market market

2 POTENTIAL COMPETITION
ï How vulnerable is this market to competitors products

3 COMPATBILITY AND FEASIBILITY


ï This is how much political and cultural alliance is with the
market? Many countries may have different cultures, but
they have acceptance and response to certain kind of goods
and also their sources. For example, we have softness of
goods from UK in Pakistan
ï GATT
General Agreement of Trade and Tariff
ï FREE TRADE AREAS
AREAS----
----Nafta,
Nafta, Lafta, ECM
ï ASEAN CONTRIES
Association of South East Asian Nations
ï CARICOM
Carribean Consumer and Common Market
ï ADVANTAGES OF SEGMENTATION &
TARGETING
ï Available Statistics
ï Cultural compatibility of Information
ï Open Dialogue and Relationship
ï Regional Proximity
ï Travel Ease. Social and Cultural
Relations
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GLOBAL MARKET ENTRY AND
EXPANSION
We begin with marketing now. We
discussed market segmentation and
having done that, we must plan
which market we must tner and
target and make cound planning vis-
vis-
à-vis entry and expansion
ï We must establish objectives. Volume
share that we aim at,and of course
profitability
ï By Entry we mean, the method we must
enter the country. There are several
methods and depending on the nature of
the product, we decide which which
method we employ/
ï How should we execute market plan? The
simple decision is Direct Marketing or
through Agents or third party?
VARIOUS METHODS OF ENTRY
EXPORTING
ï It is an age old method and perhaps tadictional and old
ï Exporting is to sell directly to the local parties of that
country or to consumers who use the product. We export
cotton and cotton yarn to textile manufacturing countries.
Exporting is very simple and low-
low-caost initiative. It does not
invlolve manufacturing overhead abroad. One of the
advantages oif exporting is that it is simple affair to handle.
Take care of your importers and their deals and
commitment. But exporting has limited expansion scope.
We can always increase our exports by finding new
markets, but we can hardly do anything ins the same
market
LICENSING
ï Licensing is one step ahead of exporting. We
authorize foreign agents to manufacture under a
licence agreement under an agreed technological
input and brand image. Licensing is a very neat
and clean way of global marketing. However, it
presupposes good relations and trust on one
another. Its only overhead is policing the
conditions of licencing agreement. We have
numerous complaints of abuse of conditions and
even dissolution of agreements.
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ï Forthe franchisor, the franchise is an
alternative to building 'chain stores'
to distribute goods and avoid
investment and liability over a chain.
The franchisor's success is the
success of the franchisees. The
franchisee is said to have a greater
incentive than a direct employee
because he or she has a direct stake
in the business.
ï Businesses for which franchising
works best have the following
characteristics:
ï Businesses with a good track record
of profitability.
ï Businesses which are easily
duplicated.
ï franchise usually lasts for a fixed time
period (broken down into shorter periods,
which each require renewal),
renewal), and serves a
specific "territory" or area surrounding its
location. One franchisee may manage
several such locations. Agreements
typically last from five to thirty years, with
premature cancellations or terminations of
most contracts bearing serious
consequences for franchisees.
JOINT VENTURES
ï JVs overcome policing and is considered as
advanced method of global marketing. JVs
integrate value chain strengthsƋ
strengthsƋsuch as
manufacturing strength with international
exporting expertise
ï JVs are a direct investment along with
other nations interst in business. It calls
for enhanced technological advantage
Some of the famous JVs are:
ï GM/ TOYOTA
ï Texas Instrument / Kobe Steel
ï AT & T / MISTSHUBISHI
JVs depend upon the product kind
time and situation world wide
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ï FOOD AND BEVERAGES
ï APPAREL, CLOTHING AND PERSONAL CARE items
ï PHARMACUETICALS
ï CONSUMERS PRODUCTS
ï MEDIA AND ENTERTAINMENT
ï INFRA-
INFRA-STRUCTURAL BIG PROJECTS
ï AMUSEMENT PARKS
ï AUTOMOBILE AND RELATED PROJECTS
ï FASHION WEAR
ï COSMETICS AND CLEANSING PRODUCTS
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ï We have to find answers to the following
questions
ï is your country condition comfortable and stable?
ï Are there avenues of diversification?
ï Does your condition allow you to financially
expand and technically feasible?
ï Will expansion strengthen your current position?
ï Will expansion give you more positive or negative
exposure?
ï Are your political relations likely to be good in
long run of time?
ï What is each other geo-geo-political condition?
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