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Chapter 7
Reaching
Global Markets
Objectives
• Understand global marketing strategy
• Analyze forces affecting international
marketing efforts
• Understand important trade agreements
• Identify methods of international market entry
• Examine forms of global organizational
structures
• Examine use of marketing mix internationally
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The Nature of
Global Marketing Strategy
• International Marketing
– Developing and performing marketing
activities across national boundaries.
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Environmental Forces
In Global Markets
Competitive
Sociocultural
Technological
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Economic
Political
Legal &
Regulatory
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Competitive Forces
Internationally
• Attend to competitive forces in
target countries
• Identify the interdependence of
global competitors
• Be mindful of global customer
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The Most
Competitive Countries
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Economic Forces Internationally
• Import tariff – duty on goods bought outside the
country and brought in
• Quota – limit on amount of goods an importing
country will accept
• Embargo – government suspension of trade
• Exchange Controls – government restrictions
on amount of particular currency
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Economic Forces
Internationally cont’d
• Balance of Trade – difference in value
between nation’s imports and exports
• Gross Domestic Product (GDP) –
measure of overall economic standing based on
total output of goods and services
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Comparative
Economic Analysis
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Political, Legal and Regulatory
Forces Internationally
• Legal and regulatory infrastructure as a
direct reflection on the political climate
– CIBERs (Centers for International Business
Education and Research)
– International import barriers
– Differing standard of ethics (U.S.’s Foreign
Corrupt Practices Act)
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Sociocultural Forces
Internationally
• Issues – predominant cultural focus
of marketing within global market
– Language
– Symbols
– Social norms, values, perceptions
– Negotiations and decision-making
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Cross-Cultural
Behavioral Differences
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Technological
Forces Internationally
• Advances in technology have advanced
international marketing
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Global Ethical and Social
Responsibility Issues
• Dumping – selling products in domestic
markets at higher prices than in foreign markets
• Cultural relativism – defining business
practices as right or wrong based on differing
moralities within particular cultures
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Least And
Most Corrupt
Countries
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Regional Trade Alliances,
Markets, And Agreements
• North American Free Trade Agreement
(NAFTA) – 1994
• CAFTA-DR – 2005
• European Union (EU) – 1993
• Common Market of the Southern Cone
(MERCOSUR) – 1991
• Asia-Pacific Economic Cooperation
(APEC) – 1989
• World Trade Organization (WTO) – 1995
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Stages Of
International Entry Modes
1) No regular export activities
2) Export via independent representatives
or agents
3) Establish one/more sales subsidiaries
internationally
4) Establish international production or
manufacturing facilities
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Involvement In
Global Marketing
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Importing and Exporting
• Importing – the purchase of products
from a foreign source
• Exporting – the sale of products to
foreign markets
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Trading Company
A company that links buyers and sellers in
different countries.
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Licensing and Franchising
• Licensing – an alternative to direct investment
requiring a license to pay commissions on sales
or supplies used in manufacturing
• Franchising – a form of licensing in which a
franchiser grants a franchisee the right to
market its product in accordance with the
franchiser’s standards.
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International FranchisingBenefits To Franchiser
 Does not have to put up large capital
investment
 Revenue stream is fairly consistent
 Retains control of name and increases
global penetration
 Agreements ensure standard of behavior
from franchisees
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Contract Manufacturing
The practice of hiring a foreign firm to
produce a designated volume of the
domestic firm’s product or a component
of it to specification; the final product
carries the domestic firm’s name.
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Specific Forms of
Contract Manufacturing
• Outsourcing
• Offshoring
• Offshore outsourcing
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Joint Ventures
• Joint Venture – partnership between
domestic and foreign firms
• Strategic Alliances – partnerships
formed to create competitive advantage
on a worldwide basis
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Direct Ownership
 Direct ownership – a company owns
subsidiaries or other facilities overseas
 Multinational enterprise – firm has
operations in many countries
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Ten Largest
Global Corporations
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Global Organizational Structure
• Organizational Structure – the way in
which a firm divides its operations and
coordinates its activities.
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Organizational Architecture
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Global Organizational
Structures cont’d
• Export Departments
• International Divisions
• Internationally Integrated Structures
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International Marketing Mix
• Customization vs. Globalization
– Customization: customizing marketing
strategy to meet different marketing
mixes
– Globalization: development of marketing
strategies that treat the world markets as
a single entity
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Marketing Mix Issues –
Product Element
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Marketing Mix Issues –
Distribution Element
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Marketing Mix Issues –
Promotion Element
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Marketing Mix Issues –
Pricing Element
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Business markets
allow for
customized
global marketing
solutions
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