Tuesday, February 9, 2016

INTERNATIONAL
MARKETING
LBSIM, New Delhi

No institution whether a business , a university ,

or hospital can hope to survive let alone to
succeed unless it measures up to the standards
setup by leaders in its field any place in the
world.
---- Peter F Drucker

Tuesday, February 9, 201

6

MANAGEMENT CHALLENGES OF
21ST CENTURY

It refers to performance of trade and investment

activities by firms across national borders .
Most important thing is crossing the border.
Firms involve in organising , sourcing,
manufacturing, marketing, and other value
addition in business on international level.
They seek foreign customers , engage in
collaborative relationship .
Firms and nations exchange many physical and
intellectual assets .

Tuesday, February 9, 201

6

INTERNATIONAL TRADE

On going economic integration and growing

interdependency.
Internationalisation means tendency of firms to
go for systematically increase the international
dimension.
Globalisation means compression of time and
space.

leads to substantial increase in volume and variety

of goods ,services, capital flows.
Also it leads to rapid diffusion of products ,
technology, knowledge regardless of origin .

Tuesday, February 9, 201

6

GLOBALISATION OF MARKETS

It

Walmart

$401

24.6%

Ford Motor

$146.3

51.9 %

General Electric

$182.5

53.7 %

CitiGroup

$52.8

74.8 %

Hewlett-Packard

$118.4

68.2 %

Boeing

$60.9

38.9 %

Intel

$37.6

85.4%

Coca-Cola

$31.9

77.0%

Apple

$36.5

46%

Starbucks

$10.4

20.8%

Tuesday, February 9, 201

6

COS. , GLOBAL REV(BILLIONS),

% OF BUSINESS FROM OUTSIDE US

WORLD 1980

2005

2009

2010

2014

GDP
10669 22137 32148
(current
prices)
USD
Billions
Investme 24.72 24.11 22.57
nt of
GDP%
Inflation 17.23 27.69 4.55
%

45514

57843

61693

72689

22.48

21.59

22.58

22.11

3.74

2.45

3.67

2.76

Exports
USD
Billions

12889

15745

18333

21916

2295

1990

4172

2000

7892

Tuesday, February 9, 201

6

WORLD AT A GLANCE

INDIA

2013-14

GDP USD Trillion

1.841

GDP USD Trillion ( PPP)

4.793

GDP Growth

5.6%%

GDP Per Capita USD

1124 , 3176 (PPP)

GDP % Contributors
Inflation

Service 57, Ind 28, Agri

15
9% plus

Exports( USD Billion)

305

Imports (USD Billion)

489

FDI in India (USD Billion) 2000-2014

309

FDI by India ( USD Billion) 2000-2014

90

Tuesday, February 9, 201

6

INDIA AT A GLANCE (MARCH 2014)

Growth in world trade in benefitting consumers.

It is mainstay of many emerging countries.
Bolstered the GDP growth in such countries.

Tuesday, February 9, 201

6

INTERNATIONAL TRADE & ITS

IMPACT

For

example, Indian Pharma companies led by

Ranbaxy is a live example of international trade.
Apollo tyres and CEAT were primarily domestic co.
till they set up plants in Sri Lanka & Africa.

World exports have grown by 100 times in last

half century.
8

Seek opportunities for growth

Earn higher margins & profits
Gain new ideas about products & services
Better serve key customers
Capacity utilisation
Gain access to lower cost or better value factors of
production
Grow in competition
Risk mitigation
Better relationship abroad

Tuesday, February 9, 201

6

WHY DO FIRMS PURSUE

INTERNATIONALIZATION
STRATEGIES ?

Competitive edge

Worldwide integration of economies & Continued lowering of

barriers

Technology edge and infrastructural development.

Improvement in logistics

Development of new goods/services

Major advances in communication, e commerce

Companies are highly linked, interdependent

Capital markets are regulated but becoming global

Excess capacity exists in wide no. of countries

Demand is shifting in new economies

Tuesday, February 9, 201

6

IMPORTANCE OF INTERNATIONAL
MKTG

Rapid growth in world trade

Experience transfers and benchmarking.

10

Tuesday, February 9, 201

6

GLOBAL PERSPECTIVE

Global commerce thrives during peace time.

In a way global trade enhances global peace.
All the activities of development, production ,
marketing requires millions of people & their
coordinated efforts.
All the interaction brings in the mutual gains ,
business relationship, personal relationship & mutual
understanding.

11

 IM

is the performance of business

activities designed to plan , price ,
promote & direct the flow of a companys
goods and services to consumers or users
in more than one nation for a profit.

