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MARKETING
Chapter
20
Global
Marketing
Copyright © 2003 by Nelson, a division of Thomson Canada Limited.
Global Marketing
Chapter
20
Objectives
1. Discuss some of the fundamental concepts that underlie
international business.
2. Identify aspects of marketing strategy that are important in the
global marketplace.
3. Outline the environment for international business.
4. Explain how the marketing mix may be affected by competition
in a global environment.
5. Outline various approaches to global marketing that are taken
by companies.
6. Discuss the various modes of entry into international markets.
7. Discuss the different types of trade agreements.
8. Discuss NAFTA.
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Global Marketing
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20
Balance of Trade and Payments
Balance of Trade
• The relationship between a country’s
exports and its imports.
Balance of Payments
• The flow of money into or out of a
country.
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Global Marketing
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20
Exchange Rate
• The rate at which a nation’s currency
can be exchanged for other currencies
or gold.
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Global Marketing
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Devaluation
• Situation in which a nation reduces the
value of its currency in relation to gold
or some other currency.
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Global Marketing
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20
Revaluation
• Situation in which a country adjusts the
value of its currency upward.
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Global Marketing
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20
Absolute Advantage
• A nation has an absolute advantage in
the marketing of a product if it is the
sole producer or can produce a product
for less than anyone else.
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Global Marketing
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Comparative Advantage
• A nation has a comparative advantage
if it can produce a given product more
efficiently per unit of output than it can
produce other products.
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Global Marketing
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20
Company Approaches to Global
Marketing (1 of 2)
• Ethnocentric Company
– Firm that assumes that its way of doing business in
its home market is the proper way to operate, and
tries to replicate this in foreign markets.
• Polycentric Company
– Firm that assumes that every country is different
and that a specific marketing approach should be
developed for each separate country.
20-8a
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Global Marketing
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20
Company Approaches to Global
Marketing(2 of 2)
• Regiocentric Company
– Firm that recognizes that countries with
similar cultures and economic conditions
can be served with a similar marketing mix.
• Geocentric Company
– Firm that develops a marketing mix that
meets the needs of target consumers in all
markets.
20-8b
Copyright © 2003 by Nelson, a division of Thomson Canada Limited.
Global Marketing
Chapter
20
Modes of International Activity
•
•
•
•
•
•
Indirect Exporting and Importing
Direct Exporting and Importing
Licensing
Joint Venture
Foreign Production and Marketing
Multinational Enterprise
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Global Marketing
Chapter
20
Indirect International Trade
• Exporting and/or importing only
through other domestic companies that
trade internationally.
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Global Marketing
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20
Direct International Trade
• Exporting directly to markets and/or
importing directly from suppliers in
other countries.
20-11
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Global Marketing
Chapter
20
Licensing
• Granting authority to produce and sell
a product developed in one country in
another.
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Global Marketing
Chapter
20
Joint Venture
• A partnership of firms from different
countries, often to set up a local
business in a country that is foreign to
one of the partners.
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Global Marketing
Chapter
20
Direct Investment
• The ownership and management of
production and/or marketing facilities in
a foreign country.
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Global Marketing
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20
Multinational Corporation (MNC)
• A corporation that produces and
markets goods and services in several
countries.
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Global Marketing
Chapter
20
Culture
• An integrated system of learned
behaviour patterns that are
distinguishing characteristics of the
members of any given society.
20-16
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Global Marketing
Chapter
20
Local Content Laws
• Laws specifying the portion of a
product that must come from domestic
sources.
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Global Marketing
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20
Cartel
• The monopolistic organization of a
group of firms.
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Global Marketing
Chapter
20
Friendship, Commerce and
Navigation (FCN) Treaties
• Treaties that address many aspects of
commercial relations with other
countries; such treaties constitute
international law.
20-19
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Global Marketing
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20
World Trade Organization (WTO)
• The international body that deals with
the rules of trade between nations.
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Global Marketing
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Principles of the Trading System
•
•
•
•
•
Without discrimination
Freer
Predictable
More competitive
More beneficial for less developed
countries
20-21
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Global Marketing
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20
Integration of World Markets (1 of 2)
• Free Trade Area
– Areas established by agreement among two
or more nations within which participants
agree to free trade of goods and services
among themselves.
• Customs Union
– Agreement among two or more nations that
establishes a free trade area, plus a uniform
tariff with nonmember nations.
20-22a
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Global Marketing
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20
Integration of World Markets (2 of 2)
• Common Market
– A customs union that also allows factors of
production such as labour, capital, and
technology to flow freely among members.
• Economic Union
20-22b
– A common market that also requires
members to harmonize monetary policies,
taxation, and government spending. In
addition, a common currency is used by
members.
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Global Marketing
Chapter
20
North American Free Trade
Agreement (NAFTA)
• The agreement establishing a free
trade area among Canada, the United
States, and Mexico that followed the
FTA.
20-23
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Global Marketing
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20
Free Trade Agreement (FTA)
• The agreement establishing a free
trade area between Canada and the
United States that preceded NAFTA.
20-24
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Global Marketing
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Trade Restrictions
• Tariff
– A tax levied against products imported
from abroad.
• Import Quota
– A limit set on the amount of products that
may be imported in a certain category.
• Embargo
20-25
– A complete ban on importing a particular
product.
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Global Marketing
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20
Tariff
• A tax levied against products imported
from abroad.
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Global Marketing
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20
Import Quota
• A limit set on the amount of products
that may be imported in a certain
category.
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Global Marketing
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20
Embargo
• A complete ban on importing a
particular product.
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Global Marketing
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Exchange Control
• Requirement that firms gaining foreign
exchange by exporting must sell their
foreign exchange to the central bank or
agency, and importers must buy
foreign exchange from the same
organization.
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Global Marketing
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20
Dumping
• Practice of selling products at
significantly lower prices in a foreign
market than in a nation’s own
domestic market.
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Global Marketing
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20
Import Quota
• A limit set on the amount of products
that may be imported in a certain
category.
20-31
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