Professional Documents
Culture Documents
General Overview
General Overview
1
General Overview
2
General Overview
3
General Overview
Levitt’s Globalization Concept
– Commonality of Wants and Desires Presumed
– Marketing Program Driven by Cost Considerations
– Minimizes Adherence to “Marketing Concept”
– Provides Cohesiveness and Order for Planning
– Management Led to Believe “controllables” are
actually controllable
4
General Overview
Economic Prosperity Derives from Trade
– Absolute Advantage
– Comparative Advantage
– Heckscher-Ohlin Factor Endowment Theory
– Foreign Direct Investment
– market imperfections
– market failure
– Multinational Enterprise
– internalization
– diversification
– eclectic
5
General Overview
Porter’s Comparative Advantage of Nations
– Focus on Firm’s “Value Chain”
– Highlights Government’s Role in Business Relations
– Evaluates Factors Employed to Create Value
– unique factors
– lowest production costs
– maximum market potential
– optimal risk-return tradeoff
– importance of strategic positioning
6
Porter’s Diamond of
National Competitive Advantage
GOVERNMENT
Firm Strategy
Structure
and Rivalry
Factor Demand
Conditions Conditions
8
General Overview
Multilateral Trade Organizations
– GATT (General Agreement on Tariffs and Trade)
– WTO (World Trade Organization)
– IMF (International Monetary Fund)
– IBRD (International Bank for Reconstruction and
Development--World Bank)
– Regional Development Banks
– Common Market Arrangements
– Free Trade Agreements
– Direct Foreign Aid Agencies
9
General Overview
Growth of Transnational/Multinational Enterprise
– Marshall Plan in the U.S.
– U.S. Foreign Direct Investment
– Development of Information Technology
– Market Failure to signal efficiencies and profits
– Desire to Diversify
– New, More Profitable Markets
– Response to Gov’t Policy which emphasized national
defense and internal market protection
10
General Overview
World Response to Multinationals and DFI
– Canada
– United States
– Western Europe
– Asia
– Developing Nations
– Newly Emerging Democracies
11
General Overview
Factors Shaping Attitudes Towards Multinationals
– Development Needs -- Pro and Con
– Technology Needs -- Pro and Con
– Risk Sharing Needs -- Pro and Con
– Market Organization Needs -- Pro and Con
– Government Policy Needs -- Pro and Con
12
Foreign Exchange
Function and Nature of Foreign Exchange Markets
– Transactions-- Currency Needs Credit
– Hedging -- Interest arbitrage Swaps
– Speculation
Monetary Institutions
– Commercial Banks
– Central Banks
– Money Markets
– Bond and Equity Markets
13
Foreign Exchange
Foreign Exchange
– Factors Affecting Demand
– Factors Affecting Supply
Dollar
Supply (Exports)
Df
De
Demand (Imports)
Qf Qe Quantity
14
International Trade and Foreign
Exchange
Demand and Supply of Foreign and Local Currancies
Relationship to Terms of Trade
– Product Price (in Canadian Dollars) / Product Price (in Yen)
Factors that Impact upon Volume of Trade
– Internal Efficiencies
– Financial Strength of Nations Currency and Credit
– Dynamic Innovativeness
15
Balance of Payments
Relationship between flows of financial assets within a
country over a year’s period.
– Current Account
– Exports and Imports
– Unilateral Transfers
– Net Trade Balance
– Net Capital Account Balance
– Capital Account
– Portfolio Investment
– Foreign Direct Investment
– Net Capital Account Balance
– Official Reserve Account
– Stock of Foreign Currencies
– Gold and other precious metals
– Bank IOUs etc.
16
Balance of Payments
Relationship Between Balance of Trade and Balance of
Payments
Relationship Between Balance of Trade and Exchange
Rates
Relationship Between Interest Rates and Capital
Account
Government’s Role in Affecting Trade, Exchange
Rates, and Balance of Payments
17
Public Policy Impact Chain
Economic
Political
Cultural
Demographic
18
Culture
What is Culture?
