Monday, January 1, 2018

INTERNATIONAL MARKETING
1 LBSIM, New Delhi
 Monday, January 1, 2018
MANAGEMENT CHALLENGES OF 21ST
CENTURY
 No institution whether a business , a university ,
or hospital can hope to survive let alone to
succeed unless it measures up to the standards
setup by leaders in its field any place in the
world.
---- Peter F Drucker

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 Monday, January 1, 2018
INTERNATIONAL TRADE
 It refers to performance of trade and investment
activities by firms across national borders .
 Most important thing is crossing the border.

 Firms involve in organising , sourcing,

manufacturing, marketing, and other value
addition in business on international level.
 They seek foreign customers , engage in
collaborative relationship .
 Firms and nations exchange many physical and
intellectual assets .
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 Monday, January 1, 2018
GLOBALISATION OF MARKETS
 On going economic integration and growing
interdependency.
 Internationalisation means tendency of firms to
go for systematically increase the international
dimension.
 Globalisation means compression of time and
space.
 It leads to substantial increase in volume and variety
of goods ,services, capital flows.
 Also it leads to rapid diffusion of products ,
technology, knowledge regardless of origin .
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 Monday, January 1, 2018
COS. , GLOBAL REV(BILLIONS),
% OF BUSINESS FROM OUTSIDE US
Walmart $401 24.6%
Ford Motor $146.3 51.9 %
General Electric $182.5 53.7 %
CitiGroup $52.8 74.8 %
Hewlett-Packard $118.4 68.2 %
Boeing $60.9 38.9 %
Intel $37.6 85.4%
Coca-Cola $31.9 77.0%
Apple $36.5 46%
Starbucks $10.4 20.8%

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WORLD AT A GLANCE

Monday, January 1, 2018

WORLD 1980 1990 2000 2005 2009 2010 2014

GDP 10669 22137 32148 45514 57843 61693 72689

(current
prices)
USD
Billions
Investm 24.72 24.11 22.57 22.48 21.59 22.58 22.11
ent of
GDP%
Inflation 17.23 27.69 4.55 3.74 2.45 3.67 2.76
%

Exports 2295 4172 7892 12889 15745 18333 21916

USD
Billions
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INDIA AT A GLANCE (MARCH 2014)

Monday, January 1, 2018

INDIA 2013-14

GDP USD Trillion 1.841

GDP USD Trillion ( PPP) 4.793

GDP Growth 5.6%%

GDP Per Capita USD 1124 , 3176 (PPP)

GDP % Contributors Service 57, Ind 28, Agri
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Inflation 9% plus
Exports( USD Billion) 305
Imports (USD Billion) 489
FDI in India (USD Billion) 2000-2014 309
FDI by India ( USD Billion) 2000-2014 90
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 Monday, January 1, 2018
INTERNATIONAL TRADE & ITS IMPACT
 Growth in world trade in benefitting consumers.
 It is mainstay of many emerging countries.

 Bolstered the GDP growth in such countries.

 For example, Indian Pharma companies led by
Ranbaxy is a live example of international trade.
 Apollo tyres and CEAT were primarily domestic co.
till they set up plants in Sri Lanka & Africa.
 World exports have grown by 100 times in last
half century.

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 Monday, January 1, 2018
WHY DO FIRMS PURSUE
INTERNATIONALIZATION STRATEGIES ?
 Seek opportunities for growth
 Earn higher margins & profits

 Gain new ideas about products & services

 Better serve key customers

 Capacity utilisation

 Gain access to lower cost or better value factors

of production
 Grow in competition

 Risk mitigation

 Better relationship abroad

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 Monday, January 1, 2018
IMPORTANCE OF INTERNATIONAL MKTG
 Competitive edge
 Worldwide integration of economies & Continued lowering of
barriers
 Technology edge and infrastructural development.
 Improvement in logistics
 Development of new goods/services
 Major advances in communication, e commerce
 Companies are highly linked, interdependent
 Capital markets are regulated but becoming global
 Excess capacity exists in wide no. of countries
 Demand is shifting in new economies
 Rapid growth in world trade
 Experience transfers and benchmarking. 10
 Monday, January 1, 2018
GLOBAL PERSPECTIVE
 Global commerce thrives during peace time.
 In a way global trade enhances global peace.

 All the activities of development, production ,

marketing requires millions of people & their
coordinated efforts.
 All the interaction brings in the mutual gains ,
business relationship, personal relationship & mutual
understanding.

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 Monday, January 1, 2018
INTERNATIONAL MARKETING
 IM is the performance of business
activities designed to plan , price ,
promote & direct the flow of a company’s
goods and services to consumers or users
in more than one nation for a profit.

