Introduction to International Marketing

1. Introduction to International Marketing Ch. 1: Scope and Challenge of International Marketing Ch.2: The Dynamic Environment of International Trade

2. Understanding International Marketing • Market, Marketing, International marketing • Domestic vs. International Marketing • Strategic Orientation: domestic, multidomestic, and global • Marketing mix: 4 Ps • Environmental forces: controllables vs. uncontrollables • Environment and the marketing mix

3. The International Marketing Mix 7 Foreign environment (uncontrollable) 1 Economic forces Political/legal forces Domestic environment (uncontrollable) 2 7 Competitive structure Political/ legal forces Competitive Forces (controllable) Cultural forces Environmental uncontrollables country market A Price Product 3 Channels of distribution Promotion Environmental uncontrollables country market B 6 Level of Technology Geography and Infrastructure Economic climate Environmental uncontrollables country market C 4 5 Structure of distribution

4. Environment Product Price Promotion Place Economic Competitive Technological Demographic Geographic Cultural Political/legal Environment and Marketing mix

5. Understanding International Marketing • International Marketing…. developing a mindset? • Developing awareness • Self-Reference Criterion (SRC) • Adapting to local culture • FPs’ Globalization Index • Economic integration • Personal contact • Political engagement • Technological connectivity

6. Global Governance • Politics/Peace- United Nations • Trade- World Trade Organization (WTO) • Money/Finance- International Monetary Fund (IMF) • Development- World Bank • Overall- G8 Nations (USA, Canada, UK, France, Germany, Italy, Japan, and Russia) • Other international institutions/bodies

7. Institutions in International Trade • World Economic and Trade Environment • WTO, IMF, and World Bank in the World Economy • Role of the organizations • Easing trade restrictions • Protest against globalization • Multinationals in the global economy • Role of American, European, Japanese, and Third World multinationals on a timeline |_______|________|_______|_______|_______|_______I 1950 1960 1970 1980 1990 20002010

8. Protectionism and Trade Barriers • Protectionism and Tariff Barriers • Cost of protectionism: arguments for and against • Nontariff Barriers: • Quota and Import Licenses • Domestic Subsidy and Economic Stimuli • Standards and documentation requirements • Boycotts and Embargoes • Monetary barriers • Antidumping Penalties

9. Balance of Payments (BOP) Account BOP Account must balance, Equation: A+B = C+D

10. Ch 1 and 2: Questions for Discussion • What is international marketing? How does it differ from domestic marketing? • What is “developing a mindset” in international marketing? How is it related to self-reference criteria? • What is protectionism? Is it good (or bad) for an economy? How? • Explain how nontraiff barriers affect trade. • What is subsidy? What is the effect of subsidy on trade and economy? • What is a BOP account? Explain the four subheads of a BOP account. Why should an international marketing manager study the BOP account of a country?

11. Top Ten 2000 U.S. Trading Partners ($ billions) Country U.S. Exports U.S. Imports Total Surplus/ Deficit Canada $176.4 $229.2 $405.6 -$52.8 Mexico 111.7 135.9 247.6 -24.2 Japan 65.3 146.5 211.8 -81.3 China 16.3 100.0 116.3 -83.8 Germany 29.3 558.7 88.0 -29.5 United Kingdom 41.5 43.5 85.0 -1.9 South Korea 27.9 40.3 68.2 -12.4 Taiwan 24.4 40.5 64.9 -16.1 France 21.0 29.0 50.0 -8.0 Singapore 17.4 19.6 37.0 -2.2

12. The Nationality of the World’s 100 Largest Industrial Corporations (by country of origin) 1963 1979 1984 1990 1993 1995 1996 2000 United States 67 47 47 33 32 24 24 36 Germany 13 13 8 12 14 14 13 12 Britain 7 7 5 6 4 1 2 5 France 4 11 5 10 6 12 13 11 Japan 3 7 12 18 23 37 29 22 Italy 2 3 3 4 4 3 4 3 Netherlands-United Kingdom 2 2 2 2 2 2 2 -- Netherlands 1 3 1 1 1 2 2 5 Switzerland 1 1 2 3 3 3 5 3 Argentina -- -- 1 -- -- -- -- -- Belgium -- 1 1 -- -- -- -- 1 Brazil -- 1 -- 1 1 -- -- -- Canada -- 2 3 -- -- -- -- -- India -- -- 1 -- -- -- -- -- Kuwait -- -- 1 -- -- -- -- -- Mexico -- 1 1 1 1 -- 1 -- Venezuela -- 1 1 1 1 -- 1 -- South Korea -- -- 4 2 4 2 4 -- Sweden -- -- 1 2 1 -- -- -- South Africa -- -- 1 1 -- -- -- -- Spain -- -- -- 2 2 -- -- -- Turkey -- -- -- -- 1 -- -- -- China -- -- -- -- -- -- -- 2