Tuesday, February 9, 201

6

INTERNATIONAL MARKETING

12

Tuesday, February 9, 201

6

INTERNATIONAL MARKETING

It is defined as process of focusing firms resources on

international marketing opportunities whether while
competing within the domestic market against
international companies or even when the firm goes
beyond national frontiers to market goods and
services .

13

IM is the performance of business activities that

direct the flow of goods and services to consumers
and user in more than one countries.

Tuesday, February 9, 201

6

INTERNATIONAL MARKETING

It offers an opportunity to a firm to prepare itself

to meet the challenges of catering to different
needs , wants , behavioral patterns and
perceptions of the consumers and users in various
countries , only when it markets the products
under its own brand umbrella.
14

Things never go in a planned way in IM

Powerful economic ,technological , industrial,
political , demographical factors affect IM
Global terrorism, armed conflict do change the
scenario.
Recessionary trends change the face of IM
drastically.

Tuesday, February 9, 201

6

NATURE OF INTERNATIONAL
MARKETING

15

International firm not only has to satisfy its

corporate objectives but it also has to bring about
customer satisfaction through coordinated
efforts.
International marketing is simply an attitude of
mind , the approach of a company with a truly
global outlook, seeking its profits impartially
around the world , home market included , on a
planned and systematic basis.

Tuesday, February 9, 201

6

INTERNATIONAL MARKETING

16

When a company decides to go international , it

must
Go

Tuesday, February 9, 201

6

INTERNATIONAL MARKETING

beyond the comfort zone of known market

GM, Mitsubishi , Microsoft, Exxon, Sony

have done it.

They

should be ready to face the uncertain scenario .

17

The rapid growth of WTO & regional trade

organizations like NAFTA & EU.
Free market system acceptance in BRIC
countries, Latin America, East Asian countries,
& Eastern Europe including CIS countries.
Impact of internet
Mandate to properly manage the resources and
global environment.

Tuesday, February 9, 201

6

FACTORS AFFECTING GLOBAL

BUSINESS

18

Domestic Company to a Global Company

No Direct Foreign Marketing
Infrequent Foreign Marketing
Regular Foreign Marketing
International Marketing
Global Marketing

Tuesday, February 9, 201

6

STAGES OF IM INVOLVEMENT

19

Stages of International Marketing

Involvement
In
In general,
general, firms
firms go
go through
through five
five different
different phases
phases in
in going
going
international:
international:
No
No Direct
Direct Foreign
Foreign Marketing
Marketing
Infrequent
Infrequent Foreign
Foreign Marketing
Marketing
Regular
Regular Foreign
Foreign Marketing
Marketing
International
International Marketing
Marketing
Global
Global Marketing
Marketing

Tuesday, February 9, 201

6

FACTORS INFLUENCING INT.

MARKETER

21

The International Marketing Task

Foreign Environment
(Uncontrollables)
7. Structure of
Distribution

1. Competition
Domestic environment
(Uncontrollables)

Environmental
uncontrollables
country market A

(Controllables) 1. Competition
Price
Product
2. Technology
Target
5. PoliticalEnvironmental
7
Market
Legal
uncontrollables
6. Geography and
country
Promotion Place or 2 .Technology
Infrastructure
market B
Distribution
4.
Culture
Environmental
3. Economy
uncontrollable
5. Political3. Economy
s
Legal
country
market C
4.
Culture

Tuesday, February 9, 201

6

IM VS DOMESTIC MARKETING

23

Internationalization may thought as 1) Process

2) An end result 3) A way of Thinking
A company becomes more involved and
committed to serve markets outside home
country.
A multinational company treats each foreign
market as separate and distinct ,developing
differentiated products and marketing specifically
for each of the markets.
The global companies operate as if entire world ,
or a major region of the world , were a single
entity .Such companies would sell the same
product(s) in the same way everywhere.

Tuesday, February 9, 201

6

INTERNATIONAL MKTG & GLOBAL

MKTG

24

Competitive capabilities in the domestic markets

Motivation for going international
Commitment for owners & top management
Skills, knowledge and resources
Experience and training

Tuesday, February 9, 201

6

IS A COMPANY READY TO ENTER FOREIGN

MKT?

25

 SRC

: Self reference criterion : It is

unconscious reference to ones own
cultural values, experiences,
knowledge as the basis for decisions.
Ethnocentrism is the notion that
ones own culture or company knows
best how to do things.

