International MKG Notes2

INTERNATIONAL MARKETING MANAGEMENT 12MBAMM418
Module I (7 Hours)
Framework of international marketing: Definition scope and challenges difference
between international marketing and domestic marketing the dynamic environment of
international trade transition from domestic to international markets orientation of
management and companies

Global e-marketing: The Death of Distance, communications, Targeting the individual
customers, relationship marketing, interactivity, Speed to market, living in an age of
technical
discontinuities, new technologies change the rules of competition, components of the
electronic
value chain.

Module II (8 Hours)
Developing a global vision through marketing research: Breadth and scope of
international
marketing research problems in availability and use of secondary data problems in
gathering
primary data multicultural research
a special problem research on internet a new opportunity estimating market
demand
problems in analyzing and interpreting research information responsibility for
conducting
marketing research communicating with decision makers. Identifying foreign markets
classification based on demand based on the stage of development other bases for
division of
world markets
Social and Cultural Environment: Basic aspects of society and culture, Approaches to
cultural
factors, Impact of Social and Cultural Environment on Marketing Industrial and
Consumer
Products

Module III (7 Hours)
Global marketing management planning and organization: Global
perspective global gateways global marketing management an old debate and a new
view
planning for global markets alternative market entry strategies organizing for global
competition

Module IV (6 Hours)
Products and services for consumers: Quality Green marketing and product
development,
products and culture analyzing product components for adaptation products for
consumers in
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global markets, product development, product adaptation, product standardization,
marketing
consumer services globally marketing of services, brands in international markets
Products and services for businesses
Demand in global business to business markets quality and global standards business
services
trade shows' crucial part of business to business marketing relationship markets in
business to
business context

Module V (8 Hours)
Licensing, Strategic Alliances, FDI: Introduction, Licensing, Strategic Alliances,
Manufacturing
Subsidiaries, Entry Modes and Marketing Control, Optimal Entry Strategies.

Global Distribution
Introduction, Distribution as Competitive advantage, Rationalizing Local Channels,
Wholesaling,
Retailing, Global Logistics, Parallel Distribution, Global Channel Design

International retailing
International expansion of retailers international retailing defined retail format
variations in
different markets general merchandise: retailing issues in international retailing

Module VI (7 Hours)
Pricing decisions: Global Pricing Framework, Pricing Basics, Marginal Cost Pricing and
its
importance, Transfer Pricing, Counter trade, Systems Pricing, Pricing and Positioning,
price
quotation INCO terms preparation of quotations.

Promotion Decisions
Promotions international advertising sales promotion in international markets
international
advertising direct mailing personal selling exhibition generic promotions in
international
marketing

Module VII (6 Hours)
Recent trends in India's foreign trade : Institutional infrastructure for exports
promotions in
India India's trade policy exports assistance exports documentation and procedures
including different stages of documentation Globalization in India, Opportunities,
Constraints and
Initiatives India - A Hub for Globalization, Globalization in India - Post Liberalization,
Indias
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Strengths, Strategies for Sustainable Competitive Advantage, Potential for Made in India,
Major
Globalization Initiatives from Indian Companies, WTO Regulations and their
implications for
India, Undesirable effects of globalization, Government Initiatives needed to foster
globalization

Module VIII (2 Hours)
The future of global marketing: Six major changes in global marketing

Contents

Sl
Modules
Page NO

No:

1
Framework of international marketing
4 13

2
Developing a global vision through marketing research
14 - 27

3
Global
marketing
management

planning
and
28 38

organization

4
Products and services for consumers
39 48

5
Licensing, Strategic Alliances, FDI
49 71

6
Pricing decisions
72 81

7
Recent trends in India's foreign trade
82 99

8
The future of global marketing
100 118

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Module I (7 Hours)
Framework of international marketing: Definition scope and challenges difference
between
international marketing and domestic marketing the dynamic environment of
international trade
transition from domestic to international markets orientation of management and
companies

Global e-marketing: The Death of Distance, communications, Targeting the individual
customers, relationship marketing, interactivity, Speed to market, living in an age of
technical
discontinuities, new technologies change the rules of competition, components of the
electronic
value chain.

Framework of international marketing
International marketing is defined as the performance of business activities designed to
plan,
price, promote, and direct the flow of a companys goods and services to consumers or
users in
more than one nation for a profit
Marketing concepts, processes, and principles are universally applicable all over the
world
International marketing is defined as the performance of business activities designed to
plan,
price, promote, and direct the flow of a companys goods and services to consumers or
users in
more than one nation for a profit.
Marketing concepts, processes, and principles are universally applicable all over the
world
Scope and challenges:
Important Points
1. An increasingly larger share of corporate profits are generated by international
operations
2. Till last decade competition for the company comes from the local market only, now it
is
not so. It comes from all the country
Global Perspective: Recent Events
1. Information technology boom
2. Enron scandals
3. September 11th attacks on the World Trade Center and Pentagon
4. Wars in Afghanistan and Iraq
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5. International conflict among China, Taiwan, and the United States
6. 2003 SARS outbreak in Asia
7. Global terrorism, e.g., Indonesia, Israel, India, and Morocco
8. Transcending these events, international commerce continued

Global Business Trends

The rapid growth of the World Trade Organization and regional free trade
areas, e.g., NAFTA and the European Union

General acceptance of the free market system among developing countries in Latin
America, Asia, and Eastern Europe

Impact of the Internet and other global media on the dissolution of national borders, and

Managing global environmental resources

Difference between international marketing and domestic marketing
International Marketing Vs Domestic Marketing

Sovereign political entities
I. Tariffs Or Customs Duties
II.
Quantitative Restrictions
III.
Exchange Controls
IV.
Local Taxes

Different Legal Systems

Different Monetary Systems

Lower Mobility Of Factors Of Production

Differences In Market Characteristics

Differences In Procedures And Documentation

Greater Degree Of Risk

The Difference
More than one nation, Competition, Legal constraints, Govt. Control, Ecological factors,
Consumer traditions, or any uncontrollable elements.

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Reasons for Internationalization
Growth
Access to new markets
Access to resources
Survival
Against competitors with lower costs (due to increased access to resources)
Leveraging Key Success Factors Abroad
Follow Customers Abroad
Pursuing Diversification
Taking Advantage of Different Growth Rates of Economies
Exploiting Product Life Cycle Differences
Internationalizing for Defensive Reasons
The effects of uncontrollable and controllable both in the domestic and foreign
environments
- International marketers deals with at least two uncontrollable Elements
1. Domestic
2. International
- As the number of international market increases: uncontrollable layer increases
- Controllable elements : 4 ps (MARKETING MIX)
- Domestic Uncontrollable elements : Political & Legal, Competition, Economy, Culture
&
Technology
- Foreign Uncontrollable elements : Political & Legal, Competition, Economy, Culture,
Technology, structure of distribution, Geography & infrastructure
Dynamic environment of international trade
Environmental Adaptation Needed
Differences are in the uncontrollable environment of international marketing
Firms must adapt to uncontrollable environment of international marketing by adjusting
the
marketing mix (product, price, promotion, and distribution)
Continuum
Adaptation
Standardization
(of Marketing Mix)
(of Marketing Mix)
INFLUENCED BY 7 ENVIRONMENTAL FACTORS

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Developing a Global Awareness
To be globally aware is to have:
1.
Tolerant of Cultural Differences, and
2. Knowledgeable of:

(a) Culture, (b) History, (c) World Market Potential,

(d) Global Economic, Social and Political Trends

Transition From Domestic To International Business

Pre Export Behaviour
1.
Firm Characteristics
2.
Perceived External Export Stimuli
3.
Perceived Internal Export Stimuli
4.
Level Of Organizational Commitment

Motivation To Export
a.
Bulk Sales
b.
Relative Profitability
c.
Insufficiency Of Domestic Demand
d.
Reducing Business Risks
e.
Legal Restrictions
f.
Obtaining Imported Inputs
g.
Social Responsibility
h.
Increased Productivity
i.
Technological Improvements

How Much Commitment
a)
No Involvement
b)
Temporary Involvement
c)
Continued Involvement
d)
Global Involvement
e)
Producing For Export

Stages of International Marketing Involvement

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In general, firms go through five different phases in going
international:
No Direct Foreign Marketing
Infrequent Foreign Marketing
Regular Foreign Marketing
International Marketing
Global Marketing

Strategic Orientation: EPRG
Schema

Orientation

EPRG Schema
Domestic
(Ethnocentric)
Marketing
Extension
Multi-Domestic
(Polycentric)
Marketing
Global Marketing
(Regio/Geocentric)

Generally, four distinctive approaches dominate strategic thinking in international
marketing:
Orientation of management and companies
Global orientation
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A global orientation means operating as if al the country markets in a companys scope
of
operations (including domestic market) are approachable as a single global market and to
standardize the marketing mix where culturally feasible and cost effective or to adapt the
marketing mix where culturally required and cost effective.

Ethnocentric or Domestic Marketing Extension Concept:
Home country marketing practices will succeed elsewhere without adaptation; however,
international marketing is viewed as secondary to domestic operations

Polycentric or Multi-Domestic Marketing Concept:
Opposite of ethnocentrism Management of these multinational firms place importance on
international operations as a source for profits Management believes that each country is
unique
and allows each to develop own marketing strategies locally

Regiocentric:
Sees the world as one market and develops a standardized marketing strategy for the
entire
world

Geocentric:
Regiocentric and Geocentric are synonymous with a Global Marketing Orientation where
a
uniform, standardized marketing strategy is used for several countries, countries in a
region, or
the entire world
Importance of International Marketing

Reach a larger market

Levels of International Marketing
Domestic
Export Marketing International
Global
Marketing
Marketing
Marketing
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Least

Limited

Substantial

Extensive
international
international
international
international
commitment
commitment
commitment
commitment

Involves

Focus
on

Focus
on
focus
direct
or indirect individual
countries segments,
rather
export
or regions
than countries or

regions

Polycentric or
Regiocentric

Geocentric
Drivers of International Expansion

Transition to Market Economy

Firm-Specific Drivers
Product Life Cycle Considerations: opportunity to prolong product lifecycle by
entering
growth markets.
Intro
Growth
Maturity
Decline
Sales
Sales
Profits

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The International Marketing Environment
Foreign Environment

(Uncontrollables)

1. Competition
7. Structure of

7
Distribution
Domestic environment
Environmental
(Uncontrollables)
uncontrol ables
country market A
(Controllables) 1. Competition
Price
Product
2. Technology
5. Political-
Target
Environmental
Legal
Market
uncontrol ables
6. Geography and
Infrastructure
Promotion Place or 2 .Technology
country
Distribution
market B
4.
Culture
Environmental
3. Economy
uncontrol ables
5. Political-
3. ECONOMY
country
Legal
market C
4. Culture

Global e-marketing: The Death of Distance
One of the powerful consequences of the widespread adoption and use of computer
mediated
communication (CMC) is believed to be the world becoming smaler." Accounts
consistently
highlight that CMC technologies such as email, video, audio or text chat, listservs and
bulletin
boards create informational environments that enable the bridging of distances among
individuals and groups. The expectation that information and communication
technologies lead
users to transcend the constraints of physical separation has been expressed as the death
of
distance

ECONOMISTS are beginning to notice that dear oil is having an impact on trade. By
making
transportation more expensive, high fuel prices are turning back the clock a bit on the
process of
globalisation

Targeting the individual customers

Many startup companies have technologies that are of interest to many different market
segments. Given a startups limited resources, the company needs to prioritize which
customers
to target with their technology and marketing efforts.

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Relationship marketing
Relationship marketing was first defined as a form of marketing developed from direct
response
marketing campaigns which emphasizes customer retention and satisfaction, rather than a
dominant focus on sales transactions

Speed to market
The elapsed time from order placement to arrival on the retail sales floor. Speed to
market is
increasingly a factor in competitiveness of any company in the apparel chain.

Living in an age of technical discontinuities

New Millennium and the Age of the Internet we business journalists can look back
knowing we
had front-row center seats at the great events of our time. I feel privileged to have helped
chronicle this extraordinary saga.

And it's not over. The Age of the Internet is, to borrow Peter Drucker's phrase, an Age of
Discontinuity. This is not just another story to cover. We are part of this story. For the
spread of
the Internet has the potential to revolutionize the practice of journalism, like nothing
since
Gutenberg's printing press.

New technologies change the rules of competition
Two major findings have characterized management literature in the past decades. The
first is that
radical innovation, while risky, is one of the major sources of long-term competitive
advantage.
For many authors, however, the phrase radical innovation is an elipsis for a longer
construction
that spells radical technological innovation. Indeed, investigators of innovation have
focused
mainly on the disruptive effect of novel technologies on industries.
The second finding is that people do not buy products but meanings. People use things
for
profound emotional, psychological, and socio-cultural reasons as well as utilitarian ones.
Analysts
have shown that every product and service in consumer as well as industrial markets has
a
meaning. Firms should therefore look beyond features, functions, and performance, and
understand the real meanings users give to things. The common assumption, however, is
that
meanings are not a subject for innovation: they are a given. One must understand these
meanings
but they cannot be innovated.
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Components of the electronic value chain
A value chain is a chain of activities that a firm operating in a specific industry performs
in order
to deliver a valuable product or service for the market. The concept comes from business
management and was first described and popularized by Michael Porter in his 1985 best-
seller, Competitive Advantage: Creating and Sustaining Superior Performance.
"The idea of the value chain is based on the process view of organizations, the idea of
seeing a
manufacturing (or service) organisation as a system, made up of subsystems each with
inputs,
transformation processes and outputs. Inputs, transformation processes, and outputs
involve the
acquisition and consumption of resources - money, labour, materials, equipment,
buildings, land,
administration and management. How value chain activities are carried out determines
costs and
affects profits."

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Module II (8 Hours)
international
marketing research problems in availability and use of secondary data problems in
gathering
primary data multicultural research a special problem research on internet a new
opportunity estimating market demand problems in analyzing and interpreting
research
information responsibility for conducting marketing research communicating with
decision
makers. Identifying foreign markets classification based on demand based on the
stage of
development other bases for division of world markets
Social and Cultural Environment: Basic aspects of society and culture, Approaches to
cultural
factors, Impact of Social and Cultural Environment on Marketing Industrial and
Consumer
Products

international marketing research

Introduction

Marketing research is traditionally defined as the systematic gathering, recording, and
analyzing
of data to provide information useful in marketing decision making.

International marketing research involves two additional complications.
(i)
Information must be communicated across cultural boundaries. That is , executive in
Chicago must be able to translate their research questions into terms that consumers in
Guanszhou, China can understand.

(ii) The environment within which the research tools are applied are often different in
foreign
markets. Rather that acquire new and exotic method of research, the international
marketing
research must develop the ability for imaginative and deft application of tried and tested
techniques in sometimes totally strange milieus.

BREDTH AND SCOPE OF INTERNATIONAL MARKETING RESEARCH
The basic difference between domestic and foreign market research is the broader scope
needed for foreign research, necessitates by higher levels of uncertainty. Research can be
divided into three types based on information needs:
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(i)
General information about the country, area and/or market
(ii) Information necessary to forecast future marketing requirement by anticipating social,
economic consumer, and industry trend within specific market or countries
(iii) Specific market information used to make product, promotion, distribution, and price
decisions and to develop marketing plans.
A countrys political stability, culture attributes and geographical characteristics are some
of the kind of information not ordinarily gathered by domestic marketing research.

THE RESEARCH PROBLEM
A marketing research study is always a compromise dictated by limits of time, cost, and
the
present state of the art. The research must strive for the most accurate and reliable
information
within existing constraints. A key to successful research is a systematic and orderly
approach
to the collection and analysis of data. The research process should follow these steps:

(i)
Define the research problem and establish research objectives.
(ii) Determine the source of information to fulfill the research objectives.
(iii) Consider the costs and benefits of the research effort.
(iv) Gather the relevant data from secondary or primary sources, or both.
(v) Analyze, interpret, and summarize the results.
(vi) Effectively communicate the results to decision makers.

DEFINING THE PROBLEM AND ESTABLISHING RESEARCH OBJECTIVES
The research process should being with a definition of the research problem and the
establishment of specific research objectives. the major difficulty here is converting a
series of
often ambiguous business problem into tightly drawn and achievable research objectives.

PROBLEMS OF AVAILABILITY AND USE OF SECOUNDARY DATA
:- The problem of availability and use of secondary data are as follows:

(i)
Availability
of
data;-detailed
data
on
the
numbers of wholesalers, retailers,
manufacturers, and facilitating services, are unavailable for many parts of the world, as
are data
on population and income. Most countries simply do not have governmental agencies that
collect on a regular basis the kind of secondary data readily available in the united state.

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(ii) Reliability of data;- Available data may not have the level of reliability necessary for
confident decision making for many reasons. Official statistics are sometimes too
optimistic,
reflecting national pride or politics rather that practical reality, while tax structures and
fear of
the tax collector often adversely affect data.

(iii) Comparability of data:- Comparability of available data is the third shortcoming
faced by
foreign marketers. In United States, current sources of reliable and valid estimates of
socioeconomic factors and business indicators are readily available. In other countries,
especially those less developed, data can be many years out of data as well as having
been
collected on an infrequent and unpredictable in many of these countries makes the
problem of
currency a vital one.

(iv) Validating secondary data:- many countries have similarly high standard for the
collection and preparation of data as those generally found in the United States, but
secondary
data from any source, including the United States must be checked carefully and
interpreted
carefully..

GATHERING PRIMARY DATA: QUANTITATIVE AND QUALITATIVE
RESEARCH

:- If, after seeking all reasonable secondary data sources, research questions are still not
adequately answered, the market research must collect primary data.- that is , data
collected
specially for the particular research project at hand.
In most primary data collection. The researchers questions respondents to determine what
they think about some topic or how they might behave under certain conditions.
Marketing
research methods, can be grouped into two basic types: quantitative and qualitative
research. In
both methods, the marketer is interested in gaining knowledge about the market.

(i)
Quantitative research:- in quantitative research, usually a large number of respondents are
asked to reply either verbally or in writing to structure questions using a specific response
format or to select a response from a set of choices. Questions are designed to obtain
specific
responses regarding aspects of the respondents behavior, intentions, attitudes, motives
and
demographic characteristics. Quantitative research provide the marketer with responses
that can
be presented with precise estimations.

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(ii) Qualitative research:- In qualitative research, if questions are asked they are almost
always
open-ended or in-depth, and unstructured responses that reflect the persons thoughts and
feelings on the subjects are sought. Direct observation of consumers in choice or product
usage
situations in another important qualitative approach to marketing research.
Qualitative research is used in international marketing research to formulate and define
a problem more clearly and to determine relevant questions to be examined in subsequent
research. It is also used where interest is centered on gaining an understanding of a
market,
rather the quantifying relevant aspects.
Qualitative research is also helpful in revealing the impact of socio-cultural factors on
behavior patterns and in developing research hypotheses that can be tested in subsequent
studies
designed to quantify the concepts and relevant relationship uncovered in qualitative data
collection.

PROBLEMS OF GATHERING PRIMARY DATA
Most problem in collecting primary data in international marketing research stem from
cultural differences among countries, and range from the inability of respondents to
communicate their opinions to inadequacies in questionnaire translation.

(i) Ability to communicate opinions:- The ability to express attributes and opinions
about a
product or concept depends on the respondents ability to recognize the usefulness and
value of
such a product or concept.
(ii) Willingness to respond;- Cultural differences offer the best explanation for the
unwillingness or the inability of many to respond to research surveys. The role of the
male, the
suitability of personal gender-based inquiries, and other gender-related issues can affect
willingness to respond.
(iii)Sampling in Field Surveys:- The greater problem in sampling stems the lack of
demographic data and available lists from which to drawn meaningful samples. If current,
reliable lists are not available, sampling becomes more complex and generally less
reliable.
(iv) Language and comprehension:-
(v) The most universal survey research problem in foreign countries is the language
barrier.
Differences in idiom and the difficulty of exact respondents answer. Equivalent concept
may
not exist in all language.