– Ways of thinking, viewing, and responding to stimuli
which is learned
– socialization
– acculturation
– values (terminal and instrumental)
Core Values of Cultures
– Canadian Asian Indian
– American Native Aboriginal Mexican
– European African Winnipeg
19
Culture
Cross-Cultural Analysis
– A systematic comparison of similarities and diff-erences
in material and behavioral aspects of culture.
– Descriptive
– Analytical/functional
– Outline of Elements in Cross-cultural Analysis
– Determine Relevant Motivations
– Determine Characteristic Behavior Patterns
– Determine Relevant Cultural Values
– Determine Important Institutions
– Determine Relevant Rules, Norms, and Laws
– Evaluate all the above with respect to mix variables
20
Culture
Group and Sub-group Identification
– Relevant In-Group Identities
– Relevant Out-Group Identities
– Boundaries Between In- and Out-Groups
Egocentrism
Ethnocentrism
– Ethnocentrism in the Extended Fishbein Model of
Consumer Behavior
Role of Country-Of-Origin in Purchase Decision
– “Made in Canada”
21
Culture
Nine Nations of North America
– New England
– The Foundry
– Quebec
– Dixie
– The Breadbasket
– The Empty Quarter
– MexAmerica
– Ecotopia
– The Islands
22
Culture
Culture and Change
– Cultural Borrowing
– Resistance to Change
– Change Congruency
– Strategies for Change
– planned
– unplanned
– Consequences of Cultural Intervention
– Examples
– Quebec Atlanta, GA
– Vietnam Faculty of Management
23
Political Environment
Types of Governments
– Formation and implementation of legislation
– Degree of Political Participation
– Orientation to Free Market
Nationalism
– Concept of the nation-state
– Economic Manifestations of Nationalism
– Conflict with Multinationalism
– Fear of Foreign Ownership and/or Control
24
Political Environment
Response to Nationalistic Fears
– Confiscation
– Expropriation
– Domestication
– Nationalization
– Direct Economic Sanctions
– exchange controls
– local content rules
– import restrictions
– tax controls
– gov’t intervention into factor resource markets
25
Political Environment
– Direct Political Sanctions
– Censure for Actions in Domestic Country
– Complaint Lodged with Multilateral Body
– Violence
– Issue of Foreign Direct Investment
– Need to Conduct Thorough Risk Analysis
– Factors of Importance to Identify
– Need to Consider the Method of Entry
– Patterns in Canada
– Canadians Investing into Other Economies
26
International Legal Environment
No Single International Law or Agency
– As Many Legal Systems as there are Nations
– Issues of Interest to Marketers
– Competition Rules Product Quality Rules
– Packaging Rules Warranty Law Advertising
– Price Maintenance Price Regulations
– Channel Agreements Patents, Trademark, & Copyright Law
– Transport/Distribution Environmental
Bases for Legal System
– Common vs Code Law
– Other Systems
27
International Legal System
Issue of Jurisdiction
– World Court
– International Court of Justice
– Determining Jurisdiction
– Jurisdictional Clauses in Contract
– Where Contract was Entered Into
– Where Provisions of the Contract were Performed
– Special Issues
Legal Recourse
– Why Not Litigate
– Why Litigate
28
International Legal Environment
– Options to Litigation
– Placate Agrieved Party
– Conciliation
– Arbitration
Protection of Intellectual Property Rights
– Difficulty of Policing Property Rights
– What is Counterfeit?
– Prior Use vs. Registration
– Conventions and Treaties
29
International Legal Environment
Marketing Laws: A Cross-Cultural Comparison
– Advertising
– Pricing
– Channel Relations
– Competition
– Extraterritoriality
– Transport/Distribution
30
Researching World Markets
Major Source of Error is a result of faulty information
Tools and techniques remain the same regardless of
domestic vs. international basis of research --
differences lie in application and the environmental
differences.
Major questions to ask:
– Can the Information be Collected?
– What are the Cost and Time requirements?
– How Reliable is the information?
– For what Purposes is the Information Being Collected?
– Is the Information Primary or Secondary?
– Does the Information Already Exist?
