Continuation of Lecture 1

How to expand abroad:

Global: Marketing mix is standard.

Transnational: Adaptation of Marketing Mix.
International: Pressure to adapt is not high thus, a mix of standardization and adaptation.
Multinational: No home country concept at all, each national has a completely different
strategy.

International Marketing Orientations:

Ethnocentric: What I am doing is perfectly fine. Has a home country effect. Product is superior.
Polycentric: Each foreign country is different Oman market strategy is different than the
strategy in Dubai.
Regiocentric: Each region is considered to be one place the GCC is one market. For example,
McArabia sold across the region.
Geocentric: A mixed strategy adaptation wherever needed, basically standard. Because it is
less expensive to standardize than to adapt.

Restraining Forces:

Why some companies dont go for international expansion?

Management Myopia: More risky to go international.

Organizational culture: Not thinking out of the box, very traditional corporate culture.
TO overcome these two factors, new blood and younger managers could be adopted.
National Control: In the US, you cannot export technology. Thus, either a restriction to go out or
to come in some country.
Aversion to globalizations.

Lecture 2 (World Economy)

Use Economic Environment for IME 1 and 2

If companies dont adapt to the environment, there will be a gap between the environment and
the adopted strategies, they create a strategic gap. Example: Kodac
Home country Environment should be studied, as well as host country environment & General
International Environment
Due to the economic integration, you need to look at the economic freedom index.

Economic Freedom affects the ability for a corporation to enter a new market and how profitable it will
be for the corporation. However, this does not stop the decisions, because even though India has a very
low Economic Freedom rate, Multinationals are still starting business in India.

Activity:

Scenario 1: -ve Scenario 3: +ve

Scenario 2: -ve Scenario 4: +ve
Indicators to understand International Environment:

1. Business Cycles: No one is aware of the Peaks and the Troughs, but both can lead to profitable
growth.
2. World GDP Growth: Look at the nominal part of the country in the world. China did not collapse
in 2008 due to the construction of Ghost cities. It is now coming back to haunt them.

That was through Fiscal policies of government spending. Why is the growth slowing down now?

- Demography of an older country, and a new 2 child rule.

- Middle Income Trap in China
- Regression to the Mean is a rule of super growth.

If the Chinese economy goes down, commodity prices will go down, and thus the global market will
decrease tremendously.

3. World Trade: has slowed down, the physical spending went down.
Very Important Slide: Consumption and Investment in advanced economies remain sluggish.
Unless people consume, companies cannot produce. If factories dont produce, need for
employment reduces, thus unemployment decreases. Spending becomes even less, and the
economy goes into a recession. China and the US stimulated the investment and consumption in
order not to let consumption reach a halt.
In 2008, people fell into the credit crisis where people did not have money to invest.
4. Balance of Payments
The US has a 2 billion dollar deficit per day.
5. Monetary Policy
Interest Rates and Quantitative Easing (Printing of money). The Federal Reserve QE1, 2, 3 &
Operation Twist & Taper Tantrum. If the dollar goes down, then everything else goes up
(Commodity Prices, Yen, Yuan, etc.).
Balance Sheet Trimming.

Negative Interest Rates are not good news, as people did not want to keep money in the banks.

When the US dollar goes up, everything goes down. There is an inverse relation between the US
dollar and the commodity prices.

6. Exchange Rate Foreign Exchange