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International Marketing


CHAPTER 1 The Scope and Challenge of International Marketing


Top 10 U.S. Players in the Global Game Company

ExxonMobil 1-4

Foreign Revenues ($ Mil)

Foreign Foreign Foreign Revenues Profits Assets (% of Total) (% of Total) (% of Total)

115,464

71.8

62.7

63.9

IBM

50,377

57.5

49.6

43.7

Ford Motor

50,138

30.8

N/A

44.2

General Motors

46,485

26.3

55.3

38.0

General Electric

35,350

31.7

22.8

47.4

Texaco

32,700

77.1

54.1

45.2

Citigroup

28,749

35.1

N/A

41.0

Hewlett-Packard

23,398

55.2

58.0

51.5

Wal-Mart Stores

22,728

13.8

8.2

36.0

Compaq Computer

21,174

55.0

101.4

28.2

Irwin/McGraw-Hill

SOURCE: Adapted from Brian Zajac, “Global Giants”. Forbes, July 24, 2000


Foreign Acquisitions of U.S. Companies U.S. Companies

1-2

Foreign Owner

Bestfoods (foods) Ben & Jerry’s (ice cream) Alpo (pet food) Pillsbury (food) Burger King (fast food) Random House (publishing) Chrysler (autos) TV Guide (magazine) New York Post (newspaper) LA Dodgers (sports) Arco (gasoline) CompUSA (retailing) Seagram (alcoholic beverages)

Irwin/McGraw-Hill

U.K. U.K. Swiss U.K. U.K. Germany Germany Australia Australia Australia U.K. Mexico France

SOURCE: Adapted from Kuri Badenhausen. “Name Game”, Forbes. Jul 24, 2000


Leading World Trading Countries, 1997 ($ billions)

3-12

Country*

Exports

Imports

Total

EU-15 U.S.A. Germany Japan United Kingdom France Italy Canada Netherlands Belgium/Luxembourg China Spain South Korea Mexico Switzerland

$2,723.5 948.6 620.6 422.6 372.6 377.2 309.7 248.2 238.4 268.0 202.3 158.0 156.3 121.7 105.5

$2,565.4 1,058.8 584.7 384.4 386.5 339.0 267.9 240.2 216.5 196.5 174.7 156.0 114.9 121.9 95.5

$5,289.9 2,007.4 1205.3 771.0 759.1 716.2 577.6 488.4 454.9 406.5 337.0 314.0 271.2 243.6 201.4

Irwin/McGraw-Hill

SOURCE: Statistic Report of Import and Export Trade 1999. Ministry of foreign Trade and Economic Cooperation, China and National Accounts, Foreign Trade by Commodities, OECD 2000.


Domestic Policy Repercussions Influences in the U.S. 1 out of every 3 U.S. farm acres is producing for export 1 of every 6 U.S. manufacturing jobs produces for export $1 of every $7 of U.S. sales goes abroad 1 of every 3 cars, 9 out of 10 TVs, 2 out of 3 suits, and every VCR sold in the U.S. is imported. Travel and tourism is the #1 source of U.S. foreign exchange. $1 of every $4 of U.S. bonds & notes is issued to foreigners.


The Scope and Challenge of International Marketing I. II.

The Internationalization of U.S. Business International Marketing

International Marketing - is concerned with planning and conducting transactions across international borders to satisfy the objectives of individuals and organizations.


The Scope and Challenge of International Marketing - Q: Why Study International Marketing? - A: There is a trend toward a global economy. No longer enough to look at domestic market Markets across the world being sought after by more competitors Explosion of international trade Global linkages become important


The Scope and Challenge of International Marketing “If we only distributed pictures in the U.S., we’d lose money. It takes the whole world now to make the economics of movie-making work” - William Mechanic President, 20th Century Fox


The Scope and Challenge of International Marketing “Half the people in the world have yet to take their first picture. The opportunity is huge, and it’s nothing fancy. We just have to sell yellow boxes of film.” - George M.C. Fisher CEO, Eastman Kodak Company


4

Invented Here, Made Elsewhere U.S. Invented Technology Phonographs 1-3

9 0%

1%

9 0%

Color TVs

1 0%

1970

4 0%

Audiotape Recorders

0%

Videotape Recorders

1%

NOW 1 0% 9 9%

Machine Tools

3 5%

Telephones

9 9%

2 5%

8 9%

Semiconductors

6 4%

Computers

7 4%

0 Irwin/McGraw-Hill

9 8%

20

40

60

80

100

Copyright Š 2002 by The McGraw-Hill Companies, Inc. All rights reserved.


World Trade Flows ( in billions of dollars ) WESTERN EUROPE

160 162 AMERICAS Intra-Trade: 221 Exports: 364 Imports: 455

40

Source: International Trade Statistics General Agreement on Tariffs and Trade Geneva 1993

44

Intra-Trade: 1,230 Exports: 481 Imports: 473

143

253

128

170

ASIA

160 191

Intra-Trade: 394 Exports: 491 Imports: 360

72 REST OF WORLD Intra-Trade: 57 Exports: 255 Imports: 303

68

1992


The Scope and Challenge of International Marketing III. Comparing Domestic and International Marketing Similarity: - Both carry out transactions that meet the needs of individuals and organizations

Differences: - International markets have greater growth potential - Some tasks associated with international marketing not included (or less intense ) than in domestic marketing (e.g., cultural research, political factors, exchange rates, trade laws, long distance distribution.)


The Scope and Challenge of International Marketing Why U.S. Share of Trade is Declining: - Lack of awareness of importance of world markets - More intense foreign competition (more modern production facilities and lower costs than in past)

How the U.S. Can Compete (given high labor costs): -

Modernization and automation (investment in R&D) Focus on high capital/labor ratio industries Manage services Use foreign labor in manufacturing industries Do effective marketing research


The Scope and Challenge of International Marketing IV. Being International V.

International Marketing Concepts


International Marketing Concepts Concept

EPRG Schema

Domestic Market Extension

(Ethnocentric)

Multi-Domestic Market

(Polycentric)

Global Marketing

(Regio/Geocentric)


The Scope and Challenge of International Marketing Figure 1.1: International and Global Marketing Multi-Country Marketing

Global Marketing


The Scope and Challenge of International Marketing International Business International Marketing

International Management International Trade

International Finance

Figure 1.2: International and Global Marketing and Related Fields of Study


The Scope and Challenge of International Marketing International Business International Marketing International Global Marketing

Trade

International Finance

Figure 1.2: International and Global Marketing and Related Fields of Study International Management


Chapter 1