31
The Market Intelligence Gathering Process
International Issues
Identification and Definition Spatial and Cultural
of the Problem Multiple Perspectives
Lack of Market Knowledge
Selection of an Appropriate
Meaning of Concepts
Research Design
Response to Measurement
Selection of the Sample(s) Sample Equivalence
33
Market Intelligence: Problem
Formulation Issues
Spatial and Cultural Separation
Multiple Perspectives
Meaning of Ideas and Concepts
– Functional Equivalence
– Conceptual Equivalence
– Definitional Equivalence
– Temporal Equivalence
– Market Structure Equivalence
34
Market Intelligence Gathering:
Research Design Issues
Measurement Issues
– Single versus Cross-cultural Measurement
– Translation Issues
– Verbal Translation
• Back Translation
• Parallel Blind Translation
• Committee Translation
– Non-verbal Translation
– Scale Development Issues
35
Market Intelligence Gathering:
Research Design Issues
Sampling Issues
– Definition of the Population
– Representativeness of the Sample
36
Market Intelligence Gathering:
Secondary and Primary Data Issues
Data Issues
– Accuracy
– Comparability
– Reliability
– Affordability
37
Market Intelligence Gathering:
Sources of Information
Secondary Sources
– Federal Government
– Department of Foreign Affairs
– Statistics Canada
– Regional International Trade Centres
– Department of Commerce (US)
– European Commission (EU)
– Country Desks, Trade Missions, Embassies
– Trade Opportunities Program
– Overseas Business Reports
– Government Intelligence Units 38
Market Intelligence Gathering:
Sources of Information
Secondary Sources (cont.)
– Service Organizations
– Major Banks
– Investment Companies
– Public Accounting Firms
– Transportation Companies
– Advertising and Consulting Firms
39
Market Intelligence Gathering:
Sources of Information
Secondary Sources (cont.)
– Others
– Economist Intelligence Unit
– Business International
– Specialized Newsletters
– Internet
– Industrial Directories
– Universities
40
Market Intelligence Gathering:
Sources of Information
Provincial/State Governments
– Manitoba Industry, Trade, and Tourism
– Economic Development Agencies
– Various Sectoral Offices
– Aerospace
– Agriculture
– Health Care
– etc.
41
Market Intelligence Gathering:
Sources of Information
International Organizations
– IBRD (World Bank)
– WTO (World Trade Organization)
– WHO (World Health Organization)
– FAO (Food and Agriculture Organization)
– ILO (International Labour Organization)
– OECD (Organization for Economic Coop. &
Dev.)
– Trade Groups (LAFTA, EFTA, etc.)
42
Market Information Gathering:
Sources of Information
Trade Associations
– Chambers of Commerce
– IATA (International Air Transport Association)
– OPEC (Organization of Petroleum Exporting
Countries)
– Canadian Manufacturers Association
– Foreign Trade Tribunals
43
Market Information Gathering:
Sources of Information
Organization’s Own Experience
– Foreign National Employees
– Experienced Executives
– Subsidiaries
44
Developing Markets and Market
Behaviour
Rapid Changes in National Economies
– Closed Economies
– Developing Economies
– Newly Industrialized Economies
– Socialist Developed Economies
– Capitalist Developed Economies
– New Hybrids
45
Developing Markets and Market
Behaviour
Marketing and Economic Development
– Challenges “Doing Business as Usual”
– Marketer Influences Direction and Magnitude of dev.
– Role of Marketer in Static vs. Dynamic Society
– Dealing with Expectations???
– W.W. Rostow’s Stages of Development Thesis
– Traditional Society
– Preconditions for Takeoff
– Takeoff
– Drive to Maturity
– High Mass Consumption
– ??????
46
Developing Markets and Market
Behaviour
– Actual Experiences in Development
– Export Driven vs. Import Substitution Bases for Dev.
– Differences between Growth and Development
– Issue of Income Distribution and Marketing
– Need for Awareness of National Development Object.
Areas where Marketers can Aid in Development
– Transfer of Entrepreneurial Spirit
– Transfer of hard and soft Technology
– Development of Infrastructure--distribution
– Orient society to Demand as well as Supply Planning
– Promote Trade as a stimulus for growth in employment
47
Developing Markets and Market
Behaviour
Marketing Functions in Developing vs. Developed Econ.
