Business Tools and Marketworld

CERTIFIED GLOBAL BUSINESS PROFESSIONAL
Online Course
SECTION 1A
BUSINESS TOOLS AND THE WORLD MARKETPLACE

ALAN L. WHITEBREAD
COURSE INTRODUCTION
The syllabus is online.
http://awhitebread.ba.ttu.edu
Many full or partial lecture slides plus other support

materials are online can also be found there.
INTERNATIONAL TRADE AND THE FIRM
Legal Technologies
Human resources Marketing Capital
INTERNATIONALSupply Chain
Management
TRADE Management
Environment Trade Competition

Finance
Stakeholders Government
ETHICS & CORE VALUES
Morals and ethics may be different between cultures.
MORALS
The differences between right and wrong.
ETHICS
The values of human conduct. Whether an action is right
or wrong, and the good or bad of motives, means, and
ends.
ETHICS
Personal ethics should exceed legal requirements.
If you have to ask about its legality, you are likely in
ethical trouble.
What is the intent of an action?
In U.S. criminal and business law, there are more severe
punishments for intent to harm.
What are your corporate ethics?
VIDEO Dilbert ethics
CORE VALUES
Values and beliefs: you can not live a dual life.
Peter Drucker, one of the great management

philosophers of our time, said It is extremely important
to do the right thing. It is equally important to also do
all the right things in international trade to maximize
your profitability.
STRATEGIC PLANNING
Set goals / objectives / examine alternatives
Develop plans
Implement a plan as soon as there is enough
substance to have a fairly high probability of success.
Always have contingency plans in place.
STRATEGIC PLANNING
What are we now?
What capabilities do we want to develop?
What businesses should we be in?
How do we get there?
Thought processes
Your educational training
What does the ability to memorize have to do with business
career success?
Thinking in different ways
What are the rewards of success?
The myopia problem
MARKETING MYOPIA
THEODORE LEVITT ARTICLE Harvard Business Review reprint, July-
August, 2004
Myopia: defining your business too narrowly

Railroads
Corner grocery [1930] vs. supermarket
What is happening to supermarkets today?
Color TV [Motorola, GTE, GE]
Lead with price conundrum
You can always get sales!

Great marketing organizations rarely have financial
problems!
STRATEGIC DIRECTION OF THE FIRM
(THE CORE COMPETENCE OF THE CORPORATION ARTICLE)
CORE COMPETENCY
The foundations [usually technologies] upon which
you build your business over a very long time.
CORE COMPETENCY TESTS
Sustainable Very long term [5+ years]

AND
Competitive Obvious customer benefits
AND
Advantage Access to additional markets or
market segments
KEY SUCCESS FACTORS
NOT CORE COMPETENCIES

YOU MUST DO BETTER ALL THE TIME TO
KEEP UP WITH YOUR COMPETITORS.
Apply the three core competency tests
[sustainable, competitive, advantage] to the
following items and see why they often fail the
core competency test.
Customer services
Design
?
THE STRATEGIC BUSINESS UNIT (SBU)
A UNIT OF THE FIRM THAT HAS DIFFERENT
OBJECTIVES AND CAN BE PLANNED SEPARATELY
FROM OTHERS.
For instance, some of General Electrics business

units include
GE Commercial Finance -- GE Industrial
GE Consumer Finance -- GE Infrastructure
GE Healthcare -- NBC Universal
THE STRATEGIC BUSINESS UNIT (SBU)
SBU ISSUES
RESOURCE COMPETITION
1. PEOPLE
2. MONEY
3. DEVELOPMENT RESOURCES
FAIR PERFORMANCE MEASURES
How do you reward very different SBUs?
WHAT IS THE ACCEPTABLE DEGREE OF AUTONOMY
FOR EACH SBU?
Trucks SBU
TECHNOLOGIES (gas electric fuel cell) /
Cars
PRODUCTS /
Tanks
SERVICES A
P
P
Delivery
L
I Transportation
C
MARKETS / A
War
SEGMENTS T
I
O
N
North America Europe Asia Export S
Business Consumer Government
DESIGNING THE BUSINESS PORTFOLIO
THE VISION STATEMENT
broadly defines what the entity should be like in 10-20

years.
This statement needs to become part of the entitys

culture to be most effective.
THE MISSION STATEMENT
provides a path to achieve a vision through clear
objectives. It will contain many of the nine following
elements.
Customers; products/services; markets; technologies;
concern for survival/growth; philosophy; self-concept;
public image; employees
U.S. Department of State Mission Statement
Create a more secure, democratic, and prosperous world
for the benefit of the American people and the
international community.
CORE COMPETENCIES
CONSIDER THE FOLLOWING