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MULTICULTURAL RESEARCH
As companies become global marketers and seek to standardize various parts of the
marketing mix across several countries, multicultural studies become more important. A
company need to determine to what extent adaptation of the marketing mix is
appropriate. Thus
market characteristics across diverse culture must be compared for similarities and
difference
before a company proceeds with standardization on any aspect of marketing strategy.

Multicultural research involves dealing with countries that have different languages,
economies, social structure, behavior, and attitude patterns. It is essential that these
differences
be taken into account.

RESEARCH ON THE INTERNET
For many countries the internet provides a new and increasingly important medium for
conducting a variety of international marketing research. Indeed, a survey of marketing
research
professionals suggests that the most important influences on the industry are the internet
and
globalization. It has been suggested that there are at least seven different uses for the
internet in
international research:-
(i)
Online survey and buyer panels
(ii) Online focus groups.
(iii) Web visitor tracking
(iv) Advertising marketing lists
(v) E-mail marketing lists
(vi) Embedded research.
A vexing challenge facing international marketers will be the cross-cultural concern
about
privacy and the enlistment of cooperative consumer and customer group. As more of the
general
population in countries gain access to the internet. This tool will be all can be used one of
several methods of collecting data offering more flexibility across countries. Today the
real
power of the internet for international marketing research is the ability to easily access
volumes
of secondary data.
There are volumes of good secondary data that can be accessed from your computer that
will make international marketing research much easier and more efficient that it has ever
been.
New opportunity
The chapter starts with identifying the types and categories of information which are
useful in
marketing decision making on a global scale and discusses the two main ways of getting
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information by surveillance or by research. Details are given on some of the sources of
information available to marketers. The chapter then describes in some detail the process
of
global marketing research and highlights the dangers and pitfalls in the process.
Uncertainty
In international marketing, the marketer is faced with a dilemma of having too much data
and too
little information. There is plenty of global data from sources like the World Bank, but
often a
lack of specific information on countries and markets. In helping to reduce uncertainty
around
decision making, precise information is the key, getting it is quite another thing.
Whilst searching for opportunities globally, uncertainties will arise due to four main
factors: lack
of knowledge of the existence of possible new market alternatives, the conditions internal
and
external to the firm which will determine the consequences of a new alternative, what
consequences these conditions when known may have for the firm, and how these
consequences
may be expressed in relevant terms of goal fulfilment. Uncertainty arises due to the time
lapse
between the decision and the outcome of the action decided on. Carlson (1975)1 also
believes that
uncertainty increases with the degree of "foreignness" of the place of outcome, the cost of
information and the learning effect, that is, when entering a foreign market knowledge of
it builds
slowly, usually by experience and its attendant uncertainty.
When marketing domestically the system is fairly easy to learn. When crossing global
boundaries
the whole process is exaggerated by necessary paperwork, exchange rates, cash flows and
transportation problems to name but a few. This uncertainty gives rise to the need for
information.
Table 5.1 Specific information
Marketing decision
Marketing intelligence
Go
international
or Assessment of global market and firm's potential share in it, in view of
remain domestic
local and international competition, compared to domestic opportunities.
Which
markets
to A ranking of world markets according to market potential, local
enter
competition and the political situation.
How to enter target Size of markets, international trade barriers, transport costs, local
markets
competition, government requirements and political stability.
How
to market in For each market, buyer behaviour, competitive practice, distribution
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target markets
channels, media, company experience
Elements of the information system
The following constitute the elements of the global information system. Data may be
specific or
general or both and used for decisions on whether to enter markets or not, in what degree
and
what emphasis in terms of the marketing mix. General information includes data on the
following:
Economic - rate of growth of GNP, level of inflation, incomes
Social - people, demographics, culture, subculture
Political - risk, instability, attitudes to "foreigners"
Technology - current, rate of change, infrastructure
Resources - money, manpower, materials, acquisitions, joint ventures
Fiscal - taxes, exchange rates
Institutions - money markets
Managerial - funds

ESTIMATING MARKET DEMAND

In assessing current product demand and forecasting future demand reliable historical
data are
required. Despite of limitations, there are approaches to demand estimation that are
usable with
minimum information. The success of these approaches relies on the ability of the
researcher to
find meaningful substitute or approximations for the needed economic, geographic, and
demographic relationships.
When the desired figures are not available, a close approximation can be made using
local
production figure plus imports, with adjustments for exports and current inventory levels.
In a
rapidly developing economy, extrapolated figures may not reflect rapid growth and must
be
adjusted accordingly. Given the greater uncertainties and data limitations associated with
foreign markets, two methods of forecasting demand are particularly suitable for
international
marketers:

(i)
Expert Opinion: - for many market estimation problems, particularly in foreign
countries
that are new to the marketer, expert opinion is advisable. In this method, expert are polled
for
their opinion about market size and growth rates. Such expert may be companies, own
sales
managers or outside consultants and government officers. the key in using expert opinion
to
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help in forecasting demand is triangulation, that is, comparing estimates produced by
different
sources.
(ii) Analogy: - This assumes that demand for a product develops in much the same way
in all
countries as comparable economic development occurs in each country.
A relationship must be established between the item to be estimated and a measurable
variable. Once a know relationship is established, the estimator then attempt to draw an
analogy
between the known situation and the country in question.

PROBLEM IN ANALYZING AND INTERPRETING RESEARCH
INFORMATION
After data are collected, the final steps in the research process are the analysis and
interpreting
of findings in light of the stated marketing problem. There are so many factors, the
researchers
must take consideration these factors and, despite their limitations, produce meaningful
guides
for management decisions.
Accepting information at face value in foreign market is imprudent:- The meanings of
words,
the consumers attitude toward a product, the interviewers attitude, or the interview
situation
can distort research findings. Just as culture and tradition influence the willingness to
give
information, so they also influence the information, so they also influence the information
given.

eadership and listener ship studies

To cope with such disparities, the foreign marketing researcher must possess three
talented to
generate meaningful marketing information.

First, the researcher must possess a high degree of cultural understanding of the market in
which research is being conducted.

Second, a creative talent for adapting research methods is necessary. A researcher in
foreign markets often is called on to produce result under most difficult circumstances
and short
deadlines.

Third, a skeptical attitude in handling both primary and secondary data is helpful.

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RESPONSIBILITY FOR CONDUCTING MARKETING RESEARCH
Depending on the size and degree of involvement in foreign marketing, a company in
need of
foreign market research can rely on an outside foreign-based agency or on a domestic
company
with a branch within the country in question. It can conduct using its own facilities or
employ a
combination of its own research force with the assistance of an outside agency.
Many companies have executive specifically assigned to the research function in foreign
operations;
Other companies maintain separate research department for foreign operations or assign a
full-
time research analyst to this activity
A trend toward decentralization of the research function is apparent. In terms of
efficiency, it
appears that local analysts are able to provide information more rapidly and accurately
than a
staff research department.
A comprehensive review of the different approaches to multi-country research suggests
that the
ideal approach is ti have local research in each country, with close coordination between
the
client company and the local research companies.

COMMUNICATING WITH DECISION MAKERS
As concert with the decision maker, it should be clearly recognized, however that getting
the
information is only half problem/job. That information must also be given to decision
makers in a
timely manner. High-quality international information system design will be an
increasingly
important competitive tool as commerce continues to globalize, and resources must be
invested
accordingly. At the most basic level, marketing research is mostly a matter of talking to
customers. Marketing decisions makers have questions about how best to serve
customers, and
those questions are posed and answered often through the media of questionnaires and
research
agencies. Even when both managers and customers speak the same language and are
from the
same culture, communication can become garbled in either direction. That the customer
misunderstands the questions and/or managers misunderstand the answers. Throw in a
language/cultural barrier, and the changes of misinformation expand dramatically. The
four kind
of company-agency-customer relationships possible are presented in overcoming the
cultural
barriers

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Identifying foreign markets
Selection of markets is the first stage in International marketing. No matter how much
attempt is
made, the firm will not succeed unless it is marketing the right product in the right export
market.
It costs lot of time and money to find out a suitable market for a product. No firm has
unlimited
resources. Proper selection of markets would avoid waste in time and effort. The time and
care
taken to select the product and the market for initial export venture can minimize the
risks and
make ultimate success quicker and more certain. One product may be more acceptable in
some
countries than in others. It would, therefore, be better to concentrate on a few fruitful
markets than
to spread too thinly. Market concentration can lead to better debt collection and cash flow
and
savings in administration. Of course, after having established in one market, the firm can
always
move on to the other markets. This is what Larsen and Toubro did while it entered the
export
markets for the first time. They concentrated on Indonesia. After having established in
Indonesia
they moved on to other nearby markets. It is easier to extend operation in other markets
because
of the experience already gained in entering the first market. It is easier to increase
business
where you have a stronghold rather than increase business in new areas.

In some instances products to be exported might by their very nature have only a small
number of
possible customers in any one country making it essential to approach a large number of
foreign
areas simultaneously. This applies to some large items such as complete cement plants or
to
extremely specialized apparatus like the equipment to measure electrical voltages in the
human
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muscle. So also in some cases, success might depend on high volume of production that it
is
essential to aim at every possible market simultaneously.

Criteria for classifying world Markets: The basic problem that a firm has to solve in the
initial
stage of planning its international marketing strategy is to identify global marketing
opportunities.
To identify and shortlist markets which offer or might offer in future opportunities that
can be
exploited by it, a classification scheme for segmenting the world markets is required.
There are
several bases of classification, principal among then are:

Classification based on demand
Classification on the basis of stages of demand: Keegan has produced a threefold
classification of
world marketers:
1. Exiting markets
2. Latent markets
3. Incipient markets
In the existing markets, consumer needs are known and are already being serviced by
some
products. The market opportunities can be assessed by estimating the consumption rate
and the
share of imports in current consumption. Latent markets have potential customers but
because no
one has offered a product to fill the latent need there is no existing market. Incipient
markets do
not exist in the present, however conditions and trends can be identified that point
towards the
emergence of future needs and preferences for product and services that will create a
potent
market, which if supplied will become an existing market.

Based on the stage of development other bases for division of world markets
Classification on the basis of Stages of Development: The world markets can be divided
into four
distinct segments, viz., industrial economies, more developed developing countries, raw
material
exporting economies and subsistence economies. Industrial Economies: These countries
lay more
emphasis on research and development and devote their resources to production of more
sophisticated products and will therefore like to import goods of simpler technology and
simpler
manufactures. These countries also have an acute shortage of labor and would, therefore
tend to
import intensive products like electronics and light engineering goods. They also tend to
import
spares and components and raw materials to feed their industries and many decorative
articles
because of their affluence. They are very particular about preventing further pollution
and,
therefore they would like to import not only anti-pollution equipment but also articles
whose
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production has been banned for risks of pollution. They are willing to provide technology
to set
up production and processing facilities in developing countries. They provide a large
market as
they have no import restriction. In fact, the five major importing countries viz., United
States, the
United Kingdom, France, Japan and Germany, account for 40 per cent of world imports

Social and Cultural Environment: Basic aspects of society and culture,
The social environment, social context, sociocultural context, or milieu, refers to the
immediate physical and social setting in which people live or in which something
happens or
develops. It includes the culture that the individual was educated or lives in, and the
people
and institutions with whom they interact.
The interaction may be in person or through communication media, even anonymous or
one-
way, and may not imply equality of social status. Therefore the social environment is a
broader
concept than that of social class or social circle.
Cultural environments consist of the influence of religious, family, educational, and
social
systems within the marketing system. Marketers who intend to market products overseas
must be
sensitive to foreign cultures. While the differences between our cultural background in
the United
States and those of foreign nations may seem small, marketers who ignore these
differences risk
failure in implementing marketing programs.
This task is not as easy as it sounds, as various features of a culture can create an illusion
of
similarity. Even a common language does not guarantee similarity of interpretation. For
example,
in the U.S. we purchase "cans" of various grocery products, but the British purchase
"tins". The
following are a few cultural differences that may cause marketers problems in attempting
to
market their products overseas.
Approaches to cultural factors
Keegan (1989) suggested a number of approaches to the study of culture including the
anthropological approach, Maslow's approach, the Self- Reference Criterion (SRC),
diffusion
theory, high and low context cultures and perception. There are briefly reviewed here.
Anthropological approach
Culture can be deep seated and, to the untrained can appear bizarre. The Moslem culture
of
covering the female form may be alien, to those cultures which openly flaunt the female
form.
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The anthropologist, though a time consuming process, considers behaviour in the light of
experiencing it at first hand. In order to understand beliefs, motives and values, the
anthropologist
studies the country in question anthropology and unearths the reasons for what,
apparently,
appears bizarre.
Maslow approach
In searching for culture universals, Maslow's (1964) hierarchy of needs gives a useful
analytical
framework. Maslow hypothesized that people's desires can be arranged into a hierarchy
of needs
of relative potency. As soon as the "lower" needs are filled, other and higher needs
emerge
immediately to dominate the individual. When these higher needs are fulfilled, other new
and still
higher needs emerge. The self-reference criterion (SRC)
Perception of market needs can be blocked by one's own cultural experience. Lee
(1965)4 suggested a way, whereby one could systematically reduce this perception. He
suggested
a four point approach.
a) Define the problem or goal in terms of home country traits, habits and norms.
b) Define the problem or goal in terms of the foreign culture traits, habits and norms.
c) Isolate the SRC influence in the problem and examine it carefully to see how it
complicates the
pattern.
d) Redefine the problem without the SRC influence and solve for the foreign market
situation.
The problem with this approach is that, as stated earlier, culture may be hidden or
non-apparent.
Uneartherning the factors in b) may, therefore, be difficult. Nonetheless, the approach
gives
useful guidelines on the extent for the need of standardization or adaption in marketing
planning.
Diffusion theory
Many studies have been made since the 1930's to assess how new innovations are
diffused in a
society. One of the most prolific writers was Everett Rogers8. In his book, "Diffusion of
Innovations" (1962) he suggested that adoption was a social phenomenon, characterized
by a
normal distribution
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Impact of Social and Cultural Environment on Marketing Industrial and Consumer
Products
Potential impacts from the Proposal considered relevant to indigenous cultural heritage in
proximity to Anketell Point include:
Possible disturbance of heritage sites during vegetation clearing, infrastructure
establishment or
operations;
Possible disturbance or contamination of heritage sites by the workforce during
construction or
operation; and Possible restrictions or access to certain areas.
Assessment of potential impacts
A preliminary assessment of known indigenous cultural heritage sites on the DIA register
within
proximity to the Proposal has identified a number of archaeological and ethnographic
sites
(Figure 3.26). Information available from the DIAs databases indicates that a total of 12
indigenous cultural heritage surveys have been completed in proximity to the Proposal;
many
completed over 15 years ago. Detailed surveys in consultation with Traditional Owners is
planned
for the Proposal area. Based on previous surveys in the Proposal area and the wider
Pilbara, it is
also considered likely that Aboriginal archaeological sites will be located in the vicinity
of major
creeks and rivers. The DIA register identifies numerous archaeological and ethnographic
sites that
are located in proximity to the Proposal. No rock shelters have been publically recorded
to date.

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Module III (7 Hours)
Global marketing management planning and organization: Global perspective
global
gateways global marketing management an old debate and a new view planning for
global
markets alternative market entry strategies organizing for global competition

Global marketing management planning and organization: Global perspective:
Confronted with increasing global competition for expanding markets, multinational
companies
are changing their marketing strategies and altering their organizational structures. Their
goals
are enhance their competitiveness and to ensure proper positioning in order to capitalize
on
opportunities in the global marketplace.
In fact, the flexibility of a smaller company may enable it to reflect the demands of global
markets and redefine its program more quickly than larger multinationals. Acquiring a
global
perspective is easy, but the execution requires planning, organizations, and a willingness
to try
new approaches-from engaging in collaborative relationships to redefining the scope of
company operations.
Global gateways
A gateway that global resource manager programs use to access resources outside a CS or
TSAF collection

GLOBAL MARKETING
Definition:
Marketing on a worldwide scale reconciling or taking commercial advantage of global
operational differences, similarities and opportunities in order to meet global objectives.

Why global marketing?
Here are three reasons for the shift from domestic to global marketing

Saturation of Domestic Markets
For a company to keep growing, it must increase sales. Industrialized nations have, in
many
product and service categories, saturated their domestic markets and have turned to other
countries
for new marketing opportunities. Companies in some developing economies have found
profitability by exporting products that are too expensive for locals but are considered
inexpensive
in wealthier countries.

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World Wide Competition
One of the product categories in which global competition has been easy to track is in
U.S.
automotive sales. Three decades ago, there were only the big three: General Motors,
Ford, and
Chrysler. Now, Toyota, Honda, and Volkswagen are among the most popular
manufacturers.
Companies are on a global playing field whether they had planned to be global marketers
or not.

E-Commerce

With the proliferation of the Internet and e-commerce (electronic commerce), if a
business is
online, it is a global business. With more people becoming Internet users daily, this
market is
constantly growing. Customers can come from anywhere. According to the book,
Global
Marketing Management, business-to-business (B2B) e-commerce is larger, growing
faster, and
has fewer geographical distribution obstacles than even business-to-consumer (B2C) e-
commerce.
GLOBAL MARKETING EVOLUTION

PHASE 1
Leverage of domestic capabilities:
Foreign market entry
Objective:- Economies of scale

PHASE 2
Expansion of foreign market presence
Objective :-Economies of Scope
PHASE 3
Coordination of global operations
Objective :-Exploit synergies
throughout network

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Benefits Of Global Marketing:

Economies of scale in production and marketing can be important competitive
advantages for
global companies

Unifying product development, purchasing, and supply activities across several countries
it
can save costs

Transfer of experience and know-how across countries through improved coordination
and
integration of marketing activities

Diversity of markets by spreading the portfolio of markets served brings an important
stability
of revenues and operations to many global firms

Helps to establish relationships outside of the "political arena"

Helps to encourage ancillary industries to be set up to cater the needs of the global player.

Disadvantages

Differences in consumer needs, wants, and usage patterns for products

Differences in consumer response to marketing mix elements

Differences in brand and product development and the competitive environment

Differences in the legal environment, some of which may conflict with those of the home
market

Differences in the institutions available, some of which may call for the creation of
entirely
new ones (e.g. infrastructure)

Differences in administrative procedures

Differences in product placement.

Global Marketing: A Old Debate and a New View

Global Marketing Management thought has undergone substantial revision

In the 1970s the argument was framed as standardization vs. adaptation

In the 1980s it was globalization vs. localization or Think local, act local

In the 1990s it was global integration vs. local responsiveness

The basic issue is whether the global homogenization of consumer tastes allowed global
standardization of the marketing mix

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PLANNING FOR GLOBAL MARKETS
Planning is a systematized way of relating to the future. It is an attempt to manage the
effects of external, uncontrollable factors on the firms strengths, weakness, objectives
and
goals to attain a desired end. Planning is the job of making things happen that might not
otherwise occur.
The difference between planning for a domestic company and for an international
company

Domestic Planning
International Planning
1.
Single language and nationality
1.
Multilingual/multinational/multicultural factors
2.
Relatively homogeneous market
2.
Fragmented and diverse markets
3.
Data available, usually accurate
3.
Data collection a large task requiring significantly
and collection easy
higher budgets and personnel allocation
4.
Political
factors
relatively
4.
Political factors frequently vital
unimportant
5.
Relative
freedom
from
5.
Involvement
in
national
economic
plans;
government interference
government influences business decisions
6.
Individual corporation has little
6.
"Gravitational" distortion by large companies
effect on environment
7.
Chauvinism helps
7.
Chauvinism hinders
8.
Relatively
stable
business
8.
Multiple environments, many of which are highly
environment
unstable (but may be highly profitable)
9.
Uniform financial climate
9.
Variety of financial climates ranging from over-
conservative to wildly inflationary
10
Single currency
10.
Currencies differing in stability and real value
11
Business "rules of the game"
11.
Rules diverse, changeable and unclear
mature and understood
12
Management
generally
12.
Management
frequently
unautonomous
and
accustomed
to
sharing
unfamiliar with budgets and controls
responsibilities
and
using
financial controls
Planning allows for rapid growth of the international function, changing markets,
increasing
competition, and the turbulent challenges of different national markets. The plan must be
blend
the changing parameters of external country environments with corporate objectives and
capabilities to develop a sound, workable marketing program.
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Planning relates to the formulation of goals and methods of accomplishing them, so it is
both a
process and a philosophy. Structurally, planning may be viewed as corporate, strategic, or
tactical. International Corporate Planning is essentially long term, incorporating
generalized
goals for the enterprise as a whole. Strategic planning is conducted at the highest levels of
management and deals with products, capital, and research, and long and short-term goals
of the
company. Tactical planning or market planning, pertains to specific and to the allocation
of
resources used to implement strategic planning goals in specific markets.
The Key success of planning is evaluating company objectives, including managements
commitment and philosophical orientation to international business.

