Global Marketing Chapters 1-4 (Gillespie 3rd edition)

Why Go International?
1. Expand Sales Profit
2. Acquire Resources
3. Minimize Risk
4. Gain Geopolitical Influence
5. React to Inquires from Abroad
6. Respond to Domestic Competitive Shock
7. Follow Major Customers Abroad
8. Leverage economies scale and scope
Global Firm
Company that Gains advantages in its cost and reputation not available domestically
Similar Tastes
Strong Country of Origin Image
Reduce Cost
Variations in consumer needs and conditions of use
variation in consumer income
cultural differences
different technical style
Development of Global Marketing
Domestic Marketing
Export Marketing
International Marketing (local investments, modification of 4 P’s)
Multinational Marketing (multidomestic)
Pan-Regional Marketing (NAFTA, EU)
Skills needed
Overcome obstacles
work with different personalities
Environmental Factors
1. Social
2. Economic
3. Technology
4. Competition
5. Regulatory
6. Political
7. Natural
Gross National Income (GNI)
The market value of final goods and services newly produced by domestically owned factors of production
Gross Domestic Product (GDP)
Values of production that takes place within a nations border, without regard to whether the production is done by domestic or foreign factors of production
Basic Theories of World Trade
1. Absolute Advantage
-Trade is based on each country selling what it is best at producing
2. Comparative Advantage
-Trade can occur between two countries even if one of the countries has no absolute advantage
3. Competitive Advantage
-Land/Natural resources, labor, technology, capital make world power
Balance of Payment (BOP)
Record of International Transactions
-Imports, Exports, and capital in one year
– Current Account Goods & services sold and purchased
Exchange Rate
Measures the value of one currency in terms of another currency
How Do Governments change value of the dollar/Exchange rate?
-Increase or remove dollars from the market in the federal reserve
-sell bonds, build things, issue products
Agencies Promoting Economic and Monetary Stability
-International Monetary Fund, Control Currency
World Bank
-Gives Loans
-World Trade Organization, Facilitate Trade
Which organization helps with currency issues?
Non-Tariff Barriers
Safety Standard
Weight Limit
Identification of Cultures
-points of reference: national, geographic, language, region, race, attire, food, laws, customs, values
Marketing and Islam
forbids interest
encourages modest dress
requires food to be halal (no alcohol or pork)
High Trust vs. Low Trust
High Trust- easily trust others
Low Trust-gives jobs to relatives because there is low trust among others
Attitudes Toward Time
Monochronic- one task at a time
Temporal Orientation
Value of past, present, or future
past-Europe and Middle East
Company Attitude to Culture
-ethnocentric: belief your country is superior
-polycentric: emphasis on individual country cultures
-Geocentric: Mixture
Context of Language
low-context: communication is clear
high-context: meanings are more implicit, interpreted
Showing emotion
affective culture- show emotions
neutral cultures- no emotion
How to select a country to invest in
1. Policy Uncertainty
2. Macro Stability
3. Tax Rates
4. Regulation and Tax Administration
5. Finance, Skills, Crime
Host Country
a country that contains an operational unit (marketing, sales, manufacturing, R&D) of an international company
Motivations of Politicains
1. Self Preservation
2. Security
3. Prosperity
4. Prestige
5. Idology
6. Cultural Identity
Host Country Pressure Groups
-labor unions
-political parties
-environmental groups
-local business community
Host Country Actions
-Government Subsidies
-Ownership Restrictions
-Operating Conditions (work permits, local content requirement, political motives, lack of security)
1. Expropriation-Formal seizure of operation (with or without compensation)
2. Confiscation- expropriation with no compensation
3. Domestication/Nationalization- local run, owners retain title but not involved in operation. Compensated
International Legal Tradition
1. Common Law- English Law
2. Civil (or code) law- written law in the past
3. Islamic law- Islamic common law
4. Socialist Law- Marxist Ideology
Regulatory Forces
1. Product Liability
2. Bankruptcy
3. Regulation cyberspace
4. Patents
5. Trademarks
Legal Issues
1. Worker Relations (health and safety)
2. employment practices
3. Antitrust prohibitions
4. Contractual relationships
5. Environmental Practices
6. Patents, trademarks, intellectual Property
7. Taxes/regulations
8. Advertising regulations
Managing Regulatory Change
Alter-bargain to get govt. to change regulations
Avoid-move to bypass the impact of the regulation
Ally- Avoid some risks by seeking strategic alliances
Risk Reduction Strategies
Sharing Risks (Joint ventures, alliances, licensing, franchising)
Miniminzing Assets at Risk
Insuring Againsts Risks (Govt., Private firms)