What is the fit with other SBUs?
What synergies exist?
How may this impact competition?
SWOT ANALYSIS
Complete the analyses for your firm and your major competitors.
STRENGTHS LEVERAG OPPORTUNITIE

E S
CONSTRAINTS VULNERABILITIES
WEAKNESSES PROBLEMS THREATS

BOSTON CONSULTING GROUP:
GROWTH SHARE MATRIX
Market Growth Rate
STARS QUESTION MARKS

HIGH
Invest heavily Decide quickly
CASH COWS DOGS

LOW
Milk for $$$ Divest or discontinue
HIGH LOW
Relative Market Share
Typical SBU movements are indicated by the arrows.
GE STRATEGIC BUSINESS PLANNING
MATRIX
Market Attractiveness Business Strength
Market size, growth rate, Market share
potential Customer & market
Competition knowledge
Profitability Cost efficiency
Government regulation Technology
? ?
GE STRATEGIC BUSINESS-PLANNING
MATRIX*
BUSINESS STRENGTH
Market share, Customer & market knowledge, Cost efficiency, Technology,
MARKET ATTRACTIVENESS
Market size, growth rate, potential,
Strong Medium Weak

High
SBU going where we SBU losing ground

want it to go.
C
A
Low Medium
The arrow indicates the movement

of the SBU over n years. D
B Bad SBU and getting
Improving SBU worse
Harvest: divest
Invest & grow Selective growth
/ dissolve
ORGANIZATIONAL CHANGE
Change is difficult.
Change is often resisted overtly and covertly.
Change is uncomfortable.
Change is a way of life.
Change is why we have developed to where we

are today.
SCENARIO PLANNING
Learn how to think differently by
Challenging conventional wisdom
Challenging assumptions
Utilizing different thought processes
Utilizing entirely different perspectives in your analysis
Comparing outcomes of different thought
methodologies
FIVE TYPES OF DEVELOPMENT PROJECTS
LARGE HARDEST
P
R R&D ADVANCED
MORE PRODUCT CHANGE LESS
DEVELOPMENT
PROJECT:
O GENETIC
ENGINEERING
C
E NEW CORE PRODUCT
NEXT GENERATION ADDITION TO DERIVATIVES AND
PRODUCT PRODUCT FAMILY EXTENSIONS
S
BREAKTHROUGH
S ALLIANCES
PARTNERSHIPS NEW CORE PROCESS
PROJECT:
NEW FAMILY OF
PROJECTS
DRUGS
C R&D JOINT VENTURE

NEXT GENERATION
PROCESS
H
PLATFORM PROJECT:
A SINGLE DEPARTMENT
APPLE iMAC:
TRANSLUCENT
UPGRADE PLASTIC
COLORATION
N TECHNOLOGY
G DERIVATIVE
INCREMENTAL
PROJECT:
CHANGE
SIMPLE SIZE CHANGE
E
SMALL EASIEST
For more information see Creating Project Plans to Focus Product
Development, Harvard Business Review, Vol. 70, No. 2, p.74.
ANSOFFS PRODUCT / MARKET
EXPANSION GRID
Existing New
products products
1. Market 2. Product
penetration development
Existing
markets or [Internal or
saturation External]
3. Market 4. Diversification
New development [usually by
markets [channels of acquisition]
distribution issue]
These show ways to grow your business generally go from

