Ch
The Scope and Challeng
PowerPoint by
Shaikh Rafiqul
Islam
M.Com (DU),MBA (Australia)
Associate
Professor
Department of
Marketing
The Trends Affecting Global Business Today
Rapid growth of WTO & regional free trade areas
such as NAFTA, EU etc
Free market system among developing countries in
Latin America, Asia, & Eastern Europe
Impact of Internet & other global media on the
dissolution of national borders
The mandate to manage resources & global
environment for the generations to come
-As a result, most business activities, like technology,
research, capital investment, production, marketing,
distribution & communications networks are global in scope
S.R.Islam, Assoc. Prof, JnU
New and Future Multinational Market Groups or
Trading Blocks of the 21st Century
European Union
European Economic Area (EC and EFTA)
North American Free Trade Area
Southern Cone-Mercosur
Asian Free Trade Area (AFTA)
Commonwealth of Independent States (CIS)
Central European Free Trade Area (CEFTA)
S.R.Islam, Assoc. Prof, JnU
New and Future Multinational Market Groups or
Trading Blocks of the 21st Century
Possible Regional Trade Groups
Western Hemisphere Free Trade Areas (WHFTA)
Canada to Argentina
Asia-Pacific Economic Cooperation (APEC)
Pacific Rim Countries including U.S.
U.S./ Canada/Mexico/Japan
South American Free Trade Area (SAFTA)
Andean Pact and Mercosur
Chinese Economic Area (CEA)
Hong Kong, Taiwan, Coastal Provinces of So. China
U.S./European Union
Many possibilities of Republics of Russia, Baltic
S.R.Islam, Assoc. Prof, JnU
States
Why internationalization?
Saturation of U.S. markets
Higher ROI in foreign markets
Need to establish early position in world markets
US firms exporting, importing and/or
manufacturing abroad
Foreign-based firms operating in U.S. markets
Growth of regional trade areas
Rapid growth of world markets
S.R.Islam, Assoc. Prof, JnU
Why internationalization?
Increasing number of competitors for global markets
U.S. multinationals increasingly face competition for
lucrative markets from companies from developing
countries
Political and economic changes in Latin America,
Asia, Eastern Europe and the former Soviet Union,
India etc.
Growth of new markets
S.R.Islam, Assoc. Prof, JnU
International Marketing Defined
The performance of business activities designed to
plan, price, promote, & direct the flow of a companys
goods & services to consumers/users in more than one
nation for a profit
The only difference in the definitions of DM and IM is.... in
more than one nation
This minor difference accounts for complexity & diversity in IM
Marketing concepts, processes, & principles are universally
applicable & the marketers task is the same in anywhere
Businesss goal is to make a profit by promoting, pricing and
distributing products for which there is a market.
S.R.Islam, Assoc. Prof, JnU
International Marketing Defined
-Natural question is whats the difference between
IM and DM?
The difference lies with the environment within which
marketing plans/strategies must be implemented
The uniqueness of IM comes from the range of
unfamiliar problems and the variety of strategies
necessary to cope with different level of uncertainty
Marketing consists of controllables & uncontrollables
S.R.Islam, Assoc. Prof, JnU
The International Marketing Task
Molding the controllables within the framework of
uncontrollables of the marketplace to achieve marketing
objectives is more interesting
Complexity of IM task depends on the number of countries in
which a marketer operates
Every country adds a set of unique problems
Every solution is unique and can not fit to others
S.R.Islam, Assoc. Prof, JnU
The International Marketing Task
Foreign environment
(uncontrollable)
Political/legal
Economic
1
forces
forces
Domestic environment
(uncontrollable)
7Political/
Cultural
forces
(controllable)
legal
forces
Price
Promotion
6
Geography
&
Infrastructure
Competitive
structure Competitive
Forces
Product
Channels of
distribution
Level of
Technology
Economic climate
4
Structure of
distribution
S.R.Islam, Assoc. Prof, JnU
Environmental
uncontrollables
country market A
Environmental
uncontrollables
country
market B
Environmental
uncontrollables
country
market C
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The International Marketing Task
Marketing decision factors
-Product
-Price
-Place
-Promotion
Aspects of the domestic environment
-Political/legal forces
-Competitive structure
-Economic climate
S.R.Islam, Assoc. Prof, JnU
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The International Marketing Task
Aspects of the foreign environment
-Political/legal forces
-Cultural forces
-Geography and infrastructure
-Structure of distribution
-Level of technology
-Competitive forces
-Economic forces
S.R.Islam, Assoc. Prof, JnU
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The International Marketing Task
Marketing decision factors
Construct a marketing program with 4 Ps for optimal
adjustment to uncontrollables assuming corporate
resources and constraints
Controllables can be altered to adjust to changing market
conditions, consumer tastes, or corporate objectives.
Uncontrollables must be evaluated & marketing program
must be adapted to them .
