Chapter 5 Rewards of Global Marketing world 10 31 2014 Global Marketing marketing that targets markets throughout the Global Vision recognizing and reacting to international marketing opportunities using effective global marketing strategies and being aware of threats from foreign competitors in all markets Importance of Global Marketing to the United States o Gross Domestic Product GDP the total market value of all final goods and services produced in a country for a given time period o The United States derives 14 of GDP from world trade o More than 10 million Americans hold jobs that are supported by exports annually o U S businesses export over 2 1 trillion in goods and services o Every U S state has realized net employment gains directly attributed to foreign trade The Impact of Trade and Globalization o Negatives of global trade Millions of Americans have lost jobs due to imports production shifts abroad or outsourcing of tech jobs Millions of others fear losing their jobs especially at those companies operating under competitive pressure Employers often threaten to outsource jobs if workers do not accept pay cuts Service and white collar jobs are increasingly vulnerable to operations moving offshore o Job Outsourcing sending U S jobs abroad Leads to corporate growth efficiency productivity and revenue growth Cost saving is a key driver o Benefits of globalization Expands economic freedom spurs competition and raises the productivity and living standards of people in countries that open themselves to the global marketplace Multinational Firms For less developed countries it offers access to foreign capital global export markets and advanced technology Multinational Corporation a company that is heavily engaged in international trade beyond exporting and importing Stages of Global Business Development o 1 Companies operate in one country and sell into others o 2 Set up foreign subsidiaries to handle sales o 3 Operate an entire line of business in another country o 4 Virtual operation Are Multinationals Beneficial o Some multinationals have shifted to low tax countries which has reduced corporate income tax payments in the U S o Capital Intensive using more capital equipment than labor in the production process Global Marketing Standardization production of uniform products that can be sold the same way all over the world o Multidomestic Strategy subsidiaries of multinational firms are allowed to compete independently in domestic markets External Environment Faced by Global Marketers Culture o A company that does not understand a country s culture is doomed to failure in that country o Language is another important aspect of culture that can create problems for marketers Economic and Technological Development o In general complex and sophisticated industries are found in developed countries and more basic industries are found in less developed countries o Gross National Income GNI a country s GDP together with its income received from other countries mainly interest and dividends Average is 11 614 Norway has the highest with 48 620 Political Structure and Actions o The least amount of business regulation fosters the strongest economies o Tariff a tax levied on goods entering a country Will either reduce the profits of the firms paying the tariff or raise prices to buyers or both o Quota limit on the amount of a product entering a country Several U S companies have sought quotas as a means of protection from foreign competition o Boycott exclusion of products from a country Governments use boycotts to exclude companies from countries with which they have a political dispute o Exchange Control a law compelling a company earning foreign exchange from its exports to sell it to a control agency usually a central bank A company wishing to buy goods abroad must first obtain a foreign currency exchange from the control agency o Market Grouping several countries agree to work together to form a common trade are that enhances trade opportunities Most well know is the European Union EU o Trade Agreement an agreement to stimulate international Mercosur the largest Latin American trade agreement which includes Argentina Bolivia Brazil Chile Colombia Ecuador Paraguay Peru Uruguay and Venezuela o Uruguay Round trade agreement to dramatically lower trade barriers worldwide Entertainment Pharmaceuticals Integrated Circuits and Software 20 years Protects patents copyrights and trademarks for Computer programs receive 50 years of protection trade Semiconductor chips receive 10 years of protection Financial Legal and Accounting Services Foreign applicants cannot be held to higher standards than domestic partners Agriculture Textiles and Apparel World Trade Organization WTO a trade organization that replaced the old General Agreement on Tariffs and Trade GATT o North American Free Trade Agreement NAFTA an agreement between Canada U S and Mexico that created the world s then largest free trade zone o Dominican Republic Central America Free Trade Agreement CAFTA DR trade agreement instituted in 2005 that includes Costa Rica the Dominican Republic El Salvador Guatemala Honduras Nicaragua and the U S o European Union EU a free trade zone encompassing 28 European countries o World Bank an international bank that offers low interest loans advice and information to developing nations o International Monetary Fund IMF international organization that acts as a lender of last resort providing loans to troubled nations and also works to promote trade through financial cooperation o Group of Twenty G 20 a forum for international economic development that promotes discussion between industrial and emerging market countries on key issues related to global economic stability Demographic Makeup o Population density o Marketers need to know whether the population is mostly urban or rural o Age is another key demographic consideration Natural Resources o Shortages in natural resources create International dependencies Shifts of wealth Export opportunities if resources are abundant Stimulus for military intervention Inflation and recession Global Marketing by the Individual Firm A company should consider entering the global marketplace only after its management has a solid grasp of the global environment Five methods of entering the global marketplace o Exporting selling domestically produced products to buyers in other countries Buyer for Export an intermediary in the global market that assumes all ownership
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