easiest [#1] to hardest [#4].
COMPETITIVE ADVANTAGE OF THE FIRM:
PORTERS THREE GENERIC STRATEGIES
COMPETITIVE ADVANTAGE
Customer Perceived Uniqueness Low Cost Position
C
O
M OVERALL COST
P INDUSTRY DIFFERENTIATION LEADERSHIP
E
WIDE Focus on perceived Hard to maintain
T
value. long term.
I
V
E
MARKET
S NICHE
C SEGMENT
Understanding and focus.
O
ONLY
P No direct battles with major competitors.
E
MARKETING MIX [The 4 Ps]
PRODUCT PLACE
-Variety
-Channels
-Design
-Coverage
-Features
-Transportation
-Branding
-Logistics
-Packaging
PROMOTION PRICE
-Advertising -List price
-Public Relations -Discounts
-Sales promotion -Allowances
-Trade Shows -Terms and conditions of sale
ATTACKING COMPETITORS:
GAPSTHE THREE DIMESIONS
CHANNELS OF
DISTRIBUTION
1
3
TECHNOLOGIES
2
PRODUCTS
2
SERVICES
APPLICATIONS
MARKETS / SEGMENTS
PRODUCT LINE PLANNING
APPLICATION SUMMARY OF GAP ANALYSIS
PRODUCT PLACE PROMO- PRICE COMPETI-
TION TION
Features Expand Stimulate How to

channels light users compete
Brands Intensify Attract non- Penetrate /

coverage users Substitute
Market Use more

segments each time
Model
number To maximize your return,
you would always do price
Services
gaps last.
added
Online Course
SECTION 1B
THE WORLD MARKETPLACE
ALAN L. WHITEBREAD
WORLD TRADE BEFORE 600 B.C.
Complex, advanced societies stretch across the
southern half of Europe, the Middle East, and
Asia.
Phoenecians
?
China traded along the Silk Road more than

2,500 miles
Find a map on the internet to see this extensive trading
network.
WORLD TRADE BEFORE 600 B.C.
India
Trades textiles,
The Roman Empire

Trades gold, silver, wine and glass.
A limited view of the world

Go to any map library on the internet and explore maps
of this time period. Look at the different perspectives of
the world between those in Europe and those in the Far
East.
WORLD TRADE 600 1500 A.D.
For centuries the Arab civilization based on trade
dominated large areas of Africa, Asia and even
parts of Europe.
Textiles, carpets, ivory, gold, spices and ceramics

The Arabic language and an educated culture were the
common threads with such items as
Sugar growing and refining
Mangos and yams
Chess and algebra
Death of the Prophet Muhammad 632

Trade follows the spread of the Muslim faith to
China, Mongolia, Spain, Mali, and many other places.
WORLD TRADE 1500 - 1800
1500-Europe lags culturally and economically

Italian trade with Levant through Venice triggers the
Renaissance.
European discovery voyages find many surprising
civilizations.
Plundering, conquest, and the spread of Christianity
10-12 million slaves were shipped from Africa & South
America to North America
more than 2 million die en route
INDUSTRIAL REVOLUTION
17th 20th centuries
Manufacturing capacity develops
Need for power generation develops
Need for labor and productivity develops
Adam Smith The Wealth of Nations, 1776
Specialization and Division of Labor
Theory of Absolute Advantage
Theory of Comparative Advantage
MERCANTILISM
A 16th century economic thought which contended
that nations should export more than they import.
It is the governments responsibility to create an

environment that promotes the advance of
mercantilism.
MERCANTILISM AND ADAM SMITH
He contended that a laissez-faire [no interference]
government approach to trade was superior since it let
the market forces address the issues.
Adam Smith An Inquiry into the Nature and
Causes of The Wealth of Nations, 1776
The beginning of classical economics
The invisible hand [free market]
Some basic assumptions of economics
Economic man [rational economic behavior]
Perfect competition: symmetry [equal power
of competitors]
Perfect market knowledge
Equilibrium [the magic point of supply and
demand]
Opportunity cost
Specialization and Division of Labor
Adam Smith
The division of labor represents a qualitative
increase in productivity.
Specialization leads to greater skill and
greater productivity of the workers.
One man draws out the wire, another straightens it,

a third cuts it, a fourth points it, a fifth grinds it at
the top for receiving the head; to make the head
requires two or three distinct operations; to put it
on is a peculiar business, to whiten the pins is
another; it is even trade by itself to put them into
the paper.
-The Wealth of Nations, Adam Smith, 1776
THEORY OF ABSOLUTE ADVANTAGE
Adam Smith
Countries have advantages and / or disadvantages in
labor,
skills,
and natural resources
as they relate to the total cost of production.
THEORY OF ABSOLUTE ADVANTAGE
Adam Smith
A country should export those products which it can produce at
lower cost than others, and it should import those products
which can be produced at lower cost by others. (Adam Smith,
Wealth of Nations)
Hypothetical Example: (for a given level of resource input)
Product US Japan
Computers 20 10
---- or ----
Automobiles 10 20
Therefore: What should the US produce and what should Japan

