Chapter 1

2. Chapter 1 Introduction to international marketing

3. What is international marketing? • The process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organisations • A tool to improve domestic and global position • Subject to constantly changing macro-environmental factors

4. The international marketplace • ‘A powerful force drives the world towards a converging commonality, and that force is technology’ (Levitt 1983) • Globalisation is creating a ‘borderless economy’ • Production becomes more efficient

5. The international marketplace • Strong drive towards uniformity and homogeneity • iPod: designed in America, assembled in China, and parts are sources from South Korea, Taiwan, Japan and Singapore • The factory floor spans the world

6. The international marketplace • Location is important to internationally orientated firms • Australia's ‘tyranny of distance’: • diminished by technological advances in transportation and communications • The locus of world power shifts (e.g. the rapid economic growth in Asia, see Fig 1.4 next slide)

7. The international marketplace Car industry – China stepping up to the plate? Click to play video

8. The international marketplace

9. The international marketplace • Timing is an important issue • Economic growth varies by country and period • Growth tends to slow down as an economy matures

10. International marketing questions • Should I obtain my supplies domestically or from abroad? • What marketing adjustments are or will be necessary? • What threats from global competition should I expect? • How can I work with these threats to turn them into opportunities? • What are my strategic global alternatives?

11. The international marketplace What Thomas Friedman means when he says ‘the world is flat’ Click to play video

12. The importance of world trade • Trading blocs have emerged (e.g. NAFTA). • Encourages trade • Firms go global or risk losing domestic markets to overseas competitors • Impacts domestic policy making

13. Global linkages • Countries, institutions and individuals are all linked • Great pressure to quickly gather, manipulate, analyse and disseminate information • Asian Economic Crisis • Global Financial Crisis

14. Global linkages: The 2008 financial crisis

15. Global linkages • World trade opens up entirely new business horizons • Technological innovation effects all business activities • Firms can operate in a ‘market space’ rather than a marketplace

16. Global linkages • Economic interdependence is not stable • for example, the decline of the United Kingdom’s relative importance to Australia • Pace of change is accelerating • The role countries play is changing

17. Low interest rates that result in an outflow of funds are unsustainable Many domestic issues have become international concerns In 2006 the WTO core subject was subsidies Domestic policy repercussions

18. Protectionist measures: benefits some i.e. Australian and New Zealand agriculture harms others i.e. Indian agriculture Policies have international repercussions Politicians take into account the domestic effects of international commitments Domestic policy repercussions

19. Currency flows: independent of trade set exchange rates (values of currencies relative to each other) outnumber trade flows 100:1 Exchange rates determine the level of trade Domestic policy repercussions

20. Policy makers seek to restrict global trade to regain power and influence events with: tariffs quotas other import regulations The usefulness of these measures are often restrained by international agreements (i.e. WTO) Domestic policy repercussions

21. EU protectionism row escalates Domestic policy repercussions Click to play video

22. Anticipating the actions of global competitors Continual development of strategy requires: technological innovation process improvements creativity Challenges in international marketing

23. Enhancing market position Awareness of global developments Adaptation to market conditions Social effects of globalisation are often questioned (e.g. G8 protests) Challenges in international marketing

24. Climate change Changing consumer attitudes G20 Summit Heightened ethical concern The popularisation of green promotion Challenges in international marketing

25. Wal-Mart's green revolution Challenges in international marketing Click to play video

26. Between 1999–2008 world trade nearly trebled (US$5.7 trillion–US$16.1 trillion) For many countries exports exceed GDP (see Fig. 1.5) Emerging economies (i.e. China and India) New technologies Opportunities in international marketing

27. Opportunities in international marketing

28. Firms can reach more customers Market saturation can be avoided Multinational agreements combine strengths Firms engaged in international marketing outperform their domestic counterparts Opportunities in international marketing

29. Lowers the risk of insolvency Higher wages Consumers have more variety Firms can learn from their competitors Global employee recruitment Opportunities in international marketing

30. SMEs are ‘born global’ Isolation is impossible Exploiting international opportunities requires careful exploration Opportunities in international marketing

31. The Maasai go mobile - an African journey with Jonathan Dimbleby Opportunities in international marketing Click to play video