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Week 12: Global MarketplaceLecture 30
Global Marketing Today
• The world is shrinking rapidly with the advent of faster communication, transportation,
and financial flows.
• Products developed in one country have found enthusiastic acceptance in other
countries.
• International trade has boomed over the past three decades.
• Since 1990, the number of multinational corporations in the world has grown from
30,000 to more than 63,000.
What is a Global Firm?
A firm that, by operating in more than one country, gains R&D, production, marketing, and
financial advantages in its costs and reputation that are not available to purely domestic
competitors.
The rapid move toward globalization means that all companies will have to answer some
basic questions:
Ø What market position should we try to establish in our country, in our economic region,
and globally?
Ø Who will our global competitors be and what are their strategies and resources?
Ø Where should we produce or source our products?
Ø What strategic alliances should we form with other firms around the world?
6 Major Decisions in Global Marketing
Looking at Global Marketing
Before deciding whether to operate internationally, a company must understand the
international marketing environment.
That environment has changed a great deal in the past two decades, creating both new
opportunities and new problems.
International Trade System
• Companies looking abroad must start by understanding the international trade system.
• When selling to another country, a firm may face restrictions on trade between nations.
• Governments may charge tariffs, taxes on certain imported products designed to raise
revenue or protect domestic firms.
• Tariffs are often used to force favourable trade behaviours from other nations.
, World Trade Organization
GATT is a 62-year-old treaty designed to promote world trade by reducing tariffs and other
international trade barriers.
Since the treaty’s inception in 1947, member nations (currently numbering 153) have met in
eight rounds of GATT negotiations to reassess trade barriers and establish new rules for
international trade
Economic Environment
• The international marketer must study each country’s economy.
• Two economic factors reflect the country’s attractiveness as a market: its industrial
structure and its income distribution.
• The country’s industrial structure shapes its product and service needs, income levels,
and employment levels.
4 Types of Industrial Structures
• Subsistence economies: In a subsistence economy, the vast majority of people engage in
simple agriculture. They consume most of their output and barter the rest for simple
goods and services. They offer few market opportunities.
• Raw material exporting economies: These economies are rich in one or more natural
resources but poor in other ways. Much of their revenue comes from exporting these
resources.
• Emerging economies (industrializing economies): In an emerging economy, fast growth
in manufacturing results in rapid overall economic growth. Examples include the BRIC
countries—Brazil, Russia, India, and China. As manufacturing increases, the country
needs more imports of raw textile materials, steel, and heavy machinery, and fewer
imports of finished textiles, paper products, and automobiles
• Industrial economies: Industrial economies are major exporters of manufactured goods,
services, and investment funds. They trade goods among themselves and also export
them to other types of economies for raw materials and semifinished goods.
1. Political Legal Environment
• Attitudes towards international buying
• Government bureaucracy
• Political stability
• Monetary regulations
2. Cultural Environment
• Sellers must understand the ways that consumers in different countries think about and
use certain products before planning a marketing program.
• There are often surprises. For example, the average French man uses almost twice as
many cosmetics and grooming aids as his wife.
• The Germans and the French eat more packaged, branded spaghetti than Italians do.
• Business norms and behaviour also vary from country to country. For example, American
executives like to get right down to business and engage in fast and tough face-to-face
bargaining.
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