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 Monday, January 1, 2018
INTERNATIONAL MARKETING

 It is defined as process of focusing firm’s resources on

international marketing opportunities whether while
competing within the domestic market against
international companies or even when the firm goes
beyond national frontiers to market goods and
services .

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 Monday, January 1, 2018
INTERNATIONAL MARKETING
 IM is the performance of business activities that
direct the flow of goods and services to consumers
and user in more than one countries.

 It offers an opportunity to a firm to prepare itself

to meet the challenges of catering to different
needs , wants , behavioral patterns and
perceptions of the consumers and users in various
countries , only when it markets the products
under its own brand umbrella.

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 Monday, January 1, 2018
NATURE OF INTERNATIONAL MARKETING
 Things never go in a planned way in IM
 Powerful economic ,technological , industrial,
political , demographical factors affect IM
 Global terrorism, armed conflict do change the
scenario.
 Recessionary trends change the face of IM
drastically.

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 Monday, January 1, 2018
INTERNATIONAL MARKETING
 International firm not only has to satisfy its
corporate objectives but it also has to bring about
customer satisfaction through coordinated
efforts.
 International marketing is simply an attitude of
mind , the approach of a company with a truly
global outlook, seeking its profits impartially
around the world , home market included , on a
planned and systematic basis.

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 Monday, January 1, 2018
INTERNATIONAL MARKETING
 When a company decides to go international , it
must
 Go beyond the comfort zone of known market
 GM, Mitsubishi , Microsoft, Exxon, Sony
have done it.
 They should be ready to face the uncertain scenario .

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 Monday, January 1, 2018
FACTORS AFFECTING GLOBAL BUSINESS
 The rapid growth of WTO & regional trade
organizations like NAFTA & EU.
 Free market system acceptance in BRIC
countries, Latin America, East Asian countries,
& Eastern Europe including CIS countries.
 Impact of internet

 Mandate to properly manage the resources and

global environment.

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 Monday, January 1, 2018
STAGES OF IM INVOLVEMENT
Domestic Company to a Global Company
 No Direct Foreign Marketing
 Infrequent Foreign Marketing
 Regular Foreign Marketing
 International Marketing
 Global Marketing

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 Stages of International Marketing
Involvement
In general, firms go through five different phases in going
international:

No Direct Foreign Marketing

Infrequent Foreign Marketing

Regular Foreign Marketing

International Marketing

Global Marketing
 Monday, January 1, 2018
FACTORS INFLUENCING INT. MARKETER

Foreign Non
Controllable

Domestic Non
Controllables

Controllable
factors

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 The International Marketing Task
Foreign Environment
(Uncontrollables)
7. Structure of 1. Competition
Distribution Domestic environment Environmental
(Uncontrollables) uncontrollables
country market A
(Controllables) 1. Competition
Price Product 2. Technology
5. Political- Target Environmental
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6. Geography and Legal Market uncontrollables
Infrastructure Promotion Place or 2 .Technology country
Distribution market B
4.
Culture Environmental
3. Economy
uncontrollables
5. Political- 3. Economy country
Legal market C
4. Culture
 Monday, January 1, 2018
IM VS DOMESTIC MARKETING

•Price •Dom environ •Foreign

Controllable factors

Domestic Non controllable

International non controllable

controllable
•Product •Competition environment
•Promotion •Political/legal •Economic forces
•Channels •Economic •Political/legal
•Research climate •Cultural forces
•Co. •Geography
characterstics •Infrastructure
•Competition

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 Monday, January 1, 2018
INTERNATIONAL MKTG & GLOBAL MKTG
 Internationalization may thought as 1) Process
2) An end result 3) A way of Thinking
 A company becomes more involved and
committed to serve markets outside home
country.
 A multinational company treats each foreign
market as separate and distinct ,developing
differentiated products and marketing
specifically for each of the markets.
 The global companies operate as if entire world ,
or a major region of the world , were a single
entity .Such companies would sell the same
product(s) in the same way everywhere. 24
 Monday, January 1, 2018
IS A COMPANY READY TO ENTER FOREIGN MKT?

 Competitive capabilities in the domestic markets

 Motivation for going international

 Commitment for owners & top management

 Skills, knowledge and resources

 Experience and training

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 Monday, January 1, 2018
MAJOR OBSTACLES
 SRC : Self reference criterion : It is
unconscious reference to one’s own
cultural values, experiences,
knowledge as the basis for decisions.
 Ethnocentrism is the notion that
one’s own culture or company knows
best how to do things.