13. U.S. Current Account by Major Components, 1990-1999 ($ billions) 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 Merchandise Trade a. Exports $201.8 $219.9 $215.9 $224.0 $246.6 $319.9 $362.1 $389.3 $416.9 $440.4 $456.9 b. Imports 268.9 332.4 338.1 368.5 409.9 446.4 477.4 498.3 491.0 536.5 589.4 c. Balance -67.1 -112.5 -122.2 -144.5 -160.3 -126.5 -115.2 -109.0 -74.1 -96.1 -132.5 Business Services a. Exports 42.3 44.3 46.2 51.8 59.4 69.1 116.5 136.6 153.7 164.4 174.5 b. Imports 35.8 42.3 47.2 51.0 58.0 63.2 86.9 98.7 101.6 104.4 112.7c. Balance +6.6 +2.0 -1.0 +0.8 +1.4 +5.9 +29.6 +37.9 +52.1 +60.0 +61.8 SOURCES: Survey of Current Business, U.S. Department of Commerce, Bureau of Economic Analysis. http://www.stat-usa.gov/BEN/heal/sch.html. Februarly 1998 Irwin/McGraw-Hill

14. U.S. Current Account by Major Components, 1983-96 ($ billions) 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 International Investment Income a. Receipts 77.3 85.9 88.8 90.1 103.8 108.2 152.5 160.3 136.9 114.4 113.9 b. Payments 52.4 67.4 62.9 67.0 83.4 105.6 138.9 139.6 122.1 109.9 109.0c. Balance +24.9 +18.5 +25.9 +23.1 +20.4 +2.6 +13.6 +20.7 +14.8 +4.5 +4.0 Total Goods and Services a. Exports 334.4 360.8 360.6 375.0 424.8 507.8 641.4 696.8 717.0 731.4 755.6 b. Imports 371.2 455.6 460.7 498.6 565.3 629.6 718.2 754.9 730.7 767.3 827.3 c. Balance -36.8 -94.8 -100.1 -123.6 -140.5 -121.8 -76.7 -58.1 -13.7 -35.9 -71.7 Net unilateral transfers -9.5 -12.2 -15.0 -15.3 -13.4 -13.6 -26.1 -33.7 +6.7 -31.9 -32.0 Current accountbalance -46.2 -107.0 -115.1 -138.9 -153.9 -135.4 -102.8 -91.8 -7.0 -67.8 -103.7 SOURCES: Survey of Current Business, U.S. Department of Commerce, Bureau of Economic Analysis. http://www.stat-usa.gov/BEN/heal/sch.html. February 1998.

15. Buying Boom for Asia, 1995-2000 What the added Between 1993 and middle class will 1995 2000 buy (In million) 73.3 Millions of households approaching $18,000 per year buying power Indexed to Singapore prices Bedrooms 32 116 Living Rooms 16 58 Kitchens 16 58 Bathrooms 32 116 Living space (sq.m.) 1,200 4,350 Large appliances 16 58 Televisions 24 87 Telephones 24 87 Cars 16 58 32.5 14.4 1991 1995 2000 SOURCE: Bill Saporito, “Where the Global Action Is.” Fortune, Autumn-Winter 1993, p.64.

16. The Price of Protectionism Industry Total Costs to Number of Cost per Consumers Jobs Saved Job Saved (in $ millions) Textiles and apparel $27,000 640,000 $ 42,000 Carbon Steel 6,800 9,000 $ 750,000 Autos 5,800 55,000 $ 105,000 Dairy products 5,500 25,000 $ 220,000 Shipping 3,000 11,000 $ 270,000 Meat 1,800 11,000 $ 160,000 SOURCE: Michael McFadden, “Protectionism Can’t Protect Jobs,” Fortune, May11, 1987, pp. 125.