THE PLANNING PROCESS
Guidelines and systematic procedures are necessary for evaluating international
opportunities
and risks and for developing strategic plans :
International planning process includes 4 phases:

T

Phase 1: Preliminary Analysis and Screening-Matching Comapany and Country
Needs
A critical first step in the international planning process is deciding in which existing
country
market to make a market investment. A companys strengths and weakness, products,
philosophies, and objectives must be matched with a countrys constraining factors and
market
potential. In the first part of the planning process, countries are analyzed and screened to
eliminate those that do not offer sufficient potential for further considerations. The next
step is
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to establish screening criteria against which prospective countries can be evaluated.
These
criteria are ascertained by an analysis of company objectives, resources, and other
corporate
capabilities and limitations. It is important to determine the reasons for enetering a
foreign
market and the returns expected from such an investment. Minimum market potential,
minimum profit, return on investment, accepatable competitive levels.

Phase 2: Adapting the Marketing Mix to Target Makets:
When target markets are slelected, the market mix must be evaluated in light of the data
generated in the phase 1. Incorrect decisions at this point lead to products inappropriate
for the
intended market or to costly mistakes in pricing, advertising, and promotion. The primary
goal
of phase 2 is to decide on am marketing mix adjusted to the cultural constraints imposed
by the
uncontrollable elements of the environment that effectively achieves corporate objectives
and
goals. Phase 2 also permits the marketer to determine possibilities for applying marketing
tactics across national markets.//

Phase 3: Developing the Marketing Plan
At this stage of the planning process, a marketing plan is developed for the target market-
whether it is a single country or a global market segment. The marketing plan begins witn
a
situation analysis and culminates in the selection of an entry mode and a specific action
program for the market. The specific plan establishes what is to be done, by whom, how
it is to
be done, and when. Included are budgets and sales and profit expectations.

Phase 4: Implementation and Control
A go decision in phase 3 triggers implementation of specific plans and anticipation of
successful marketing. However, the planning process does not end at this point. All
marketing
plans require coordination and control during the period of implementation. An
evaluation and
control system requires performance-objective action, that is, bringing the plan back on
track
should standards of performances fall short. A global orientation facility the difficult but
extremely important management tasks of coordinating and controlling the complexities
of
international marketing.

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ALTERNATIVE FOREIGN MARKET ENTRY STRATEGIES:
When a company makes the commitment to go international, it must choose an entry
strategy.
This decision should reflect an analysis of market characteristics ( such as potential sales,
strategic importance, cultural differences, and country restrictions) and company
capabilities
and characteristics, including the degree of near-market knowledge, marketing
involvement,
and commitment that management is prepared to make.

Alternative Market-Entry Strategies
Import regulations may be imposed to protect health, conserve foreign exchange, serve as
economic reprisals, protect home industry, or provide revenue in the form of tariffs.
A company has four different modes of foreign market entry from which to select

EXPORTING
Exporting can be either direct or indirect. In direct exporting the company sells to a
customer in
another country. In contrast, indirect exporting usually means that the company sells to a
buyer
(importer or distributor) in the home country who in turn exports the product. The
internet is
becoming increasingly important as a foreign market entry method. Direct sales,
particularly for
high technology and big ticket industrial products a direct sales force may be required in
a foreign
country. This may mean establishing an office with location expatriate managers and
staff
depending of course on the size of the market and potential sales revenues.

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CONTRACTUAL AGREEMENTS
Contractual agreements are long term, non-eqauity associations between a company and
another
in a foreign market. Contractual agreements involve the transfer of technology, processes,
trademarks, or human skills.
Contractual forms of market entry include:

(1)Licensing: A means of establishing a foothold in foreign markets without large capital
outlays is licensing of patent rights, trademark rights, and the rights to use technological

(2)Franchising: In licensing the franchiser provides a standard package of products,
systems,
and management services, and the franchisee provides market knowledge, capital, and
personal
involvement in management.
STRATEGIC INTERNATIONAL ALLIANCES
Strategic alliances have grown in importance over the last few decades as a competitive
strategy in global marketing management. A strategic international alliance (SIA) is a
business
relationship established by two or more companies to cooperate out of mutual need and to
share
risk in achieving a common objective.. SIAs are sought as a way to shore up weaknesses
and
increase competitive strengths. SIAs offer opportunities for rapid expansion into new
markets,
access to new technology, more efficient production and marketing costs.

An example of SIAs in the airlines industry is that of the Oneworld alliance partners
made up of
American Airlines, Cathay Pacific, British Airways, Canadian Airlines, Aer Lingus, and
Qantas.

INTERNATIONAL JOINT VENTURES
International joint ventures (IJVs) have been increasingly used since 1970s.JVs are
used as a
means of lessening political and economic risks by the amount of the partners
contribution to the
venture. JVs provide a less risky way to enter markets that pose legal and cultural barriers
than
would be the case in an acquisition of an existing company. A joint venture is different
from
strategic alliances or collaborative relationships in that a joint venture is a partnership of
two or
more participating companies that have joined forces to create a separate legal entity.
Joint
ventures are different from minority holdings by an MNC in a local firm.
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Four factors are associated with joint ventures:
1. They are established, separate, legal entities
2. They acknowledge intent by the partners to share in the management of the Jv.
3. They are partnerships between legally incorporated entities such as companies,
chartered
organizations, or governments, and not between indiciduals
4. Equity positions are held by each of the partners.

CONSORTIA
Consortia are similar to joint ventures and could be classified as such except for two
unique
characteristics.
(1)They typically involve a large number of participants.
(2)They frequently operate in a country or market in which none of the participants is
currently
active.
Consortia are developed to pool financial and managerial resources and to lessen risks

DIRECT FOREIGN INVESTMENT
A fourth means of foreign market development and entry is direct foreign investment.
Companies may manufacture locally to capitalize on low-cost labor, to avoid high import
taxes,
to reduce the high costs of transportation to market, to gain access to raw materials, or as
a
means of gaining market entry. Firms may either invest in or buy local companies or
establish
new operations facilities.

Comparison of Market Entry Options
The following table provides a summary of the possible modes of foreign market entry:
Comparison of Foreign Market Entry Modes
Mode
Conditions
Favoring
Advantages
Disadvantages
this Mode
Exporting
Limited sales potential in
Minimizes risk and
Trade
barriers
&
target
country;
little
investment.
tariffs add to costs.
product
adaptation
Speed of entry
Transport costs
required
Maximizes
scale;
Limits
access
to
Distribution
channels
uses
existing
local information
close to plants
facilities.
Company viewed as
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High
target
country
an outsider
production costs
Liberal import policies
High political risk
Licensing
Import
and
investment
Minimizes risk and
Lack of control over
barriers
investment.
use of assets.
Legal protection possible
Speed of entry
Licensee
may
in target environment.
Able to circumvent
become competitor.
Low sales potential in
trade barriers
Knowledge
target country.
High ROI
spillovers
Large cultural distance
License
period
is
Licensee lacks ability to
limited
become a competitor.
J oint
Import barriers
Overcomes
Difficult to manage
Ventures
Large cultural distance
ownership
Dilution of control
Assets cannot be fairly
restrictions
and
Greater
risk
than
priced
cultural distance
exporting
a
&
High sales potential
Combines
licensing
Some political risk
resources
of
2
Knowledge
Government
restrictions
companies.
spillovers
on foreign ownership
Potential
for
Partner may become
Local
company
can
learning
a competitor.
provide skills, resources,
Viewed as insider
distribution
network,
Less
investment
brand name, etc.
required
Direct
Import barriers
Greater knowledge
Higher
risk
than
I nvestment
Small cultural distance
of local market
other modes
Assets cannot be fairly
Can better apply
Requires
more
priced
specialized skills
resources
and
High sales potential
Minimizes
commitment
Low political risk
knowledge
May be difficult to
spillover
manage
the
local
Can be viewed as
resources.
an insider

ORGANIZING FOR GLOBAL COMPETITION
An international marketing plan should optimize the resources committed to company
objectives. The organizational plan includes the type of organizational arrangements to be
used,
and the scope and location of responsibility. Companies are usually structured around one
of
three alternatives:
1. Global product divisions responsible for product sales throughout the world;
2. Geographical divisions responsible for all products and functions within a given
geographical
area; or
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3. A matrix organization consisting of either of these arrangements with centralized sales
and
marketing run by a centralized functional staff, or a combination of area operations and
global
product management.

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Module IV (6 Hours)
Products and services for consumers: Quality Green marketing and product
development,
products and culture analyzing product components for adaptation products for
consumers in
global markets, product development, product adaptation, product standardization,
marketing
consumer services globally marketing of services, brands in international markets
Demand in global business to business markets quality and global standards business
services
trade shows' crucial part of business to business marketing relationship markets in
business to
business context

PRODUCTS AND SERVICES FOR CONSUMERS

QUALI TY:

The ability of a product or service to meet customer needs. It can be defined on 2
dimensions,

Both are important but consumer perception of a quality product often has to do more
with
market perceived quality. It is also measured in many industries by objective third
parties.
Maintaining performance quality is critical, but frequently a product that leaves the
factory at
performance quality is damaged as it passes through the distribution chain.
A product may have to change in a number of ways to meet the physical or mandatory
requirements of a new market, ranging from simple package changes to total redesign of
the
physical core product.
Green marketing is a term used to identify concern with the environmental consequences
of a variety of marketing activities.
Quality is associated with customer satisfaction. It is a means to an end.

Q: QUEST FOR EXCELLENCE.
U: UNDERSTANDING CUSTOMERS NEEDS.
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A: ACTION TO ACHIEVE CUSTOMERS APPRECIATION.
L: LEADERSHIP.
I: INVOLVING ALL PEOPLE.
T: TEAM SPIRIT TO WORK FOR A COMMON GOAL.
Y: YARDSTICK TO MEASURE PROGRESS.

GREEN MARKETING
At the forefront of the green movement, with strong public opinion and specific
legislation
favoring environmentally friendly marketing and products.
Green marketing is a term used to identify concern with the environmental consequences
of a
variety of marketing activities. The designation that a product is environmentally
friendly is
voluntary, and environmental success depends on the consumer selecting the eco-friendly
product. In some countries each level of the distribution chain is responsible for returning
all
packaging, packing, and other waste materials up the chain

PRODUCTS AND CULTURE:

A product is the sum of physical and psychological satisfactions it provides the user. A
product is more than a physical item. It is a bundle of satisfaction that the buyer receives.
A
products physical attributes generaly are required to create its primary function. The
meaning
and value imputed to the psychological attributes of a product can vary among cultures
and are
perceived as negative or positive.

To maximize the bundle of satisfaction received and to create positive product attributes
rather than negative ones, adaptation of the nonphysical features of a product. The
adoption of
some products by consumers can be affected as much by how the product concept
conforms to
norms, values, and behavior patterns as by its physical or mechanical attributes.

An important first step in adapting a product to a foreign market is to determine the
degree
of newness as perceived by the intended market. Any idea perceived as new by a group
of
people is an innovation. Product diffusion is the process by which innovation spreads. A
critical
factor in the newness of a product is its effect on established patterns of consumption and
behavior.

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Analyzing the 5 characteristics of an innovation can assist in determining the rate of
acceptance or resistance of the market to a product. A products,

The perceived marginal value of the new product relative to the
old.
With acceptable behavior, norms, values.
The degree of complexity associated with product use.
The degree of economic and/or social risk associated with product use.
The ease with which the product benefits can be communicated.

After the degree of its acceptance or resistance.

ANALYZI NG PRODUCT COMPONENTS FOR ADAPTATI ON:

A product is a multidimensional, and the sum of all its features determines the bundle of
satisfactions received by the consumer.

Core Component: It consists of the physical product, the platform that contains the
essential
technology and all its design and functional features. It is on the product platform that
product
variations can be added or deleted to satisfy local differences. Alterations in design,
functional
features, flavors, color can be made to adapt the product to cultural variations. Functional
features
can be added or eliminated depending on the market.

Packaging Component:

Includes style features, packaging, labeling, trademarks, brand name, quality, price of a
products package. Packaging component frequently require both discretionary and
mandatory
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changes. Care must be taken to ensure that corporate trademarks and other parts of the
packaging component do not have unacceptable symbolic meanings. Labeling law create
a
special problem for companies selling products in various markets with different labeling
laws
and small initial demand in each.

Support Services Component:

Includes repair and maintenance, instructions, installations, warranties, deliveries and the
availability of spare parts. Repair and maintenance are difficult in developing countries.

The product component model can be a useful guide in examining adaptation
requirements of products destined for foreign markets. A product should be carefully
evaluated
on each of the 3 components for mandatory and discretionary changes that may be
needed.

MARKETI NG CONSUMER PRODUCTS & SERVI CES GLOBALLY:

Products are often classified as tangible, whereas services are intangible. The
intangibility
of services results in characteristics unique to a services. It is inseparable, heterogeneous,
and
perishable. A service can be marketed as a B2B or consumer service.

There are various barriers to entering global markets for consumer services:-

PRODUCTS AND SERVI CES FOR BUSI NESS:

B2B marketing requires close attention to the exact needs of customers. Basic differences
across various markets are less than for consumer goods, but the motives behind
purchases
differ enough to require a special approach. Global competition has risen to the point that
industrial goods marketers must pay close attention to the level of economic and
technological
development of each market to determine the buyers assessment of quality. Companies
that
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adapt their products to these needs are the ones that should be the most effective in the
market
place.

The demand for products and services in B2B markets is by nature more volatile than in
most common markets. The demand also varies by level of economic development and
the
quality of educational systems across countries. Ultimately, product or service quality is
defined
by customers, but global quality standards such as ISO 9000 are being developed that
provide
information about companys attention to matters of quality. After sale services are
hugely
important aspect of industrial sales. The demand for other kinds of business services is
burgeoning around the world. Trade shows are an especially important promotional
medium in
B2B marketing.

product adaptation

Definition
Marketing strategy whereby new products are based on modification or some
improvement on
existing or competing products, and not on pioneering innovations. It is the strategy of a
follower.

PRODUCT STANDARDISATION
Even though product adaptation becomes inevitable in the case of certain products, it
should
be realized that there is sound economics logic behind a product policy which suggests
uniformity in all markets. Terpstra has identified six factors which may favour
international
product standardization.

1. Economies of Scale in Production: When only one standard version is marketed in all
the
areas, it will be possible to have larger production runs, which will result in lower
manufacturing costs.

2. Economies in Product Research and development: Similarly, product standardization
will
allow recovery of all costs incurred in product research and development from the entire
sales. This will reduce the recovery period as also lower the break-even point. Moreover,
additional expenditure on adapting product to each individual market can be avoided.

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3. Economies in Marketing. When the same product is to be launched in different
markets,
economies can be achieved in terms of sales literature, sales force training, inventory
management, advertising and after-sales requirements.

There are 3 marketing factors which may reinforce the standardization level:

1. Consumer
Mobility:
Consumers
are
becoming
increasingly
more
mobile
and
transcontinental travel in now fairly common. A consumer who is loyal to a particular
brand in his home market is more likely to remain loyal in a foreign country as well when
the product in question is the same.

2. Made-in Image: When the name of a country is associated with a high standard of
quality
in the minds of the consumers, a product manufactured in that country may enjoy a
psychological premium in the foreign markets.

3. Impact of Technology: Industrial products generally tend to have standard and
specifications and do not require much adaptation for foreign markets unless climatic and
similar considerations call for it.

Consumer services globally marketing of services

MARKETING OF SERVICE
Advice regarding adapting products for international consumer markets also applies to
adapting
services or intangible products
However, many consumer services are distinguished by four unique characteistics:
1.intangibility,
2.inseparability,
3.heterogeneity, and
4.perishability

Most services are inseparable and require production and consumption to occur almost
simultaneously; thus, exporting is not a viable entry method for them.

Globally, consumer services marketers face the following four barriers:
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protectionism,
controls on transborder data flows,
protection of intellectual property, and
cultural requirements for adaptation

BRANDS I N I NTERNATI ONAL MARKETS:

A GLOBAL BRAND is defined as the worldwide use of a name, term, symbol, design or
combination thereof intended to identify goods or services of one seller and to
differentiate
them from those of competitors. A successful brand is the most valuable resource a
company
has. Brand image is at the very core of business identity and strategy.
The brands are Kodak, Sony, Coca-cola, Toyota, Marlboro, Kel ogg, Levis, Caterpil ar,
Nestle,
Mars, P&G, Gillette, and BMW.

A global brand gives a company a uniform worldwide image that enhances efficiency and
cost savings when introducing other products associated with the brand name, but not all
companies believe a single global approach is the best.

Country of origin (COE) can be defined as any influence that the country of
manufacture, assembly or design has on a consumers positive or negative perception of a
product.
TOP 20 GLOBAL BRANDS:
1. COCA-COLA
2. MICROSOFT
3. IBM
4. GE
5. INTEL
6. NOKIA
7. DISNEY
8. MC DONALDS
9. MARLBORO
10. MERCEDES
11. FORD
12. TOYOTA
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13. CITIBANK
14. HP

Demand in global business to business markets
Demand in Global Business-to-Business Markets
Demand in industrial markets is by nature more volatile
Stages of industrial and economic development affect demand for industrial products
The level of technology of products and services make their sales more appropriate for
some countries than others
Cyclical swings in demand
Professional buyers tend to act in concert
Derived demand accelerates changes in markets
Derived demand can be defined as demand dependent on another source
Minor changes in consumer demand mean major changes in related industrial demand
Boeing
Worldwide demand for travel services related to demand for new airplanes
Commercial aircraft industry one of the most volatile
Quality and global standards:
International standards, which have general applicability for basic medical education, can
be
defined. These take account of the variations among countries in medical education due
to
differences in teaching tradition, culture, socio-economic conditions, the health and
disease
spectrum, and different forms of health care delivery systems. Such differences can also
occur
within individual countries. The scientific basis of medicine is universal. The task of
medical
education everywhere is the provision of health care. Notwithstanding variations, there is
a
high degree of equivalence of structure, process and product of medical schools
worldwide.

A global set of standards for medical education is not to be equated with a global core
curriculum. The core of the medical curriculum consists of the fundamental theory and
practice of medicine, specifically basic biomedical, behavioural and social sciences;
general
clinical skills, clinical decision skills, communication abilities and medical ethics, and
must be
Addressed by all medical schools aiming to produce safe practitioners of quality.