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 Monday, January 1, 2018
STEPS TO CHECK SRC &
ETHNOCENTRICISM
 Define the business problem or a goal in home
country cultural traits , habits or norms
 Define the business problem or goal in foreign
country cultural traits , habits or norms thru
consultation with natives of target country .
Make no value judgments.
 Isolate SRC influence in the problem & examine
it carefully to see how it complicates the
problems.
 Redefine the problem without the SRC influence
and solve for the optimum business goal
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situation.
 Monday, January 1, 2018
DEVELOPING GLOBAL AWARENESS
 Tolerance towards cultural difference
 Knowledge of culture, history, world market
potential,
 Knowledge of global economic, social and political
trends

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 Monday, January 1, 2018
EPRG FRAMEWORK
 Ethnocentric Approach
 Polycentric Approach

 Regiocentric Approach

 Geocentric Approach

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 Strategic Orientation: EPRG Framework

Orientation EPRG Framework

Domestic Marketing (Ethnocentric)

Extension

Multi-Domestic (Polycentric)
Marketing

Global Marketing (Regio/Geocentric)

 Strategic Orientation: EPRG Framework
Generally, four distinctive approaches dominate strategic thinking in
international marketing:
1. Ethnocentric or Domestic Marketing Extension Concept:
Home country marketing practices will succeed elsewhere
without adaptation; however, international marketing is
viewed as secondary to domestic operations

2. Polycentric or Multi-Domestic Marketing Concept:

Opposite of ethnocentrism
Management of these multinational firms place importance
on international operations as a source for profits
Management believes that each country is unique and
allows each to develop own marketing strategies locally
 Strategic Orientation: EPRG Framework
Generally, four distinctive approaches dominate strategic thinking in
international marketing:
3. Regiocentric:
Sees the world as one market and develops a standardized
marketing strategy for the entire world

4. Geocentric:
Regiocentric and Geocentric are synonymous with a Global
Marketing Orientation where a uniform, standardized
marketing strategy is used for several countries, countries in
a region, or the entire world
 Monday, January 1, 2018
INTERNATIONAL MKTG & GLOBAL MKTG
 Internationalization may thought as 1) Process
2) An end result 3) A way of Thinking
 A company becomes more involved and
committed to serve markets outside home
country.
 A multinational company treats each foreign
market as separate and distinct ,developing
differentiated products and marketing
specifically for each of the markets.
 The global companies operate as if entire world ,
or a major region of the world , were a single
entity .Such companies would sell the same
product(s) in the same way everywhere. 33
LIMITATIONS

Monday, January 1, 2018

 Three factors limit to general applicability of this
approach.
 Very significant differences in consumer
demands and in marketing requirements exist
country to country.
 As income rise , many consumers tend to become
less price sensitive and willing to pay more to get
products and services.
 Thirdly , a move toward more flexible production
systems in some industries has lowered (though
failed to eliminate) the cost advantage of very
large scale production.
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 Monday, January 1, 2018
SELECTED US COMPANIES & THEIR INT
TRADE
Company Global Revenues % Revenue from
($Bilions) Outside US
Wal-Mart 401 24 %
Ford 146 51.9
GE 182 53.7
Citi group 52 74.8
HP 118 68.2
Boeing 60.9 38.9
Intel 37.6 85.4
Coca Cola 31 77.1
Apple 8.3 40.7
Starbucks 10.4 20.8
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 Monday, January 1, 2018
JOHN DEERE ( US) VS. HYUNDAI(S KOREA)

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 Monday, January 1, 2018
TOP 10 COUNTRIES’ TRADE WITH US($ BILLION)

Country Total trade Exports Imports Balance

Canada 429 204 225 -19
Mexico 305 129 176 -47
Japan 148 51 97 -46
China 366 69 297 -228
Germany 114 43 71 -28
UK 93 45 48 -3
South Korea 68 29 39 -10
Taiwan 46 18 28 -10
Dutch 48 32 16 +16
Italy 34 10 24 -14
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 Monday, January 1, 2018
 In addition to U.S. economic assistance, a move toward
international cooperation among trading nations was
manifest in the negotiation (1986–1994) of the General
Agreement on Tariffs and Trade (GATT).

