+

International Marketing
Chapter 1 (Second Part): Introduction to
International Marketing
Olga C. Martn Moreno
omartin@espol.edu.ec
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International Marketing

n 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.
n The difference is the environment
n Competition, legal restraints, government
controls, weather, fickle consumers, economic
conditions, technological constraints,
infrastructure concerns, culture, and political
situations.

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+ Global vs. Regular 3

Marketing
nScope of activities are outside
the home-country market

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The International Marketing

Task

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+ Scope of International 5

Marketing
Scope of International Marketing

Culture, values
International Marketing and technology
in the global economy
Political economy
Part 1 &
Company Analysing created advantage
capabilities competitors Environment
Public policy, risk
& regulation
Product and
Consumer brand strategies Services
products
Part 2 Industrial Brand
products
Market Selection

Acquisitions and FDI

Exporting (Foreign Direct Investment)
Part 3 Market entry
Strategic alliances Strategic market entry

Selling and
Distribution Operations and negotiations
Part 4 performance
Pricing Assessing
performance
Olga C. Martn Moreno, MMGC.
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The Global Trade

Enviroment
+ General Agreement on Tariffs and 7

Trade (GATT)
nTreaty among nations to promote trade
among members established in 1947

nHandled trade disputes

nLacked enforcement power; nicknamed
the General Agreement to Talk and Talk
nDisputes lasted for years
nReplaced by World Trade Organization in
1995
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The World Trade Organization

nForum for trade-related

negotiations among 160 members

nBased in Geneva
nServes as dispute mediator through
DSB (Dispute Settlement Body)
nHas enforcement power and can
impose sanctions

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World Trade Organization (WTO)

Unlike GATT, WTO is an institution, not

an agreement
nItsets many rules governing trade between its
132 members
nWTO provides a panel of experts to hear and
rule on trade disputes between members, and,
unlike GATT, issues binding decisions

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The IMF and the World Bank

nThe International Monetary Fund (IMF)
and the World Bank Group are two global
institutions created to assist nations in
becoming and remaining economically
viable.
nThese organizations play important roles in
international trade:
n by helping maintain stability in the financial
markets and
n by assisting countries that are seeking economic
development and restructuring
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Preferential Trade Agreements

nMany countries seek to lower barriers

to trade within their regions
nPTAs give partners special treatment
and may discriminate against others
nOver 300 PTAs have been notified to
the WTO

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Free Trade Area

Two or more countries n Countries continue

agree to abolish tariffs and independent trade
policies with countries
other barriers to trade outside agreement
amongst themselves
n Rules of origin
requirements restrict
transshipment of goods
from the country with
the lowest tariff to
another
Anti-TTP protest, Tokyo, 2012

Olga C. Martn Moreno, MMGC.

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Advantages and Disadvantages of

Free Trade Agreements

https://www.youtube.com/watch?v=sLoL99lIJzU

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+North AmericaNAFTA 14

nNAFTA established as a free trade area in

1994
nCanada, United States, Mexico
nAll three nations pledge to promote
economic growth through tariff reductions
and expanded trade and investment
n No common external tariffs
n Restrictions on labor and other movements
remain
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NAFTA Income and Population

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U.S. Goods Exports in 2014

$1.6 Trillion

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U.S. Goods Imports in 2014

$2.3 Trillion

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+ Balance of Payments 18

The BP is the difference between receipts and

payments Receipts
merchandise export sales.
money spent by foreign
tourists.
transportation.
payments of dividends
and interest from FDI
abroad.
new foreign investments in
the U.S.

Payments
costs of goods imported.
spending by U.S. tourists
overseas.
new overseas
investments.
cost of foreign military
and economic aid.
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Latin America: SICA, Andean

Community, Mercosur, CARICOM

nIncludes the Caribbean, Central, and South

America
nHistory of no growth, inflation, debt, and
protectionism has given way to free markets,
open economies, and deregulation
nSome concern for further growth with the rise of
left-leaning politicians

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+ Central American Integration System 20

(SICA)
El Salvador,
Honduras, Guatemala,
Nicaragua, Costa
Rica, and Panama
Moving towards a
common market
Common External
Tariff of 0 to 15%
Retains tariffs on
goods also produced
in importing country
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DR-CAFTA

nSICA members El Salvador, Honduras,

Guatemala, Nicaragua, Costa Rica joined
the Dominican Republic and the United
States in a FTA
n80% of US goods and 50% + of
agricultural goods are duty free
nPaperwork is reduced
nReduced risks mean more direct foreign
investment
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Andean Community

Bolivia, Colombia, Ecuador, Peru

48th anniversary in 2017
Customs Union
Abolished foreign exchange,
financial and fiscal incentives, and
export subsidies
Established common external
tariffs

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MERCOSUR and CARICOM

n MERCOSUR: Common Market of the South:

Argentina, Brazil, Paraguay, Uruguay, Venezuela:
move freely through member countries
n Bolivia, Chile, Ecuador, Peru
n Associate members
n Participate in free trade area but not customs union

n CARICOM: Movement toward unity in the

Caribbean. Antigua and Barbuda, Bahamas,
Barbados, Belize, Dominica, Grenada, Guyana,
Haiti, Jamaica, Montserrat, St. Kitts and Nevis, St.
Lucia, St. Vincent and the Grenadines,
Suriname, and Trinidad and Tobago.

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MERCOSUR,
Andean, &
CARICOM
Income and
Population

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+ Asia-Pacific: The Association of 25

Southeast Asian Nations (ASEAN)

n Brunei, Cambodia,
Indonesia, Laos,
Malaysia, Myanmar,
Philippines,
Singapore, Thailand,
Vietnam
n Top trading partners
U.S., Japan, EU, China
n Geographically close;
historically divided

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+ Singapore 26

n Worlds2nd largest
container port
n 2nd highest standard
of living in the
region behind Japan
n 5.4 million people
n Over
3,000
companies
n Crimeis nearly
nonexistent Singapore, an important trade hub in
Asia, is becoming a cultural destination.
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The European Union (EU)

n Initially
began with the 1958
Treaty of Rome
n Objective is to harmonize
national laws and
regulations so that goods,
services, people, and money
could flow freely across
national boundaries
n 1991Maastricht Treaty set
stage for transition to an
Lithuania joined the euro zone economic union with a
On January 1, 2015. central bank and single
currency (the Euro)

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European Union
28 countries

450 million people

$15 trillion GNI (Gross

National Income)

Euro currency, 1999

Harmonization of laws and

regulations

Price transparency

No customs at national
borders
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The Middle East

nAfghanistan, Bahrain, Cyprus, Egypt, Iran, Iraq,

Israel, Jordan, Kuwait, Lebanon, Oman, Qatar,
Saudi Arabia, Syria, the United Arab Emirates,
Yemen
n Primarily Arab, some Persian and Jews
n 95% Muslim, 5% Christian and Jewish
n Wide variation in Economic Freedom rankings
n Bahrain is 18th, UAE is 25th, Saudi Arabia is 77nd
n Oil prices drive commerce
n 25% of worlds oil in Saudi Arabia
n Arab Spring 2011

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Gulf Cooperation Council

Established in
1981 by 6
countries with
45% of worlds oil,
only 18% of
output
These countries
are attempting to
diversify
industries

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Africa

54 nations over three distinct areas

Republic of South Africa
North Africa
Black Africa or sub-Saharan Africa

Mena: Middle East and North Africa

Viewed as a regional entity

Regional agreements
Economic Community of West African States
East African Cooperation
South African Development Community

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