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Business services
For many industrial products the revenues from associates services exceed the revenues
from the products
Cellular phones
Printers
Leasing capital equipment
Services not associated with products
Boeing at-sea-satellite-launch services
Ukrainian cargo company space rental on giant jets
Professional services (advertising, banking, healthcare, etc.)
Client followers
Mode of entry
Licensing
Franchising
Direct investment
Protectionism
Restrictions on cross-border data flows
Stages of Economic Development:

The traditional
society

The age of m ass
Preconditions
consum ption
for take off

Stages of
Econom ic
Developm ent

Drive to

m aturity
Take off

Trade Shows: A Crucial Part of Business-to-Business Marketing
Secondary methods for marketing:
Advertising in print media
Catalogs
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Web sites
Direct mail
Trade shows have become the primary and most important vehicle for doing business in
many foreign countries
Total annual media budget spent on trade events:
Europeans 22 percent
Americans 5 percent
Trade shows
Provide the facilities for a manufacturer to exhibit and demonstrate products to
potential users
Allow manufacturers to view competitors products
Are an opportunity to create sales and establish relationships with agents,
distributors, franchisees, and suppliers
Online trade shows
Become useful in difficult economic and/or political circumstances
Are obviously a less than adequate substitute for live trade shows
Relationship Marketing in Business-to-Business Contexts
Not a matter of selling the right product the
first time
Instead selling a continuously changed the product to keep it right over time
The objective of relationship marketing
To make the relationship an important attribute of the transaction
Differentiating oneself from competitors
Using the Internet to facilitate relationship building and maintenance
Cisco Systems
Solar Turbines Inc.
Customer
Sales engineer
Application engineer
Engineering and control systems
Project manager
Manufacturing technicians
Customer services
Suppliers
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Module V (8 Hours)
Licensing,
Strategic
Alliances,
FDI:
Introduction,
Licensing,
Strategic
Alliances,
Manufacturing Subsidiaries, Entry Modes and Marketing Control, Optimal Entry
Strategies.
Global Distribution
Introduction,
Distribution
as
Competitive
advantage,
Rationalizing
Local
Channels,
Wholesaling, Retailing, Global Logistics, Parallel Distribution, Global Channel Design
International expansion of retailers international retailing defined retail format
variations
in different markets general merchandise: retailing issues in international retailing

LICENCING:

A means of establishing a foothold in foreign markets without large capital outlays is
licensing patent right, trademarks right, and the rights to use technological processes are
granted
in foreign licensing. It is a favorite strategy for small and medium sized companies,
although it
is by no means. Common examples of industries that use licensing arrangements in
foreign
markets are television programming and pharmaceuticals. Not many confine their foreign
operation to licensing alone it is generally viewed as a supplement to exporting or
manufacturing rather than the only mans of entry into foreign market.

Although licensing may be the least profitable way of entering a market, the risks and
headaches are fewer than for direct investments. It is a legitimate means of capitalizing
on
intellectual property in a foreign market, and such agreements can also benefit the
economies of
target countries.
A quick and easy entry tool with little capital investment in the foreign markets.
Some countries offer licensing as the only means of tapping the market.
Licensing is also considered to be an effective tool for life extension of products during
their stage of maturity in order of their life cycle.
Licensing is a good alternative to start foreign production and marketing activity in a
destination country which has economic inflation, shortages of skilled labour, increasing
domestic and foreign governmental regulation and restriction, and severe international
competition.
In the licensing arrangement periodic royalties are guaranteed, whereas shared income
from investment fluctuates and stays risky.
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The company which has a strong domestic base can benefit through licensing
arrangement
in developing customized products without expensive research.
Licensing provides an alternative when exports are no longer profitable because of
intense
competition.
Licensing can reduce transportation costs and help promoting exports in
non-competitive
markets.
One of the major advantages of licensing is the immunity over stringent political
intervention as expropriation.

STRATEGIC ALLIANCES
A strategic alliance is a type of cooperative agreements between different firms, such as
shared
research, formal joint ventures, or minority equity participation. The modern form of
strategic
alliances is becoming increasingly popular and has three distinguishing characteristics
1. They are frequently between firms in industrialized nations.
2. The focus is often on creating new products and/or technologies rather than
distributing
existing ones.
3. They are often only created for short term durations.

TYPES OF STRATEGIC ALLIANCES
Technology-based alliances
Production-based alliances
Distribution-based alliances
Resource-based alliances
Benefits
The organizational efficiency will be improved with the flexibility and informality in
strategic alliances.
Alliances developed strategically offer access to new markets and technologies.
The risk and expenses are shared among the allies reducing the impact of risk on the
participating members.
The alliance would help the partners build their independent brand and manage retailing
of
goods and services.
Alliances can take various formsfrom simple research and development deals to heavy
budget projects.
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Manufacturing Subsidiaries
A subsidiary, subsidiary company, daughter company,or sister company is a
company that is
completely or partly owned by another corporation that owns more than half of the
subsidiary's stock, and which normally acting as a holding corporation which at least
partly or
(when as) a parent corporation, wholly controls the activities and policies of the daughter
corporation. The subsidiary can be a company, corporation, or limited liability company.
In some
cases it is a government or state-owned enterprise. The controlling entity is called its
parent
company, parent, or holding company.
An operating
subsidiary is
a
business
term
constantly
used
within
the
United
States railroad industry. In the case of a railroad, it refers to a company that is a
subsidiary but
operates with its own identity, locomotives and rolling stock. In contrast, a non-operating
subsidiary would exist on paper only (i.e. stocks, bonds, articles of incorporation) and
would use
the identity and rolling stock of the parent company.

The entry modes
Exporting
Contractual agreement
Licensing
Franchising
Joint venture
Strategic alliance
Wholly-owned subsidiaries

Market control
Each international market is different, so strategies and controls will vary
Distance, language differences and cultural variations cause communications problems
Resentment from subsidiaries of HQ control
Local marketing plan will need to controls appropriate for HQ and subsidiaries.

International context of control
Obtaining performance information
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Principles of a control system.
Simple process of control
Control techniques
Effective control systems
Benchmarking
Balanced Scorecard

Principles of a control system
Aim to translate strategic plans into actions (Drummond and Ensor 2001).
Ensure that behaviour and operations conform to corporate objectives
Organisations need to measure, compare and analyse variances so that timely
corrections can
be made
Effective control involves the measurement of inputs as well as outputs.
Control is important because:
1. You cant manage what you cant measure adage
2. Gaining importance to measure ROI in marketing
3. Moves afoot to include branding in financial accounts.
Global Distribution
Introduction,
A worldwide computerized reservation network used as a single point of access for
reserving
airline seats, hotel rooms,
rental
cars,
and
other travel related items by
travel agents, online
reservation sites, and large corporations.
The premier global distribution systems are Amadeus, Galileo, Sabre, and Worldspan.
They are
owned and operated as joint ventures by major airlines, car rental comopanies, and hotel
groups.
Also called automated reservation system (ARS) or computerized reservation system
(CRS).

Distribution channels

Getting the product to the target market can be a costly process

Forging an aggressive and reliable channel of distribution may be the most critical and
challenging task facing the international firms

Each market contains a distribution network with many channel choices whose structures
are
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In some markets the distribution structure is multi-layered, complex, inefficient, even
strange

Competitive advantage will reside with the marketer best able to build the most efficient
channel
Channel of distribution or marketing channels is defined as the whole set of interrelated
marketing agencies which are involved in making the goods available form the producer
to
the consumers.
Channel of distribution structures
s, the
passage of ownership (title), and the buying and selling negotiations between producers
and
middlemen and between middlemen and customers

producer
to use

and services reflect existing competition, market characteristics, tradition, and economic
development
eloped marketing infrastructure
such as
those found in many emerging markets to the highly complex, multi-layered system
found in
Japan
Japanese distribution structure
a structure dominated by many small middlemen dealing with many small
retailershigh
density of middlemen,

stemthe small retailer
Distribution in Japan has long been considered the most effective non-tariff barrier to the
Japanese market .The Japanese distribution structure is different enough from its U.S. or
European counterparts
It has four distinguishing features:
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by a unique culture
the small retailer.
Channel factor:
Manufacturers depend on wholesalers for a multitude of services to other members of
the distribution network. Financing , physical distribution , warehousing , inventory ,
promotion and payment collection are provided to other channel members by wholesalers
.
the system works because wholesalers and all other middlemen downstream are tied to
manufacturers by a set of practices and incentives designed to ensure strong marketing
support for their product and to exclude rival competitors from the channel .wholesaler
typically act as agent middlemen and extend the manufacturers control through the
channel
the following element
1. Inventory financing :- sales are made on consignment with credit extending for
several
months .
2.Cumulative rebates :- rebates are given annually for any number of reasons including
quantity purchases , early payments , achieving sales target , performing services ,
maintaining specific inventory levels , participating in sales promotions , remaining loyal
to
suppliers , maintaining manufacturers price policies , cooperating and contributing to
overall
success.
3. Merchandise returns :- all unsold merchandise may be returned to the manufacturers.
4. Promotional support :- intermediaries receive a host of displays , advertising layouts ,
management educations programs , in store demonstrations and other dealer aids that
strengthen the relationship between the middlemen and the manufacturer.
Distribution patterns
Even though patterns of distribution are in a state of change and new patterns are
developing , international marketers need a general awareness of the traditional
distribution
base . The traditional system will not change overnight and vestiges of it will
remain for
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years to come .Nearly every international firm is forced by the structure of the market to
use at least some middlemen in the distribution arrangement.
The following description should convey a sense of the variety of distribution patterns.
General patterns : generalizing about internal distribution channel patterns of various
countries is almost as difficult as generalizing about behaviors patterns of people. Despite
similarities, marketing channels are not the same throughout the world. Marketing
methods
taken for granted in the United States are rare in many countries.
Middlemen Services:- The service attitudes of people in trade vary sharply at both the
retail and whole sale levels from country to country .

Line Breadth:- every nation has a distinct pattern relative to the breadth of line
carried by wholesalers and retailers . The distribution system of some countries is
characterized by middlemen who carry or can get everything in other every middlemen is
a
specialist dealing only in extremely narrow lines. Government regulation in some
countries
limit the breadth of line that can be carried by middlemen and licensing requirement to
handle certain merchandise are not uncommon.

Costs and Margins :- cost levels and middlemen margins vary widely from country
to country depending on the level of competition , service offered , efficiencies for
inefficiencies of scale and geographic and turnover factors related to market size
,purchasing power , tradition and other basic determinants.

Channel Length:-some correlation may be found between the stage of economic
development and the length of marketing channels . In every country , channels are likely
to
be shorter for industrial goods and high priced consumer goods than for low priced
products. In general , there is an inverse relationship between channel length and the size
of
the purchase .combinations wholesaler retailer or semi wholesaler exist in many
countries
adding one or two link to the length of the distribution chain.

Nonexistent Channels : one of the things companies discover about international
channel of distribution patterns is that in many countries adequate market coverage
through
a simple channel of distribution is nearly impossible. In many instances , appropriate
channels do not exist .

Blocked Channels :- International marketers may be blocked from using the
channel of their choice. Blockage can result from competitors already established lines in
the various channel or from trade associations or cartels having closed certain channels.
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Stocking :- the high cost of credit , the danger of loss through inflation , a lack of
capital and other concerns cause foreign middlemen in many countries to limit
inventories
this often results in out of stock conditions and sales lost to competitors.

Power and Competition :-distribution power tends to concentrate in countries where a
few large wholesalers distribute to a mass of small middlemen . large wholesalers
generally
finance middlemen downstream . the strong allegiances they command from their
customers enables them to effectively block existing channels and force an outsiders to
rely
on less effective and more costly distribution .

Distribution patterns are always evolving and new patterns are developing and marketing
channels are not the same throughout the world

Distribution as Competitive advantage
Which is worlds largest seling biscuit brand? Its that thing in yelow wrapper with that
baby pic
on it that has ruled the Indian market for some 75 years now. Yes, its Parle-G. It is a
biscuit that
has remained a strong favourite in the market despite not being very differentiated- a
simple
glucose biscuit. Significantly, they havent done much wrong over the years, sticking to a
simple
yet effective strategy- Be Available. What really differentiates Parle-G in the
marketplace is their
strong Sales and Distribution system. They make it a point never to lose out on a
customer by
being available in the remotest of locations- including several villages with populations
of just
about 500 people. Parle has an extensive network of over 1500 wholesalers who in cater
to nearly
450,000 retailers. In a way thus, they have beaten competition not by spending multi
millions on
advertising but by using their extensive sales and distribution network as the key
differentiating
factor.
There are several other examples of companies who have used this approach to become
industry
leaders. Which channel a company uses to reach its consumers and how effectively it
utilizes
these channels can go a long way in determining the success of their marketing strategy.
Traditionally, there are 4 levels available between the manufacturer and the consumer.
With changes in the market place, this structure has changed dramatically. Earlier, most
companies used one of the above channels to reach its customers leaving little room for
differentiation on this basis. That however no more holds true with sales and distribution
becoming an integral part of companies business model. Companies now look to beat
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competition by creating value for customers through their sales and distribution
structures. Take
Dell for example. Dell redefined the entire PC industry by using a direct selling model,
the
shipping companies being the only intermediary. They entered the industry at a difficult
but
quickly adapted to the retail chain evolution by adopting a radically different path and
taking
orders on the phone. The move paid off as they have gone to become one of the industry
leaders.
Rationalizing Local Channels,

stribution channel configuration for entry into a foreign markets is rarely
optimal once the product is established on the market

oing a good enough job
in the market

Wholesaling
The sale and distribution of goods to users other than end consumers. Wholesaling
involves
selling merchandise to retailers, wholesalers and merchants, or to industrial, commercial
and
institutional users. A wholesaler can act as a middleman, brokering deals between these
businesses. Wholesaling often occurs when large quantities of merchandise are
reassembled,
sorted, then repackage, and distribute in smaller lots.

Wholesaling Functions

contact

reveals important clues as to the countrys stage of development
Full-service wholesalers can usually be counted on in most countries
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-ins with existing brands and chains
they might not be wil ing to distribute the firms products
-service concept should be carefully assessed for each country
entered, since a full-service wholesaler will retain market knowledge and
control the marketing.
limited services wholesalers might be more beneficial,
because of increased control and more management learning.
Power and Competition
The size distribution of wholesalers in many countries approximates the well-known
80-20 rule
80 percent of the transactions are handled by 20 percent of the firms Efficiency
The trend toward integration is based on the technological developments that have make
large-
scale economies and technical coordination feasible
These vertically and horizontally integrated firms become gate-keepers to the local
market
entry barriers.

Retailing
Retail is the sale of goods and services from individuals or businesses to the end-user.
Retailers
are part of an integrated system called the supply chain. A retailer purchases goods or
products in
large quantities from manufacturers directly or through a wholesale, and then sells
smaller
quantities to the consumer for a profit. Retailing can be done in either fixed locations like
stores
or markets, door-to-door or by delivery. Retailing includes subordinated services, such as
delivery. The term "retailer" is also applied where a service provider services the needs of
a large
number of individuals, such as for the public. Shops may be on residential streets, streets
with few
or no houses or in a shopping mall. Shopping streets may be for pedestrians only.
Sometimes a
shopping street has a partial or full roof to protect customers from precipitation. Online
retailing,
a type of electronic commerce used for business-to-consumer (B2C) transactions and
mail order,
are forms of non-shop retailing.
Different economies have different retail structures (e.g. Gillette blades are sold through
drugstores in the US, tobacco shops in Italy, department stores in Germany, on the street
in
Moscow, at movie counters in Thailand, & from traveling vans in India)

GLOBAL LOGISTICS the transportation & storage activities necessary to transfer
the
physical product from the manufacturing plants & warehouses in different countries to
various
local market countries
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Nowadays, global distribution has been consolidated such that fully integrated
transportation from
point to point across the world is possible at low cost.
Air Express
Technical innovations in computerized inventory systems and numerically controlled
machines
for good handling made possible the growth of air express systems
Ocean Carriers
For shipments of bulky and low-value-per-unit products
Ocean vessels are still the most economical carrier alternative overseas
There have been a number of global carrier alliances in the shipping industry due to the
savings
involved in sharing resources and the advantage in providing integrated one-stop services
to the
shipper
Overland Transportation
The increasing volume of international trade has put the inland distribution system under
pressure
One North American solution has been the roll-on-roll-off system in which a loaded
container is
simply rolled onto a railcar and shipped by rail for part of the way, avoiding congested
freeways

The competitive need on the part of global companies to be close to the customer and
provide
fast and efficient service
This places increased demand on warehousing and inventory management

Parallel Distribution
Parallel distribution on genuine goods by intermediaries other than authorized channel
members
Three main factors motivate entrepreneurs to engage in gray trade:
1. Wide price discrepancies between national markets
2. Limited availability of certain models or versions in one market
3. Inexpensive logistics means that transportation can be accomplished with relative ease
Global Channel Design
Two major considerations:
1. What type of channel/middlemen should be used to ensure that the strategic marketing
objectives are met in that country?
2. What are the important functions in the channel network for that country?
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REVISIT YOUR FSAS
Key success factors and FSAs vary across countries and across channels
WHAT CHANNELS ARE AVAILABLE?
Once you identify the critical features of your channel network, find out if the country
market
possesses these channels
CHANNEL TIE-UP
Channel members might be difficult to enlist due to entry barriers, competition, and
special trade
allowances
COORDINATION & CONTROL
Once a distribution network is established, coordination & control from a centralized
headquarters
should be feasible
International expansion of retailers
As the global economy continues to stumble, retailers are struggling to achieve growth
domestically.
While there are pockets of opportunity, many retail sectors in the United States are
saturated and not
expected to grow much, if at all. Growth may be heavily dependent on winning share
from
competitors, typically a taxing effort. Consequently, many retailers are looking beyond
their borders
or potential growth. Foreign markets offer attractive growth rates fueled by burgeoning
middle
classes, lower competitive intensity, and greater pricing flexibility. Additionally, a global
presence
may help retailers lessen their risk exposure to an economic downturn in any one market.
Some of the
biggest historical barriers to entering foreign markets have eroded. Many foreign
governments have
opened their countries to outside investment. Technological advances have revolutionized
consumers
and companies ability to communicate and share information. Similarly, enhancements
in
infrastructure around the world have made producing and transporting goods
considerably more
feasible.
However, entering new countries is not as simple as signing a lease and opening the
doors. Market
entry requires careful consideration of external risks and internal parameters in order to
understand
market dynamics, requisite competencies, and financial implications. There is no one
size fits al
odel. Based on these considerations, retailers should select a method of entry that
balances two
critical but often conflicting interests: speed and control.

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Introduction of retailing

Retailing is going through a process of rapid internalization: the retailing environment
worldwide is undergoing dynamic changes; with local retailers defensively countering
competitive moves of mammoth chains or successfully duplicating their strategies.

Major international retailers are no longer competing only for mature markets-and for
consumers in highly industrialized countries. Retailers competitive arena has expanded
to al
emerging markets, where they are responding to an increasing affluence of consumers
and to
their increasingly sophisticated consumer related demands. Numerous successful global
retailers
and consumer-product-companies-cum-retailers such as Wal-Mart (US),
Promodes/Carrefour
(France), Louis Vuitton Moet Henessy(France).

International expansion of retailers
Retailers are expanding internationally to gain competitive advantage and to increase
sales, profits, and overall firm performance. As they expand beyond their home country
borders,
retailers also take cost advantage of cost savings and learn from experiences in a way that
could
further enhance home-country operations
Ex:- Tesco, the British retailer, for example, is using its stores in central and eastern
Europe as a testing ground for ideas hat are intended for application in the home market:
the
new Tesco extra in Newcastle., is based on a Tesco hypermarket in Hungary.

Retailers from America are expanding in Latin America, Asia and Europe. For example
Wal-Mart has adopted an aggressive strategy for international penetration; its purchase of
the
Asda group (UK) has boosted its international sales to $25 billion, which is only a
fraction of its
total sales figure of $165 billion. Its ambition is for its international operations to account
for a
third of sales.
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The top ten list of retailers.
Name of retailer
Country
Sales in million
dollars
Wal-Mart
U.S
137,634
Metro AG
Germany
52,131
Sears Roebuck
U.S
36,704
Rewe Gruppe
Germany
36,212
Edeka Rruppe
Germany
32,573
Aldi Gruppe
Germany
32,403
Dayton Hudson
U.S
30,951
Carrefour
France
30,489
Tenzelmann
Germany
30,243
Gruppe

International retailing defined:-
International retailing is defined as all the activities involved in selling products and
services to final international consumers for their personal consumption.
International retailing differs from local retailing as defined in marketing management in
that it address operations of international retailers beyond home-country borders, as well
as
operations of local retailers in different countries in world wide- in general and/or in
response to
the presence or entry of international retailers aiming for their target market, as such an
examination international retail operations must include an evaluation of global and local
retailing formats, retail practices, and overview of local retailing environments.