Tuesday, February 9, 201

6

MAJOR OBSTACLES

26

Define the business problem or a goal in home

country cultural traits , habits or norms
Define the business problem or goal in foreign
country cultural traits , habits or norms thru
consultation with natives of target country .
Make no value judgments.
Isolate SRC influence in the problem & examine
it carefully to see how it complicates the
problems.
Redefine the problem without the SRC influence
and solve for the optimum business goal
situation.

Tuesday, February 9, 201

6

STEPS TO CHECK SRC &

ETHNOCENTRICISM

27

Tolerance towards cultural difference

Knowledge of culture, history, world market
potential,
Knowledge of global economic, social and political
trends

Tuesday, February 9, 201

6

DEVELOPING GLOBAL AWARENESS

28

Ethnocentric Approach
Polycentric Approach
Regiocentric Approach
Geocentric Approach

Tuesday, February 9, 201

6

EPRG FRAMEWORK

29

Strategic Orientation: EPRG Framework

Domestic Marketing

(Ethnocentric)

Extension

Multi-Domestic
Marketing

(Polycentric)

Global Marketing

(Regio/Geocentric)

Strategic Orientation: EPRG Framework

Generally, four distinctive approaches dominate strategic thinking in
international marketing:

1. Ethnocentric or Domestic Marketing Extension Concept:

Home country marketing practices will succeed elsewhere

without adaptation; however, international marketing is
viewed as secondary to domestic operations
2. Polycentric or Multi-Domestic Marketing Concept:

Opposite of ethnocentrism
Management of these multinational firms place importance
on international operations as a source for profits
Management believes that each country is unique and
allows each to develop own marketing strategies locally

Strategic Orientation: EPRG Framework

Generally, four distinctive approaches dominate strategic thinking in
international marketing:

3. Regiocentric:

Sees the world as one market and develops a standardized

marketing strategy for the entire world
4. Geocentric:

Regiocentric and Geocentric are synonymous with a Global

Marketing Orientation where a uniform, standardized
marketing strategy is used for several countries, countries in
a region, or the entire world

Internationalization may thought as 1) Process

2) An end result 3) A way of Thinking
A company becomes more involved and
committed to serve markets outside home
country.
A multinational company treats each foreign
market as separate and distinct ,developing
differentiated products and marketing specifically
for each of the markets.
The global companies operate as if entire world ,
or a major region of the world , were a single
entity .Such companies would sell the same
product(s) in the same way everywhere.

Tuesday, February 9, 201

6

INTERNATIONAL MKTG & GLOBAL

MKTG

33

Three factors limit to general applicability of this

approach.
Very significant differences in consumer demands
and in marketing requirements exist country to
country.
As income rise , many consumers tend to become
less price sensitive and willing to pay more to get
products and services.
Thirdly , a move toward more flexible production
systems in some industries has lowered (though
failed to eliminate) the cost advantage of very
large scale production.

Tuesday, February 9, 201

6

LIMITATIONS

34

Company

Global Revenues

% Revenue from

Wal-Mart

($Bilions)
401

Outside US
24 %

Ford

146

51.9

GE

182

53.7

Citi group

52

74.8

HP

118

68.2

Boeing

60.9

38.9

Intel

37.6

85.4

Coca Cola

31

77.1

Apple

8.3

40.7

Starbucks

10.4

20.8

Tuesday, February 9, 201

6

SELECTED US COMPANIES & THEIR

INT TRADE

35

Tuesday, February 9, 201

6

JOHN DEERE ( US) VS. HYUNDAI(S

KOREA)

36

BILLION)
Country

Total trade Exports

Imports

Balance

Canada

429

204

225

-19

Mexico

305

129

176

-47

Japan

148

51

97

-46

China

366

69

297

-228

Germany

114

43

71

-28

UK

93

45

48

-3

South Korea 68

29

39

-10

Taiwan

46

18

28

-10

Dutch

48

32

16

+16

Italy

34

10

24

-14

Tuesday, February 9, 201

6

TOP 10 COUNTRIES TRADE WITH US($

37

In addition to U.S. economic assistance, a move toward

international cooperation among trading nations was
manifest in the negotiation (19861994) of the General
Agreement on Tariffs and Trade (GATT).

