Marketing 6: Understanding and reaching global markets

What accounts for 85% of world trade?

What accounts for the other 15%?

85% Manufacturing

15% Service

Gross Domestic Product (GDP)

monetary value of all products and services produced by a country in one year

Globalization

The focus on creating economic, cultural, political, and technological interdependence among individual national institutions and economies.

Five influences on globalization

Economic protectionism

Economic integration

Global competition

Global network

Economic espionage

Protectionism

shielding a country’s economy from foreign competition

European Union

27 member countries that eliminate barriers of free trade

Global competition

Exists when firms originate, produce, and market their products and services worldwide.

Economic espionage

The clandestine collection of trade secrets or proprietary information about a company’s competitors.

Currency exchange rate

The price of one country’s currency expressed in terms of another country’s currency.

Global market entry strategies

Exporting, licensing, joint-venture, direct investment

Exporting

making products in the home country and then selling them in another country

Licensing

offers the right of an intellectual property to another organization in exchange for a fee

Joint venture

A global market-entry strategy in which a foreign company and a local firm invest together to create a local business in order to share ownership, control, and profits of the new company.

Direct investment

a domestic firm owning a foreign subsidiary

Product extension

selling the product the same way in another country

Product adaption

changing an existing product to make it more appropriate in foreign markets

Product invention

making a completely new product for a foriegn market

Dumping

when a firm sells a product in a country below its actual cost