Retail Formats: Variation in different markets
There are three main retail formats:
1.General merchandise retailing
2.Food retailing
3.Non store retailing.

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1. General Merchandise Retailing
a. Specialty Stores
Specialty Stores offer a narrow product line and wise assortment. In this category are
clothing
stores (usualy further specialized in to the women`s, mens, or children`s clothing stores),
bookstores, toy stores, office supply stores, and consumer electronics, among others.
In many markets, specialty stores---- chains in particular--- are expanding at the expense
of all forms of n nonfood retailing. For example, specialty store chains are taking market
share
away from traditional department stores in the United Kingdom and France. U.K
especially
retailers have great strides in international expansion: Marks & Spencer is rapidly
expanding in
France, and retailers such as Virgin Records have already made substantial inroads in to
the U.S
market .In France ,specialty store appear to be particularly well suited to addressing the
unique
French lifestyle. Local payers, as well as international firms such as the Gap, are very
successful
in the market.
In most developing countries, specialty stores represent the main retail format. Although
western and local specialty chain stores are quite popular and have done well for decades,
developing country markets are dominated by independent specialty stores(usually
family-
owned), such as apparel stores, cosmetic stores, and local arts and crafts stores aimed at
the
tourist market as well as other traditional retail system as exemplified by specialized
markets.

b. Specialized Markets
Specialized markets contain specialty stores specialized in a particular product category.
Example of such markets exist worldwide in both developed and development countries.
Examples of specialized markets are the Cairo Gold Market in the Khan El Khalili
bazaar, the
Jade Market in Hong Kong, and the spice Market and Gold Market in the Covered Bazaar
in
Istanbul, Turkey. Specialized market may even cover entire cities. For example, the town
of
Otavalo Ecuador, house large and small retailers of leather goods.

c. Department Stores

Department stores offer a broad variety of goods and wide assortments. Among the
products they carry are clothing for men, women, and children; household appliances and
electronics; kitchenware; china; home furnishing; and toys and games. Outside the United
States, department stores typically also have large supermarkets sections, and some may
even
carry fresh produce.
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In the United States and Canada, and department stores have suffered substantial losses in
the past decade, mostly attributed to the rise in the discount stores, off-price retailers, and
category killers. In an attempt to conquer new markets, however, a number of chains
have been
looking overseas for expansion: Sears Roebuck and JCPenney, in particular, have been
looking
at the Latin American Market, with JCPenney recently opening a number of stores in
Mexico
and Chile.
Although department stores remain a dominant retail outlet in Asia, they are currently
displaying symptoms of decline, such as oversupply, over duplication of merchandise,
fierce
competition, and declining profits. Shanghai alone witnessed the demise of five
department
stores in 1997. Existing department stores in the city have done well when changing their
format, for example, specializing in European style clothing and furnishings, or
emulating the
hypermarket environment by offering lower prices and maintaining a customer-friendly
environment.

d. General Merchandise Discount Stores
General Merchandise Discount Stores sell high volumes of merchandise, offer limited
service, and charge lower prices. Discount stores are divided in to two categories: all
purposes
discount stores, which offer a wide variety of merchandise and offer a wide assortment.
The all-purpose category is dominated by stores such as Wal-Mart, Kmart, and target in
the United States. Internationally, this retailer category tends to draw a substantial portion
of
profits from its supermarkets section. In all purpose categories, Wal-Mart has more than
600
stores internationally mainly they ate present in Canada, Mexico, Puerto Rico, Argentina,
Brazil, Germany, and the United Kingdom. Wal-Mart also has a presence in china,
through joint
ventures, and two franchise locations in Indonesia. Its goal is to derive one-third of its
earnings
from international operations.
Category specialists, also known as category killers or stores with category dominance,
are large specialty stores that carry a narrow variety of merchandise and a wide
assortment.
Among examples of category specialists successful internationally are office supply
stores, such
as Staples, Office Max, and office Depot; home improvement centers, such as Home
Depot;
bookstores, such as Borders, which are especially well received in East Asia; children`s
stores,
such as Toys R Us, which leads sales in this product category from Scandinavia to
South
Africa; and furniture stores, such as IKEA, which dominates the modern, basic furniture
market.

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e. Off price retailers
Off price retailers sell brand name and designer merchandise below regular retail; the
products they sell may include over runs, irregular products, as well as products from
previous
seasons. Among example of off price retailers are factory outlet stores; close-out retailers,
with
broad, inconsistent assortments; and single price retailers. Although this type of retailing
is
popular in US and Canada, in the rest of the world, there are only limited possibilities,
other
than store sales, for purchasing brand names at a discount. For example Hugo boss has an
out
let store in Sothern Germany, close its factory, near Stuttgart, and Zurich has a famous
designer
out let mail; Italy has few outlet stores for its famous designers. Non of these examples
come
close in depth and variety to the north American off price retailer presence, but that is
about to
change, as more and more international consumers demands similar deals as the ones
offered in
the US.
Often, American companies must build their own outlet stores in environments where
this
type of retail format is unknown. In Japan, for instance, in the Tokyo suburb of
Sagami-one,
American malls international opened an outlet mall for companies such as Guess! And
Laura
Ashely to sell discountinued merchandise at a discount.

f. Catalog showrooms
Catalog showrooms usually offer high turn over, brand name goods at discount price. A
typical format for a catalog showroom is one in which customers order from a Catalog in
the
showroom where the product is only displayed, and then pick up the merchandise at a
designated location. Internationally, the goods sold in retail formats are not typically
brand
name goods, but, rather, they are goods that have not sold in season through a companies
catalog. For example, Neckrmann and Quelle, the well-known German catalog retailers,
have
catalog showrooms in many of Germanys largest cities where they sel their catalog store
brands. In addition, Ikea uses this strategy to sell to consumers worldwide: customers
receive a
catalog and in the showroom, they order in the store the product they would like to
produce and
pick it up from a designated location in its unassembled state.

Retail Patterns
- the extremes in size in retailing are similar to those that
predominate
in wholesaling. The retail structure and the problem it engenders cause real difficulties
afro
the international marketing firm selling consumer goods .large dominant retailers can be
sold
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direct , but there is no adequate way to directly reach small retailers who in the aggregate
handle a great volume of sales.
-selling directly to the consumer through the mail , by telephone or
door to
door is often the approach of choice market with insufficient or underdeveloped
distribution
systems. The approach of course also works well in the most affluent market.
- effort to improve the efficiency of the distribution system new
types
of middlemen and other attempts to change traditional ways as typically viewed as
threatening and are thus resisted .
- A marketers options range from assuming the entire
distribution activity to depending on intermediaries for distribution of the product .
channel
selection must be given considerable thought because once initiated it is difficult to
change
and if proves inappropriate , future growth of market share may be affected
a) Agent middlemen ;- represent the principal rather than themselves
b) merchant middlemen:- take title to the goods and buy and sell on their own account.

wholesaling
Some general retailing patterns include:
Home-Country Middlemen :- located in the producing firms country provide marketing
services from a domestic base. By selecting domestic middlemen as intermediaries in the
distribution process , companies relegate foreign market distribution to others.

Manufacturers Retail Stores :- An important channel of distribution for a large
number of manufacture is the owned or perhaps franchised.

Global Retailers:-as global retailer like Ikea , Costco, Sears Roebuck , Toys R Us
and Wallmart expand their global coverage , they are becoming a major domestic
middlemen for international markets.

Export Management Companies :- is an important middlemen for firms with
relatively small international volume or for those unwilling to involve their own
personnel
in the international function.

Trading Companies:- trading companies have a long and honorable history as
important intermediaries in the development of trade between nation. Trading companies
accumulate , transport and distribute goods from many countries .
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U.S. Export Trading Companies :-the ETC act allows producers of similar products to
form export trading companies .A major goal of the ETC Act was to increase U.S exports
by encouraging more efficient export trade services to producers and suppliers in order to
improve the availability of trade finance and to remove antitrust disincentives to export
activities.

Complementary Marketers :-companies with marketing facilities or contacts in different
countries with excess marketing capacity or a desire for a broader product line sometimes
take on additional lines for international distribution although the formal name for such
activities is complementary marketing.

Manufacturers Export Agent :- is an individual agent middlemen or an agent
middlemen firm providing a selling service for manufactures.

Home-country middlemen, or domestic middlemen, provide marketing services from a
domestic base and find foreign markets for products for local manufacturers
Frequently used types of domestic intermediaries include:
Home-Country Brokers:- the term broker is a catchall for a variety of middlemen
performing low cost agent services.
Buying Offices :- a variety of agent middlemen may be classified simply as buyers or
buyer
for export. Their common denominator is a primary function of seeking and purchasing
merchandise on request from principals as such they do not provide a selling service
Selling Groups:- several types of arrangement have developed in which various
manufactures or producer cooperate in a joint attempt to sell their merchandise abroad.
This may take the form of complementary exporting or of selling to a combined business
such
a Webb Pomerene export association.
Webb-Pomerene Export Associations:-are another major form of group exporting.
WPEAs
Act of 1918 made it possible for American business firms to join forces in export
activities
without being subject to the Sherman antitrust . WPEAs cannot participate in cartesl or
other
international agreement that would reduce competition in the united states but can offer
four major benefits
1. reduction of export costs
2. demand expansion through promotion
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3. trade barriers reductions
4. improvement of trade terms through bilateral bargaining .
Foreign Sales Corporation :- is a sales corporation set up in a foreign country or U.S
possession that can obtain a corporate tax exemption on a portion of the earnings
generated
by the sale or lease of export property.
Export Merchants :- are essentially domestic merchants operating in foreign market . as
such
they operate much like the domestic wholesaler . specifically they purchase goods from a
large
number of manufacturers , ship them to foreign countries and take full responsibility for
their
marketing .
Export Jobbers:- deal mostly in commodities they do not take physically possession of
goods
but assume responsibility for arranging transportation.
Foreign-Country Middlemen :- using foreign country middlemen moves the
manufacturers
closer to the market and involves the company more closely with problems of language ,
physical distribution , communications and financing . foreign middlemen may be agents
or
merchants , they may be associated with the parent company to varying degrees or they
may
be temporarily hired for special purposes. Some of the more important foreign country
middlemen are manufacturers representatives and foreign distributors.
Manufacturers Representatives:- are agent middlemen who take responsibility for a
producers goods in a city , regional market area entire country or several adjacent
countries .
when responsible for an entire country the middlemen is often called a sole agent.
Distributors :- A foreign distributor is a merchant middleman. This intermediary often
has
exclusive sales right in a specific country and works in close co-operation with the
manufacturer . the distributor has a relatively high degree of dependence on the supplier
companies and arrangements are likely to be on a long run continuous basis.
Foreign-Country Brokers:- are agents who deal largely in commodities and food
products .
the foreign brokers are typically part of small brokerage firms operating in one country or
in
a few contiguous countries.
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Managing Agents and Compradors :- A managing agent conducts business within a
foreign
nation under an exclusive contract arrangement with the parent company. The managing
agent
in some cases invests in the operation and in most instances operates under as contract
with
the parent company.
Dealers :- generally speaking anyone who has a continuing relationship with a supplier
in
buying and selling goods is considered a dealer . more specifically dealers are middlemen
selling industrial goods or durable consumer goods direct to customers they are the last
step
in the channel of distribution.
Import Jobbers, Wholesalers, and Retailers :- import jobbers purchase goods directly
from
the manufacturers and sell to wholesalers and retailers and to industrial customers . large
and
small wholesalers and retailers engage in direct importing for their own outlets and for
redistribution to smaller middlemen . the combination retailer wholesaler is more
important in
foreign countries than in the united states. It is not uncommon to find large retailers
wholesaling goods to local shops and dealers.
-country middlemen, who find markets for foreign
manufacturers include:
Factors Affecting Choice of Channels

The international marketers needs clear understanding of market characteristic and must
have
established operating policies before beginning the selection of channel distribution . the
following points should be addressed prior to the selection process

goals in terms of volume, market share, and profit margin
requirements.

distribution.

Once these points are established , selecting among alternatives middlemen choices to
forge
the best channel can begin . marketers must get their goods into the hands of consumers
and must choose between handling all distribution or turning part or all of it over to
various
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middlemen . Distribution channels vary depending on target market ,competition and
available distribution intermediaries.
1. Cost :- There are two kinds of channel cost
a. The capital or investment cost of developing the channel and
b. The continuing cost of maintaining it.
The later can be in the form of direct expenditure for the maintenance of the company
selling
force or in the form of margins , markup or commissions of various middlemen handling
the
goods.
2. Capital requirement :- the financial ramifications of a distribution policy are often
overlooked .critical element are capital requirement and cash flow patterns associated
with
using a particular type of middlemen .
3. Control ;- the more involved a company is with the distribution , the more control its
exerts . A company own sales force affords the most control , but often at a cost that is
not
practical.
4. Coverage :- another major goal is full market coverage to gain the optimum volume of
sales obtainable in each market , secure a reasonable market share. And attain satisfactory
market penetration .coverage may be assessed by geographic or market segments or both
.
5. Character :- the channel of distribution system selected must fit the character of the
company and the markets in which it is doing business. Some obvious product
requirement
often the first considered relate to perishability or bulk of the product , complexity of sale
,
sales service required and value of the product.
6.Continuity :- channel of distribution often pose longevity problems . most agent
middlemen firms tend to be small institution when one individual retires or moves out of
a
line of business the company may find it has lost its distribution in that area. Wholesaler
and especially retailers are not noted for their continuity in business either. Most
middlemen
have little loyalty to their vendors.

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Issues in international retailing
In the run-up to the EU's implementation of International Financial Reporting Standards
(IFRS) in
2005, PwC published. IFRS in Action to help board members in retail and consumer
goods
companies better understand what the change to IFRS would mean for their respective
industries.
Now, some three years later, the implications and effects of the move to IFRS are easier
to see.
PwC took the opportunity to update its IFRS framework for financial reporting across a
range of
issues in the retail and consumer sector. Issues and Solutions for the Retail and Consumer
Goods
Industries: International Financial Reporting Standards is the result, and it offers an
extensive set
of accounting solutions to help you understand the key issues and concerns behind this
ongoing
shift to IFRS.

The report also provides a US GAAP perspective to help companies (that must report
under this
framework) understand the impact that IFRS might have on their operations.

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Module VI (7 Hours)
Pricing decisions: Global Pricing Framework, Pricing Basics, Marginal Cost Pricing and
its
importance, Transfer Pricing, Counter trade, Systems Pricing, Pricing and Positioning,
price
quotation INCO terms preparation of quotations.

Promotion Decisions
Promotions international advertising sales promotion in international markets
international
advertising direct mailing personal selling exhibition generic promotions in
international
marketing
Global Pricing Framework
Due to the increased shifting sales focussed towards e.g. China, India and other fast
developing countries, global Industrial companies are facing sooner that anticipated on
the
complexity of regional pricing differences.
By using advanced price indexing techniques global price setpoint and differentiation
issues can be resolved by defining the relative and absolute price positioning.
Global Pricing is lot more complex than domestic pricing due to:

-dumping laws

ods of payment
Pricing Basics

-Plus formula

For Global Pricing, there are several other factors to be considered in addition to the
basics
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Transfer Pricing
s have to determine transfer prices, I.e. the prices charged on subsidiaries for
products,
components and supplies.

ax laws governing transfer pricing

Counter trade & Systems Pricing

al currency for some other goods that is then sold for US$ or other
currency

be
separately priced or priced as a bundle
Issues with Counter Trade
ade arises when a country does not have sufficient foreign exchange or its
currency
is not freely convertible

any
profits
a in USSR

production for the right to export into that country

orting potato chips from India

Evaluation of Counter Trade

de

value of
certain goods is difficult to valuate
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Counter Trade is a reality in Global markets
Points to Consider in Counter Trade

ds back?

Turnkey Pricing

individually

factors
Price and Positioning
on Positioning
-Quality Relationships (high price = High Quality)

ce during introduction & falling
prices later on

PRICE QUOTATION
Many businesses, such as hairdressers, use a standardized price list that remains the
same for
every customer. Other businesses, such as painters and decorators, have to provide
tailored prices
for the specific products or services a customer wants to buy. This is usually done with
an estimate or a quotation. Larger, more complicated projects are often priced on the
basis of a
detailed tender document drawn up by the customer.
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This guide outlines how to present your prices to your customers. It tells you how to
create a price
list, describes the difference between a quotation and an estimate, details how to prepare
quotations and estimates and describes how to price a tender for a contract.
1. Prepare a price list
2. The difference between a quotation and an estimate
3. Prepare a written estimate
4. Prepare a written quotation
5. Prepare a price for a tender
6. Win contracts at the right price
PREPARE A PRICE LIST
Most businesses will need to draw up a price list at some stage. If you sell a fixed range
of
products, this may be the only form of pricing you need. This type of standard price list
can also
be used as the basis for pricing your non-standard orders.
It's a good idea to date your price lists - particularly if your customer is likely to keep it
for a long
time. You should make it clear when any special offers expire. It can also be useful to
include a
clause at the end of the price list stating that prices are subject to change.
You should make clear whether any delivery, packing or postage costs are included in
your
prices. Additionally, although you don't have to indicate discounts for bulk purchases on
your
price list, it might attract more business.
You may be able to use software packages such as Sage Simply Accounting to help you
draw up
complex price lists.

THE DIFFERENCE BETWEEN A QUOTATION AND AN ESTIMATE
It's impossible for some businesses to give standard prices for goods and services. This
may be
because the skills, time and materials required for each job vary depending on different
customers' needs.
This situation is more common in some trades than others - decorators or builders, for
example,
rarely do exactly the same job twice. When it's not possible to work from a standard price
list, you
have to give a quotation or an estimate instead.
A quotation is a fixed price offer that can't be changed once accepted by the customer.
This holds
true even if you have to carry out much more work than you expected.
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If you think this is likely to happen, it makes more sense to give an estimate. You can
also specify
in the quotation precisely what it covers, and that variations outside of this will be subject
to
additional charges.
An estimate is an educated guess at what a job may cost - but it isn't binding. To take
account of
possible unforeseen developments, you should provide several estimates based on various
circumstances, including the worst-case scenario. This will prevent your customer from
being
surprised by the costs.
To work out a quote or estimate you need to know your fixed and variable costs. These
include
the cost-per-hour of manual labour and the cost of the materials you'll require. Your
quote or
estimate is then calculated according to what you think the job will involve.
You should provide all your quotes and estimates in writing and include a detailed
breakdown.
This will help to avoid any disputes about what work is included in your overall price.
You may also wish to set an expiry date. Your quote or estimate will no longer be valid
after this
time.
INCO terms
Trade terms used in different countries may appear identical on the surface, but actually
have
different meanings as they are used domestically. Incoterms are internationally
recognized and thus
help to prevent confusion in terms of foreign trade contracts, by helping sellers and
buyers understand
their obligations in any transaction. Examples of Incoterms include "DAT" (Delivered at
Terminal),
"DDP" (Delivered Duty Paid) and "CIF" (Cost, Insurance and Freight).
PREPARATION OF QUOTATIONS
Quotation: - Its a financial document send from supplier to customer regarding service
to be
provided. Its also called as temporary financial document for negotiations." A statement
of price,
terms of sale, and description of goods or services offered by a supplier to a prospective
purchaser, a
bid. When given in response to an inquiry, a quotation often is considered an offer to
sell."
Preparation of price quotations will be discussed in classroom in detail.