– Nature of Goods & Service Storage Activities
– Means of Exchange Production sophistication
– Local vs. Out-sourcing Transport Infrastructure
– Communication Infrastructure Sales & Promotion Methods
– Pricing bases--Role of Bargaining Product Assortment
– Market Organization Customer Service Issues
– Role of Planning & Analysis Role of Credit
– Status Issues Importance of Geography
– Impact of Business Cycles Entrepreneur Orientation
– Role of the Family and Other Institutions
48
Multinational Market Groups
Factors Regarding Economic/Political Integration
– Economic Political Legal
– Cultural Social
Patterns of Integration
– Regional Cooperative Group
– Free Trade Area
– Customs Union
– Common Market
– Economic Union
– Political Union
49
Multinational Market Groups
Examples of Integration
– European Economic Community (EEC)
– Enlargement of EEC (6 to 9 to 12)
– Single European Act--1992
– Canada-US Free Trade Agreement (FTA)
– North American Free Trade Agreement (NAFTA)
– European Free Trade Agreement (EFTA)
– Andean Common Market
– African Integration Experiences
– Association of Southeast Asian Nations (ASEAN)
50
The Trading Blocs
European American Asian
Canada-US ASEAN
EU
FTA AFTA
EEA NAFTA
EFTA Mexico
CBI AUS, NZ, JAP
CARICOM
NED
CACM
HK, JAP, SK
TH
Former MERCOSUR
USSR
ANCOM
Lome Other Pacific
(Africa) Nations 51
Multinational Market Groups
– Marketing Implications
– Marketing Strategy
– Tactical Issues
– Explicit Barriers and Potentials
– Marketing Mix Implications at Operative Level
52
Global Marketing Management:
Planning and Organization
Global Marketing Restated:
– product life cycle design segmentation
– competition production consumers
– product price promotion
– distribution
Benefits and Costs of Global Marketing
– transfer of experience--benefit
– control and coordination--benefit
– uniformity--benefit
– unresponsiveness to consumers--cost
– inflexibility--cost
– tendency toward marketing relativism--cost
– control and coordination--cost
53
Global Marketing Management:
Planning and Organization
Alternative Marketing Strategies
– Exporting Licensing Joint Venture
– Consortia Management Contracts
Market Planning Process
– Study Chart on Planning Process in Text
– Analysis and Definition
– Marketing Mix Definition
– Marketing Plan Development
– Implementation, Evaluation, & Control
Methods of Control
– Centralized - New Forms
– Decentralized 54
International Product Analysis
Support Service
Components
Repair &
Maintenance Deliveries
Packaging
Installation Component
Warranty
Instructions Trademark Price
Spare Parts
Core Quality
Other Related Component
Services Styling Physical
Product Packaging
55
International Product Analysis
Degree of Standardization
– What is the aspect of the product to be made adaptable?
– What aspect of the product can be standardized?
– Which aspects of the product are critical for competitive
advantage?
– Begs the question of identification and ranking of
attributes and
consumer preferences. How should it be done? Who
should do it?
– Preference dimensions
• status taste achievement aspiration
material value 56
International Product Analysis
Innovation, Adaptation, and Diffusion
– Degree of Newness
– Newness and Product Life Cycle
– Degree of Perceived Newness
57
International Product Analysis
Perceived Attributes of the Product
– Relative Advantage
– Compatability Relative
Relative to to Core
core and
and Non-Core attributes
– Complexity non-core attributes
– Trialability
– Observability
58
Marketing Industrial Products
Who are Industrial Customers?
– Commercial Enterprises
– Original Equipment Manufacturers
– User Customers
– Industrial Distributors
– Government Organizations
– Local
– Provincial
– Federal
– Institutional Customers
– Schools
– Hospitals
– Churches
59
Why Enter International
Markets?