produce?
THEORY OF COMPARATIVE ADVANTAGE
Relative production costs are more meaningful in

determining what trade should take place than absolute
production costs. Even if a country has an absolute
advantage in the production of all products, it should
produce those products for which it has the greatest
comparative advantage and it should import other
products.
-David Ricardo, 1817
THEORY OF COMPARATIVE
ADVANTAGE EXAMPLE
PRODUCT US JAPAN US COMPARATIVE
ADVANTAGE
Computers 20 10 20:10 or 2:1
OR
Automobiles 30 20 30:20 or 1.5:1
Therefore: What should the U.S. produce and what should

Japan produce?
INDUSTRIAL REVOLUTION [15th 16th

centuries]
An increased need for raw materials
Why was colonization needed for
Resources
Markets
INDUSTRIAL REVOLUTION [17th 20th

centuries]
Development of trading centers
London, Marseilles, Seville, and Constantinople
Which is now called ___ ?
Americas independence broke up European empires.
British open markets for the products of new

manufacturing industries and secure supplies of
needed raw materials.
The world divided into metropolitan [trading] centers
and colonial dependencies.
Advances in communications and transportation

increase the volume and speed of trade. Sound
familiar?
THE WORLD IS NOT AS IT SEEMS
Africa compared to the Former Soviet Union
The former Soviet

Union was 8.7 million
square miles
Africa is 11.6 million

square miles -
33 % LARGER! Compare this to the Peters projection.
ECONOMIC GEOGRAPHY
CHINA
SINGAPO HONG KONG

RE
INDIA
Notice the difference in population and per capita income.

Just because a country has a lot of people does not mean it
has a large market for your products. If you are dealing with
consumer products, disposable income is a better measure
than per capita income.
COUNTRY ECONOMIC STRUCTURE
$35,000
INDUSTRIALIZED G8 PER CAPITA+
INCOME
$19,999
INDIA
INDUSTRIALIZING
MEXICO
RAW MATERIAL BRUNEI - OIL $11,999

EXPORTING
COSTA RICA - BANANAS
AFGHANISTAN $5,000
SUBSISTENCE
ETHIOPIA
$100
This is an example of combining scaleslevel of development
and per capita income.
INDUSTRIALIZED NATIONS
G8
PEOPLES LIFESTYLE = ?
INCOME = ?
LIVING CONDITIONS = ?
INFRASTRUCTURE = ?
VALUE-ADDED CAPABILITIES = ?
WORLD HOT SPOTS
Air Security International
http://www.airsecurity.com/hotspots/HotSpots.asp
Review all hot spots for the current day.
This is one of many private and public groups that

provide daily updates on troubled areas of the world.
INTERNATIONAL MARKETING / COMMERCE
SECTION 2A
CULTURAL ISSUES - 1
ALAN L. WHITEBREAD
CULTURE: DEFINITIONS
Culture is a set of beliefs and values that are
passed from generation to generation in a
society.
Culture is like an icebergeasy to observe the

obvious items, but most of it is not easily
noticed or observed.
CULTURE
Culture exists but is rarely discussed in its
own environment.
Cultural relativism is the idea that any

individuals behavior and beliefs make sense
in their native culture.
Ethnocentrism describes looking at the

world from your cultural viewpoint.
Being ethnocentric could cause you to introduce
an inappropriate product or marketing mix
because you did not adapt it to the other culture.
SOME CHARACTERISTICS OF CULTURE
Culture defines acceptable behaviors.
Culture limits choices of products, channels, promotion
appeals, and marketing efforts.
The work ethic and labor laws come from the native
culture.
Culture is a shared meaning system and set of social

expectations that is always slowly evolving.
Culture develops common habits and
thoughts, simplifying communication.
Think about conversations about football [U.S.]
or soccer in other countries.
Culture is slowly learned over a lifetime.