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International Advertising
The basic framework and concepts of international advertising include the following
seven steps:
1. Perform marketing research
2. Specify the goals of the communication
3. Develop the most effective message(s) for the market segments selected
4. Select effective media
5. Compose and secure a budget
6. Execute the campaign, and
7. Evaluate the campaign relative to the goals specified
Decisions involving advertising are those most often affected by cultural differences
among
country markets
Consumers respond in terms of their culture, its style, feelings, value systems, attitudes,
beliefs, and perceptions
Advertisings function is to interpret the qualities of products in terms of consumer
needs,
wants, desires, and aspirations, the emotional appeals, symbols, and persuasive
approaches
Reconciling an international advertising campaign with the cultural uniqueness of
markets is
the challenge confronting the international or global marketer
Sales Promotions in International Markets
Sales promotions are marketing activities that stimulate consumer purchases and
improve
retailer or middlemen effectiveness and cooperation
Sales promotions are short-term efforts directed to the consumer or retailer to achieve
such
specific objectives as consumer-product trial or immediate purchase
Examples of sales promotion include
1. Cents-off
2. In-Store Demonstrations
3. Samples
4. Coupons
5. Gifts
6. Product Tie-Ins
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7. Contests
8. Sweepstakes
9. Sponsorship of Special Events,
10. Point-Of-Purchase Displays
International Advertising and the Communications
The international communications process consists of the following seven steps:
1. An information source. An international marketing executive with a product message
to
communicate
2. Encoding. The message from the source converted into effective symbolism for
transmission
to a receiver
3. A message channel. The sales force and/or advertising media that convey the encoded
message to the intended receiver
4. Decoding. The interpretation by the receiver of the symbolism transmitted from the
information source
5. Receiver. Consumer action by those who receive the message and are the target for the
thought transmitted
6. Feedback. Information about the effectiveness of the message that flows from the
receiver
(the intended target) back to the information source for evaluation of the effectiveness of
the
process
7. Noise. Uncontrollable and unpredictable influences such as competitive activities and
confusion that detract from the process and affect any or all of the other six steps
DIRECT MAIL ADVERTISING
It is highly selective.
This form of advertising is elastic as the retailer can add or delete the name of
consumers at
his discretion.
A wide variety of merchandise or service can be advertised to the same consumer.
Privacy on consumer preference/order can be maintained.
Market competition can be avoided instantly.
Direct mail advertising is personal and specific. Home delivery of goods and services
can be
assured. Performance of merchandise/service sales can be monitored and evaluated.
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PERSONAL SELLING
1. Happens via Sales Person
2. In the eyes of most of the customer, the sales person is the company
3. The sales Representative is the final link in the culmination of a companys marketing
&
Sales effort.
4. Growing global competition coupled with the dynamic & complex Nature of
international
business increases both the need & the means for closer ties with the both customers &
suppliers. Relationship marketing built on effective communication between the seller &
the
buyer, focuses on building long term alliances rather than treating each sales as a one
time
event.
5. Advances in IT are changing the nature of personnel selling & sales management
6. Following are the steps to manage the sales force:
a)
Designing the Sales Force
b)
Recruiting Marketing & Sales Personnel( Sales Personnel include Expatriates, Local
Nationals & Third Country Nationals. Virtual Expatriates are the new breed of
Expatriates
developed through Internet)
c)
Selecting Sales & Marketing Personnel
d)
Training for International Marketing
e)
Motivating Sales Personnel.
f)
Evaluating & Controlling Sales representatives.

Exhibition
An exhibition, in the most general sense, is an organized presentation and display of a
selection
of items. In practice, exhibitions usually occur within museums, galleries and exhibition
halls,
and World's Fairs. Exhibitions include (whatever as in major art museums and small art
galleries;
interpretive exhibitions, as at natural history museums and history museums), for
example; and
commercial exhibitions, or trade fairs
The word "exhibition" is usually, but not always, the word used for a collection of items.
Sometimes "exhibit" is synonymous with "exhibition", but "exhibit" generally refers to a
single
item being exhibited within an exhibition.
Exhibitions may be permanent displays or temporary, but in common usage,
"exhibitions" are
considered temporary and usually scheduled to open and close on specific dates. While
many
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exhibitions are shown in just one venue, some exhibitions are shown in multiple locations
and are
called travelling exhibitions, and some are online exhibitions.
Though exhibitions are common events, the concept of an exhibition is quite wide and
encompasses many variables. Exhibitions range from an extraordinarily large event such
as
a World's Fair exposition to small one-artist solo shows or a display of just one item.
Curators are
sometimes involved as the people who select the items in an exhibition. Writers and
editors are
sometimes needed to write text, labels and accompanying printed material such as
catalogs and
books. Architects, exhibition designers, graphic designers and other designers may be
needed to
shape the exhibition space and give form to the editorial content. Organizing and holding
exhibitions also requires effective event planning, management, and logistics
Generic promotions in international marketing
In the US more than a billion dollars is spent annually on generic commodity promotion,
with
spending in some individual product categories exceeding $100 million.
In South Africa R37 million was spent in 2008 on generic commodity promotion by way
of statutory
measures. Extensive economic research has been done for many years to evaluate generic
promotion
programs.
A number of studies evaluating the impacts of promotional programs on the demand for
agricultural
commodities have been undertaken for a variety of generic promotion campaigns.
In the US more than a billion dollars is spent annually on generic commodity promotion,
with
pending in some individual product categories exceeding $100 million.
In South Africa R37 million was spent in 2008 on generic commodity promotion by way
of statutory
measures. Extensive economic research has been done for many years to evaluate generic
promotion
programs.
A number of studies evaluating the impacts of promotional programs on the demand for
agricultural
commodities have been undertaken for a variety of generic promotion campaigns.
Generic promotion,
by definition, should be brand or market share neutral.
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It may increase total demand but it should not result in one firm or group of firms gaining
market
share over another. In theory brands associated commodities are not expected to lose or
gain market
share from the generic advertising of the commodity.
Under circumstances where a generic campaign enhances or reduces one brand share or
market share
relative to others a significant equity problem occurs. Equally, if a commodity based firm
is of
sufficient size to successfully promote its own brand and capture those gains the firm
may argue that
their contributions to generic promotion efforts could be more effectively used to
promote their own
brands.
In this regard the level of concentration and the competitive structure of the commodity
sector
become major factors in determining the usefulness of generic promotional campaigns.
At some point, notwithstanding the economic arguments for or against generic
promotional
campaigns, the implementation of these programs may move beyond the economics and
into the
political, legislative, and judicial arenas.
The economic evidence is generally in favour of generic promotion via mandated
marketing
programs.
General
evidence
confirming
the
positive
effects
of
generic
promotional
campaigns.Results generally vary between very low impacts in some instances to
significantly
positives impacts in other instances.
Notwithstanding the varied impacts of these generic programs the evidence suggests that
generic
promotion can expand total demand versus individual firm efforts that often compete
only for market
are and shelf space with little impact on expanding the total pie.

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Module VII (6 Hours)
Recent trends in India's foreign trade: Institutional infrastructure for exports promotions
in India
India's trade policy exports assistance exports documentation and procedures
including
different stages of documentation Globalization in India, Opportunities, Constraints and
Initiatives India - A Hub for Globalization, Globalization in India - Post Liberalization,
Indias
Strengths, Strategies for Sustainable Competitive Advantage, Potential for Made in India,
Major
Globalization Initiatives from Indian Companies, WTO Regulations and their
implications for
India, Undesirable effects of globalization, Government Initiatives needed to foster
globalization

Institutional infrastructure for exports promotions in India
The Government of India has set up several institutions whose main functions are to help
an
exporter in his work.
It would be advisable for an exporter to acquaint himself with these institutions and
nature of
help that they can render to him so that he can initially contact them and have a clear
picture of
what help he can expect of the organized sources in his export effort.

Institutions engaged in export effort fall in six distinct tiers.
nd Industry

Export Promotion Board
There is an export promotion board under the Chairmanship of the cabinet secretary to
provide policy and infrastructural support through greater coordination among ministries
concerned for boosting the growth of exports.
All ministries directly connected with facilitating foreign trade are represented on this
board
by their secretaries.
Export Promotion Council

lopments in the export
sector
and measures necessary to facilitate future growth in exports, assist manufactures and
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exporters to overcome the various constraints and extend to them the full range of
services
for the development of market overseas.

India Trade Promotion Organization (ITPO)
It has become into effect from 01-01-1992 with the main objective of promoting exports
and
imports and up gradation of technology through the medium of fairs to be held in India
and
abroad, to undertake publicity through the print and electronic media to assist Indian
companies in
product development, to organize programs, buyer seller meets, contact promotion
programs for
specific products in specific market.

National Center for Trade Information (NCTI)

help
Indian and foreign enterprises in the promotion of the trade from and to India.
Export Credit Guarantee Corporation (ECGC)
For minimizing the risk element in export business and to facilitate the flow of finance
from the
banks to exporters, Export Credit Guarantee Corporation was established
Marine Products Export Development Authority
The marine products export development authority started functioning in September
1972. the authority serves the seafood industry right from fishing to processing,
packaging,
storing, transporting and marketing to the different marketers all over the world. The
authority
is entrusted with the task of ensuring a healthy growth of the industry through judicious
regulation, conservations and control. Importers and exporters can obtain any information
relating to the markets and the products from the Marine Export Development Authority.

Agricultural and Processed Food Products Export Development Authority
With a view to increase the exports from agricultural sector, council has been
established. It will coordinate its activities with national bodies like Horticulture Board
and
State Governments for generating production for exports and with research institute for
development of value added products.
Export Import Bank
It was established for the purpose of financing, facilitating and promoting foreign trade
of India. The bank is the principal financial institution in India for coordinating the work
of
institutions engaged in financing export and import trade.
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Federation of Indian Export Organisations
An apex body called the Federation of Indian Export Organisations was established in
order to make a common and coordinating platform for the various export organizations.

Department of Commercial Intelligence and Statistics
It is located at Kolkata. Its functions comprise:
1. commercial intelligence
2. collection, compilation and publication of the statistics of trade, tariffs and shipping.

Indias Export Policy
The objectives are:
To earn adequate foreign exchange to finance the required volume of imports

single
country/limited number of countries
asing employment opportunities

uate.

Indias Trade Policy

of
its economy.

the
level of imports to the level of foreign exchange available to the government.

export promotion and import management.

Indias Import Policy
The objectives are:

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Long Term Fiscal Policy
The government of India has formulated long-term fiscal policy which was presented in
December 1985. The principal features of the Long Term Fiscal Policy relating to the
foreign
trade sector are as follows:

Commodities

Export Assistance
Developing countries have started manufacturing industries only recently. As a result
their
cost of production generally tends to be high because of the following reasons:
1. Total market availability within the country is small with the result that the
economies of large scale production cannot be reaped.
2. Productivity of labour is low because the level of mechanization as compared to that
in the developed countries is low.
3. The cost of production is generally a function of experience i.e. learning by doing.
4. Manufacturing units in developing countries being small and new, have considerably
less expertise in the field of international marketing and because the volume of
exports is low, the per unit cost of the trade promotion expenditure tends to be high.

India has to raise higher resources for development which has to be done through a
number
of indirect levies which tend to push up the overall cost of production.

Most developing countries have therefore resorted to a number of export promotion
measures. India has also been providing export assistance to Indian exporters.

From 1992, export incentive system in India has been made simple. There are essentially
three major incentives. These are:
1. market based exchange rate
2. fiscal concessions
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3. facilities under the export import policy

Export documents
Standardized and Aligned Pre-shipment documents more than two dozen
commercial and regulatory documents are involved in the pre-shipment stage of
export transactions. These include 16 commercial documents and 9 regulatory
documents.

Commercial Documents
The commercial documents are those which, by customs of trade, are required for
effecting
physical transfer of goods and their title from the exporter to the exporter to the important
and
realization of export sale proceeds.

14 out of 16 commercial documents have been standardized and aligned to one another,
shipping order and Bill of exchange could not be brought within the fold of the aligned
documentation system because of their very different data elements and having very little
in
common with other commercial documents.
The commercial documents are classified into principal documents and auxiliary
documents.

Principal Export Documents:

1) commercial Invoice
2) packing list
3) bill of lading
4) combined transport document
5) certificate of inspection/quality control(where required)
6) insurance certificate
7) certificate of origin
8) Bill of exchange and shipment advice

Auxiliary Documents:
1) Proforma Invoice
2) Intimation for inspection
3) Shipping Instructions
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4) Insurance declaration
5) Shipping order
6) Mate receipt
7) Application for certificate of origin
8) Letter to the bnk for collection/negotiation of documents

Regulatory documents:
Regulatory pre-shipment export documents are those which have been prescribed by
different
government departments/bodies in compliance of the requirements of various rules and
regulations under relevant laws governing export trade such as export inspection, foreign
exchange regulations, export trade control, customs etc.

Documents related to goods:
Invoice :
An invoice is the selers bil for merchandise and contains particulars of goods, such as
the
price per unit at particular location, total value, packing specifications, terms of sale,
identification marks of the package, etc

Packing note and list:
A packing note should include the packing note number, the date of packing, the name
and
address of the exporter, the name and address of the importer, the order number, date,
shipment
per s/s etc. Apart from the details in the packing note, a packing list should also include
item-
wise details.

Certificate of origin:
A certificate of origin, as the name indicates, is a certificate which specifies the country
of the
production of the goods. This certificate also to be produced before clearance of goods
and
assessment of duty, for the customs law of the country may require this procedure.

CERTIFIED RELATED TO SHIPMENT
1) Mate receipt:
A mate receipt is a receipt issued by the commanding office of the ship when the cargo is
loaded on the ship, and contains information about the name of the vessel, berth, date of
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shipment, description of packages, marks and numbers, condition of the cargo at the time
of
receipt on board the ship, etc.

2) Shipping Bill:
The shipping bill is the main document on the basis of which the customs permission for
export is given. The shipping bill contains particulars of the goods exported, name of the
vessel,
master or agents, flags, the port at which goods are to be discharged, the country of final
destination, etc.

3) Cart Ticket:
A car ticket, also known as a cart chit, vehicle and gate pass, is prepared by the exporter
and includes details of the export cargo in terms of the shippers name, the number of
packages,
the shipping bill number, the port of destination and the number of the vehicle carrying
the
cargo.

4) Certificate of Measurement:
Freight is charged either on the basis of weight or measurement. When it is charged on
the
basis of weight, the weight declared by the shipper may be accepted. The certificate
contains the
name of the vessel, port and destination, the description of goods, the quality, length,
breadth,
depth, etc. of the packages.

5) Bill of Lading:
The bill of lading is a document wherein the shipping company gives its official receipts
for the
goods shipped in its vessel and at the same time contracts to carry them to the port of
destination. It is also a document of title to then goods and, as such, is freely transferable
by
endorsement and delivery.
A bill of lading serves 3 main purposes:

s a contract for the transportation of goods
6) Airway Bill:

An Airway bill, also called, an air consignment note, is a receipt issued by an airline
for the carriage of goods. As eah shipping company has its own bill of lading, each airline
has
its own airway bill.
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Documents Related To Payment
(a) Letter of Credit:
A letter of credit is a document containing the guarantee of a bank to honor drafts drawn
on it by an exporter, under certain conditions and up to certain amounts, provided that the
beneficiary fulfils the stipulated conditions.

(b) Bill of Exchange:
The Negotiable Instrument Act,1881, defines the bil of exchange as an instrument in
writing containing an unconditional order, signed by the maker, directing a certain person
to pay
a certain sum of money only to, or to the order of, a certain person or to the bearer of the
instrument.

(c) Trust Receipt:
If the importer is unable to take possession of the documents by making the payment on
the D/P bill following the arrival of the goods, the merchandise may be made available to
the
importer by his bank under an arrangement whereby the importer signs a trust receipt.

(d) Letter of Hypothecation:
A letter of hypothecation is a document signed by the customer conveying to a banker the
full ownership of goods at the port of destination in respect of which he has made
advances
either by loan or by acceptance or negotiation of bills of exchange.

(e) Bank Certificate of payment:
It is a certificate issued by the negotiating bank of the exporter, certifying that the bill
covering
particular consignments, has been negotiated and that the proceeds received in
accordance with
exchange control regulations in the approved manner.

Documents Relating To Inspection
Certificate of inspection:
It is a certificate issued by the export inspection agency, certifying that the consignment
has
been inspected as required export act 1963, and satisfies the condition relating to quality
control
and inspection applicable to it, and is certified to it , and is certified export worthy.

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Documents Related To Excisable Goods
I. G.P. Forms:
a. A GP form is a gate pass for the removal of excisable goods from a factory or
warehouse. Form GP1 is used for the removal of excisable goods on payment of duty and
form
GP 2 is used for the removal of excisable goods with payment of duty.

II.
Form C:
a. Form c is to be used for applying for rebate of duty on the excisable goods ( other
than vegetables, non essential oils and tea) exported by sea.

III.
Forms A.R. -4/A.R. -4A:
a. These forms are meant for applying for the removal of excisable goods for export by
sea/post. Form A.R.-4 is used for applying For excise inspection at the factory and form
A.R.-
4A is used when the goods are to be exported under the claim for rebate of excise duty or
under
bond.

Documents Related To Foreign Exchange Regulation

Foreign exchange regulations in India require to fill several forms. There are four
important types of forms namely, GR/PP, VP/COD and SOFTEX form for exporter of
computer
software obtainable from the RBI or a bank authorized deal with the foreign exchange.

Globalization in India
India had the distinction of being the world's largest economy in the beginning of the
Christian
era, as it accounted for about 32.9% share of world GDP and about 17% The goods
produced in
India had long been exported to far off destinations across the world. Therefore, the
concept of
globalisation is hardly new to India.
India currently accounts for 1.2% of World trade as of 2006 according to the World
Trade
Organisation (WTO). Until the liberalisation of 1991, India was largely and intentionally
isolated
from the world markets, to protect its fledgling economy and to achieve self-reliance.
Foreign
trade was subject to import tariffs, export taxes and quantitative restrictions, while
foreign direct
investment was restricted by upper-limit equity participation, restrictions on technology
transfer,
export obligations and government approvals; these approvals were needed for nearly
60% of new
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FDI in the industrial sector. The restrictions ensured that FDI averaged only around
$200M
annually between 1985 and 1991; a large percentage of the capital flows consisted of
foreign aid,
commercial borrowing and deposits of non-resident Indians.
India's exports were stagnant for the first 15 years after independence, due to the
predominance of
tea, jute and cotton manufactures, demand for which was generally inelastic. Imports in
the same
period consisted predominantly of machinery, equipment and raw materials, due to
nascent
industrialization. Since liberalization, the value of India's international trade has become
more
broad-based and has risen to
63,080,109 crores in 200304 from
1,250 crores in 1950
51. India's major trading partners are China, the US, the UAE, the UK, Japan and the EU.
The
exports during April 2007 were $12.31 billion up by 16% and import were $17.68 billion
with an
increase of 18.06% over the previous year.
India is a founding-member of General Agreement on Tariffs and Trade (GATT) since
1947 and
its successor, the World Trade Organisation. While participating actively in its general
council
meetings, India has been crucial in voicing the concerns of the developing world. For
instance,
India has continued its opposition to the inclusion of such matters as labour and
environment
issues and other non-tariff barriers into the WTO policies.
Opportunities, Constraints and Initiatives
1. In recent times, Indian exporters face a number of problems. The problems demotivate
the
business firms to enter into foreign markets. Some of the problems are as follows:
2. Recession in World Markets: The world markets faced recession in 2008 and in the
first
half of 2009. The recession was triggered due to sub-prime crisis of USA in Sept 2007.
Due to recession, the demand for several Indian items such as gems and Jewellery,
textiles
and clothing, and other items were badly hit. During recession, exporters get low orders
from overseas markets, and they have to quote lower prices. Therefore, exporters get low
profits or suffer from losses.
3. Protectionist Measures by Developed Countries: The developing countries like
India
have to face the problem of protectionist measures by developed countries. For instance,
in 2009, USA Govt. provided a bailout package to General Motors and other firms to
overcome from financial crisis. The bailout package contained Buy American Clause
which means the firms getting financial assistance from the Govt. have to use domestic
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content rather than importing from other countries. Since USA is the major importer from
India, some of the exporters such as auto parts suppliers have to face problems.
4. Reduction in Export Incentives: Over the years, the Govt. of India has reduced
export
incentives such as reduction in DBK rates, withdrawal of income tax benefits for majority
of exporters, etc. The reduction in export incentives demotivates exporters to export in
the
overseas markets:
5. Competition from China:India is facing stiff competition from China in the world
markets, especialy in the OECD markets. As a result, Indias share of exports to OECD
markets has declined from 53% of total exports in 2000-01 to about 38% in 2007/8. Some
of the Indian exporters have lost their overseas contracts due to cheap Chinese goods arid
supplies.
6. Problem of Product Standards: Developed countries insist on high product standards
from developing countries like India. The products from developing countries like India
are subject to product tests in the importing countries. At times, the importing countries
do
not allow imports of certain items like fruits, textiles, and other items on the grounds of
excessive toxic content. Therefore, Indian exporters lose markets especially in developed
countries.
7. Problem of Anti-dumping Duties: Developed countries impose anti-dumping duties
on
certain goods imported from developing countries like India, Brazil, China and so on. For
instance, USA had imposed anti-dumping duties on Indian steel items in 2008. Quite
often, the anti-dumping duties are not justified. Therefore, India has to approach the
dispute settlement body of WTO to resolve the dispute regarding anti-dumping duties.
Till
the dispute is resolved, Indian exporters lose business opportunities.
8. Problem of Sea Pirates Attacks: A major risk faced by international trade is attack by
pirates in the Gulf of Aden. More than half of Indias merchandise trade (exports and
imports) passes through the piracy infested Gulf of Aden. New exporters and importers
are facing problems because of increased pirate attacks as they find it difficult to get
insurance cover.
9. Problem of Subsidies by Developed Countries: The developed countries like USA
provide huge subsidies to their exporters. For instance, in case of agriculture exporters,
USA, UK and others provide huge subsidies to their exporters. Therefore, the exporters
of
developing countries like India find it difficult to face competition in the world markets.
10. Documentation Formalities: There are a number of documents to be prepared in
export
trade. In India, there are as many as 25 documents (16 commercial documents and 9
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regulatory documents) to be filled in. However, aligned documentation system (ADS) has
simplified export documentation procedure.
11. Foreign Exchange Regulations: Export marketing is subject to foreign exchange
regulations. For instance, in India, the exporters have to give a declaration in Form GR to
the Reserve Bank of India (RBI) that they will realize the full value of exports within a
period of 180 days.

