Chapter 7 Global Marketing The increasing globalization of markets affects not only large U S corporations like Kraft which actively search out new markets but also small and medium sized businesses that increasingly depend on goods produced globally to deliver their products and services In the United States the market has evolved from a system of regional marketplaces to national markets to geographically regional markets e g Canada and the United States together to international markets and finally to global markets Globalization refers to the processes by which goods services capital people information and ideas flow across national borders Global markets are the result of several fundamental changes such as reductions or eliminations of trade barriers by country governments the decreasing concerns of distance and time with regard to moving products and ideas across countries the standardization of laws across borders and globally integrated production processes Countries that score well on the scale represent the best markets for globalized products and services those lowest on the scale represent the most troublesome markets Yet the recent financial meltdown in global markets also has led to suggestions of de globalization especially as flows of capital reverse and global trade shrinks Growth of the Global Economy globalization of marketing and production Changes in technology especially communications technology have been the driving force for growth in global markets for decades The telegraph radio television computer and Internet increasingly connect distant parts of the world Today communication is instantaneous Sounds and images from across the globe are delivered to TV sets radios and computers in real time which enables receivers in all parts of the world to observe how others live work and play The globalization of production also known as off shoring refers to manufacturers procurement of goods and services from around the globe to take advantage of national differences in the cost and quality of various factors of production e g labor energy land capital Not all offshoring is about inexpensive labor The growth of global markets also has been facilitated by organizations that are designed to oversee their functioning Perhaps the most important of these organizations is represented by the General Agreement on Tariffs and Trade GATT The purpose of the GATT is to lower trade barriers such as high tariffs on imported goods and restrictions on the number and types of imported products that inhibited the free flow of goods across borders Later the GATT was replaced by the World Trade Organization WTO The WTO differs from the GATT in that the WTO is an established institution based in Geneva Switzerland instead of simply an agreement Furthermore the WTO represents the only international organization that deals with the global rules of trade among nations Its main function is to ensure that trade flows as smoothly predictably and freely as possible The WTO also administers trade agreements acts as a forum for trade negotiations settles trade disputes reviews national trade policies and assists developing countries in their trade policy issues through technical assistance and training It has over 150 members The International Monetary Fund was conceived in 1944 and the initial members signed the agreement in 1945 The primary objective of the IMF is to promote international monetary cooperation and facilitate the expansion and growth of international trade Along with the IMF the World Bank Group is dedicated to fighting poverty and improving the living standards of people in the developing world It is a development bank that provides loans policy advice technical assistance and knowledge sharing services to low and middle income countries in an attempt to reduce poverty Thus the key difference between the IMF and the World Bank is that the IMF focuses primarily on maintaining the international monetary system whereas the World Bank concentrates on poverty reduction through low interest loans and other programs Both organizations affect the practice of global marketing in different ways but together they enable marketers to participate in the global marketplace by making it easier to buy and sell financing deserving firms opening markets to trade and raising the global standard of living which allows more people to buy goods and services However these organizations also have been criticized by a diverse group of nongovernmental organizations religious groups and advocates for workers and the poor One of the most persuasive arguments that anti globalization groups use is that many of the problems related to globalization can be attributed to the seemingly insatiable appetite of countries in North America and Europe as well as Japan and other industrialized nations for natural resources oil gasoline timber food and so forth As the industrialized West has put into place laws that protect workers rights workers safety and the environment U S firms also have outsourced production to less developed countries that either have no such laws or don t enforce them Without laws to protect workers and the environment the factories that produce these goods often exploit both the workers and the environment of these countries Industrialized nations obtain the goods they crave at low costs but at what price to the country that provides them We consider this point in Ethical and Societal Dilemma 7 1 Assessing Global Markets Because different countries with their different stages of globalization offer marketers a variety of opportunities firms must assess the viability of various potential market entries As illustrated in Exhibit 7 1 we examine four sets of criteria necessary to assess a country s market 1 economic analysis 2 infrastructure and technological analysis 3 government actions or inactions and 4 sociocultural analysis Information about these four areas offers marketers a more complete picture of a country s potential as a market for products and services 1 Economic Analysis Using Metrics o The greater the wealth of people in a country generally the better the opportunity a firm will have in that particular country o A firm conducting an economic analysis of a country market must look at three major economic factors using well established metrics 1 the general economic environment 2 the market size and population growth rate and 3 real income I Evaluating the General Economic
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