Domestic Market Saturation
Life Cycle Stages
Inherent Perceived Quality Differences
Protect Existing Market Share
60
Why Not to Enter International
Markets
Home Country Sufficient
Lack of Sound Marketing Information re
Foreign Opportunities
High Costs
Organizational Inertia
61
Information on International
Markets
Dunn & Bradstreet’s Principal International
Businesses
Predicast’s F & S Index
Europe’s 1500 Largest Companies
Major Firms in Europe and Far East
62
Industrial Market Considerations
Product Strategy
– Specifications R&D Support Services New Competition
– Licensing FDI Mgmt Contract Turn-Key Counter-trade
Channel Strategy
– Resident Buyers Mfg’s Reps Distributors Trading Companies
Promotion Strategy
– Use of Trade Fairs and Exhibits
– Expert Testimonials and Reputation
Pricing Strategy
– Price/Quality Relationship Most Important
– Bid System
– Role of Physical Distribution and Demand Management Important
– Prices Often Difficult to Determine at Time of Sale
63
International Distribution
Components of Distribution
– Physical Handling
– Transportation
– Transfer of Ownership
– Buying and Selling Negotiations
– Customer Satisfaction--GOAL!!
Alternative Distribution Channels
– Direct and Indirect Exporting
– Merchants and Agents
64
International Distribution
Critical Considerations for Merchant/Agent
– Availability
– Cost of Service
– Functions Performed
– Extent of Control Desired
Alternative 1 - Direct -- Own Sales Force
65
International Distribution
Alternative 2 - Indirect--Merchant Middleman
– Domestic Merchant Middleman
– Purchase on Own Account
– Minimum Credit Risk
– Handles Functions Outside Domestic Market
66
International Distribution
Alternative 2 - (cont.)
– Varieties of Domestic Merchant Middlemen
– Export Merchants
– Export Jobbers
– Export Buyers
– Trading Companies
– Complementary Marketers
– Foreign Merchant Middlemen
67
International Distribution
Alternative 2 - (cont.)
– Varieties of Foreign Merchant Middlemen
– Distributors
– Import Jobbers
– Wholesalers and Retailers
– Affiliated Middlemen
68
International Distribution
Alternative 3 - Agent Middlemen
– Domestic Agents
– Export Management Companies
– Manufacturer’s Export Agent
– Broker
– Buyer
– Export Commission House
69
International Distribution
Alternative 3 - Agent Middlemen
– Foreign Agents
– Broker
– Manufacturer’s Rep
– Factor
– Managing Agent
70
International Distribution
General Issues
– Issue of Social Acceptance
– Line Breadth
– Costs and Margins
– Channel Length
– Maintenance of Customer Value
– Channel Existence
– Channel Cost and Control
– Conflict
– Cooperation
– Leadership 71
Stages of Export Development
Completely Uninterested Exporter
Partially Interested Exporter
Exploring Exporter
Experimental Exporter
Small Experienced Exporter
Large Experienced Exporter
72
Export Operations:
Preparing for Export Markets
Set Objectives
Determine Commitment
Devise Preliminary Export Budget
Determine Organizational Fit for Exporting
Develop Export Information
Assess Potential Markets
Devise Marketing Plan
Fully Assess and Reassess Company Readiness
73
Export Operations: Export
Market Strategy
Market Research and Analysis
Product Design
Pricing
Distribution
Promotion
Packing, Marking, & Labeling
Transportation
74
Export Operations: Export
Payment Methods
Cash with Order
Cash on Delivery (COD)
Open Account
Electronic Transfer
Bills of Exchange
Letter of Credit (revocable, irrevocable, confirmed)
Barter (compensation deals, swaps, offsets, counterpurchase
Advanced Purchase Arrangement
75
Export Operations
Transportation Documentation
– Bill of Lading
– A8A Customs Cargo Control Document
Licenses
– General License
– Validated License
– Commodity Control List
Import Restrictions
– Tariffs Import License Quotas Exchange Permits
76
Export Operations: Logistics
Choice of Transport Mode
– Domestic
– Truck Rail Water Air Freight Pipeline
– Foreign
– Truck Rail Water Air Freight
Choice of Carrier
– Cost Dependability Timeliness Risk Service
Other Logistics Functions
– Inventory Order Processing Customer Service
– Packaging Storage Materials Handling
77
Export Operations
Export Documentation
– Commercial Invoice
– Consular Invoice
– Certificate of Origin
– Certificate of Value
– Packing List
– Health Certificate
– Insurance Certificate
– Export Permit
– Export Declaration
78
Assessing Organizational
Readiness
Capitalize on Strengths in Domestic Markets
Provide the Financial Resources for the Job
Human Resource Requirements are High
Must Possess Export-Related Skills
– Ability to Speak Foreign Languages
– Familiarity with Foreign Languages/Business Practices
– Possess Contacts in Potential Foreign Target Markets
– Develop Contacts in Canadian Export Community
– Gain Experience in International Negotiating
– Experience Technical Aspects of International Trade
– Develop Ability to Assess Market Potential
– Be Involved in Continuous Training to Acquire Expertise
79
Assessing Organizational
Readiness (cont.)