Major Globalization Initiatives from Indian Companies

Globalization of Markets: It refers to the merging of national markets into one huge
global
marketplace. Globalization of Production: It refers to the sourcing of goods and services
from
locations around the world to take advantage of national differences in the cost and
quality of
factors of production. Falling Barriers to Trade and Investment: The falling of barriers to
international trade enables firms to view the world as their market. Technological
Innovation:
Technological changes have achieved advances in communication, information
processing, and
transportation technology, including the Internet and the World Wide Web.
FACTORS
DETERMINING
INBUILDING GLOBAL COMPANIES POLITICAL
FACTORS - - Democratic -
Theocracy
(religious) -
province)
Japan, France( centralized)
POLITICAL FACTORS Government takeover of asset(with or without permission)-
Operational
- Opposition
parties,
-
Economi
GDP-

Home
country
Trademark
protection & piracy laws, GATT, codes of conduct
ITCSUBSIDIARIES JOINT VENTURES ITC Infotech Surya Nepal Private Limited
Maharaja
Heritage Land base Resorts Ltd. King Maker Marketing Inc., USA ITC Filtrona
Technico Pty
Limited. Australia Russel Credit Limited ASSOCIATE COMPANIES Wimco Limited

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Gujarat Hotels Limited Srinivasa Resorts Limited International Travel Fortune Park
Hotels
Limited House Bay Islands Hotels Limited Gold Flake Corporation Limited
ITC INFOTECH The company services industries including, Banking Financial
Services &
Insurance (BFSI), Consumer Packaged Goods (CPG), Retail, Manufacturing,
Engineering
Services, Media & Entertainment, Travel, Hospitality, Life Sciences and Transportation
&
Logistics. Ranked amongst Top 10 Specialty Application Development Providers -
Global
Services, CMP Media
ITC CIGARETTES Market Value. The Indian tobacco market grew by 8.9% in 2012 to
reach
value of $11.6 billion. Market Value Forecast In 2013, the Indian tobacco market is
forecast to
have a value of $14.9 billion, an increase of 29.4% since 2008.
MAHINDRAMAHINDRA AND MAHINDRA FORGINGSMAHINDRA Their global
presence
They are one of the largest and most means that you can find technologicaly advanced
Mahindra vehicles on the manufacturers of forged roadsboth paved and and machined
components in the world. unpavedof Australia, They create parts like Europe, Latin
America,
links, knuckles, spindles, Malaysia, and South shafts, crankshafts, camshafts, pistons, ball
Africa.
And they are joints, and stub axles that seeking out new terrain are used in automotive,
every day
agriculture, railway, mining, construction and other industries throughout the world.
MAHINDRAMAHINDRA SATYAM TECH MAHINDRA Since commencing
operations in
1986 as a joint Sathyam is a global player in venture between Mahindra and the global
Information, British Telecom (BT), they have Communication, and Technology (ICT)
space.
They become one of Indias largest provide enterprise business software exporters and
ranked
solutions, infrastructure No.1 in the Telecom Software services, industry native Category
(Voice
& Data 2010-11). solutions, integrated For over two decades, they have engineering
solutions,
been the chosen transformation consulting services, partner for wire-line, wireless and
application
development and broadband operators in Europe, management services, and Asia-Pacific
and
North America. business process outsourcing to more than 350 clients in We operate in
more than
30 35 countries. countries through 17 sales offices and 13 delivery centers, working with
major
players like British Telecom, Vodafone, among others
INFOSYS Infosys is a global leader in consulting, technology and outsourcing with
revenues of
US$ 7.231 bilion Infosys provides business consulting, technology, engineering and
outsourcing
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services to help clients in over 30 countries build tomorrows enterprise. Infosys and its
subsidiaries have 155,629 employees as on Dec 31, 2012.
INFOSYS Infosys takes pride in building strategic long-term client relationships. 97.5%
of our
revenues come from existing customers Infosys has a global footprint with 67 offices
and 69
development centers in US, India, China, Australia, Japan, Middle East, UK, Germany,
France,
Switzerland, Netherlands, Poland, Canada and many other countries.
DABUR Dabur has a special herbal health care and personal care range successfully
selling in
markets ranging from the Middle East, Far East, North Africa and Europe Inroads into
several
European and American markets that have good potential due to resurgence of the
back-to-nature
movement Export of Active Pharmaceutical Ingredients (APIs), manufactured under
strict
international quality benchmarks, to Europe, Latin America, Africa, and other Asian
countries
Export of food and textile grade natural gums, extracted from traditional plant sources
Six
modern manufacturing facilities spread across South Asia, Middle East and Africa to
optimize
production by utilizing local resources and the most modern technology available

acquired
Corus Group for U.S. $12.11 bi
is
considered to be one of the biggest foreign acquisitions by an Indian company, and after
this only
TATA Steel came out to be the fifth largest steel producer in the whole world.
TATA Ja
Land

was for
The deal was
effective
from May 2008. The deal is seen as yet another endeavor of the fast growing Indian
industries,
also the latest in a string of foreign acquisitions by Tata.
Bharti Airtel had acquired Zain Africa for a value of U.S.
$10.7
billion. The acquisition gives Bharti Airtel a total customer base of 180 million, including
131
ide
the
country, Bharti Airtel can in the long term benefit from economies of scale, including
getting
better deals from suppliers
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Aditya Birla Novelis (U.S.) Has acquired the entire stake in the Atlanta based
aluminium
company Novelis for U.S. $6 bilion This company had separated from Alcan, a global
aluminium company
ONGC Imperial Energy (U.K.) Oil and Natural Gas Corp (ONGC) has acquired
Imperial
Energy. This deal was for 1.3 bilion pounds (U.S. $1.9 bilion). The company owed the
acquisition to government support, which in the past seven years increase its number of
projects
to 39 in 17 countries, from just a single project in Vietnam
Essar Steel Global Algoma Steel (Canada) Ruias owned Essar Steel Global acquires the
Canadian
steel company Algoma Steel at a valuation of Canadian $1.85 billion. Essar Steel
Holding, Essar
Groups overseas investment arm made the investment possible and easy. Algoma would
definitely provide Essar an excellent platform for the Canadian and North American
market
Reliance Marcel us Shale Reliance, led by Indian billionaire Mukesh Ambani, got the
right to
buy 40 percent of all new Marcellus Shale leases that Atlas acquires, after this purchase
acquisition and agreement was completed.
Acquisition Price ($m) Reliance Industries Flag Telecom, Bermuda 212 Trevira,
Germany 95Tata
Motors Daewoo, Korea 118Infosys Technologies Expert Information 3.1 Services,
Australia
Wockhardt CP Pharmaceuticals, UK 18Cadila Health Alpharma SAS, France
5.7Hindalco Straits
Ply, Australia 56.4Wipro NerveWire Inc, US 18.5Aditya Birla Dashiqiao Chem, China
8.5United
Phosphorus Oryzalin Herbicide, US 21.3Bharat Forge Carl Dan Peddinghaus Gmbh,
Germany
28Ranbaxy RPG Aventis, France 80
WTO Regulations and their implications for India
The World
Trade
Organization (WTO)
is
an organization that
intends
to
supervise
and liberalize international trade. The organization officially commenced on 1 January
1995
under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade
(GATT),
which commenced in 1948.The organization deals with regulation of trade between
participating
countries; it provides a framework for negotiating and formalizing trade agreements, and
a
dispute resolution process aimed at enforcing participant's adherence to WTO
agreements, which
are signed by representatives of member governments and ratified by their parliaments.
Most of
the issues that the WTO focuses on derive from previous trade negotiations, especially
from
the Uruguay Round (19861994).
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The organization is attempting to complete negotiations on the Doha Development
Round, which
was launched in 2001 with an explicit focus on addressing the needs of developing
countries. As
of June 2012, the future of the Doha Round remained uncertain: the work programme
lists 21
subjects in which the original deadline of 1 January 2005 was missed, and the round is
still
incomplete. The conflict between free trade on industrial goods and services but retention
of protectionism on farm
subsidies to
domestic agricultural
sector (requested
by developed
countries) and the substantiation of the international liberalization of fair trade on
agricultural
products (requested by developing countries) remain the major obstacles. These points of
contention have hindered any progress to launch new WTO negotiations beyond the
Doha
Development Round. As a result of this impasse, there has been an increasing number of
bilateral
free trade agreements signed. As of July 2012, there were various negotiation groups in
the WTO
system for the current agricultural trade negotiation which is in the condition of
stalemate.
Principles of the trading system
The WTO establishes a framework for trade policies; it does not define or specify
outcomes. That
is, it is concerned with setting the rules of the trade policy games. Five principles are of
particular
importance in understanding both the pre-1994 GATT and the WTO:
1. Non-discrimination. It has two major components: the most favoured nation (MFN)
rule,
and the national treatment policy. Both are embedded in the main WTO rules on goods,
services, and intellectual property, but their precise scope and nature differ across these
areas. The MFN rule requires that a WTO member must apply the same conditions on all
trade with other WTO members, i.e. a WTO member has to grant the most favorable
conditions under which it allows trade in a certain product type to all other WTO
members. "Grant someone a special favour and you have to do the same for all other
WTO members." National treatment means that imported goods should be treated no less
favorably than domestically produced goods (at least after the foreign goods have entered
the market) and was introduced to tackle non-tariff barriers to trade (e.g. technical
standards, security standards et al. discriminating against imported goods).
2. Reciprocity. It reflects both a desire to limit the scope of free-riding that may arise
because of the MFN rule, and a desire to obtain better access to foreign markets. A
related
point is that for a nation to negotiate, it is necessary that the gain from doing so be greater
than the gain available from unilateral liberalization; reciprocal concessions intend to
ensure that such gains will materialise.
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3. Binding and enforceable commitments. The tariff commitments made by WTO
members in a multilateral trade negotiation and on accession are enumerated in a
schedule
(list) of concessions. These schedules establish "ceiling bindings": a country can change
its bindings, but only after negotiating with its trading partners, which could mean
compensating them for loss of trade. If satisfaction is not obtained, the complaining
country may invoke the WTO dispute settlement procedures.
4. Transparency. The WTO members are required to publish their trade regulations, to
maintain institutions allowing for the review of administrative decisions affecting trade,
to
respond to requests for information by other members, and to notify changes in trade
policies to the WTO. These internal transparency requirements are supplemented and
facilitated by periodic country-specific reports (trade policy reviews) through the Trade
Policy Review Mechanism (TPRM). The WTO system tries also to improve
predictability
and stability, discouraging the use of quotas and other measures used to set limits on
quantities of imports.
5. Safety valves. In specific circumstances, governments are able to restrict trade. The
WTO's agreements permit members to take measures to protect not only the environment
but also public health, animal health and plant health.
There are three types of provision in this direction:
-economic objectives;
ompetition"; members must not use environmental
protection measures as a means of disguising protectionist policies.

Exceptions to the MFN principle also allow for preferential treatment of developing
countries, regional free trade areas and customs unions.
Undesirable effects of globalization

Globalization seems to be looked on as an unmitigated good by economists.
Unfortunately,
economists seem to be guided by their badly flawed models; they miss real-world
problems. In
particular, they miss the point that the world is finite. We dont have infinite resources, or
unlimited ability to handle excess pollution. So we are setting up a solution that is at
best
temporary.
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Economists also tend to look at results too narrowlyfrom the point of view of a business
that can
expand, or a worker who has plenty of money, even though these users are not typical. In
real life,
businesses are facing increased competition, and the worker may be laid off because of
greater
competition.
ources more quickly.

worldwide implications of their actions

developing countries

developed
countries.
y from corporations, and onto individual
citizens.

Government Initiatives needed to foster globalization

Globalization of Markets: It refers to the merging of national markets into one huge
global
marketplace. Globalization of Production: It refers to the sourcing of goods and services
from
locations around the world to take advantage of national differences in the cost and
quality of
factors of production. Falling Barriers to Trade and Investment: The falling of barriers to
international trade enables firms to view the world as their market. Technological
Innovation:
Technological changes have achieved advances in communication, information
processing, and
transportation technology.

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Module VIII (2 Hours)
The future of global marketing: Six major changes in global marketing

Global economies are so tightly interconnected that companies, governments and
industries will
soon be forced to cooperate in ways we could not have imagined just a few years ago.
In fact, Ernst & Young believes the six trends are themselves connected by three
underlying
drivers that have helped establish each trend and perpetuate it.
1. Demographic shifts. Population growth, increased urbanization, a widening divide
between countries with youthful and quickly aging populations and a rapidly growing
middle class are reshaping not only the business world, but also society as a whole.
2. Reshaped global power structure. As the world recovers from the worst recession
in
decades, the rise of relationships between the public and private sectors has shifted the
balance of global power faster than most could have imagined just a few years ago.
3. Disruptive innovation. Innovations in technology continue to have massive effects
on
business and society. We're now seeing emerging markets become hotbeds of innovation,
especially in efforts to reach the growing middle class and low-income consumers around
the globe.
Six global trends, interconnected by three key drivers of change

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Six global trends, interconnected by three key drivers of change

1. Emerging markets increase their global power
2. Cleantech becomes a competitive advantage
3. Global banking seek recovery through transformation
4. Government enhances ties with private sector
5. Rapid technology created innovative and mobile world
6. Demographic shifts transforms the global work force

1. Emerging markets increase their global power
Emerging markets serve as the world's economic growth engine, and the far-reaching
effects of
their spectacular rise continue to play out. But their risks are often downplayed.
Therefore, taking
advantage of emerging-market opportunities requires careful planning.

emerging markets have become the darlings of the financial press and a favorite talking
point of C-suite executives worldwide.
only for their natural resources or as a source of cheap labor and
low-cost
manufacturing, emerging markets are now seen as promising markets in their own right.
Rapid population growth, sustained economic development and a growing middle class
are making many companies look at emerging markets in a whole new way.

corporations now do so.
market leaders represent a major shift in the global competitive
landscape
a trend that will only strengthen as they grow in size, establish dominance and seek
new opportunities beyond their traditional domestic and near-shore markets.
icular, we see the following trends ahead:

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Leading emerging markets will continue to drive global growth
Estimates show that 70% of world growth over the next few years will come from
emerging
markets, with China and India accounting for 40% of that growth.
Adjusted for variations in purchasing power parity, the ascent of emerging markets is
even more
impressive: the International Monetary Fund (IMF) forecasts that the total GDP of
emerging
markets could overtake that of the developed economies as early as 2014.
The forecasts suggest that investors will continue to invest in emerging markets for some
time to
come. The emerging markets already attract almost 50% of foreign direct investment
(FDI) global
inflows and account for 25% of FDI outflows.
The brightest spots for FDI continue to be Africa, the Middle East, and Brazil, Russia,
India and
China (the BRICs), with Asian markets of particular interest at the moment.
By 2020, the BRICs are expected to account for nearly 50% of all global GDP growth.
Securing a
strong base in these countries will be critical for investors seeking growth beyond them.

Emerging market leaders will become a disruptive force in the global competitive
landscape
As emerging market countries gain in stature, new companies are taking center stage. The
rise of
these emerging market leaders will constitute one of the fastest-growing global trends of
this
decade.
These emerging market companies will continue to be critical competitors in their home
markets
while increasingly making outbound investments into other emerging and developed
economies.
Working to serve customers of limited means, the emerging market leaders often produce
innovative designs that reduce manufacturing costs and sometimes disrupt entire
industries.
A case in point: India's Tata Motors' US$2,900 Nano, priced at less than half the cost of
any other
car on the market worldwide. A version is set to go on sale in Europe this year.
Many emerging market leaders have grown up in markets with "institutional voids,"
where
support
systems
such
as
retail
distribution
channels,
reliable
transportation
and
telecommunications systems and adequate water supply simply don't exist.
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As a result, these companies possess a more innovative, entrepreneurial culture and have
developed greater flexibility to meet the demands of their local and
"bottom-of-the-pyramid"
customers.

Emerging markets will become the new battleground
The BRICs are having a major impact on their regional trading partners and more distant,
resource-rich countries, an increasing number of which are being pulled into their
economic orbit.
In 2009, emerging-to-emerging (E2E) trade reached US$2.9 trillion. This massive flow of
investment among emerging markets is well on its way to creating a second tier of
emerging
market leaders.
As pressure for resources increases, we expect a battle for first-mover advantage among
emerging
heroes, global players and emerging market governments in regions such as the Middle
East and
Africa.

Global influence grows
Inevitably, the BRICs' growing economic strength is leading to greater power to
influence world
economic policy.
In October 2010, for example, emerging economies gained a greater voice under a
landmark
agreement that gave 6% of voting shares in the IMF to dynamic emerging countries such
as
China. Under the agreement, China will become the IMF's third-biggest member.

2. Cleantech becomes a competitive advantage
The cleantech-enabled transformation to a low-carbon, resource-efficient economy may
be the
next industrial revolution.
As this transformation accelerates, global corporations are increasingly realizing that they
must
understand the impact of cleantech on their industries and develop strategic plans to adapt
to this
change.
Going big: the rising influence of corporations on cleantech growth, EY's 2010 global
survey of
corporations with more than US$1b in revenue, showed that cleantech is an
organization-wide or
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business-unit-level initiative for 89% of respondents; 33% spend 3% or more of total
revenues on
cleantech and 75% expect cleantech spending to increase over the next five years.
national strategic platform for creating jobs, fostering innovation and establishing local
industries.
According to Bloomberg New Energy Finance, investment in cleantech surged 30% in
2010 over
the previous year to US$243b, double the amount recorded in 2006 and nearly five times
that of
2004.
There is still a large gap between the capital required and the capital available to fuel the
transition to a low-carbon economy. Primary energy demand is expected to grow by 36%
worldwide between 2019 and 2035, with the bulk of that new energy use (93%) coming
from
emerging markets.
By 2035, China alone will see its energy needs rise by 75%, according to the
International Energy
Agency (IEA) report, World Energy Outlook 2010.
In the coming years, surging demand, energy prices, energy security concerns and
scarcity of
natural resources will encourage governments and companies to work harder to diversify
their
energy portfolio mix and to continue investments in clean energy innovation, deployment
and
adoption.
This inevitable move to a low-carbon, resource-efficient economy presents an
opportunity to
stake out and capture a strategic competitive position not just for governments, but
also for
innovators, investors and corporations, too.
The energy mix evolves
Renewable energy is still expensive in most places, which will limit its use in the short
run. But as
wind, solar and other renewable projects scale up, their prices will continue to fall.
The IEA predicts that power generation using renewables will triple between 2010 and
2035.
Fossil fuels such as oil and coal will lose market share over time, as natural gas and
nuclear power
contribute to the diversified energy mix.
There has been a surge in construction of nuclear power reactors worldwide. Natural gas,
a
cleaner-burning fossil fuel, is expected to grow more important, serving as a bridge to a
renewables-based economy.

