International Marketing MBA-907

INTERNATIONAL
MARKETING
7/7/15

Importance & Challenges

Global Environment and

International
Managers

Difficulties Operating in Borderless World

Challenges

Economic

Legal-political

Socio-cultural

Multinational Corporations

Foreign Markets - Entrance

International Marketing MBA-907

7/7/15

A Borderless World
3

Business is becoming a unified, global

field

Companies that think globally have a

competitive edge

Domestic markets are saturated for

many companies

Consumers can no longer tell from which

country they are buying
International Marketing MBA-907

7/7/15

Four Stages of Globalization

4

Domestic stage:
market potential is limited to the home country
production and marketing facilities located at home
International stage:
exports increase
company usually adopts a multi-domestic approach
Multinational stage:
marketing and production facilities located in many countries
more than 1/3 of its sales outside the home country
Global (or stateless) stage:
making sales and acquiring resources in whatever country
offers the best opportunities and lowest cost
ownership, control, and top management tend to be dispersed
International Marketing MBA-907

7/7/15

4 Stages of Globalization
1. Domestic

2. International

3. Multinational

4. Global

Strategic Orientation

Domestically
Oriented

Export- Oriented
multi-domestic

Multinational

Global

Stage of Development

Initial foreign
involvement

Competitive
positioning

Explosion of
international
operations

Global

Cultural Sensitivity

Of little
importance

Very important

Somewhat
important

Critically
important

Many good
ways

The least-cost
way

Many good
ways

Manager Assumptions One best

way

SOURCE: Based on Nancy J. Adler, International Dimensions

of Organizational Behavior, International
4th ed. (Cincinnati,
Ohio:
South- 7/7/15
Marketing
MBA-907
Western, 2002), 8-9.

Global (stateless) Corporations

6

Number is increasing

Awareness of national borders decreasing

Rising managers expected to know a 2nd or 3rd

language

Corporate Example Nestle (Swiss)

CEO Peter BrabeckLetmathe (Austrian)

Half of general managers (non-Swiss)
Strong faith in regional managers who are native to the
region

International Marketing MBA-907

7/7/15

The International
Business Environment

International management is management of

business operations conducted in more than one
country

Fundamental tasks do not change

Basic management functions

are the same - domestic or international

Greater difficulties and risks when performing on an
international scale

International Marketing MBA-907

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International Environment Factors

8

Economic
Economic
developm
ent
Infrastruc
ture
Resource
and
product
markets
Per capita
Income
Exchange
rates
Economic
conditions

Legal-Political
Political risk
Government
takeovers
Organizatio
n

Tariffs, quotas,
taxes

Terrorism,
political
Sociocultural
Socio values, beliefs instability
Language
Laws,
Religion (objects, taboos,
regulations
holidays)
Kinship patterns
Formal education, literary
Time orientation

International Marketing MBA-907

7/7/15

Economic Development

Countries categorized as developing or

developed

Criterion used to classify is per capita income

Developing countries have low per capita

incomes

LDCs located in Asia, Africa, and South America

Developed are North America, Europe, & Japan

Driving global growth in Asia, Eastern Europe, &

Latin America
International Marketing MBA-907

7/7/15

Infrastructure
10

A countrys physical facilities that support

economic activities

Airports, highways, and railroads

Energy-producing facilities
Communication facilities

International Marketing MBA-907

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Resource and Product Markets

11

When operating in another country...

Managers must evaluate market demand

To develop plants, resource markets must
be available raw materials and labor

Corporate Example McDonald

International Marketing MBA-907

7/7/15

Exchange Rates
12

Rate at which one countrys

currency is exchanged for
another countrys
Has become a major concern
for companies doing business
internationally
Changes in the exchange
rate can have major
implications for profitability
of international operations
International Marketing MBA-907

7/7/15

The Legal-Political Environment

13

Political Risk due to events or actions by

host governments

Loss of assets
Loss of earning power
Loss of managerial control
Government takeovers
Acts of violence
International Marketing MBA-907

7/7/15

Political Instability
14

Events such as riots, revolutions, or

government upheavals that affect the
operations of an international
company

International Marketing MBA-907

7/7/15

Laws and Regulations

15

Government laws and regulations differ

from country to country

Make doing business a true challenge for

international firms

Internet has increased impact of foreign

laws on U.S. companies expands
potential for doing business on global
basis
International Marketing MBA-907

7/7/15

Sociocultural Environment
16

Culture shared knowledge, beliefs, values,

common modes of behavior, and ways of thinking
among members of a society

Intangible
Pervasive
Difficult for outsider to learn

Managers need to understand difference in social

values to comprehend local cultures and deal
with them effectively

International Marketing MBA-907

7/7/15