From the real national market, select any companyof your choice, wishing to go global. Critically analyze the chosen company based on the following questions.
Questions:
What variables need to beconsideredwhile developing a list of potential countries?
Describe the four steps a firm should take when it is considering going global.
Discuss at least three challenges that a company may face in the early period of expansion.
Describe the three main categories of market entry strategies.
Instructions for the students
The answer to each question is not less than 100 words
Justify your answers, with the help of course materials, Text Book, Online resources.(See the course materials of Ch-5)
The choice of the company and the selection of countries must be based on referenced information.(Why did you select the country and the company?)5
Global Marketing
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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CHAPTER OBJECTIVES
1.
What are the challenges and
opportunities of competing in global
markets?
2.
What are the environmental
influences of global marketing?
3.
What are the steps in evaluating
and implementing global
marketing?
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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OBJECTIVE 1
What are the challenges and
opportunities of competing in
global markets?
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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Global marketing includes all
marketing activities conducted at an
international level by
individuals or businesses.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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GLOBAL MARKETING
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Population – 6.8 billion
Languages > 6,500
Countries* – 195
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Average Income – $5,000
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N: Population – 6.8 billion in 2010 and expected to increase
to 9.1 billion by 2050.
Countries – The number of countries that are cited depends
on who is doing the counting. A typical number cited is 192,
which includes all the members of the United Nations.
Vatican City and Kosovo are also recognized as independent
countries, but they are not members of the U.N. Many also
consider Taiwan to be an independent country but they too
are not members of the U.N.
Languages – There are 6,909 known languages in the world
today, but only 389 have over 1 million speakers. Of these,
only nine have more than 100 million native speakers
(Mandarin, Spanish, English, Hindu/Urdu, Arabic, Bengali,
Portuguese, Russian, and Japanese). These nine cover
almost 40% of the world’s populations.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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GLOBAL MARKETING
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Access to New
Markets
Access Foreign
Investment
Overcome Trade
Barriers
Enhance Brand
Image
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Gain Scale
Economies
Access Lower
Costs
Offset Domestic
Cycles
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N: There are numerous benefits of going global. For
each potential benefit however, there is a
drawback. Today, most large companies are global
and even small firms have connection to the global
economy through the products and services they
purchase.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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BRIC COUNTRIES
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Brazil
Russia
33% of world economic growth
from 2000-2009
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25% of the world’s land mass
40% of the world’s population
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India
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
China
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GLOBAL MARKETING
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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N: What changes must be made to the marketing
mix when entering global markets? While some
elements can remain the same, changes often have
to be made to two or more marketing mix elements.
Changes will certainly be needed to the place
(distribution) element.
Brands names change between countries quite
often.
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BRAND NAMES IN GLOBAL MARKETS
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Brand Name
(in U.S.)
Brand Name
(elsewhere)
Mr. Clean
Mr. Proper (Germany)
Lay’s Potato Chips
Walkers Crisps (U.K.)
Sure Deodorant
Rexona (U.K.)
Dawn Dish Detergent
Fairy (U.K.)
Campbell’s Soup
Batchelors (U.K.)
N: Some of the different brand names used for the same product
throughout the world. Often, brand names and package designs
must be altered to fit the local market.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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OBJECTIVE 2
What are the environmental
influences of global marketing?
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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D
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Global marketing environment
is the environment in different
sovereign countries, with characteristics
distinct to the home environment of an
organization, influencing decisions on
marketing activities.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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GLOBAL OPERATIONS
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International
Multinational
Global
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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N: International companies have no investment outside of their
home country. They purchase goods and services from companies
on the world market.
Multinational companies have assets and operations in multiple
countries and focus on adapting products and services to the
specific needs of each country they enter. Examples: McDonald’s
(the Big Mac is adapted to local tastes/culture – can’t sell beef in
India.)
Global companies also have assets and operations in multiple
countries but concentrate on penetrating multiple countries with
only minimal changes. Examples: Nike, Coke
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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OUTSOURCING VS. OFFSHORING
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Transfer of work to another company
Using specialized services
Outsourcing
In-country or out-of-country
Offshoring
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Moving work outside home country
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N: The terms outsourcing and offshoring are often misinterpreted.
Offshoring is moving jobs outside a company’s home country. The
work can be performed by the same company in another country, or
it can be shifted to another company in another country. Either way,
the work is performed in another country. Most major
manufacturers will use offshoring to some degree. Ford and GM
have plants in Canada and Mexico, as well as Europe and Asia.
Outsourcing is the transference of work to outside suppliers. The
work may be performed in-country or can be moved offshore. Nearly
every company uses outsourcing to some degree, whether it be
through hiring a logistics (trucking) firm to ship goods, using an
external advertising agency, or contracting janitorial services.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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GROSS DOMESTIC PRODUCT (GDP)
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Rank
Country
GDP
(in millions of USD)
1
United States
2
Japan
5,068,000
3
China
4,909,000
4
Germany
3,353,000
5
United Kingdom
2,184,000
6
Italy
2,118,000
7
Brazil
1,574,000
8
Spain
1,464,000
9
Canada
1,336,000
10 Russia
14,260,000
1,225,000
N: Gross Domestic Product (GDP) measures the total dollar value of the goods
and services a country produces within a single year. Some companies have
GDPs that exceed that of entire countries.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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IF WAL-MART WERE A COUNTRY…
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GDP Rank
Company
Revenue
(in millions)
22
Wal-Mart
408,214
33
E30on
301,500
35
Royal Dutch Shell
278,188
38
BP
246,138
40
Saudi Aramco
233,300
46
Toyota
202,843
47
Sinopac (Oil & Gas)
197,019
N: Wal-Mart would rank as the 22nd largest country (based on GDP),
placing them ahead of Sweden, Norway, Austria, Taiwan, and Saudi
Arabia. If these companies were countries, here is where they would
rank in terms of GDP.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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GLOBAL MACROENVIRONMENT
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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N: The issues of the macroenvironment expand exponentially
for companies that enter foreign markets. Economic, political,
legal, and cultural elements present many new challenges to
companies. These elements not only influence a company’s
decision to enter foreign markets, but also how they will
operate globally.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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THE ECONOMIST: BIG MAC INDEX
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Country
Local Price
(in U.S. $)
United States
$3.71
Brazil
$5.26
Britain
$3.63
China
$2.18
Canada
$4.18
Japan
$3.91
Malaysia
$2.25
Switzerland
$6.78
Exchange rates as of 10/13/2010
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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N: The Big Mac Index is a way to illustrate the purchasing power of
consumers in different global markets. The results can be used to see
currency valuations and whether one country’s currency is under- or
overvalued. The table shows that the currencies of both China and
Malaysia are undervalued (by roughly 40%) , but the same can be said
for the U.S. dollar when compared to the Swiss franc.
