Global Marketing 8th Edition

value chain
.Decisions at every stage, from idea conception to support after the sale, should be
assessed in terms of their ability to create value for customers
value equation
Value Benefits/Price
competitive advantage
When a company succeeds in creating more value for customers than its competitors, that
global industry
competitive advantage can
be achieved by integrating and leveraging operations on a worldwide scale
the concentration of attention on a core
business or competence
ethnocentric orientation
A person who assumes that his or her home country is superior to the rest of the world (standardized or extension approach)
polycentric orientation
management’s belief or assumption that each country in which a company does business
is unique. This assumption lays the groundwork for each subsidiary to develop its own unique
business and marketing strategies in order to succeed; the term multinational company is often
used to describe such a structure ( localized or adaptation approach)
regiocentric orientation,
region becomes the relevant geographic unit; management’s
goal is to develop an integrated regional strategy
geocentric orientation
views the entire world as a potential market and strives
to develop integrated global strategies. A company whose management has adopted a geocentric
orientation is sometimes known as a global or transnational company
means some type of advantage that a company enjoys by virtue of the fact
that it has experience in more than one country. Leverage allows a company to conserve
resources when pursuing opportunities in new geographical markets.
nontariff barriers (NTBs)
nonmonetary restrictions on cross-border trade, such as the proposed “Buy American”
provision in Washington’s economic stimulus package, food safety rules, and other bureaucratic
obstacles. NTBs have the potential to make it difficult for companies to gain access to some
individual country and regional markets.
an organizational function and a set of processes for creating, communicating, and
delivering value to customers and for managing customer relationships in ways that benefit the
organization and its stakeholders
global marketing
focuses its
resources on global market opportunities and threats.
marketing mix
the four Ps
domestic product (GDP)
a measure of a nation’s economic activity, is calculated by adding
consumer spending
Market capitalism
an economic system in which individuals and firms allocate resources and
production resources are privately owned. Simply put, consumers decide what goods they desire
and firms determine what and how much to produce; the role of the state in market capitalism is to
promote competition among firms and to ensure consumer protection
Private ownership; free enterprise economy; capitalism;
minimal social safety net; highly flexible employment
policies. (United States,
Canada, Great Britain)
Social market
economy model
Private ownership; “social partners” orientation that
includes employer groups, unions, and banks; unions and
corporations are involved in government, and vice versa;
inflexible employment policies (Germany, France,
Mix of state ownership and private ownership; high taxes;
some market regulation; generous social safety net (Sweden, Norway)
centrally planned socialism.
the state has broad powers to serve the public interest as it sees
fit. State planners make “top-down” decisions about what goods and services are produced and
in what quantities; consumers can spend their money on what is available. Government ownership
of entire industries as well as individual enterprises is characteristic of centrally planned
centrally planned capitalism
An economic system in which command resource
allocation is utilized extensively in an overall environment of private resource ownership
market socialism
market allocation policies are permitted within an overall environment of
state ownership.
Low-income countries
s have a GNI per capita of less than $996. About 13 percent of the world’s population is included in this economic category
Low-income countries Cont.
1. Limited industrialization and a high percentage of the population engaged in agriculture
and subsistence farming
2. High birth rates, short life expectancy
3. Low literacy rates
4. Heavy reliance on foreign aid
5. Political instability and unrest
6. Concentration in Africa south of the Sahara
Lower-middle-income countries
with a GNI per capita between $996 and $3,945. Consumer markets in these countries are
expanding rapidly. Countries such as China, Indonesia, and Thailand represent an increasing
competitive threat as they mobilize their relatively cheap—and often highly motivated—labor
forces to serve target markets in the rest of the world.
Upper-middle-income countries
known as industrializing or developing countries, are
those with GNI per capita ranging from $3,946 to $12,195. In these countries, the percentage of
the population engaged in agriculture drops sharply as people move to the industrial sector and the
degree of urbanization increases. Chile, Hungary, Malaysia, Mexico, Venezuela, and many other
countries in this stage are rapidly industrializing
newly industrializing economies
Lower-middle- and upper-income countries that achieve the highest sustained rates of economic
growth. characterized by greater industrial output than developing economies; heavy manufactures and refined
products make up an increasing proportion of exports.
High-income countries
known as advanced, developed, industrialized, or postindustrial
countries, are those with a GNI per capita of $12,196 or higher. With the exception of a few oilrich
nations, the countries in this category reached their present income level through a process
of sustained economic growth.
Group of Twenty (G-20)
Established in 1999; it is comprised
of finance ministers and central bank governors from 19 countries plus the Europ
Organization for Economic
Cooperation and Development (OECD
The 30 nations that belong to the
OECD believe in market-allocation economic systems and pluralistic democracy. The organization
has been variously described as an “economic think tank” and a “rich-man’s club”
represented the dominant economic centers of the world. Today,
nearly 75 percent of world income as measured by GNP is located in the Triad
balance of payments
a record of all economic transactions between the residents of a
country and the rest of the world
current account
a broad measure that includes merchandise trade (i.e., manufactured goods) and
services trade (i.e., intangible, experience-based economic output) plus certain categories of
financial transfers such as humanitarian aid
trade deficit
A country with a negative current account balance. the outflow of money to pay for imports exceeds the inflow of money for sales of exports.
a trade
a country with a positive current account balance
capital account
a record of all long-term direct investment, portfolio investment,
and other short- and long-term capital flows. The minus signs signify outflows of cash
can result from government action or an economic crisis; whatever the cause,
devaluation is reduction in the value of a nation’s currency against other currencies.
Beijing has responded
by adopting a policy of revaluation to allow the yuan to strengthen against the dollar and other
The Big Mac Index
(retarded version of CPI index, basket of goods)
establishing an offsetting currency position such that
the loss or gain of one currency position is offset by a corresponding gain or loss in some other
currency. The practice is common among global companies that sell products and maintain operations
in different countries.
put option
gives the buyer the right,
not the obligation, to sell a specified number of foreign currency units at a fixed price, up to the
option’s expiration date
call option
is the right, but not the obligation, to buy the
foreign currency.) In the example of bidding the foreign project, the company can take out a put
option to sell the foreign currency for dollars at a set price in the future. In other words, the U.S.
company locks in the value of the contract in dollars.