Must Have Top-Level Commitment
– Any Reservations About Entering Foreign Markets?
– Is Exporting Viewed as Peripheral or Sporadic?
– Resistance to Developing a Strategic Export Market Plan?
– Willing to Devote Many Hours to Export Development
– Prepared to Trade-Off Profits in Short-Run?
– Interested in Long-Term International Relationships?
80
Assessing Organizational
Readiness (cont.)
Is the Organization Structured for Expansion?
– Past Growth Experience--Foreign or Domestic?
– Young, Energetic Staff with Drive and Ambition?
– Sound Organizational Structure
– Boundary Spanning
– Interorganizational Communication
– Continuous Learning Culture
– Market Intelligence Sensing Capability
– Flexibility, Adaptability, Viability
81
Marketing Communications
Public Relations
Sales Promotions
International Advertising
– The message
• Information source
• Encoding
• Message channel
• Decoding
• Receiver
• Feedback
• Noise
82
Marketing Communications
Legal Issues
– Puffing
– Comparative Advertising
– Specific Product prohibitions
– Use of media
– Truth in advertising
Language and symbolism Issues
83
Marketing Communications
84
Sales Force Management
Sources of Personnel
– Expatriates
– Virtual Expatriates
– Local Nationals
– Third-Country Nationals
– Host-Country Restrictions
85
Sales Force Management
Selection of Personnel
– Maturity
– Knowledge
– Positive Outlook
– Cultural Empathy
– Flexibility
– Tolerance
– Hard Working
86
Sales Force Management
Training
– Generally poor
– Minimal criteria
• Awareness of cultural setting
• Cultural imperatives and restrictions
• Economic reward
• Good communication
• Proper training re products/services
• Support of family
87
Pricing in International Markets
Pricing Objectives
– Enhance Market Share
– Enhance ROI
– Manage Demand
– Cost Recovery
88
Pricing in International Markets
Major Issues to Consider
– Nature of the Product
– Degree of Competition
– Degree of Substitutibility
– Channel Efficiency
– Price and Income Elasticity Considerations
89
Pricing in International Markets
Major Pricing Components
– Production Costs
– Marketing Costs
– Profit Margins
– Transportation and Distribution Costs
– Taxes, Tariffs, Duties, etc.
– Documentation Costs
– Exchange Rate Movements
– Interest Rates
– Insurance and Risk Bearing Costs
– Inflation
90
Approaches to International
Pricing
Cost-Based Methods
– Cost Plus
– Fully Allocated Cost
Market Based Methods
– Zone Pricing
– “What the Market Will Bear”
– Incremental Cost Pricing
Transfer Pricing
Countertrade
Dumping
91
Manufacturing Price (Domestic) $362.00 $362.00
Transportation to Wholesaler 18.00 23.00
$380.00
Export Documentation 4.00
Overseas Shipping & Handling 2.50
Overseas Freight and Insurance 58.50
$450.00
Import Tariff: 20% of Landed Cost 90.00
$540.00
Handling at Foreign Port of Entry 3.00
$543.00
Transportation form Port to Importer 17.00
$560.00
Importer Margin ( to Wholesaler) 10% 56.00
$616.00
Wholesale Margin: 8% 30.40 49.28
$410.40 $665.28
Retail Margin: 40% 164.16 266.12
FINAL RETAIL PRICE $574.56 $931.40