Introduction to International Marketing

Ch. 1: Scope and Challenge of International Marketing Ch.2: The Dynamic Environment of International Trade

Understanding International Marketing

Market, Marketing, International marketing Domestic vs. International Marketing

Strategic Orientation: domestic, multidomestic, and global Marketing mix: 4 Ps Environmental forces: controllables vs. uncontrollables Environment and the marketing mix

The International Marketing Mix

Foreign environment (uncontrollable) Political/legal forces

1
Domestic environment (uncontrollable) (controllable)

Economic forces

7
Cultural forces

Political/ legal forces

Competitive structure Competitive Forces

Price Promotion

Product
Channels of distribution

Environmental uncontrollables country market A Environmental uncontrollables country market B Environmental uncontrollables country market C

6
Geography and Infrastructure

Economic climate

Level of Technology

4
Structure of distribution

Environment and Marketing mix

Product Environment Economic Competitive

Price

Promotion

Place

Technological
Demographic Geographic Cultural Political/legal

Understanding International Marketing

International Marketing. developing a mindset?

Developing awareness Self-Reference Criterion (SRC) Adapting to local culture FPs Globalization Index Economic integration Personal contact Political engagement Technological connectivity

Global Governance
Politics/Peace- United Nations Trade- World Trade Organization (WTO) Money/Finance- International Monetary Fund

(IMF) Development- World Bank Overall- G8 Nations (USA, Canada, UK, France, Germany, Italy, Japan, and Russia) Other international institutions/bodies

Institutions in International Trade

World Economic and Trade Environment WTO, IMF, and World Bank in the World Economy

Role of the organizations Easing trade restrictions Protest against globalization Multinationals in the global economy Role of American, European, Japanese, and Third World multinationals on a timeline

|_______|________|_______|_______|_______|_______I 1950 1960 1970 1980 1990 2000 2010

Protectionism and Trade Barriers

Protectionism and Tariff Barriers Cost of protectionism: arguments for and against Nontariff Barriers:

Quota and Import Licenses Domestic Subsidy and Economic Stimuli Standards and documentation requirements Boycotts and Embargoes Monetary barriers Antidumping Penalties

Balance of Payments (BOP) Account

A. Current Account
Merchandise Trade Services Unilateral Transfer

C. International Reserve
Gold, Silver, and Precious Metals Foreign Currency Special Drawing Rights (SDR)

B. Capital Account
Portfolio Investment Direct Investment Short term loans

D. Net Statistical Discrepancy

BOP Account must balance, Equation: A+B = C+D

Ch 1 and 2: Questions for Discussion

1. What is international marketing? How does it differ

2.

3. 4. 5.

6.

from domestic marketing? What is developing a mindset in international marketing? How is it related to self-reference criteria? What is protectionism? Is it good (or bad) for an economy? How? Explain how nontraiff barriers affect trade. What is subsidy? What is the effect of subsidy on trade and economy? What is a BOP account? Explain the four subheads of a BOP account. Why should an international marketing manager study the BOP account of a country?

Top Ten 2000 U.S. Trading Partners ($ billions)

Country Canada Mexico Japan China Germany United Kingdom South Korea Taiwan France Singapore U.S. Exports $176.4 111.7 65.3 16.3 29.3 41.5 27.9 24.4 21.0 17.4 U.S. Imports $229.2 135.9 146.5 100.0 558.7 43.5 40.3 40.5 29.0 19.6 Total $405.6 247.6 211.8 116.3 88.0 85.0 68.2 64.9 50.0 37.0 Surplus/ Deficit -$52.8 -24.2 -81.3 -83.8 -29.5 -1.9 -12.4 -16.1 -8.0 -2.2

The Nationality of the Worlds 100 Largest Industrial Corporations (by country of origin)
1963 1979 1984 1990 1993 1995 1996 2000

United States
Germany Britain France Japan Italy Netherlands-United Kingdom Netherlands Switzerland Argentina Belgium Brazil Canada India Kuwait Mexico Venezuela South Korea Sweden South Africa Spain Turkey China

