international mkting
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GLOBAL
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Why Firms Go International:
Internationalization Drivers
To take advantage of global market opportunitiesand reach a larger market
To keep pace with the competition
To increase sales and market share
To prolong the product life cycle
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Drivers of International Expansion
Competition
Regional Economic and Political Integration
Technology
Improvements in Transportation and
Telecommunication
Economic Growth and Emerging Market Economies
Converging Consumer Needs
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Facilitators of International Trade:
The World Trade Organization
Largest and most influential international tradeorganization
Ensures free flow of trade
Functions: Provides assistance to developing and transition
economies
Offers help for export promotion
Promotes regional trade agreements and economiccooperation
Reviews members trade policies and engages in routinenotification of new trade measures
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The World Trade Organization
WTO agreements represent trade rules andregulations and act as contracts guaranteeingcountries trade rights and binding governments tofree trade policies.
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Facilitators of International Trade:
Group of Seven (Eight)G7 (G8)
Members from the most industrialized countries:Canada, France, Germany, Italy, Japan, United
Kingdom, United States, and Russia Yearly meetings involve heads of state, government
ministers, and directors of central banks.
Addresses: Biotechnology, food safety, economicdevelopment, disarmament, arms control, organizedcrime, drug trafficking, terrorism, environmental issues,and trade
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Facilitators of International Trade:
The Development Banks
The World Bank
Largest international bank that
sponsors economic development
Employs international specialistsin economics, finance, sectoral development
Focus on health and information technology
African Development BankAsian Development Bank
European Bank for Reconstruction and Devt
Inter-American Development Bank
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Regional Economic and Political Integration
Determinants of Integration
Shared culture
Shared history
Regional proximity
Similarity in level of
economic development
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Types of Integration
Bilateral Agreements, Multilateral Forums and Agreements
General agreements between two or more countries, typically industryspecific
OPEC, NATO, Commonwealth of Independent States
Customs Union
Trade association that eliminates or greatly reduces all trade restrictions formember countries, also adopts common external tariffs on productsimported from outside the area: NAFTA
Common Market
Eliminate all tariff and barriers to trade, adopt common external tariffs, and
allow for free movement of capital and labor within the common market:Andean Common Market, Southern Cone Common Market (MERCOSUR)
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Types of Integration (cont.)
Monetary Union
Involves a common monetary policy, the creation of a
unified central bank, and the use of a single currency:Euroland
Political Union Common governing and legislative bodies, and enforcement
powers: example: European Union
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Religion
Defined as societys relationship to the supernatural and determines dominant
values and attitudes
Firms must adapt their offering to the local religion.
Culture
Culture influences consumption.Elements of culture vary greatly across countries.
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Government Barriers
Local governments control international market entrants using arguments forprotectionism:
Excess productive capacity
Excess labor
Infant industry argument and industrialization
Natural resources conservation and environmental protection
Consumer protection National defense
Tariffs, Quotas, Licenses
Discourage imports of particular goods
Penalize countries that are not politically aligned with the importingcountry
Generate revenues
Nontariff barriers are used by countries in the WTO, NAFTA, and EU.
and other obstacles:
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International Competition
Competitors can erect entry barriers to entry.
Effective entry barriers include:
Price cuts
Blocking distribution channels
Binding retailers to exclusive contracts
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Levels of
International Marketing Involvement
Domestic marketing
Export Marketing
International marketing
Global marketing
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International Entry Mode Selection
Exporting: Either direct or indirect, low risk but low control
Licensing: More risks, greater control. Involves a licensor who offers the know-
how or brand name, and a licensee, who pays royalties.
Franchising:Is service industrys equivalent of licensing.
Joint Ventures: Involve a foreign company joining with a local company to set up
a new corporate entity Wholly Owned Subsidiaries:Assumes long-term commitment and has a high
level of risks, but can be extremely profitable
Branch Offices:Not separate entities, but part of the international company.High level of control and lower risk than subsidiary
Strategic Alliance: All joint ventures, licensing, and franchising agreements, aswell as low-commitment agreements
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The International Marketing Mix
Standardization versus adaptation
Product
Country of Origin Effects
Place (Distribution)
Established vs. New Channels
Promotion
Use of English
Restrictions
Price
Dumping
Parallel imports (gray marketing)
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Introductionand Growth
MNCmanufacturesin developed
countries,exports todevelopingcountries
EarlyMaturity
MNC movesproduction todeveloping
countries,beginsimporting to
home country
LateMaturity
Competitorfrom
developingcountryexports
product toMNC home
country.
Decline
Developingcountries
remain viabletarget
markets;Home-country
market isdiminishing.
Sales
Time
The International Product Lifecycle