The Global Marketing

Environment
Friday, November 3

The marketing environment

Is composed of the actors and
forces that affect a companys
ability to operate effectively in
providing services and products to
its customers.
It is useful to classify these forces
into 2 categories
Microenvironment and
macroenvironment

Whats the difference between the

two?
Microenvironment immediate
environment like suppliers,
distributors, customers and
competitors.
Macroenvironment economic,
social, political/legal forces.

Where does everyone fit in?

Legal

CUSTOMERs

Political

Macroenvironment

Suppliers

Individual

Distributors Social

Competitors

Economic

Microenvironment

Social Cultural Factors include:

Attitude of people to work.
Attitude to wealth
Family
Marriage
Religion
Education
Ethics
Human Relations
Social Responsibilities

Characteristics of Culture are:

Derived mostly from the climate conditions of
geographical region and economic conditions of the
country.
Traditional beliefs and values shared in a society.
Way of life.
Norms, customer, arts and values.
Prescriptive Product choices
Learned and socially shared.
Subjective
Saving habits
Dynamic

Examples of Cultural Attitude and

International Marketing
Dressing habits, living styles, eating
habits, consumption pattern, priority of
needs are dictated by culture.
Examples:
Eating of beef: Not by Indians (Hindus).
Fish/Sea Food- Japanese, snakes and
dogs- China saree and bangles Indian
ladies.
Burka/Parda Women of middle East.
Eye contact Right in USA and not good in
Japan.

Cross Cultural Communication

(i) Low Context Culture: like
USA, Canada, Germany: They use
words to convey the information
and meaning
(i) High Context Culture: India, Japan,
Saudi Arabia, Middle East countries
Communication is mostly indirect
and expressive/ non-verbal manner.
France- High context.
Germany Low context

Culture Universals
Communication
needs irrespective of religion,
race, region, caste, etc., like Athletic, sports
bodily adornment, cooking, dancing, singing,
education,
joking,
kingroups,
status
differentiation and dream interpretations.
Cultural differences
-Offering beverages and food to guest first
Asian Culture
- USA Not necessary that they offer
food/beverages to guests first.
- Time/Punctuality
-Negotiation styles

 Religion an important social institution

influencing business.
Family System:
- Joint Family Africa, Asia, Japan,
China (Reduces per head demand of
goods)
- Nuclear Family: USA, Europe
Culture affects behaviour and behaviour
affects business, employee behaviour,
consumer behaviour.
Motivation and Achievement: Materialistic and
non-materialistic societies.
- Individualism and Western countries/USA.

Collectivism Indonesia, Thailand,

Japan and India.
Religion and Business Christians
Believe in capitalism, business,
creation of wealth, hard work.
Islam: Profit in business property
holder is trustee of Allah. Interest on
loans is not recommended.
Hinduism: To conduct in ethical
manner. Follow Dharma.

Technological Environment

Application of Knowledge Factors

Level, Japan and India (use of Robots)
Innovation
I.T.
Communication
Aviation
Japan/Germany Automobiles industry,
Steel.
Machine Tools Germany and France.
Transfer of Technology- Contract-AmountPeriod.
Updated Technology.

Scanning of Technological Environment

Level of Technology in Home and host
Country.
Compatibilities of technologies in both
countries.
To select appropriate technology for host
country.
Compatibility of selected technology with
culture, taste, preferences of host countrys
customers.
Governmental policies regarding technology
transfer.
Modes of Technology Transfer- Joint Ventures,
Technological Alliances.
Environmental aspects and technology.

Economic Environment
Economic System:
- Capitalist
- Socialist/Communism
- Mixed
Case of Mcdonalds in Moscow in 1990:
Problem of construction material and
input material of standard quality for
food.
73 stores by 2001 in Russia.

Macroeconomic issues affecting

business decision.
(i)Economic growth
(ii)Inflation - Higher prices, money
requirement is high, affect interest
rates.
- Balance of Payment.
- Economic Transition changes,
liberalization, globalization.

POLITICAL ENVIRONMENT
- Democracy
- Communist Countries
- Dictatorship
Types of Political Risks:
1. Confiscation: China of US properties in 1949.
2. Expropriation: Nationalization with
compensation Banks in India in 1969.
3. Nationalization: Poland, Czech and Burma.
4. India and FDI in retail and aviation sectors.

