CM

Global Trade and Marketing Strategies

Selling and Global Business Concept Overview

  • Goal: To understand the complexities of international business and global trade dynamics.
  • Key Terms Introduced:
    • Ethnocentrism: The belief in the superiority of one's own nation or ethnic group, often leading to prejudice against other cultures.
    • Barter vs. Countertrade:
    • Barter: Exchange of goods for goods without using money.
    • Countertrade: A form of barter that occurs at an international level, trading goods directly instead of using dollars.

Key Players in Global Trade

  • Top Three Countries in Imports and Exports:
    1. United States
    2. China
    3. Germany
  • Import Definition: The act of bringing goods into a country.
  • Export Definition: The act of sending goods out from a country.
  • Unique Fact: Germany's leading position in trade highlights its strong economy despite geographical and population size limitations.

Economic Indicators

  • Gross Domestic Product (GDP):
    • Definition: Measure of the economic performance of a country, indicating the total value of all goods and services produced.
    • Importance: Crucial for understanding potential market viability and business operations in foreign countries.

Understanding Global Economy and Globalization

  • Globalization: The increasing interdependence of national economies through trade and financial flows.
    • Key Concept: Countries are working together economically, culturally, politically, and technologically.
    • Interdependence: Highlights nations’ shared interests and need for cooperation, although some nations (e.g., India) resist full globalization.

Attributes of Global Business Strategies

  1. Protectionism:
    • Definition: Shielding domestic industries from foreign competition through tariffs and quotas.
    • Impact: Seen in various nations, including the United States, with policymakers pushing for balance in trade relationships.
  2. Economic Integration:
    • Definition: The process of combining economies, often leading to purchasing goods from different countries without awareness.
  3. Global Marketplace:
    • Platforms: Websites like Amazon, eBay, and Etsy are examples of how businesses can reach global consumers.
  4. Economic Espionage:
    • Definition: The attempted theft of trade secrets and confidential business information on an international scale.
    • Notable Fact: 23 nations target U.S. businesses regularly for espionage, costing billions in preventive measures.

Political and Cultural Considerations

  • Culture's Role in Business:
    • Cross-Cultural Analysis: It's vital to understand cultural differences when conducting business internationally.
    • Example: Spain's afternoon siesta affects business hours and expectations.

Customs and Symbols

  • Customs: Behaviors and expectations in business that vary by culture, such as tipping practices and greeting rituals.
  • Cultural Symbols: Representations within a culture that should not be misused or disrespected, like national flags.
  • Language: Importance of accurate translation and understanding of meaning; misuse can lead to marketing blunders (e.g., mistranslated slogans).

Types of Business Strategies in Global Markets

  1. International Firm:
    • Definition: A business that uses the same marketing strategy abroad as it does at home. Example: A U.S. company replicates its American marketing approaches in countries like Brazil and China.
  2. Multinational Firm:
    • Definition: A business that adapts marketing strategies for each country it operates in. Example: Snuggle fabric softener changes brands and scents to suit different cultural preferences.
  3. Transnational Firm:
    • Definition: A business that views the global market as a single platform and standardizes its products while making minor adjustments for cultural relevance. Example: Coca-Cola and McDonald’s maintain recognizable branding worldwide while tweaking products minimally for local markets.

Market Entry Strategies

  1. Exporting:
    • Risk Level: Low risk; low reward.
    • Description: Selling domestically produced products in foreign markets.
  2. Licensing:
    • Risk Level: Moderate risk; moderate reward.
    • Description: Allowing another company rights to produce and sell its products. Potential for brand dilution exists.
  3. Joint Venture:
    • Risk Level: Higher risk; higher reward.
    • Description: Collaboration with a local business where both parties share resources and expertise. Cultural differences may present challenges.
  4. Direct Investment:
    • Risk Level: Highest risk; highest potential reward.
    • Description: Establishing physical operations in the foreign market, hiring local personnel, and investing in local infrastructure.

Product and Promotion Strategies

  • Product Extension: Selling the same product in the new market with no modifications.
  • Adaptation: Modifying products to meet local preferences or standards.
  • Product Invention: Developing unique products that cater specifically to a new market’s needs.

Distribution Challenges

  • Methods: Transporting goods to foreign markets via ships, air, or overland means like rail and trucking.
  • Terms:
    • Dumping: Selling goods below cost in foreign markets to offload surplus.
    • Gray Market: Distribution through unauthorized channels, often using alternative delivery methods or networks.

Conclusion

  • Final Thoughts: Understanding and navigating these various aspects are crucial for success in international business.
  • Ensure comprehension of all definitions and be ready to apply this knowledge in practical contexts, including exams and assignments.
  • Remember: Homework due the day after this session focused on the covered chapter.