WHY GO GLOBAL?

1. WHY GO GLOBAL?

2. REASONS FOR GLOBAL MARKETING/BUSINESS • Need for sales-growth. • Need to reduce costs by sourcing raw materials, inputs, or final products. • Need to gain competitive edge--economies of scale or strategic posturing.

3. SEEKING MARKETS • The largest single domestic market--the U.S.--is only 25% of the total world market. 75% is outside. • Coca Cola derives over 70% sales and 80% profits from overseas markets.

4. Second largest market is Japan at 15% of the total world market. • Among the European markets, Germany is the largest at only 6% of the total world market. • Other countries have even smaller markets.

5. SEEKING INPUTS • Minerals • Farm Produce • Forest Products • Labor

6. STRATEGIC POSTURING CAT versus KOMATSU

7. WHAT ARE THE DRIVERS OF GLOBALIZATION • TECHNOLOGICAL FACTORS • TRAVEL & TRANSPORT • TELE-COMMUNICATIONS • MEDIA • SOCIO-POLITICAL FACTORS • REDUCTION OF TRADE BARRIERS • MARKET LIBERALIZATION • INTERDEPENDENCE

8. “A JET GOES SO FAR--IT BRINGS PEOPLE TOGETHER.”--BOEING. • JET TRAVEL IS ONE OF THE MOST EXCITING DEVELOPMENTS OF OUR TIMES. • THE FIRST U.S. PASSENGER JET WAS BUILT BY BOEING IN 1958. B-707 COULD CARRY 181 PASSENGERS AT A SPEED OF 550 M/HR. • THE JUMBO (B-747) SHOWN HERE DEBUTED IN 1969.

9. AIRCRAFTS TYPE SEATS SPEED RANGE nm B-747-400 416 565nm/hr 7330 (14 Hr) B-777-300 365 565 7250 (14 Hr) B-777-200 301 565 8820 (18 Hr) B-737-800 162 530 2942 A-340-200 239 578 8000 A-330-200 253 578 6400 DC-10-40 250 600 5000

10. WORLD TRAVEL FIGURES • IN 2000, NUMBER OF PASSENGERS ON SCHEDULED DOMESTIC AIRLINES WAS 1.1 B AND INTERNATIONAL AIRLINES WAS 0.5 B. • IN 1988, THE CORRESPONDING FIGURES WERE 0.8 B AND 0.3 B. • GROWTH IS EXPECTED TO REMAIN AT ABOUT 5% PER YEAR. • Source; ICAO (May 2001)

11. TRAVEL FIGURES FOR U.S. • NUMBER OF INTERNATIONAL TRAVERLERS HAS INCREASED FROM 5.5M IN 1960 TO 55.5M IN 2000. • AVERAGE DISTANCE TRAVELED HAS INCREASED FROM 1,510 MILES IN 1960 TO 3,322 MILES IN 2000. • NUMBER OF DOMESTIC TRAVELERS INCREASED FROM 52.4 M IN 1960 TO 610 M IN 2000, REPRESENTING OVER HALF OF DOMESTIC WORLD TRAVEL. • Source: air-transport.org

12. MEGA AIRCRAFTS • A3XX-100 IS DESIGNED TO CARRY 481-656 PASSENGERS AND FLY 8000 NM. • BOEING IS CONTEMPLATING A 800-1000 PASSENGER PLANE

13. TRANSPORTATION • CONTAINERIZATION HAS BEEN THE BIGGEST SINGLE TECHNOLOGICAL INNOVATION IN SHIPPING. • OTHERS INCLUDE: • SIZE • SPEED • HANDLING

14. CONTAINER SHIPS • A 40’ CONTAINER CAN CARRY 4403 VCRs OR 10,000 PAIRS OF SHOES. • NEWER SHIPS CAN CARRY 3,300 40’ CONTAINERS. USUAL IS 500-1000. • A 100 CAR DOUBLE-DECK FREIGHT TRAIN CAN CARRY 200 40’ CONTAINERS.

15. SPEED • SINGAPORE-NEW YORK JOURNEY TAKES 21 DAYS WHILE SINGAPORE TO LOS ANGELES TAKES 23 DAYS. • AVERAGE TIME TAKEN TO HANDLE AND CLEAR A SHIPMENT IS LESS THAN 1 DAY IN SINGAPORE, 3 DAYS IN THE U.S. AND 15 DAYS IN JAPAN.

