Marketing Chapter 5: Developing a Global Vision

Global Marketing
marketing that targets markets throughout the world
Global Vision
recognizing and reacting to international marketing opportunities, using effecting global marketing strategies, and being aware of threats from foreign competition in all markets
Gross Domestic Product (GDP)
the total market value of all final goods and services produced in a country for a given time
Job Outsourcing
sending U.S. jobs abroad
Multinational Corporation
a company that is heavily engaged in international trade, beyond exporting and importing
Capital Intensive
using more capital than labor in the production process
Global Marketing Standardization
production of uniform products that can be sold the same way all over the world
Multidomestic strategy
when multinational firms enable individual subsidiaries to compete independently in domestic markets
Mercosur
the largest Latin American trade agreement; includes Argentina, Boliva, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, Uruguay, and Venezuela
Uruguay Round
an agreement to dramatically lower trade barriers worldwide; created the WTO
World Trade Organization
a trade organization that replaced the old General Tariff Agreement on Tariffs and Trade (GATT)
General Agreement on Tariffs and Trade
a trade agreement that contained loopholes enabling countries to avoid trade-barrier reduction agreements
NAFTA
an agreement between Canada, America, and Mexico that created the world’s then largest free trade agreement. Largest Economy in the world
Central America Free Trade Agreement
a trade agreement instituted in 2005, that includes Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States
European Union
a free trade zone, encompassing 27 European countries
World Bank
an international bank that offers low-interest loans, advice, and information to developing nations
International Monetary Fund
an international organization that acts as a lender of last resort, providing loans to troubled nations, and also works to promote trade through financial cooperation
Group of 20 (G-20)
a forum for international economic development that promotes discussion between industrial and emerging market countries on key issues related to global economic stability
Exporting
selling domestically produced products to buyers in other countries
Buyer for Export
an intermediary in the global market who assumes all ownership risks and sells globally for its own account
Export Broker
an intermediary who plays the traditional broker’s role by bringing buyer and seller together
Export Agent
an intermediary who acts like a manufacturer’s agent for the exporter; the export agent lives in a foreign market
Licensing
the legal process whereby a licensor allows another firm to use its manufacturing process, trademarks, patents, trade secrets or other proprietary knowledge
Contract Manufacturing
private label manufacturing by a foreign company
Joint Venture
when a domestic firm buys part of a foreign company or joins with a foreign company to create a new entity
Direct Foreign Investment
active ownership of a foreign company or of overseas manufacturing or marketing facilities
Floating Exchange Rates
a system in which prices of different currencies moves up and down based on the demand for and the supply of each currency
Dumping
the sale of an exported product at a price lower than that charged for the same or like product in the “home” market of the exporter
Countertrade
a form of trade in which all or part of the payment for goods or services is in the form of other goods or services
Blog
a publicly accessible web page that functions as an interactive journal, where readers can post comments on the author’s entries
US Trade
-Exports 20% of industrial production and 25% of economic growth
Trade Restrictions
1. Tariff – Revenue and protective
2. Quota – Limit
3. Embargo (boycott) -Ban
4. Exchange control – amount and rate
5.Discrimination – bids and standards
Joint Venturing
1. Licensing
2. Contract Manufacturing
3. Joint Ownership
4. Management Contracting
Contract Manufacturing
Sell on your own risk- fear of foreign producer learning and stealing
Direct Ownership
1.High risk.
2. Own and operate in Foreign Country
3.Local Incentives
4.Deepend foreign Relationships
5.Control
6.High risk
Global Organizational Forms (multinational Firms)
1.Ethnocentric
2.Polycentric
3.Geocentric
Ethnocentric
-Home country oriented
-Managers from foreign country
-Glass ceiling
-Extension Strategy
Polycentric
-Multi domestic Marketing Strategy
-Specifically home country oriented
-Look and act like other companies
-Leave it to the locals
Geocentric
-Mostly US based companies
-No allegiance to specific country
-World orientation
-Global Marketing Strategy
Theory of Comparative Advantage
Nation should export those items which it produces most efficiently (lowest relative cost) and import those items which it produces less efficiently
US Comparative Advantages
-Advanced Technology
-Large area of fertile land and temperate zone
-Large Domestic Market
-Complex Management
US Comparative Disadvantages
-Low Tech
-Shortage of basic materials
-High wages
How much of US corporate profits comes from foreign trade and investments?
33.5%
Emargo
Trade restriction which identifies a ban on the importation of a product or service
Management Contracting
The most common form of joint venturing in the US
Direct Ownership advantages
-Local Incentive
-Image enhancement
-Deeper local relationship
NAICS
A detailed numbering system developed by the U.S., Canada, and Mexico to classify North American business establishments by their main production processes.
Forms of International Trade
Licensing, Exporting, Franchising, Contract Manufacturing, Joint Ventures/Strategic Alliances, Foreign Direct Investment
Societal Classification of Offerings
Gideon Sjoberg’s theory that says cities changed over time