International chpt 1

Global commerce

The exchange of goods and services between businesses and customers across national borders

Global commerce thrives…

On peace. For example, look at the phone industry. More than 5 billion people around the world possess mobile phones. Samsung (South Korea), Apple (US), and Huawaei (China) are market leaders.

International marketing is important why

It is hard work. It can enrich you, your family, your company, and your country. When this is done well large companies or small, the needs and wants of customers in other lands are well understood, and prosperity and peace are promoted along the way

International marketing obstacle example

In 2011 when the earthquake and tsunami hit Japan and floods in Thailand caused major trade disruptions.

When these disasters occurred competition from Chinese companies continued to raise concerns in the U.S.

Inequities that marked the financial losses suffered by citizens caused global protests and violence both within and across countries.

Covid 19 impact on international trade

The loss of lives cause by the disease across nations had been horrific. This impacted international trade.

Disruptions in world trade leads to high inflation at both the consumer and wholesale price levels.

Global commerce- expect the

Unexpected. Nothing goes as planned. International markets are unpredictable. Relationships are best maintained with flexibility.

What is increasing in international business

Increasing number of North American firms exporting, importing, and manufacturing abroad. Growing regional trade areas. Growth of world markets and increasing number of competitors for global markets.

4 most dynamic events that will influence the shape of international business in the future

1) the rapid growth of the world trade organization and new free trade agreements around the world

2) the trend toward the acceptance of the free market system amount developing countries in Latin America, Asia, and Eastern Europe

3) the burgeoning impact of the internet, mobile phones, and other global media on the dissolution of national borders

4) mandate to manage the resources and global environment properly for generation to come

Example of climate change is a problem in the market

Severe drought kills livestock. For rural communities dependent on farming, their primary source of survival vanishes. The ruined farmers move to domestic cities looking for work. These cities often lack the housing and jobs to support these people which leads to high unemployment and poverty. As water and arable land shrink, competing groups such as settled farmers and nomadic herders clash over what remains. Weak or corrupt government fail to manage these tensions. When domestic conditions become unlivable millions are forced to cross International borders.

How climate change spreads internationally

Once climate driven mitigation reaches other nations, it reshapes the global political landscape.

-nationalists and populist political groups take advantage of people’s fears about immigration to gain power. When these groups get into government, they usually create stricter border laws and make it much harder for refugees to get protection.

-when war drives people from their homes they usually flee to neighboring poor or developing countries.

Because of climate change water is becoming scarce while the need for it is growing. This shortage creates intense arguments, tense political standoffs, and even threats of war between neighboring countries.

Challenge in international marketing

Develop strategic plans that are competitive in intensifying global markets. For a growing number of economies, international is no longer a luxury but a necessity for economic survival.

Many familiar U.S. companies are now

Foreign controlled or headed in that direction. For example, when you pop by a 7 eleven convenience store you are buying directly from Japanese companies.

Well known brands no longer owned by the U.S. are

The wall streeet journal (Australian), universal studios, Ben and jerry’s (UK), Budweiser (Belgium)

Global business work in two directions

1) companies building factories in the US

2) US buying businesses overseas

For example, a foreign company starts by just exporting its products to the U.S. if Americans buy a lot of these products the company becomes successful enough to make a bigger investment. Instead of shipping products across the ocean they build or buy factories right inside the US. Ex: Car companies like Honda (Japan) now manufacture many of their vehicles in America.

but also American companies spend money to buy businesses in other countries. For example, Ford (American company car) bought and sold Volvo (Swedish car company).

The shift of markets in the U.S.

Now foreign Companies all over the world are moving in the U.S. to compete with them. International teams are moving to the U.S. market and playing in the U.S. by directly competing with the sports industry. This causes slower domestic growth for American companies. To keep growing and making money US companies are forced to look outside the country and sell their products in foreign markets. For many of these businesses the money they make overseas is now a huge part of their profit.

Companies have found what abroad

They need to spend more money and time improving their market positions abroad bc competition for these growing markets is intensifying. Amazon example.

Uniqueness of foreign marketing

Comes from the range of unfamiliar problems and variety of strategies needed to cope with different levels of uncertainty encountered in foreign markets.

Unpredictable elements that can affect international marketing are

Competition, legal restraints, government controls, weather, natural disasters. Marketer can’t control these but they must adapt them in a manner consistent with a successful outcome.

Controllable elements

Product, price, promotion, distribution, research

Uncontrollable elements

Completion, politics, laws, consumer behaviors, level of tech

Domestic marketer

Promoting and selling products or services within a company’s home country

Uncertainty is created

By the uncontrollable elements of all business environments, but each foreign country which a company operates adds its own unique set of uncontrollable factors

The international marketing task

the diagram shows that international marketing involves managing controllable firm decision within uncontrollable domestic and foreign environments. Each layer influences the next, meaning marketers must adapt strategies to both home countries and global conditions.

How is doing business globally unpredictable

A county’s political, social, and economic environments can change drastically and rapidly. For example, China has transitioned from a state controlled economy to a market driven one that creates a confusing, unstable environment for foreign companies.

The uncontrollable foreign environment

When moving to an international marketing culture is forgein uncontrollable element. You cannot change a country’s culture you can only adjust your marketing mix to fit it. (4 ps)

Example of culture adjustment

Different cultures see actions and times in dif ways which can easily cause business failures if people do not understand these differences. Ex: in the US time is viewed strictly they start exactly on time otherwise it’s disrespectful. In Latin America time is flexible and relationship building is more important than rushing into a meeting.

Self reference criterion

Unconscious reference to one’s own cultural values, experiences and knowledge as a basis for decisions. Ex: people naturally assume how things work at home is how they work everywhere. Ex: US and how the view personal space. When someone gets too close we feel uncomfortable and move further away. That is our SRC. Unconsciously reacting. When marketers take time to look beyond their own self reference criteria the results are more positive. Ex: British manufacture ignoring their SRC knew they had to package the biscuits differently to accommodate the Japanese market.

The most effective way to control the influence of ethnocentrism and SRC is to

Recognize their effects on our behavior. Awareness and asking questions helps when doing business in another culture

To be globally aware is to

1) tolerance of and a willingness to learn about cultural differences

2) knowledge of cultures, history, world market potential, and global, economic, social, and limits k trends

Global awareness can be established

With personal connections in other countries

Factors favoring faster internationalization

Resource advantage- high tech or marketing based resources internationalize faster than traditional manufacturing firms

Market pressures- having a small domestic market combined with large production capacities pushes companies to look abroad sooner

Global networks- firms with key managers who possess strong international networks are able to speed up the expansion process

Political vs social vs economic measures?

They track dif parts of human society governance, wealth, and community life and they influence and shape one another.

Political- focus on power, governance law which can dictate economic growth. Ex: political decision to raise minimum wage shifts economic distribution and improves social health.

Economic: wealth and financial security dictate a populations quality of life, access to school

Social: cultural norms, public opinion

Ex: growing public awareness about environmental concerns can reshape a nations political platform and force companies to adopt to green economic practices

Ethnocentrism

Notion that people in one's own company, culture, or country know best how to do things

International business

Performance of business activities such as pricing, promotion, product, placement across national borders