MKTG 311 1st Edition Lecture 25 Outline of Last Lecture I. Retail Communication- Store layoutII. Grid Layout versus Free Flow LayoutIII. Non-store RetailingIV. Global Perspective on World Trade from 12th editionV. Economic ConsiderationsA. Indicators of Economic Health- GDP and balance of tradeB. Level of Economic DevelopmentOutline of Current Lecture I. Economic ConsiderationsII. Political/ Regulatory Environment ConsiderationsIII. Cultural Environment ConsiderationsIV. The Global Marketing Environment- 4 Major TrendsV. The Global Marketing EnvironmentVI. Decide how to enter the market- Figure 7-5(Old Edition: 7-6)Current LectureI. Economic Considerations- Economic Infrastructure of the country considering entering:- Stability of the financial system, communication system, transportation system, distribution system.- Currency exchange rate- Price of one country’s currency expressed in terms of another country’s currency.- Consumer income and purchasing power- Average income in the country and how is it distributed across the country.II. Political/ Regulatory Environment Considerations for entering the market:These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- Stability of the government, how receptive is the government to multinational firms.- PRS: Political Risk Services: They conduct political risk analysis for 140 countries= internal turmoil, external conflict, government restrictions, tariffs to other trade barriers.III. Cultural Environment Considerations- Cultural Values (2Types)- Collectivist: Community is more important than individual goals. People tend to view themselves as members of groups and feel the needs of groups are important than the needs of the individual. Example: Asian, particularly China, Greece, Taiwan, and Thailand.- Individualist: Attach more important to personal goals. Example: US and English speaking nations.- Cultural Symbols- How does the meaning of different symbols vary in different cultures? Knownas Semiotics- Japanese: Superstitious about the number 4 = Shi = Death- Ethnocentrism- Individuals prefer to try products made in their own culture over those made elsewhere, in some cases, they may actually feel it is ethically wrong to purchase outside their culture.Factors to Succeed for FirmsIV. The Global Marketing Environment- 4 Major Trends1. Decline in protectionismRoadblocks in the Global Market1. Import quotas: Limitations on the amount of product allowed to enter a country. Makes domestic goods more expensive, due to absence of cheaper, foreign goods. Example: Russian meat market and US sugar market- 70+ years.2. Embargos: Extreme quota that prohibits specified foreign goods entirely. Example: US and Cuba (Rum and Cigars)3. Tariffs: Tax on imported goods, gives domestic competitors an advantage as the tax is applied to imports. Average tariff for manufactured goods- 4%. Example: EUcountries have a 10% tariff on Japanese auto imports.4. Red Tape or BureaucracyV. The Global Marketing Environment- GATT (General Agreement on tariffs and trade) lobbying group, grew into WTO (World Trade Organization) in 1995- 150 members. Purpose: Freeing World Tradeand eliminating trade barriers and tariffs. *Let to 200,000 tariff reductions- Economic Communities: Groups of countries that work together to promote world among themselves and then together they have more power.1. Largest: EU- 27 member countries 500M consumers. 16 countries shape the Euro.2. NAFTA: 450M consumers3. Asian Free Trade Agreement: Not as formal, more loosely organizedControl is a function of commitment and riskVI. Decide how to enter the market- Figure 7-5(Old Edition: 7-6)4 ways to enter the global market1. Exporting: Produce the goods in one country, sell them in another.- Direct: On their own- Indirect: Rely on an intermediary.- Positive: Great way to try out the global market2. Licensing: One firm (the licenser) gives another firm (the licensee) the right to produce and market the product in the foreign market.- Positive: Fewer barriers to entry than exporting- Negative: Give up some control over production and marketing- Franchising- Contract Manufacturing: Foreign Manufacturers the product according to stated specifications.- Contract Assembly: Foreign firm assembles the product, but does not manufacture