Success depends on the amount of successful adaptation
of marketing mix to these uncontrollables
S.R.Islam, Assoc. Prof, JnU
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The International Marketing Task
Domestic Uncontrollables
Any political decision involving domestic foreign policy has
a direct effect on IM- positive or negative
-Impact of U.S. governments ban on trade with South Africa to
protest apartheid and then the withdrawal of apartheid
Domestic economic climate has farreaching effects on IM
-Capacity to invest in plants and facilities in either market
depends on domestic economic vitality
Competition within home country affects a company's
domestic as well as international plans.
-Eastman Kodak dominated US film market and competitive
structure changed when Fuji Photo Film became formidable by
cutting prices
S.R.Islam, Assoc. Prof, JnU
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The International Marketing Task
Foreign Uncontrollables
Assessing foreign uncontrollables involves substantial doses
of cultural, political, & economic shock
Polar extremes in political stability, class structure, &
economic climate exist
Some dynamic upheavals create the problems of dramatic
change in cultural, political, & economic climates
-China moved from a communist legal system to free market economy
These are major sources of uncertainty to which cope with
S.R.Islam, Assoc. Prof, JnU
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The International Marketing Task
Foreign Uncontrollables
Political shifts may result in expropriation/confiscation/
domestication /imposing restrictions and need close attention
Different strategies are needed due to differences in political
climate, stages of economic development, level of technology
Political details and ramifications are less transparent
Sometimes corruptions prevail and marketers may receive
unfair treatment and law may be different
S.R.Islam, Assoc. Prof, JnU
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The International Marketing Task
Foreign Uncontrollables
Alien status increases the difficulty of assessing &
forecasting business climate because:
-foreigners control the business
-culture of the host country is alien to management
-For example, Indian govt gave CocaCola the choice of
either revealing its secret formula or leaving the country
S.R.Islam, Assoc. Prof, JnU
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The International Marketing Task
Foreign Uncontrollables
Level of technology and expertise is a problem due
differences in economic development
Cultural conditioning is like an iceberg
All other factors also pose lots of uncertainty
Influencing factors are:
-Geography and infrastructure
-Structure of distribution
-Level of technology
-Competitive forces
-Economic forces
S.R.Islam, Assoc. Prof, JnU
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Environmental Adaptation Needed
Interpret the influence of uncontrollables on marketing plan
The task of adjustment is most challenging
In domestic market marketers response is automatic based
on inherited (acquired) frame of reference (FOR)
-A Frenchman knows how to behave and operate in France
FOR, a highly persistent aspect, can be a serious constraint
when operating abroad
S.R.Islam, Assoc. Prof, JnU
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Environmental Adaptation Needed
Adjust marketing efforts to cultures to which one is not
attuned
-A westerner must learn that white is a symbol of mourning in
some parts of Asia not bridal gowns
-Circle with thumb and forefinger: OK in USA, Zero or worthless
in France, Money in Japan, Sexual insult in Greece
Cultural conditioning is like an iceberg of which 9/10 is
unknown
S.R.Islam, Assoc. Prof, JnU
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SRC and Ethnocentrism: Major Obstacles
The key to success in IM is adaptation
-Adaptation is a conscious effort to anticipate the influences of
foreign and domestic uncontrollables on marketing mix and then
to adjust marketing mix
The primary obstacle to this is SRC and Ethnocentrism
-SRC- an unconscious reference to ones own cultural
values, experiences & knowledge as basis for decisions
-Ethnocentrism- the notion that ones own culture/company
knows the best how to do things
S.R.Islam, Assoc. Prof, JnU
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SRC and Ethnocentrism: Major Obstacles
Both affect our ability to observe, interpret and respond
Misunderstanding & misinterpretation is created, like
body language, personal space
SRC prevents us from being aware of cultural differences
Both influence an evaluation of the appropriateness of a
domestically designed marketing mix for a foreign market
S.R.Islam, Assoc. Prof, JnU
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SRC and Ethnocentrism: Major Obstacles
Both impede the ability to access a foreign market
Taking time to look beyond his SRC gives positive result
Everything may not be different
The best way to control is to recognize their influences on
our behavior
S.R.Islam, Assoc. Prof, JnU
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Steps suggested to isolate SRC influences and
to maintain a vigilance regarding ethnocentrism
1.
Define the business problem or goal in home-country cultural
traits, habits, or norms.
2.
Define the business problem or goal in foreign-country traits,
habits, or norms through consultation with natives of the target
country. Make no value judgments.
3.
Isolate the SRC influence in the problem & examine it carefully
to see how it complicates the problem.
4.
Redefine the problem without the SRC influence & solve for
the optimum business goal situation.
-Example An American sales manager newly posted to
Japan decided that his Japanese sales representatives did
not need to come into Japanese office every day for an early
morning meeting before
beginning
calls on clients in Tokyo.
