Business Strategy: Going

Global
International Marketing

• International Marketing: is the exchange of goods and services

between nations. Making Marketing presence beyond the boarders of
country of origin

• Global Firm – Operates in more than one country, gains marketing,

production, R&D , sees world as the market . Example Coca Cola,
Microsoft
Why Go Global (International)
• Specific expertise that offer comparative advantage
• Local market saturation, competition
• Need for expansion and opportunity for greater profits
• Push from value chain
• Reap benefits of Globalization
• Economies of scale: By operating on a larger scale, a business is likely to
benefit from cost savings known to reduce their prices, there by giving them
a price advantage
• Increase brand recognition
• Spread risks: By operating in various countries
 Advantages in international trade:
Absolute
Absolute advantage occurs when a country has natural resources or talents, an uncontested
superiority that allow it to produce an item at the lowest cost possible. China has an absolute
advantage in the production of silk.
Comparative
Comparative advantage introduces opportunity cost as a factor for analysis in choosing between
different options for production diversification. It describes the economic reality of the work gains
which arise from differences in their factor endowments or technological progress.

• Consumers benefit because competition encourages the production of high-quality goods with
lower prices.
• Producers gain higher profit by expanding their operations into international markets.
• Workers benefit because international trade leads to higher employment rates.
• Nations benefit because foreign investment in a country often improves, employment
opportunity the standard of living for that country’s people.
• Improvement in Balance of Trade, Foreign Reserves etc
 Balance of Trade
• The difference in value between the exports and imports of a nation is called its
balance of trade.
• A positive balance happens when a nation exports more than it imports. A
negative balance, also called a trade deficit, results when a nation imports more
than it exports.
• A negative balance of trade reduces a nation’s revenue. When more money
leaves a country than comes in, the country is in debt or is a debtor nation.
• Unemployment, Inflation, Fluctuation in currency brings negative result of a
large trade deficit.
• State / Governments intervention in policies regulating international trade
 Trade Barriers
• Free Trade
• Commercial exchanges between nations conducted on free market principles;
without tariffs, import quotas, or other restrictive regulations.
• Controls and restrictions to regulate the flow of goods and services.

• Tariffs - Tax on imports, a duty imposed to discourage import particular good,

also a revenue to state

• Quotas -Limit on either the quantity or monetary value of a product that may
be imported. Encouraged local production

• Embargoes - an official ban on trade or other commercial activity with a

particular country ( Eg. Current embargoes against Iran and North Korea )
Trade Agreements

Understanding arrived to encourage free trade among particular countries.

World Trade Organization (WTO)
• A global coalition formed in 1995 with participation of 140 governments that
makes rules governing international trade, encourage free movement of trade

• Open markets and promote global free trade

• Reduce tariffs
• Standardize trade rules
• Study important trade issues
• Evaluate the health of the world economy
 Trade Agreements
continued;
• North American Free Trade Agreement (NAFTA)
• An international trade agreement among the United States, Canada, and Mexico.
• European Union (EU)
• Trading bloc among 27 European countries
• Establish free trade among its member nations
• Create a single European currency and central bank
• Maintain competitive practices, Maintain environmental and safety standards
• Provide security
• Association of South East Asian Nations (ASEAN)
Members Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore,
Thailand and Viet Nam
• South Asian Free Trade Area (SAFTA)
Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka
Global Economic Environment
Factors attract country to be considered for international market entry a)
Industrial Structure b) Economic Distribution
• Industrial Structure
a) Subsistence Economies- Engaged in simple agriculture, consume what they
produce, does not offer market opportunities ( Papua New Guinea )
b) Raw Material Exporting Economies – Rich in natural resources poor in
industrialization ( African countries with vast natural resources)
C) Industrializing Economies – Manufacturing accounts reasonable amount of
economy but progressive. Create new reach class , growing middle class (India ,
Brazil)
d) Industrial Economies – Exporters of manufactured goods, services. High
income expands market opportunities (Germany, Australia)
Issues

• Understanding on unknown territories, consumer behaviour

( Ex Europe , Africa , Arab against Asian practices)
• Cultural issues across countries/ territories: language, ethics, customs
• Legal issues: copyright and patent: legislation must be adhered to.
This will cover issues such as brand names slogans, trademarks ,
inventions, pricing decisions. must take account of any regulation on
market power. In the UK any form with at least 25% market share is
classified as a monopoly
• Consumer protection law
• Political issues ( China vs US)
Social and Demographic Understandings
• Social and demographic issues: different socio-economic and
demographic conditions in overseas markets mean that marketers
must consider their marketing mix
• Pressure groups: activist groups
• Economic issues: An economic argument for more and free
international trade is that it enables people to have a greater choice
of products at more competitive price.
• Centrally plan economies that have extreme protection to local
products
Indicators for Market Potential
• Demographic Characteristics - Education, Population size and growth, Age

• Social Cultural Factors –Consumer life style, beliefs, cultural norms, language

• Geographic Characteristics - Climate , Country size, Population density

• Political Legal Structure – National Priorities, Political Stability, Policy

towards global trade, Monetary and trade regulations , Bureaucracy

• Economic Factors – GDP size & Growth, Income Distribution , Industrial

International Market Entry
• Exporting
• Licensing
• Franchising
• Joint Venture / Joint Ownership
• Wholly owned subsidiary
• Piggybacking
 International Market Entry Methods 1
• Exporting - Direct sale of goods and / or services in another country. enter into the global marketplace
with minimal risk and control might Direct Exports handle own exports, Indirect exports through an
intermediary

• Joint Venturing – Entering in to an agreement with foreign company to produce or market your
products . Sharing the expertise, joint investments ( Bajaj )

• Licensing / Franchising - allows another company in your target country to use your property, brand,
trading / production practices for a fee ( Pizza hut, McDonnell)

• Joint Ownership – Form an dedicated operation entity in foreign country with shared investment and
responsibilities ( Toyota Lanka, Noritake)

• Direct Investment – Set up an own business entity in foreign country ( Nestle, UniLivers)
Trade Marks and Patents
• Trade Marks - A word, phrase, design, or a combination that identifies your
goods or services, distinguishes them from the goods or services of others,
and indicates the source of your goods or services. Coca-Cola® for soft drinks

• Patent - Technical inventions, such as chemical compositions like

pharmaceutical drugs, mechanical processes like complex machinery, or
machine designs that are new, unique, and usable in some type of industry.
(Word Software, SAP, Hybrid Engine)

• Copyright - Artistic, literary, or intellectually created works, such as novels,

music, movies, software code, photographs, and paintings that are original
and exist in a tangible medium, such as paper, canvas, film, or digital format.
Designing International Channels taken into account
entire global supply chain
Thanks !