67
13 7 4 3 2 2 1 1 ---------------

47
13 7 11 7 3 2 3 1 -1 1 2 --1 1 -------

47
8 5 5 12 3 2 1 2 1 1 -3 1 1 1 1 4 1 1 ----

33
12 6 10 18 4 2 1 3 --1 ---1 1 2 2 1 2 ---

32
14 4 6 23 4 2 1 3 --1 ---1 1 4 1 -2 1 --

24
14 1 12 37 3 2 2 3 --------2 ------

24
13 2 13 29 4 2 2 5 ------1 1 4 ------

36
12 5 11 22 3 -5 3 -1 -----------2

U.S. Current Account by Major Components, 1990-1999 ($ billions)

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993

Merchandise Trade
a. Exports b. Imports c. Balance $201.8 268.9 -67.1 $219.9 $215.9 $224.0 $246.6 $319.9 $362.1 $389.3 $416.9 $440.4 332.4 338.1 368.5 409.9 446.4 477.4 498.3 491.0 -74.1 536.5 -96.1 $456.9 589.4 -132.5

-112.5 -122.2 -144.5 -160.3 -126.5 -115.2 -109.0

Business Services
a. Exports b. Imports c. Balance 42.3 35.8 +6.6 44.3 42.3 +2.0 46.2 47.2 -1.0 51.8 51.0 +0.8 59.4 58.0 +1.4 69.1 63.2 +5.9 116.5 86.9 +29.6 136.6 98.7 +37.9 153.7 101.6 +52.1 164.4 104.4 +60.0 174.5 112.7 +61.8

Irwin/McGraw-Hill

SOURCES: Survey of Current Business, U.S. Department of Commerce, Bureau of Economic Analysis. http://www.stat-usa.gov/BEN/heal/sch.html. Februarly 1998

U.S. Current Account by Major Components, 1983-96 ($ billions)

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993

International Investment Income

a. Receipts b. Payments c. Balance 77.3 52.4 +24.9 85.9 67.4 +18.5 88.8 62.9 +25.9 90.1 67.0 +23.1 103.8 83.4 +20.4 108.2 105.6 +2.6 152.5 138.9 +13.6 160.3 139.6 +20.7 136.9 122.1 +14.8 114.4 109.9 +4.5 113.9 109.0 +4.0

Total Goods and Services

a. Exports b. Imports 334.4 371.2 360.8 455.6 360.6 460.7 375.0 498.6 424.8 565.3 507.8 629.6 641.4 718.2 696.8 754.9 717.0 730.7 731.4 767.3 755.6 827.3

c. Balance

-36.8

-94.8 -100.1

-123.6 -140.5

-121.8

-76.7

-58.1

-13.7

-35.9

-71.7

Net unilateral transfers Current account balance

-9.5

-12.2

-15.0

-15.3

-13.4

-13.6

-26.1

-33.7

+6.7

-31.9

-32.0

-46.2

-107.0 -115.1

-138.9 -153.9

-135.4

-102.8

-91.8

-7.0

-67.8 -103.7

SOURCES: Survey of Current Business, U.S. Department of Commerce, Bureau of Economic Analysis. http://www.stat-usa.gov/BEN/heal/sch.html. February 1998.

Buying Boom for Asia, 1995-2000

What the added middle class will buy (In million) Bedrooms Living Rooms Kitchens Between 1993 and 1995 2000 32 16 16 116 58 58
Millions of households approaching $18,000 per year buying power
Indexed to Singapore prices

73.3

Bathrooms
Living space (sq.m.) Large appliances Televisions

32
1,200 16 24

116
4,350 58 87

32.5 14.4 1991 1995 2000

Telephones
Cars

24
16

87
58

SOURCE: Bill Saporito, Where the Global Action Is. Fortune, Autumn-Winter 1993, p.64.

The Price of Protectionism

Industry Total Costs to Consumers (in $ millions) Number of Jobs Saved Cost per Job Saved

Textiles and apparel Carbon Steel

$27,000 6,800

640,000 9,000

42,000

$ 750,000

Autos
Dairy products Shipping Meat

5,800
5,500 3,000 1,800

55,000
25,000 11,000 11,000

$ 105,000
$ 220,000 $ 270,000 $ 160,000

SOURCE: Michael McFadden, Protectionism Cant Protect Jobs, Fortune, May11, 1987, pp. 125.