 International trade had ground to a halt following World

War I when nations followed the example set by the U.S.
passage of the Smoot-Hawley Act (1930), which raised
average U.S. tariffs on more than 20,000 imported goods to
levels in excess of 60 percent. In retaliation, 60 countries
erected high tariff walls, and international trade stalled,
along with most economies. A major worldwide recession
catapulted the world’s economies into the Great Depression
when trade all but dried up

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 Monday, January 1, 2018
FOREIGN ACQUISITIONS OF US
COMPANIES

US Companies OwnerCountry
Firestone Japan
Burger King UK
Chrysler Germany

Australia
New York Post
China
IBM (PC)
China
Huffy (Cycles)

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 Monday, January 1, 2018
INDIAN COMPANIES ACQUIRING FOREIGN
FIRMS
Buyer Target Sector Amount ($ Stake %
mn)
Videocon Daewoo elec Con 696 NA
Durable
Tata Tea Energy beverages 670 30
Dr Reddy Betapharm Pharma 572 100
Suzlon Hunsen Energy 565 100
VSNL Teleglobe Telecom 239 100
Tata Coffee Eight O Clock Beverages 220 100
Tata Chem Brunner Chemical 113 36.5
Mond s
Apeejay Premier foods Bevereges 138 NA
Tata Steel Millenium Steel 131 100 40
Appollo Dunlop Tyres 66 100
 Monday, January 1, 2018
DEVELOPING GLOBAL AWARENESS
 Opportunities in global business abound for those
who are prepared to confront myriad obstacles
with optimism and a willingness to continue
learning new ways.
 The successful businessperson in the 21st
century will have global awareness and a frame
of reference that goes beyond a region or even a
country and encompasses the world.
 To be globally aware is to have (1) tolerance of
cultural differences and (2) knowledge of
cultures, history, world market potential, and
global economic, social, and political trends 41
 Monday, January 1, 2018
GLOBAL MARKETING
 At global marketing , the profound change is seen
in the orientation of the company towards the
markets and its planning.
 Company treats entire globe as its one market.

 Market segmentation is no longer restricted to its

own country’s boundary
 Entire operation –orgn structure, source of
finance, production, marketing takes global
perspective.

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 Monday, January 1, 2018
MAJOR CONCERNS OF MARKETING
MANAGERS
 Developing new products
 Developing relationship with suppliers,
distributors, even customers
 Fewer but stronger global competitors

 Enhanced price competition

 Greater regional integration and government

regulations
 Developing a marketing culture.

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 Monday, January 1, 2018
BALANCE OF PAYMENTS (1)
 A nation’s balance-of-payments statement presents an
overall view of its international economic position and is an
important economic measure used by treasuries, central
banks, and other government agencies whose responsibility
is to maintain external and internal economic stability.
 A balance of payments represents the difference between
receipts from foreign countries on one side and payments to
them on the other.
 On the plus side ,balance of payments are merchandise
export sales; money spent by foreign tourists; payments to
the India for insurance, transportation, and similar
services; payments of dividends and interest on
investments abroad; return on capital invested abroad; new
foreign investments in India and foreign government 44
payments to the India .
 Monday, January 1, 2018
 On the minus side are the costs of goods
imported, spending by Indian tourists overseas,
new overseas investments, and the cost of foreign
military and economic aid.
 A deficit results when international payments
are greater than receipts. It can be reduced or
eliminated by increasing a country’s
international receipts (i.e., gain more exports to
other countries or more tourists from other
countries) and/or reducing expenditures in other
countries.
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 Monday, January 1, 2018
 A balance-of-payments statement includes three
accounts: the current account , a record of all
merchandise exports, imports, and services plus
unilateral transfers of funds;
 The capital account , a record of direct
investment, portfolio investment, and short-term
capital movements to and from countries; and
 the official reserves account , a record of
exports and imports of gold, increases or
decreases in foreign exchange, and increases or
decreases in liabilities to foreign central banks.
Of the three, the current account is of primary
interest to international business.

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 Monday, January 1, 2018
DEGREE OF ADAPTATION
 Business customs can be grouped into
imperatives , customs that must be recognized
and accommodated; electives , customs to which
adaptation is helpful but not necessary; and
exclusives , customs in which an outsider must
not participate.
 An international marketer mustappreciate the
nuances of cultural imperatives, cultural
electives, and cultural exclusives

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 Monday, January 1, 2018
IMPERATIVES
 BEIJING, CHINA:
GermanChancellor Angela Merkel
and Chinese Prime Minister Wen
Jiabao toast after the EU–China
Business Summit at the Great
Hall of the People in Beijing.
 The summit was boosted by the
settlement of a trade row that had
left 80 million Chinese-made
garments piled up in European
seaports, unable to be delivered to
shops under a quota pact agreed to
at the time.
 Drinking half a bottle is a cultural
elective, but taking a sip is more of
an imperative in this case. 48
Monday, January 1, 2018
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THE FOUR RISKS IN INTERNATIONALIZATION

Commercial

1/1/2018
Risk

50
Cross Risk in
Currency
Cultural Int Risk
Risk Business

Country
Risk