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Chapter 1

Chapter 1. The Scope and Challenge of International Marketing. Chapter Learning Objectives. The changing face of Australasian business The scope of the international marketing task The importance of the self-reference criterion (SRC) in international marketing

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Chapter 1

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  1. Chapter 1 The Scope and Challenge of International Marketing

  2. Chapter Learning Objectives The changing face of Australasian business The scope of the international marketing task The importance of the self-reference criterion (SRC) in international marketing The progression of becoming a global marketer The increasing importance of global awareness

  3. Global Perspective: Global Commerce Promotes Effective International Relationships Global commerce requires knowledge about different markets Economic situation Demographic characteristics Political situation Long-term conditions Emerging trends Regional interests and global democratic values must be considered Political considerations and government expectations are key inputs into effective relationship building.

  4. Events and Trends Affecting Global Business The rapid growth of the World Trade Organisation and regional free trade areas. The trend toward the acceptance of the free market system among developing countries in Latin America, Asia, and eastern Europe. The burgeoning impact of the Internet, mobile phones, and other global media on the dissolution of national borders. The mandate to properly manage the resources and global environment for the generations to come.

  5. The Internationalisation of Australian Business Increasing globalisation of markets. Increasing number of Australian companies are foreign controlled A$1210 billion in foreign investment in Australia –roughly A$530 billion more than Australian overseas investment. U.S. and U.K. are largest investors accounting for more than ½ of all foreign investment. Increasing number of foreign companies establishing subsidiary operations or gaining entry through mergers with Australian companies. Increasing difficulty for domestic markets to sustain customary rates of growth.

  6. Foreign Acquisitions of Australian Brands

  7. International Marketing Defined d International marketing is the performance of business activities designed to plan, price, promote, and direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit.

  8. The International Marketing Task

  9. Environmental Adaptation Needed Be able to interpret effectively the influence and impact of the culture in which you hope to do business Cultural adjustments. Establish a frame of reference. Avoid measuring and assessing markets against the fixed values and assumptions of your own culture.

  10. The Self-Reference Criterion and Ethnocentrism The key to successful international marketing is adaptation to the environmental differences from one market to another. Primary obstacles to success in international marketing: SRC is an unconscious reference to one’s own cultural values, experiences, and knowledge as a basis for decisions. Ethnocentrism is the notion that one’s own culture or company knows best how to do things.

  11. The Self-Reference Criterion and Ethnocentrism (continued) Dangers of the SRC: Failing to recognise the need to take action. Discounting the cultural differences that exist among countries. Reacting to a situation in a way offensive to your hosts. Ethnocentrism and the SRC can influence an evaluation of the appropriateness of a domestically designed marketing mix for a foreign market. The most effective way to control the influence of ethnocentrism and the SRC is to recognise their effects on our behaviour.

  12. Framework for Cross-cultural Analysis Define the business problem or goal in home-country cultural traits, habits, or norms. Define the business problem or goal in foreign-country cultural traits, habits, or norms through consultation with natives of the target country. Make no value judgments. Isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem. Redefine the problem without the SRC influence and solve for the optimum business goal situation.

  13. Developing a Global Awareness Tolerance of cultural differences: Understanding cultural differences and accepting and working with others whose behaviour may be different from yours. Knowledge of cultures, history, world market potential, and global economic, social, and political trends. Approaches to global awareness: Select individual managers specifically for their demonstrated global awareness. Develop personal relationships in other countries. Have a culturally diverse senior executive staff or board of directors.

  14. Stages of International Marketing Involvement No direct foreign marketing Companies do not actively cultivate consumers beyond their borders. Infrequent foreign marketing Sales to foreign markets dependent on surplus products. Regular foreign marketing Permanent productive capacity devoted to producing goods for foreign markets. Primary focus is domestic market. International marketing Seek markets worldwide with marketing and/or production occurring outside home country. Global marketing World is viewed as one market with segmentation occurring across borders.

  15. Strategic Orientation Domestic market extension orientation International operations an extension of domestic operations. Multidomestic market orientation Marketing is carried out on country-by-country basis. Global market orientation Use of standardised marketing mix across national borders.

  16. The Orientation of International Marketing An environmental/cultural approach to international strategic marketing. Intended to demonstrate the unique problems of international marketing. Relates the foreign environment to the marketing process by illustrating the influence of culture. Discussion of international marketing ranges from the marketing and business practices of small exporters to the practices of global companies.

  17. Foreign Policy’s Global Top 20

  18. Summary The internationalisation of Australian business is proceeding with increasing pace. The globalisation of markets and competition necessitates all managers to pay attention to the global environment. International marketing is defined as the performance of business activities across national borders. Environmental factors such as laws, customs, and cultures must be taken into account if firms are to market products and services at a profit in other countries.

  19. Summary (cont.) Self-reference criteria and ethnocentrism limit the international marketer’s abilities to understand and adapt to differences prevalent in foreign markets. Solutions: Global awareness Sensitivity Strategic orientations found among managers of international marketing operations: Domestic market extension orientation Multidomestic market orientation Global market orientation

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