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Clean energy is a national competitive advantage
Many governments are aggressively implementing clean energy policies, setting
emissions targets
and providing incentives for cleantech investing.
China, Germany, India and Brazil are gaining leadership positions in solar, wind and
biofuels.
The US remains a cleantech leader because of its entrepreneurial culture and vibrant
venture
capital environment. Policy-makers are betting that cleantech investments will yield other
benefits
such as job creation and innovation- led economic growth.
Notably, private investment is flowing to countries with comprehensive, clear and
long-term
energy policies aimed at incentivizing renewable energy use, promoting efficiency and
reducing
carbon emissions.

Companies make cleantech a strategic priority
Sensing commercial opportunity, companies increasingly are building cleantech into their
growth
strategies. Many are also "greening" their existing products in response to increasing
consumer
demand.
Others are moving into growth areas that fall outside their traditional lines of business,
hoping to
achieve first-mover advantage as the landscape evolves. For example, Google and Cisco
have
both entered the home energy management space.
In the past year, corporate activity in the cleantech marketplace has significantly
increased
through direct investments, partnerships and acquisitions of newly formed cleantech
companies.
Raw materials are strategic assets, especially in a time of scarcity. To secure them, some
governments have turned outward. China, for example, is now deeply invested in Africa.
Companies, meanwhile, are reconfiguring supply chains, seeking greater flexibility in an
effort to
mitigate the impact of raw materials shortages, higher commodity costs and price
volatility. Some
businesses are protecting their supply chains by acquiring their raw material suppliers.
Steelmakers, for example, have recently bought several iron ore and coal mines in
different
countries to guard against supply chain disruptions.

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Organizations are more transparent about sustainability
As concerns about resource scarcity, including energy and water, become more pressing,
companies will face increasing pressure from their stakeholders to demonstrate that their
businesses are sustainable.
Companies will also have to disclose the social and environmental impact of their
business
activities. Although most sustainability reporting is currently voluntary, the broad trend is
toward
greater disclosure.
More than 3,000 companies worldwide issue such reports, following such voluntary
guidelines as
the AA1000 AccountAbility Principles Standard and the Global Reporting Initiative
Reporting
Framework.
These voluntary guidelines may soon become mandatory.

3. Global banking seeks recovery through transformation
Three years after the financial crisis began, the global financial system remains in flux.
Regulatory clarity is nearing, but many issues remain unresolved.
Initiatives of the G20, the Basel III global banking standards and the Dodd-Frank Wall
Street
Reform and Consumer Protection Act (the Dodd-Frank Act) in the US have begun to
bring some
aspects of the new rules into focus.
While regulators have focused mostly on the systemic risk posed by some of the largest
and most
interconnected institutions, banks are concerned with their ability to compete and the
resulting
regulatory impact on returns.
The final shape of the global regulatory framework is still unclear, but it seems clear that
international banking will change in fundamental ways, including:
mits on executive pay

-the-counter (OTC) derivatives
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(PE)
funds in the US

Emerging market financial institutions are gaining global stature
In the developed world many financial institutions continue to recover from the financial
crisis,
and, in many cases, emerging market banks are in better shape. Many rose from the crisis
with
hardly a scratch.
While the traditional top two international financial centers New York and London
remain
secure in their status, capitals of finance in Asia are rising in the rankings.
In The Global Financial Centres Index's September 2010 ranking, Hong Kong rose to
third
position, while Singapore was fourth.
It is growing increasingly apparent that the banking sectors and institutions of emerging
markets
particularly those of China, India and Brazil will make a strong move toward
increasing
their presence on the global scene.
As 2011 unfolds, emerging market banks are well positioned to continue to benefit from
strong
credit growth in their local economies.
However, while many emerging market banks have the scale to consider expanding into
other
emerging or developed markets, there remain a number of barriers to entry, including the
lack, in
many cases, of robust investment banking capabilities.

G20 initiatives will require increased regulatory oversight
In the US, the Dodd-Frank Act mandates that OTC derivatives, for example, be regulated
by the
SEC and the Commodity Futures Trading Commission (CFTC).
Similar rules are also expected in the EU and the UK.
At the same time, new consumer financial protection agencies have been created and
proposals to
strengthen consumer protection authorities have been proposed.
New rules limiting executive compensation are a major regulatory focus affecting the
sector. The
goal is to ensure that excessive risk-taking is not rewarded. These measures include an
agreement
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to lower 2010's aggregate bank bonuses in the UK from the previous year, increase
transparency
and reduce clawbacks and deferred shares subject to vesting periods.

Regulation will drive up the cost of business for many large financial institutions
The substance of the new rules creates challenges. For instance, Basel III requires banks
to boost
capital and liquidity levels, implement a leverage ratio, increase risk coverage for certain
assets
and activities and raise standards for supervisory review.
In the US, the Dodd-Frank Act is more than 2,300 pages long and will require agencies to
write
353 new rules and conduct 68 studies.
Not surprisingly, large financial institutions cite regulatory uncertainty as the biggest
challenge
they face.
Their uncertainty is compounded by the fragmentation of regulations, as individual
countries set
out to make their own rules.

Governments enhance ties with the private sector
The global recession left many developed countries with falling tax revenues and rising
expenses.
Key emerging market countries did not experience the disruptions caused by the financial
crisis,
but they face the need to develop infrastructure, educational institutions and social safety
nets for
their fast-growing middle classes.
To meet those needs, governments of both mature and developing countries have three
priorities:

and
ensures better employment

through diverse vehicles and activities, including state-owned corporations, sovereign
wealth funds (SWFs), industrial planning and regulation.

role in the economy.
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Looking ahead, we believe governments will increasingly take the lead in five key
areas:

Developed countries rebalance their finances
-to-GDP ratios, most developed countries are now
struggling to put their finances in order.
-to-GDP ratio rose
from less than 80% to 95%.
In 2011, the debt ratio is expected to break the 100% mark. Deutsche Bank projects that
the debt-
to-GDP ratio for developed countries will reach 133% of GDP by 2020.
Alarmed by these numbers, developed economies at the G20 Summit in Toronto in June
2010
committed themselves to reducing their deficits by 2013, and to stabilizing or reducing
government debt-to-GDP ratios by 2016.

Emerging markets countries expand their social benefits
Emerging markets countries with a surplus need to boost social spending on pensions,
health care
and infrastructure. In some markets, a stronger safety net is intended to promote
economic
growth.
Most Chinese, for example, essentially insure themselves through extraordinarily high
household
savings rates. To strengthen its consumer economy, China must first convince consumers
that it is
safe for them to spend.
Emerging market countries also need to improve the effectiveness of their tax
administration, and
to invest in infrastructure, telecommunications, transportation, education and housing.
Public-
private partnerships (PPPs) are likely to become important investment vehicles in these
markets.

Aging populations and immigration inflows pose new spending challenges
Meeting the needs of people who are living longer, healthier lives will have a tremendous
financial impact. Standard & Poor's reports that the median age-related public spending
for
developed economies (including health care, pensions, long-term care and
unemployment) is
expected to rise from 17% of GDP in 2010 to 27% in 2050, versus 11% to 17% for
emerging
market countries.
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Median public spending on age-related health care in developed economies is expected to
grow
from 6% of GDP in 2010 to 11% in 2050, versus 4% to 11% of GDP for emerging
market
economies.
Increased immigration flows are also expected to put upward pressure on future
government
spending.

Governments direct their economies
Against the backdrop of uneven economic recovery around the globe, governments
continue to be
active in economic life. An enormous amount of wealth remains concentrated under state
control
in the form of SWFs.
Although SWF assets fell in value after the recession, they are set to grow again. The
total assets
of SWFs are expected to climb from roughly US$3.5 trillion in 2010 to US$8 trillion by
2015,
making SWFs powerful sources of capital for years to come.
State-owned enterprises (SOEs) will remain important to defending strategic industries
and
guaranteeing the adequacy of critical infrastructure in some countries. SOEs are
becoming larger
and more globally competitive:
-two percent of Indian companies on the 2010 Fortune Global 500 list are SOEs.
-six Chinese SOEs (excluding Taiwan-based companies) are on the 2010 list, up
from 34 in 2009.
-owned energy giants are now in the top 10.

Governments balance global cooperation with pursuit of their national interests
Greater globalization necessitates a new agenda for international economic cooperation,
but at the
same time, diverging domestic needs are creating conflict.
The G20 agree in principle that global rebalancing is desirable to create long-term
economic
growth and financial stability. Developed economies have to save more and spend less to
get their
financial houses in order.
Key emerging markets need to reduce their reliance on exports and stimulate domestic
demand.
Meanwhile, the need for faster economic growth is fueling new rounds of trade
protectionism and
stimulus plans.
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Trade and currency issues were high on the agenda at the G20 Summit in Seoul in
November
2010.
Debate centered on varying perceptions of China's valuation of its currency to drive
exports, as
well as quantitative easing in the US and its potential to increase capital inflows to
emerging
countries and fuel asset bubbles.
Despite fragmented views, the G20 Seoul declaration managed to reaffirm the notion of
working
together, with a focus on moving toward more market-determined exchange rate systems,
refraining from competitive devaluation of currencies and pursuing a full range of
policies
conducive to reducing excessive imbalances.

Rapid technology innovation creates a smart, mobile world

Over the past 25 years, the digital revolution has changed the way we work and play
almost
beyond recognition. Yet the smart, interconnected world we live in now is still neither as
smart,
nor as connected, as we would like it to be.
Consumers want more powerful devices and applications, while businesses seek more
cost-
effective technology to cope with increasingly complex challenges.
Satisfying these demands will lead to explosive growth in data and analytics, to new
competition
in almost every field, and to the disruption and realignment of many industries.
Specifically, we expect to see the following changes:

Businesses will compete on analytics to differentiate themselves
The growing number of embedded sensors collecting information about the world, and
the rise of
social networks that store the data people share, will generate immense quantities of
information.
IDC, a market research firm, suggests that the amount of digital information created each
year
will increase to 35 trillion gigabytes by 2020, requiring 44 times more data storage than
in 2009.
For example, telematics applications, similar to global positioning systems, will allow
organizations to send, receive and store information via telecommunications devices
while
controlling remote objects.
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Although commonly associated with the automotive industry, telematics applications are
being
developed for use in medical informatics, health care and other fields. Despite these
advances in
technology, simply collecting and managing the massive volumes of data will provide
minimal
value.
The real payback comes when business intelligence is applied to enable companies to
make better
strategic decisions.
Business intelligence, which enables organizations to gather quantifiable data on each
area of the
organization and analyze it in a way that yields information they can act on helping
them
enhance decision making, improve performance, mitigate risk and sometimes even create
new
business models ; is growing in importance.

Smart mobility will change the way people interact
Increasingly, smart devices portable tools that connect to the internet have become
a part of
our lives. In the last quarter of 2010, sales of smartphones outpaced those of PCs for the
first time,
according to data from IDC.
By 2014, more smart devices could be used to access the internet than traditional
computers. The
move to an increasingly mobile world will create new players and new opportunities for a
variety
of industries.
We expect that new emerging market companies will be significant competitors, growing
rapidly
in part because a lack of legacy systems will enable them to profit more quickly from
new
technology as it becomes available.
Emerging markets will create plenty of opportunities related to smart technology, and
they will
not be limited to for-profit enterprises
In Kenya, for example, mobile phones are being used to collect data and report on
disease-
specific issues from more than 175 health centers serving over 1 million people. This
technology
has reduced the cost of the countrys health information system by 25% and cut the time
needed
to report the information from four weeks to one week.

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Technology blurs boundaries
Many industries will be disrupted by the consequences of technology innovation. The
"blur"
created by digital technologies will intertwine geographies, economies, industries,
products and
even private and business lives. Technology insiders have long spoken of "true
convergence," and
this is it.
As smart devices become increasingly accepted, companies will move into adjacent
markets to
exploit new revenue models such as mobile commerce and mobile payment systems.
Already, a
number of data and tech giants are jockeying for position.
As these waves of disruption continue, whole new markets will be created even as long-
established businesses are destroyed. In this changing environment, network providers,
for
example, will be faced with a choice: either evolve into the role of innovation provider,
or be
content simply to serve as a utility.
Over the long term, the ultimate blurring of boundaries might take the form of Web 3.0
often
called the "semantic web" a term that refers to functions and activities involving the
integration of machines, the web and human beings. Currently the stuff of science fiction,
the
semantic web is nevertheless an area to watch.

Cloud computing takes off finally
Analysts have been talking about cloud computing for years, but cloud-based services are
finally
starting to take off.
By 2016, Gartner, a consultancy, expects al Forbes Global 2000 companies to use public
cloud
services, transforming much of the current IT hardware, software and database markets
into
infinitely flexible utilities.
When cloud computing becomes widespread, it will transform businesses and business
models,
potentially reducing both initial and recurring costs for IT buyers, increasing their
flexibility and
lowering their risks. Whats not to like about an infinitely scalable, pay-as-you-go
business
model?
Despite concerns related to data security, privacy and business continuity, its value
proposition
makes the success of cloud computing inevitable. Over time, cloud-based services will
grow
increasingly sophisticated and evolve into full-scale business processes as a service.
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The power of the individual will spur innovation
Google, Facebook, Twitter, smartphones, tablets and e-readers technologies that
originated in
the consumer space are now reshaping the way companies communicate and
collaborate with
employees, partners and customers.
Through the new possibilities for "social listening," businesses are able to better
understand what
their customers and employees need and want.
More change can be expected when the generation that has grown up with new
technologies and
instant information gratification joins the workforce.
For example, by 2014, Gartner forecasts that social networks will become the main form
of
business communication for 20% of employees worldwide.

Governments role in innovation grows
Governments will increasingly become involved in technology, investing in a broad
range of
applications from home-grown innovation incubators to local manufacturing sites that
create
jobs and manage geopolitical risk.
In cloud computing, for example, governments are taking the lead, much as the US did in
the
development of the internet.
In China, the Beijing Academy of Science and Technology has built the countrys largest
industrial cloud-computing platform, designed to serve small- and medium-sized
enterprises in
government-supported
industries,
including
biotech,
pharmaceuticals,
new
energy
and
knowledge-intensive manufacturing.
At the same time, governments havent forgotten their regulatory role. As citizens share
more
personal data on websites such as Facebook, many governments are considering
regulations to
protect citizens privacy and corporations data.
The EU is developing stricter privacy rules, including an "online right to be forgotten,"
which
would require websites to delete data permanently at an individuals request.
However, the public pressure to strengthen privacy protection through legislative means
is likely
to vary by region. Consumers in regions such as North America, for example, seem
willing to
trade some privacy in return for customized service.
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Demographic shifts transform the global workforce
Despite a growing global population, the availability of skilled workers is actually
shrinking, and
no longer just in advanced, aging countries such as Japan and Italy. Now, some emerging
markets, such as China and Russia, are also feeling a demographic pinch.
The data suggests that this is only the beginning. A demographic divide wil soon arise
between
countries with younger skilled workers and those that face an aging, shrinking workforce.
The
war for talent will become increasingly acute in certain sectors, especially areas requiring
high
skill levels and more education.
More specifically, we expect:

Labor force demographics will shift profoundly
Despite projected growth in the global population from 6.9 billion in 2010 to 7.6 billion
in 2020,
the working-age population is expected to decline in many countries. Japan already has
more
people exiting the workforce than there are workers prepared to enter it.
In the European labor market, 2010 marked the first time more workers retired than
joined the
workforce. While this labor gap is a relatively manageable 200,000, it will surge to 8.3
million by
2030.
By the end of this decade, other large economies such as Russia, Canada, South Korea
and China
will also have more people at retirement age than are entering the workforce. Other,
younger
countries stand to profit from those trends.
One-third of Indias population is now under the age of 15.
Other emerging market economies with young labor forces such as Brazil, Mexico and
Indonesia
may benefit from a demographic dividend, a surge in productivity and growth as those
workers
join the labor pool.
But the dividend pays off only if the country provides its youth with adequate educational
and
economic opportunities to develop their skills.
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There is a growing mismatch between the skills employers need and the talent
available
An estimated 31% of employers worldwide find it difficult to fill positions because of
talent
shortages in their markets, reports the 2010 Talent Shortage Survey from Manpower, an
international employment agency.
When it comes to attracting employees with critical skills, the task becomes even more
challenging. Today, 65% of global companies and more than 80% of companies in
fast-growth
economies are having problems finding employees with the skills they need, according to
Towers
Watson, an HR consultancy.
Why cant companies find the right talent despite the growing ranks of college-educated
workers
and the high unemployment in some of the best-educated markets?

Part of the answer has to do with the rising skill level needed in the evolving global
economy.
Another element is the failure of educational systems to produce an adequate base of
talent to
meet these changing needs. Although educational access is growing worldwide, not
enough
students graduate with the skills desired by global employers.

Generation U and women to fill the skills gaps
Desperate for workers, many companies will become more accepting of diverse
employees,
particularly older workers and women.
The leading US advocacy group for retired people, the AARP, believes that 80% of baby
boomers
will keep working full- or part-time past their current retirement age.
The Pew Research Center predicts that Generation U (unretired) workers will fuel 93% of
the
growth in the US labor market through 2016.
Women, an increasingly well-educated source of talent, have entered the workforce in
ever
greater numbers in recent decades. However, their talents are still often underutilized.
This is particularly true in societies with traditional views of gender roles, including
many fast-
growing economies.
SJBIT/MBA
Page 116


The talent market is increasingly global and mobile
Economic development and greater integration across markets in the past few decades
have
caused many talented people to explore career opportunities overseas.
Cross-border migration has grown 42% in the last decade, from 150 million to 214
million, with
most of the traffic directed toward OECD countries.
Higher unemployment in developed markets has discouraged many migrants recently.
Between a
lack of opportunity and local hostility to migrant workers, more would-be migrants are
staying
home.
New legal restrictions also have created a disincentive.
As the economy recovers, however, demand for labor is expected to bounce back and
migration along with it. Some countries have taken initial steps to soften or reverse
restrictive
policy changes that they implemented at the height of the recession.
The dramatic growth of emerging market countries is also beginning to change migration
patterns. Although developed markets are still a top choice for economic migrants, we are
increasingly seeing reverse migration as well.
According to the World Economic Forum, The return migration of highly skiled
workers to
their home countries is a growing trend for emerging countries.

Employees gain more bargaining power
Over the past 20 or 30 years, the bond between company and employee has weakened,
even in
corporate cultures where loyalty was once prized.
Fast-changing company needs and a desire to cut costs led first to more frequent layoffs,
and then
to nontraditional relationships where the expectation was not decades of service, but only
a few
years.
In a period of high unemployment, this new social contract is an advantage for the
employer. But
as the market turns, skilled employees should benefit. They will want a better
understanding of
their employment options and a greater say in how work is assigned, assessed and
rewarded.
SJBIT/MBA
Page 117


The employer will no longer define the workplace; rather, employees priorities and
preferences
will dictate what the future workplace will look like, particularly now that technology
makes it
easier than ever to design a variety of flexible arrangements.
Companies operating in aging societies will have to craft methods to engage or re-engage
the
experienced base of talent. Companies that fail to respond to this change and do not
succeed in
redefining their employee value proposition will fail to attract, retain or develop talent
effectively.

SJBIT/MBA
Page 118

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