16. TRIVIA TIME • WHICH PORT HANDLES THE LARGEST VOLUME OF CARGO? (‘99: 326 M MT) • WHICH PORT HANDLES THE SECOND LARGEST VOLUME OF CARGO? (‘99: 304 M MT) • SOUTH LOUISIANA IS #3 AT 194 M MT • Source: infoplease.com/ipa

17. TRIVIA TIME • WHICH PORT HANDLES THE LARGEST CONTAINER TRAFFIC? (‘99: 8.10 M 40’ CONTAINERS) • WHICH PORT HANDLES THE SECOND LARGEST CONTAINER TRAFFIC? (‘99: 7.97 M 40’ CONTAINERS) • LA IS #6 AT 2.2 M 40’ CONTAINERS • Source: infoplease.com/ipa

18. WORLD AIR CARGO • IN 1999, THE WORLD AIR CARGO WAS ABOUT 28.2 m mt (67.5 b ton-mile), OF WHICH 17.2 m mt (57.9 b ton-mile) COMPRISED OF INTERNATIONAL FREIGHT. • A JUMBO SHOWN HERE CAN CARRY UP TO 124 mt OF CARGO OR ABOUT 5 40’ CONTAINERS. • Source: icao.int/icao/en/nr/pio200106..htm

19. AIR TRANSPORT IN THE U.S. • U.S. INTERNATIONAL AIRCARGO INCREASED FROM 1.30 b ton-miles IN 1970 TO 13.2 b ton-miles IN 2000. • U.S. DOMESTIC AIRCARGO INCREASED FROM 2.2 b ton-miles IN 1970 TO 7.9 b ton-miles IN 2000. • WHILE ONLY 5% OF U.S. TRADE BY WEIGHT IS HANDLED BY AIR, IT CONSTITUTES 25% OF TRADED VALUE. • Source: air-transport.org

20. TRUCKING • CONTAINERIZATION HAS REVOLUTIONALIZED TRUCKING TOO. • U.S. IMPORTS FROM MEXICO 20.7 M MT (2000) BY TRUCK VALUED AT $88.7 B • U.S. IMPORTS FROM CANADA 65.7 M MT (2000) BY TRUCK VALUED AT $127.8 B • Source: bts.gov/ntda/tbscd/reports/nat_m2000.html & 2000.html • Source: bts.gov/transborder/reports/weight/new_mlb20001.html & clb2001.html

21. RAIL • U.S. IMPORTS FROM MEXICO 6.6 M MT (2000) BY RAIL VALUED AT $21.1 B • U.S. IMPORTS FROM CANADA 60 M MT (2000) BY RAIL VALUED AT $49.7 B.

22. CAPACITY • EVEN IN 1960, TRANSATLANTIC CABLE COULD CARRY ONLY 138 CONVERSATIONS SIMULTANEOUSLY. • NOW A FIBER OPTIC CABLE CAN CARRY UP TO 1.5M CONVERSATIONS. • WHAT DO YOU THINK HAPPENED TO COST??

23. MEDIA • THE REACH OF TELEVISION AND PRINT MEDIA HAS BECOME GLOBAL. • ADVERTISING COMPANIES HAVE BECOME GLOBAL. • IT IS EASY TO REACH PEOPLE IN DIFFERENT COUNTRIES MORE COST EFFECTIVELY.

24. SOCIO-POLITICAL FACTORS • REDUCTION OF TRADE BARRIERS • MARKET LIBERALIZATION • INTERDEPENDENCE

25. TRADE LIBERALIZATION • EXPORT VOLUME HAS INCREASED OVER 17 TIMES SINCE 1950 (FROM $420B IN 1950 TO $7300B IN 1999) • INVESTMENT HAS INCREASED OVER 25 TIMES SINCE 1950 (FROM $14B IN 1950 TO $350B NOW). • TARIFFS AND RESTRICTIONS HAVE FALLEN WORLDWIDE. GATT/ WTO • Source: worldbank.org/data/databytopic/databytopic.html#INTERNATIONAL%20ECONOMICS

26. Emerging Market Access IndexOpenness to Trade • Singapore • Chile • Hong Kong • Estonia • Peru • Slovenia • South Africa Lithuania Venezuela Taiwan Kuwait Latvia Romania Israel Mexico Zimbabwe Hungary Argentina Colombia Turkey Czech Rep. Egypt Philippines Poland South Korea Bulgaria Thailand Slovakia

27. BENEFITS OF FREE TRADE • SPECIALIZATION LEADS TO EXPLOITATION OF COMPARATIVE ADVANTAGE. • CONSUMERS HAVE GREATER CHOICE. • AN OPEN DOMESTIC MARKET IS A SOURCE OF COMEPTITIVE STRENGTH. • COUNTRIES WITH OPEN TRADE HAVE DEVELOPED MUCH FASTER.

28. INTERDEPENDENCE TRADE AND INVESTMENT LIBERALIZATION HAS LED TO DEEPER FORMS OF ECONOMIC INTERDEPENDENCE AMONG NATIONS.