S.R.Islam,
Assoc. Prof, JnU
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Developing Global Awareness
Opportunities waits for those who are prepared to face
myriad obstacles with optimism, and learn new ways
Globally awareness needs:
Tolerance for cultural differences
-Tolerance is understanding differences and accepting and
working with others whose behavior is different
Knowledgeable about:
-cultures
-history
-world market potential,
-global economic, social and political trends
Be globally aware through personal relationships
Be aware of falling in love with other country cultures
S.R.Islam, Assoc. Prof, JnU
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Stages of International Marketing Involvement
Marketer must decide the degree of marketing
involvement and commitment
No direct foreign marketing
Infrequent foreign marketing
Regular foreign marketing
International marketing
Global marketing
S.R.Islam, Assoc. Prof, JnU
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Stages of International Marketing Involvement
No direct foreign marketing
Does not actively cultivate customers in foreign market
Products reach foreign markets via domestic wholesalers
or distributors
Foreigners may come directly to the firm
Many firms receive orders from international Web surfer
S.R.Islam, Assoc. Prof, JnU
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Stages of International Marketing Involvement
Infrequent foreign marketing
Temporary surpluses result in infrequent foreign marketing
Increased domestic demand may withdraw foreign task
Little or no change in company organization or product
line
Few companies today fit this model
S.R.Islam, Assoc. Prof, JnU
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Stages of International Marketing Involvement
Regular foreign marketing
Permanent productive capacity devoted to production of goods
Employ foreign or domestic overseas middlemen or own sales
force or sales subsidiaries in foreign countries
Primary focus is to serve domestic market needs
As overseas demand grows, production is allocated for foreign
markets
Products are adapted to meet the needs of individual foreign markets
S.R.Islam, Assoc. Prof, JnU
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Stages of International Marketing Involvement
International marketing
Fully committed to & involved in IM
Seek markets all over the world & sell products of
planned production in various countries
Offer region/country-specific marketing & production
Become an international or multinational marketing firm
S.R.Islam, Assoc. Prof, JnU
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Stages of International Marketing Involvement
Global marketing
Treat the world as a single market
Based on global homogeneity
Market segments are defined by income levels, usage
patterns, or other factors that span countries and regions
Major profit comes from abroad
Entire operation begins to take on a global perspective
- Coca-Colas transition from international to global
S.R.Islam, Assoc. Prof, JnU
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Strategic Orientation
Management thinking and management orientation is
reflected
Each strategic orientation also reflects philosophical
orientation of activities
Three strategic orientations are:
-Domestic market extension orientation
-Multi-domestic market orientation
-Global orientation
S.R.Islam, Assoc. Prof, JnU
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Strategic Orientation
Domestic market extension orientation
Domestic product sales extension into foreign markets
International operations is secondary
Primary motive is to market excess domestic
production
Firms with this marketing approach are classified as
ethnocentric in the EPRG schema
S.R.Islam, Assoc. Prof, JnU
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Strategic Orientation
Multi-domestic market orientation
The importance of differences in overseas markets and
offshore business is recognized
Marketing programs are adapted
Subsidiaries operate independently of one another
Control is typically decentralized
Firms with this orientation would be classified in the
EPRG schema as polycentric.
S.R.Islam, Assoc. Prof, JnU
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Strategic Orientation
Global orientation
Marketing activity is global, and market coverage is
the world
Strives for efficiencies of scale by developing a
standardized marketing mix
The global marketing company would fit the
regiocentric or geocentric classifications
S.R.Islam, Assoc. Prof, JnU
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Strategic Orientation
EPRG framework
Ethnocentric
Polycentric
Regiocentric
Geocentric
S.R.Islam, Assoc. Prof, JnU
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Ethnocentric Orientation
Assumes home country is superior to the rest of the world;
associated with attitudes of national arrogance and
supremacy
Management focus is to do in host countries what is done
in the home country
-Sometimes called an international company
-Products and processes used at home are used abroad
without adaptation
S.R.Islam, Assoc. Prof, JnU
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Polycentric Orientation
Management operates under the assumption that every
country is different; the company develops countryspecific strategies
-Sometimes called a multinational company
-Company operates differently in each host country
based on that situation
Opposite of ethnocentrism
S.R.Islam, Assoc. Prof, JnU
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Regiocentric Orientation
Region becomes the relevant geographic unit (rather than
by country)
Management orientation is geared to developing an
integrated regional strategy
-European Union
-NAFTA
S.R.Islam, Assoc. Prof, JnU
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Geocentric Orientation
Entire world is a potential market
Managerial goal is to develop integrated world market
strategies
-Global companies serve world markets from a single
country and tend to retain association with a
headquarters country
-Transnational companies serve global markets and
acquire resources globally; blurring of national
identity
S.R.Islam, Assoc. Prof, JnU
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Last Words
Most problems encountered by the foreign marketer result
from the strangeness of the environment within which
marketing programs must be implement
Success hinges on the ability to assess & adjust properly to
the impact of a strange environment
The successful international marketer possesses the best
qualities of anthropologist, sociologist, psychologist,
diplomat, lawyer, prophet, and businessman
S.R.Islam, Assoc. Prof, JnU
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