Legal Environment
- Common Law
- Civil Laws
- Contract Laws
- Theoretical Laws
- Degree of wide-pendence of judiciary.
Common Laws: Tradition, Customers,
Culture, Precedence and usage are bases
of common laws. These laws are in force
in countries like, USA, UK, Hongkong.
- Regulatory bodies
Different
Acts
relating
to
Marketing/Business.

Legal Environment
Civil or code Law :
- Derived from Roman Law and found in
Germany , Japan , France , non- islamic
countries and non- marxist countries.
Islamic Law : Derived from interpretation of
Koran.
- Found in Pakistan , Iran , Saudi Arabia and
other islamic states.
Marxist Law : Mainly in states of socialist
economies like : Russia , China , Eastern
Europe , etc,.

Legal Environment
International commercial disputes :
- Between two Governments
- Between two Companies
- Between Government and a company

Jurisdiction in cases of disputes :

- Based on jurisdiction clause included in the
contract.
- On the basis of where the contract was
entered
- On the basis of where the provisions of the
contract were performed.

Legal Environment
Intellectual property Rights : Each country
has its own laws .
Cyber laws : Each country has its own
laws .
Uncommon laws in European Union :
Italy : Bans all forms of Tobacco Ads.
Greece : Bans all Ads. Of toys
Finland : Bans car Ads related to high speed
Sweden : Bans Ads directed to children below
12 yrs.

Natural Environment
Topography
Water bodies
Seasons
Rains
Temperature
Location in world map

Natural Environment
Shortages
Shortagesof
of
Raw
Raw Materials
Materials

Increased
IncreasedPollution
Pollution

Governmental
Governmental
Intervention
Intervention

Factors
FactorsAffecting
Affecting
the
the
Natural
Natural
Environment
Environment

Global Economic Forces

Economic Growth and
Unemployment
Interest Rates and Exchange Rates
Development of Economic Areas

Economic State
The general state of both national and
international economies can have a
profound effect on an individual
companys success or failure.
Most of the worlds economies went
through a significant growth period in
the late 1990s, driven mainly by
developments in telecommunications
and computing.

As an example
Ireland Late 1990s car sales rose
from 70,000 to around 200,000 in 2000.
ipod In 2005 saw a 60% increase
over the year before - $3.3 billion.
iPod's sales growth is expected to cool
from a sizzling 234% in 2005 to just
18% in 2006.
Wonder why??

Economic Growth defined

Economic growth is driven by greater
use of inputs (such as labor, capital
and natural resources) and/or growth
in productivity.
This increase in an economys ability
to produce goods and services which
brings about a rise in standards of
living.

Economic Growth what is

happening?
Switzerland, Finland and Sweden are the
worlds most competitive economies
according to The Global Competitiveness
Report 2006-2007, released by the World
Economic Forum in September 2006.
Denmark, Singapore, the United States,
Japan, Germany, the Netherlands and the
United Kingdom complete the top ten list,
but the United States shows the most
pronounced drop, falling from first to sixth.

The results
Low growth rates are reflected in high
unemployment levels, which in turn
affect consumers spending power.

Countries Unemployment rates (%)

Afghanistan 40% (2005 est.)
Norfolk Island 0% (2005 est.)

Nauru 90% (2004 est.)

United Arab Emirates 2.4% (2005)
France 9.9% (2005 est.)
United States 5.1% (2005 est.)

What can change unemployment

rates?

Interest and Exchange Rates

One of the levers that governments can
use to manage the economy is interest
rates.
Interest rates are the rate at which money
is borrowed by businesses and
individuals.
Throughout the world, interest rates are
historically low.

Exchange Rates
Exchange rates are the rates at which
one currency buys another. With the
formation of the European Union,
exchange rates between most European
countries are now fixed.
For the U.S. dollar, the euro, sterling, and
the yen are still traded on variable rates.
Why would the dollar not be strong
today?

How much is your money worth?

1.00 Euro =1.27779 USD
United States Dollars
1 Euro = 1.43932 Canadian Dollar
1 Euro = 1,936.27 Italian Lira

Europe and Japan have suffered a sharp

economic slowdown over the past decade.
To rekindle growth, they need to encourage
competition (especially in the services
sector), which will, in turn, boost
productivity growth, the most desirable
source of growth in all economies.