Adaptive behavior occurs when a person
changes a behavior pattern to be constructive.
Dont stand with your arms folded across your chest at
an international trade show as it is viewed as negative
not constructive behavior.
Enculturation or socialization
When you live in another culture for some time you learn
it through acculturation.
Cultures may have very different behaviors in the
same situation.
Cultural differences can easily be seen in the behavior
of two people from two different cultures.
Each culture defines acceptable and unacceptable
behavior.
Gestures
Cultures impact on behavior also affects buyer
behavior and consumption patterns.
Culture goes from generation to generation with little
change. Enduring cultures perpetuate themselves and
resist change.
Culture is the set of generations of experiences over

many centuries. Different cultures adapt to change at
different rates.
HOW WOULD YOU DIFFERENTIATE
ONE CULTURE FROM ANOTHER?
ART, SCULPTURE, and ARCHITECTURE
AUTHORS and POETS WORKS
DANCE, FESTIVALS, and FASHION
EDUCATION
MUSIC and THEATRE
PHILOSOPHY
RELIGION
Use examples from your travels.

HOFSTEDES CULTURAL DIMENSIONS:
117,000 IBM employees in 88 countries
#1 INDIVIDUALISM: The degree to which the
individuals interests are more important than those
of the group.
Low [Collective]
Ecuador, Guatemala, Japan
High [Individual]
U.S., Australia
#2 MASCULINITY: The degree to which male

dominance is accepted.
Low [Feminine]
Finland, Norway, Sweden
High [Masculine]
Austria, Italy, Japan, Mexico
HOFSTEDES CULTURAL
DIMENSIONS
#3 UNCERTAINTY AVOIDANCE: The degree to which
people deal with ambiguous or uncertain situations and
have created beliefs and institutions to avoid them.
Low [Risk Accepting]
Denmark, Great Britain, Jamaica, Singapore, Sweden, U.S.
High [Risk Averse]
Argentina, Greece, Israel, Italy, Japan, Portugal
#4 POWER DISTANCE EQUALITY : The acceptance

of an unequal distribution of power of entities.
Low [Egalitarian; boss gains trust of employees]
Australia, Austria, Denmark, Israel, Canada, U.S.
High [Hierarchical; the boss must be obeyed]
Brazil, China, India, Malaysia, Mexico, Panama, Turkey
MATERIAL ACHIEVEMENT
The degree to which the dominant values of a society
are money, personal possessions, and success.
PERSONAL SPACE IN THE U.S.
INTIMATE PERSONAL SOCIAL PUBLIC

DISTANCE DISTANCE DISTANCE DISTANCE
<18 18 TO 48 48 TO 96 96 TO 120
THE GREATER THE POWER DISTANCE SCORE,

THE GREATER THE SPACING.
THIS WOULD BE TRUE FOR COLOMBIA,
PAKISTAN, THAILAND, AND SIMILAR SCORES.
THE NOTION / PERCEPTION OF TIME
Past Present Future
United States
Past PresentFuture
Japan
China Past Present Future
Russia Past Present Future
Americans easily link past and present and future when discussing a topic, while
Russians tend to focus on past or present or future.
For more detailed information see Riding the Waves of Culture, Trompenaars and Hampden-Turner, 2 nd
edition, 2000
ARRIVING FOR THE FIRST TIME
- CULTURE SHOCK !
LANGUAGE
DRESS
ETIQUETTE
MOOD
LONELINESS an outsider
THEIR NOTION OF TIME
DECISION-MAKING PROCESSES
CULTURE SHOCK!
What are the other cultures
SYMBOLS TRADITIONS
HEROES RELIGIONS
RITUALS SUPERSTITIONS
VALUES DESIGN ISSUES
CUSTOMS HOLIDAYS
COLORS LAWS
WHAT DO YOU NEED TO KNOW TO
EFFECTIVELY DEAL WITHIN A DIFFERENT
CULTURE?
Adapt products, processes, and
services to local markets.
Build relationships.
Embrace the local culture.
Employ locals.
Help employees understand your
culture.
COMMUNICATIONS TIPS
Be direct in low-context cultures.
U.S. and Northern Europe
Be less direct in high-context cultures.
Japan, Latin America, and Saudi Arabia
Always refer to months when writing and
how to write dates.
Avoid references to weekend, eight-hour
day, dinner time and lunch time.
Work, break, and lunch hours and what different meals
are called vary widely.
ASPECTS OF
COMMUNICATION
Verbal
Direct or indirect
Style [Business or personal]
Humor
Nonverbal
Written
Gestures
Style [Business or personal]
THE FORCES OF CULTURE:
LANGUAGE
Communication using words and symbols with rules
for their assembly into sentences or their equivalent.
Language plays a large role in the methods of
thinking.
Non-verbal forms of communication [e.g., body
language, gestures, ...] and their successful
interpretation are often even more culturally
dependent.
MOST POPULAR LANGUAGES
ENGLISH*, CHINESE MANDARIN
Over 1,000,000,000 people
English is the fastest-growing language
SPANISH and PORTUGUESE

