Chapter 7 – Understanding and reaching global consumers and markets. After reading chapter 7, you should be able to: Describe the nature and scope of world trade from a global perspective and identify the major trends that have influenced world trade and global marketing, identify the environmental forces that shape global marketing efforts, name and describe the alternative approaches companies use to enter global markets,...
McGrawHill/Irwin Copyright © 2013 by The McGrawHill Companies, Inc. All rights reserved 7-1 LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 7, YOU SHOULD BE ABLE TO: LO1 LO2 Describe the nature and scope of world trade from a global perspective and identify the major trends that have influenced world trade and global marketing Identify the environmental forces that shape global marketing efforts 7-2 LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 7, YOU SHOULD BE ABLE TO: LO3 LO4 Name and describe the alternative approaches companies use to enter global markets Explain the distinction between standardization and customization when companies craft worldwide marketing programs 7-3 HOW DELL, INC., BUILT A BILLION DOLLAR BUSINESS IN INDIA 7-4 LO1 DYNAMICS OF WORLD TRADE WORLD TRADE FLOWS Global Perspective • Trade Feedback Effect • Countertrade United States Perspective • Gross Domestic Product (GDP) • Balance of Trade 7-5 FIGURE 7-1 Leading countries in global merchandise trade in terms of imports (U.S.) and exports (China) 7-6 FIGURE 7-2 Porter’s diamond of national competitive advantage: four key elements on why some industries and firms in different countries become world leaders 7-7 LO1 DYNAMICS OF WORLD TRADE COMPETITIVE ADVANTAGE OF NATIONS Porter’s “Diamond” • Factor Conditions • Demand Conditions • Related and Supporting Industries • Company Strategy, Structure, and Rivalry Economic Espionage Act (1996) 7-8 Sony 3D TV and Bruno Magli Shoes LO1 What element of Porter’s Diamond of National Competitive Advantage? 7-9 MARKETING IN A BORDERLESS ECONOMIC WORLD LO1 TREND 1—DECLINE OF ECONOMIC PROTECTIONISM Protectionism Tariffs Quota General Agreement on Tariffs and Trade (GATT) World Trade Organization (WTO) 7-10 Values Values are a society’s personally or socially preferable modes of conduct or states of existence that tend to persist over time 7-63 Customs Customs are what is considered normal and expected about the way people things in a specific country 7-64 Foreign Corrupt Practices Act (1977) The Foreign Corrupt Practices Act (1977) is a law, amended by the International Anti-Dumping and Fair Competition Act (1998), that makes it a crime for U.S corporations to bribe an official of a foreign government or political party to obtain or retain business in a foreign country 7-65 Cultural Symbols Cultural symbols are things that represent ideas and concepts 7-66 Semiotics Semiotics is a field of study that examines the correspondence between symbols and their role in the assignment of meaning for people 7-67 Back Translation Back translation is the practice where a translated word or phrase is retranslated into the original language by a different interpreter to catch errors 7-68 Consumer Ethnocentrism Consumer ethnocentrism is the tendency to believe that it is inappropriate, indeed immoral, to purchase foreign-made products 7-69 Bottom of the Pyramid Bottom of the pyramid is the largest, but poorest, socioeconomic group in the world 7-70 Microfinance Microfinance is the practice of offering small, collateral-free loans to individuals who otherwise would not have access to the capital necessary to begin small businesses or other incomegenerating activities 7-71 Currency Exchange Rate A currency exchange rate is the price of one country’s currency expressed in terms of another country’s currency 7-72 Exporting Exporting is a global market-entry strategy in which a company produces goods in one country and sells them in another country 7-73 Joint Venture Joint venture is a global marketentry strategy in which a foreign company and a local firm invest together to create a local business in order to share ownership, control, and profits of the new company 7-74 Direct Investment Direct investment is a global market-entry strategy that entails a domestic firm actually investing in and owning a foreign subsidiary or division 7-75 Dumping Dumping occurs when a firm sells a product in a foreign country below its domestic price or below its actual cost 7-76 Gray Market A gray market is a situation where products are sold through unauthorized channels of distribution Also called parallel importing 7-77 ... Multidomestic Marketing Strategy Transnational Firms • Global Marketing Strategy • Global Brand 7- 17 MARKETING IN A BORDERLESS ECONOMIC WORLD LO1 TREND 3C—GLOBAL CONSUMERS Global Consumers 7- 18 MARKETING. .. Foreign Corrupt Practices Act (1 977 ) 7- 21 FIGURE 7- B Cultural appreciation 7- 22 LO2 A GLOBAL ENVIRONMENTAL SCAN CULTURAL DIVERSITY Cultural Symbols • Semiotics #13 7- 23 A GLOBAL ENVIRONMENTAL SCAN... 3A—GLOBAL COMPETITION Global Competition Strategic Alliances 7- 15 FIGURE 7- A Global companies and marketing strategy 7- 16 MARKETING IN A BORDERLESS ECONOMIC WORLD LO1 TREND 3B—GLOBAL COMPANIES