A
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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ECONOMIC COMMUNITIES
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NAFTA
European Union
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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N: NAFTA (North American Free Trade Agreement) –
Established in 1994 as a trading partnership between the
U.S., Canada, and Mexico.
EU (European Union) – Established in 1993 as an economic
and political partnership among 27 European countries.
Eliminated travel restrictions between countries and
established a single currency (the Euro). The EU made it
easier for companies to move products between member
countries.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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OBJECTIVE 3
What are the steps in evaluating
and implementing global
marketing?
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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D
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Global marketing processes
are a series of strategic marketing
decisions which include deciding to go
global, determining which markets to
enter, deciding how to enter the
markets, and selecting the global
marketing program.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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GLOBAL MARKETING
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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N: Should we go global? – Entering foreign markets often require managers to
learn new languages and laws, currency fluctuations, competitors, cultures,
and other differences. While the risks are greater, the rewards can far outweigh
any potential losses. Going global for the sake of being a multinational
company is generally not a valid reason.
Where? – If the decision has been made to expand into another country (or
countries), which country should the company enter? Logical choices include
those countries that have similar needs, cultures, and values to the company’s
home market. Other aspects that should be considered are market size and
future growth rates, stable currencies, and stable political systems.
How to enter? – Companies have many different methods for entering foreign
markets. These include direct export (establish own sales branches), indirect
export (sells through local intermediaries), joint ventures (licensing, contract,
or joint ownership), or direct investment. These are covered more on the next
slide.
Which strategy? – Should the product have the same design as those in the
home market, or will the product need to be redesigned to fit consumers in the
new market? Can the current brand name be used? How does it translate into
the new language? More on this will be covered in the next slide.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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GOING GLOBAL – SHOULD WE GO?
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Reasons for going global…
1. Offset sluggish economy in home market
2. Capitalize on market opportunities abroad
3. Directly compete with global competitors
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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GOING GLOBAL – WHERE TO?
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Size of Market
Buyer Characteristics
Culture
Financial Capability
Long-term Goals
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Competitive
Economic
Legal
Governmental
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N: Companies have multiple decisions to make when
determining which country to enter. The market potential
looks at the size of the market and the ability of customers to
buy the company’s products, etc. The environment in the
country can also influence a manager’s decisions – this
includes the types of local laws, the enforcement of these
laws, and the openness of the country to foreign investments,
etc. In addition, the company must have the financial
capability and long-term dedication to the venture.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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GLOBAL POPULATION
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North America – 534 million
Europe – 728 million
Asia – 4.1 Billion
Africa – 990 million
South America – 392 million
Australia – 35 million
N: This shows the population of the world’s continents. Asia has 30% of the
world’s landmass and 60% of the world’s population – this is primarily due to
the populations of India and China.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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BROADBAND INTERNET PENETRATION
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Rank
Country
Broadband
User (%)
Total Internet Users
(000’s)
1
Denmark
37%
4.4
2
Netherlands
36%
13.8
3
Switzerland
35%
5.7
4
United States
34%
213.3
5
Norway
33%
3.9
6
Canada
33%
24.0
7
South Korea
32%
36.8
8
Finland
31%
4.3
9
Australia
30%
16.9
NA
China
22%
298.0
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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N: The penetration of broadband Internet access (based on
the penetration %). This slide shows the dangers that
managers face if they only consider percentages. China has
65.5 million broadband Internet users, while the U.S. has
72.5.
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GOING GLOBAL – HOW TO ENTER
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Export
• Direct
• Indirect
Joint
Venture
Direct
Investment
• License/Contract
• Joint Ownership
Lower
Risk
Higher
Risk
Lower
Cost
Higher
Cost
Lower
Profit
Higher
Profit
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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GOING GLOBAL – WHICH STRATEGY?
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Same brand name?
Same size? Price?
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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GLOBAL MARKETING PROCESSES
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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N: Going global is an incremental process, with
continents and countries being entered on a step
by step basis; this is especially true at the
beginning phases of global expansion. Typically,
companies focus on entering markets that are
similar to the home market in terms of language,
culture, etc.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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GLOBAL MARKETING MISCUES
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Company
Intended Message
Translated Message
Braniff Air
(Spanish)
Fly in Leather (seats)
Fly Naked
Coca-Cola
(China)
Ke-Kou-Ke-La
Bite the wax tadpole
Electrolux
(U.S.)
Ad tag line read “Nothing sucks like an Electrolux”
Ford Pinto
(Brazil)
Pinto is slang for tiny male, um…
Chevy Nova
(S. America)
Nova means “it won’t go”
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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VISUAL SUMMARY
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
5-*
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
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