Over 500,000,000 people
RUSSIAN, BENGALI, ARABIC

Over 200,000,000 people
COMMUNICATION TIPS
Write at an appropriate level.
Speak clearly, simply, and slowly.
Make your counterpart feel comfortable with your
languagebe helpful and empathetic.
Use highly qualified native translators [written] and
interpreters [spoken].
Understand levels of interpreter expertise
Understand interpreter specialization
COMMUNICATING EFFECTIVELY
Avoid all
metaphors [he's a bear],
clichs [every man for himself],
jargon [HACCP testing],
idioms [you're right on the right track],
and slang [humungous],
difficult or rarely used words and / or phrases and / or
meanings.
Remember, literal translations often don't make sense.

NONVERBAL COMMUNICATION
Facial expression
Head shaking: agreement / disagreement
Gestures
Europe men greeting by kissing on the cheek
three times.
U.S. = ?
Posture
Sitting back in the chair: listening, not highly
interested
Leaning forward in the chair: attentive and
interested
NONVERBAL COMMUNICATION
Tone of voice: authority to empathy
Dress: expensive = power
Expensive: power
Navy blue thin pin striped suit: authority / control
Crying: sadness / joy
Time
Ladies: How long would you wait for a date?
Men: How long will you wait for your date to get ready?
Online Course
SECTION 2B
CULTURAL ISSUES - 2
ALAN L. WHITEBREAD
MEETING AND GREETING
Making an initial contact

The first meeting VIDEO: Cinzano
Names
Titles / rank
Showing respect
Formal distance
Proper gifts and gift-giving
Be careful of improper gifts and gift treatment
CONVERSATION
Proper topics
Topics to avoid include
?
The role of humor
Be direct or not?
NEGOTIATIONS
Typical negotiating tactics
Which style?
How is compromise viewed?
How do you overcome an impasse?
What is the normal bargaining process?
SOCIAL
What is the normal role of
women in business?
the importance of respect?
individuality?
What is the importance of the person vs. the group?
What social barriers exist?

THE FAMILY
A related group of people that influences
and is influenced by the culture around it.
The family is the primary method by which

culture is transmitted from one generation
to another.
In early years, children primarily learn from their
parents.
Cultural changes have changed the nature

of families.
Review the history of women working outside
the home in the U.S.
REFERENCE GROUPS
Can be peer groups or role models
Provide guidance for behavior that is not specifically
part of the cultural norm
Very important to socially conspicuous behavior
clothing styles
country examples of attire are
EATING AND ENTERTAINING
For Business vs. in the Home
Timeliness
Manners
Host expectations
Guest expectations
MANAGEMENT STYLE
Problem solving method
Do they adapt to change?
Do they commonly work as a group?
How do they view competition?
How do they handle disagreements?
What else?
BUSINESS MEETINGS
Timeliness
Structure
Duration
Breaks
Food and drink service
Presentation style
CULTURE: GIFT GIVING
DEPENDS ON
Country
Local practices and superstitions
Nature of your business
Level of the contact
e.g., the more important the individual, the nicer the gift
CULTURE: GIFT GIVING ERRORS
KOREA
Do not open your gift in private.
CHINA
Clocks are a symbol of bad luck.
4 is generally thought to be unlucky.
MUSLIM NATIONS
Liquor is usually forbidden.
ALL SE ASIA COUNTRIES
13 is generally unlucky.
Knives and scissors represent severing
relationships.
CULTURE: ENTERTAINMENT
Chinese
Entertainment ranks higher than gifts.
Japanese
Entertainment is far less important than gifts.
CULTURE: LITTLE THINGS
BUSINESS CARDS
1 or 2 sides?
You may show university degrees in Asia.
How should one exchange and / or present ones card?
AMERICAN CULTURE
Value Personal freedom

Language English
Myth Santa Claus
Custom Daily bath
Ritual Star Spangled Banner
Law Consumer protection
Materialistic Diamond engagement
rings
Online Course
SECTION 3A
ORGANIZATION ISSUES AND EXPORTER CHECKLIST
ALAN L. WHITEBREAD
SECTION 3
This section is divided into two parts and each one
has a set of lecture slides.
This first lecture examines international

business organization and readiness issues.
The second lecture focuses on keys to

success in international business including
negotiations, sources of export assistance,
and key checks you need to make about
every prospect and customer.
ORGANIZATIONAL GOALS
The key is to find a structure which allows the
organization to profitably respond to market
differences and dynamics.
A market difference is something that is not the same as
in another market.
A market dynamic is something that drives the market.
Provide examples of market differences and dynamics.

