Marketing chapter 7a understanding and reaching global consumers and market

McGraw-Hill/Irwin

Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.


LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 7, YOU SHOULD BE ABLE TO:

LO1

Describe the nature and scope of world trade from a global
perspective and its implications for the United States.

LO2

Identify the major trends that have influenced the landscape of
global marketing in the past decade.

Identify the environmental factors that shape global marketing
LO3

efforts.

7-2


LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 7, YOU SHOULD BE ABLE TO:

LO4

Name and describe the alternative approaches companies use to
enter global markets.

LO5

Explain the distinction between standardization and customization
when companies craft worldwide marketing programs.

7-3


MATTEL’S GLOBAL MARKETING IS MORE THAN CHILD’S PLAY

Slide 7-5


DYNAMICS OF WORLD TRADE

LO1

WORLD TRADE FLOWS

 Global Perspective

•

Countertrade

•

Trade Feedback Effect

 United States Perspective

•

Gross Domestic Product (GDP)

•

Balance of Trade

7-5


DYNAMICS OF WORLD TRADE

•

World Trade Flows

– Dollar value of world trade has more than doubled in past decade and
will exceed $12.5 trillion in 2009

– Manufactured gods and commodities account for 75 percent of world
trade

– Service industries represent the other 25 percent

Slide 7-6

DYNAMICS OF WORLD TRADE

•

World Trade Flows

– Reflects interdependencies among industries, countries, and regions
– Manifests in country, industry, and regional exports and imports

Slide 7-6


DYNAMICS OF WORLD TRADE

•

Global Perspective

– U.S., Europe, Canada, China, and Japan account for more than twothirds of world trade

– Approximately 15 – 20 percent of world trade involves countertrade
– A country’s imports affect its exports, and vise versa – trade
feedback effect

Slide 7-6


DYNAMICS OF WORLD TRADE

•

United States Perspective

– Gross domestic Product (GDP)
– Balance of Trade
–

Exports vs. Imports

– Three largest importers of U.S. goods and services are Canada,
Mexico, and Japan

– The four largest exporters to U.S. are Canada, China, Mexico, and
Japan

Slide 7-6


FIGURE 7-1 World trade flows for goods and commodities within and
between geographic regions ($ billions U.S.)

7-10


DYNAMICS OF WORLD TRADE

LO1

COMPETITIVE ADVANTAGE OF NATIONS

 Porter’s “Diamond”

•

Factor Conditions

•

Demand Conditions

•

Related and Supporting Industries

•

Company Strategy, Structure, and Rivalry

 Economic Espionage Act (1996)
7-11


DYNAMICS OF WORLD TRADE

•

Competitive Advantage of Nations – Porter’s “Diamond”

–

Factor Conditions

•

Reflect a nation’s ability to turn its natural resources, education, and
infrastructure into a competitive advantage

–

Demand conditions

•

Include both the number and sophistication of domestic customers for
an industry’s product

Slide 7-6


DYNAMICS OF WORLD TRADE

•

Competitive Advantage of Nations – Porter’s “Diamond”

–

Related and Supporting Industries

•

Firms and industries seeking leadership in global markets need
clusters of world-class suppliers that accelerate innovation

–

Company Strategy, Structure, and Rivalry

•

Factors include conditions governing the way a nation’s businesses
are organized and managed, along with the intensity of domestic
competition

Slide 7-6


FIGURE 7-2 Porter’s diamond of national competitive advantage: 4 key
elements on why some countries become world leaders

7-14


DYNAMICS OF WORLD TRADE

•

Competitive Advantage of Nations – “The Dark Side”

–

Economic Espionage

•

Clandestine collection of trade secrets or proprietary information
about competitors

–

Economic Espionage Act (1996)

•

Theft of trade secrets by foreign entities a federal crime in the U.S.

Slide 7-6


Concept Check

1. What is the trade feedback effect?

A: The phenomenon in which a country’s imports affect its
exports and vice versa.

Slide 7-11

Concept Check

2. What variables influence why
some companies and industries
in a country succeed globally
while others lose ground or fail?

A: (1) factor conditions; (2) demand conditions; (3) related and
supporting industries; and (4) company strategy, structure, and
rivalry.

Slide 7-12


MARKETING IN A BORDERLESS ECONOMIC WORLD

•

Decline of Economic Protectionism

(Trends)

1.
2.
3.
4.

Gradual decline of economic protectionism by individual countries
Formal economic integration and free trade among nations

Global competition among global companies for global customers
Development of networked global marketplace

Slide 7-13


MARKETING IN A BORDERLESS
ECONOMIC WORLD
TREND 1—DECLINE OF ECONOMIC PROTECTIONISM

•

Decline of Economic Protectionism

–

Practice of shielding one or more industries within a country’s economy
from foreign competition, usually through tariffs and quotas

Slide 7-13


MARKETING IN A BORDERLESS
LO3

ECONOMIC WORLD
TREND 1—DECLINE OF ECONOMIC PROTECTIONISM

 Protectionism
 Tariffs

 Quotas
 General Agreement on
Tariffs and Trade (GATT)

 World Trade Organization (WTO)
7-20


FIGURE 7-3 Protectionism hinders world trade through tariffs and quotas
policies of countries, raising prices and limiting supply

7-21


MARKETING IN A BORDERLESS
LO3

ECONOMIC WORLD
TREND 2—RISE OF ECONOMIC INTEGRATION

 European Union

•

Euro

 North American Free Trade Agreement (NAFTA)

 Asian Free Trade Agreements
7-22

Euro Launch TV Ad
What are the benefits of economic integration?

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are needed to see this picture.

7-23


FIGURE 7-4 The European Union in 2007 consists of 27 countries with more
than
500 million consumers

7-24


MARKETING IN A BORDERLESS
LO3

ECONOMIC WORLD
TREND 3—GLOBAL COMPETITION

•

A New Reality: Global Competition among Global Companies for
Global Consumers

 Global Competition

•

Divisions or Subsidiaries

 Strategic Alliances

7-25