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Definition 1. Global industry - It is an industry in which strategic position of competitors in major geographic or national markets are fundamentally affected by their overall global position.
2. Global firm It is a firm that operates in more than one country & captures R&D, production logistical, marketing & financial advantages in its cost & reputation that are not available to purely domestic competitors.
Country
USA Japan
$Billion
9,646 4,337
Rank
1 2
GNP GNP(PPP) per Capita per Capita 34,260 34,210 34,260 26,460
Germany
UK France Italy China Canada Brazil Spain Mexico India World
2,058
1,464 1,429 1,154 1,065 647 607 590 498 471 31,171
3
5 4 6 7 8 9 10 11 12 --
2,054
1,407 1,440 1,348 4,966 840 1,245 757 864 2,432 44,506
5
7 6 8 2 11 9 12 10 4 --
25,050
24,500 23,670 20,010 840 21,050 3,570 14,960 5,080 460 5,150
25,010
23,500 24,470 23,370 3,940 27,330 7,320 19,180 8,810 2,390 7,350
23 countries. 460 million population. Physically less than size of Australia. 32% of world income by 2000.
2.
o
o
o
3.
o o
North America.
407 million population. $9,254 billion GNP.
4.
o o
Asia Pacific.
30 countries. 52% of world population. 25% of global income. 58% income by Japan.
o
o
5.
o o o
Latin America.
7% of world wealth. 9.5% of population. 510 million population.
6.
o o
Middle East.
16 countries. 1.9% of world GNP. 260 million population.
7.
o
o o
Africa.
730 million population. 1.3% of world wealth. 11.9% of world population.
2.
3. 4. 5.
Deciding whether to go abroad? Deciding which market to enter? Deciding how to enter the market? Deciding on the marketing program? Deciding on the marketing organization?
Challenges 1. Difficulty in understanding consumer psychology. 2. Huge foreign indebt ness. 3. Unstable government. 4. Foreign exchange problem. 5. Government regulations. 6. Tariff & other trade barriers. 7. Corruption. 8. Technological pirating. 9. High cost of production & communication adaptation. 10. Shifting borders.
Types of countries to consider 1. Attractiveness is influenced by product, geography, income, population, political climate. 2. Neighboring countries. 3. Low risk. 4. High competitive advantage.
Indirect exporting
Occasional exporting. Active exporting. - Types of intermediaries 1. Domestic based export merchant. 2. Domestic based export agent. 3. Co-operative organization. 4. Export management companies.
Direct exporting
Domestic based export department or division. Overseas sales branch or subsidiary. Traveling export sales representatives. Foreign based distributor or agent.
Licensing
For use of manufacturing process, trade mark, patent, trade secret or other item of value for a fee or royalty. Disadvantages 1. Less control of licensor over licensee. 2. Creation of new competitors. Types 1. Management contract. 2. contract manufacturing. 3. franchising.
Joint ventures
Share of ownership & control Reasons 1. Necessary or desirable for economic & political reason. 2. Lack of financial, physical or managerial resources. 3. Government may keep the condition for entry. Drawback Partners may disagree over investment, marketing or other policies.
Direct investment
Foreign based assembly or manufacturing facility. Advantages 1. Secure cost economies. 2. Image building by creating jobs. 3. Close relationships with government, customers, local supplier or distributor. 4. Fully control over its investment. 5. Locally purchased goods have domestic contents.
2. Promotion - Communication adaptation. a. One message everywhere. b. Same theme globally but adapt the copy to each local market. c. Global pool of ads. d. Media adaptation. e. Sales promotion techniques to different markets.
3. Prices - Three choices a. Setting uniform prices everywhere. b. Setting market based price in each country. c. Setting cost based pricing in each country.
- Problems in pricing a. Price escalation. b. Transfer pricing. c. Dumping charges. d. Gray market. e. Devaluation of currency.
4. Place ( Distributive channels ) - Sellers international marketing headquarter. a. Export department. b. International division. - Channels between nations. a. Agents. b. Trading companies. - Channels within foreign nations.
Organizational strategies 1. A global strategy treats the world as a single market. 2. A multinational strategy treats the world as portfolio of national opportunities. 3. A glocal strategy standardizes certain core elements & localizes other elements.