Tuesday, February 9, 201

6

International trade had ground to a halt following World

War I when nations followed the example set by the U.S.
passage of the Smoot-Hawley Act (1930), which raised
average U.S. tariffs on more than 20,000 imported goods to
levels in excess of 60 percent. In retaliation, 60 countries
erected high tariff walls, and international trade stalled,
along with most economies. A major worldwide recession
catapulted the worlds economies into the Great Depression
when trade all but dried up

38

Tuesday, February 9, 201

6

FOREIGN ACQUISITIONS OF US
COMPANIES

39

Buyer

Target

Sector

Amount ($

Stake %

mn)
696

NA

670

30

Videocon

Daewoo elec

Tata Tea

Energy

Con
Durable
beverages

Dr Reddy

Betapharm

Pharma

572

100

Suzlon

Hunsen

Energy

565

100

VSNL

Teleglobe

Telecom

239

100

Tata Coffee

Eight O Clock

Beverages 220

100

Tata Chem

Chemicals 113

36.5

Apeejay

Brunner
Mond
Premier foods

Bevereges 138

NA

Tata Steel

Millenium

Steel

131

100

Appollo

Dunlop

Tyres

66

100

Tuesday, February 9, 201

6

INDIAN COMPANIES ACQUIRING

FOREIGN FIRMS

40

Opportunities in global business abound for those

who are prepared to confront myriad obstacles
with optimism and a willingness to continue
learning new ways.
The successful businessperson in the 21st
century will have global awareness and a frame
of reference that goes beyond a region or even a
country and encompasses the world.
To be globally aware is to have (1) tolerance of
cultural differences and (2) knowledge of
cultures, history, world market potential, and
global economic, social, and political trends

Tuesday, February 9, 201

6

DEVELOPING GLOBAL AWARENESS

41

At global marketing , the profound change is seen

in the orientation of the company towards the
markets and its planning.
Company treats entire globe as its one market.
Market segmentation is no longer restricted to its
own countrys boundary
Entire operation orgn structure, source of
finance, production, marketing takes global
perspective.

Tuesday, February 9, 201

6

GLOBAL MARKETING

42

Developing new products

Developing relationship with suppliers,
distributors, even customers
Fewer but stronger global competitors
Enhanced price competition
Greater regional integration and government
regulations
Developing a marketing culture.

Tuesday, February 9, 201

6

MAJOR CONCERNS OF MARKETING

MANAGERS

43

A nations balance-of-payments statement presents an

overall view of its international economic position and is an
important economic measure used by treasuries, central
banks, and other government agencies whose responsibility
is to maintain external and internal economic stability.

Tuesday, February 9, 201

6

BALANCE OF PAYMENTS (1)

A balance of payments represents the difference between

receipts from foreign countries on one side and payments to
them on the other.
On the plus side ,balance of payments are merchandise
export sales; money spent by foreign tourists; payments to
the India for insurance, transportation, and similar
services; payments of dividends and interest on
investments abroad; return on capital invested abroad; new
foreign investments in India and foreign government
payments to the India .

44

Tuesday, February 9, 201

6

On the minus side are the costs of goods

imported, spending by Indian tourists overseas,
new overseas investments, and the cost of foreign
military and economic aid.
A deficit results when international payments
are greater than receipts. It can be reduced or
eliminated by increasing a countrys
international receipts (i.e., gain more exports to
other countries or more tourists from other
countries) and/or reducing expenditures in other
countries.

45

Tuesday, February 9, 201

6

A balance-of-payments statement includes three

accounts: the current account , a record of all
merchandise exports, imports, and services plus
unilateral transfers of funds;
The capital account , a record of direct
investment, portfolio investment, and short-term
capital movements to and from countries; and
the official reserves account , a record of exports
and imports of gold, increases or decreases in
foreign exchange, and increases or decreases in
liabilities to foreign central banks. Of the three,
the current account is of primary interest to
international business.

46

Business customs can be grouped into

imperatives , customs that must be recognized
and accommodated; electives , customs to which
adaptation is helpful but not necessary; and
exclusives , customs in which an outsider must
not participate.
An international marketer mustappreciate the
nuances of cultural imperatives, cultural
electives, and cultural exclusives

Tuesday, February 9, 201

6

DEGREE OF ADAPTATION

47

Tuesday, February 9, 201

6

IMPERATIVES

BEIJING, CHINA:
GermanChancellor Angela Merkel
and Chinese Prime Minister Wen
Jiabao toast after the EUChina
Business Summit at the Great Hall
of the People in Beijing.
The summit was boosted by the
settlement of a trade row that had
left 80 million Chinese-made
garments piled up in European
seaports, unable to be delivered to
shops under a quota pact agreed to
at the time.
Drinking half a bottle is a cultural
elective, but taking a sip is more of
an imperative in this case.

48

Tuesday, February 9, 201

6

49

THE FOUR RISKS IN

INTERNATIONALIZATION
02/09/16
50