ORGANIZATIONAL GOALS
TRADE-OFF
the value of centralization comes from
knowledge
planning
co-ordination
the value of decentralization comes from

maximize response flexibility for a local situation
possibly lose some coordination, implementation, and control
ORGANIZATIONAL STRUCTURE
Organizational structure is a function of the situation.
Multinationals generally use a simple, flat organization

structure with few levels of management.
GLOBAL ORGANIZATION STRUCTURES
INTERNATIONAL
GEOGRAPHIC / AREA
PRODUCT
FUNCTIONAL
MARKET / CUSTOMER
COMPLEX
INTERNATIONAL STRUCTURE
CEO or VP
Marketing
U.S. Central and Europe, Asia Export

South Africa, &
Canada Pacific
America Middle East
Functional areas exist in areas that are large enough to
support them.
ADVANTAGES DISADVANTAGES
- -
- -
- -
1 - Fill in three advantages and three disadvantages of this structure.
2 Modify this structure, do the analysis again and compare the
results.
Copyright A. Whitebread, 2001-2007.
GEOGRAPHIC STRUCTURE
V P
M A R K E T IN G
P R O D U C T P R O D U C T EA S TE R N W E S TER N M A R K E T IN G
M A N A G E R M A N A G E R S A LES S A LES C O M M U N .
G R O U P 1 G R O U P 2 M A N A G E R M A N A G E R M A N A G E R
-SIMPLE STRUCTURE -NO SPECIALIZATION
-LOW COST OF SALES AND -CONTROLLING HOW THE

ADMINISTRATION SALES FORCE SPENDS ITS TIME
-DIRECT INTERACTION -FRACTURED FEEDBACK

-COMPLETE PRODUCTS
KNOWLEDGE REQUIREMENT

PRODUCT STRUCTURE
VP
MARKETING
PRODUCT PRODUCT SALES SALES MARKETING

MANAGER MANAGER MANAGER MANAGER COMMUN.
GROUP 1 GROUP n GROUP 1 GROUP n MANAGER
-DRIVEN BY PRODUCT -DUPLICATION OF EFFORT
PURCHASES
-HIGHER ADMIN. COSTS
-SPECIALIZED KNOWLEDGE
-COORDINATION NEEDS
FOR SPECIALIZED PRODUCTS
-MAJOR ACCOUNT
-HELPS PRODUCTION
PROBLEM WITH MULTIPLE
SCHEDULING
PRODUCT LINE PURCHASES

FUNCTIONAL STRUCTURE
CEO
Marketing Operations Finance Human IT

and Sales and Resources
Accounting
- -
- -
- -
1 - Fill in three advantages and three disadvantages of this structure.

2 Modify this structure, do the analysis again and compare the
results.
MARKET / CUSTOMER STRUCTURE
VP
M A R K E T IN G
PR O D U C T PR O D U C T N A T IO N A L M A JO R M A R K E T IN G
M AN AG ER M AN AG ER SALES AC C O U N TS C O M M U N .
G R O U P 1 G R O U P 2 M AN AG ER M AN AG ER M AN AG ER
N A T IO N A L O EM FED ER AL
AC C O U N TS G O V 'T .
-DRIVEN BY CUSTOMER TYPE -HIGHER SELLING AND
-SALES MANAGEMENT ADMINISTRATIVE COSTS
CONTROLS FIELD TIME
-IMPROVED FEEDBACK

COMPLEX STRUCTURE - 1
V P
M A R K E T IN G
N A T IO N A L D IR E C T G R O U P M A JO R M A R K E T IN G
S A LES M A R K E T IN G P R O D U C T A C C O U N TS C O M M U N .
M A N A G E R M A N A G E R M A N AG E M E N T M A N AG E R M A N AG E R
D IR E C T R E S E LLER TE LE SA LES IN T E R N E T N A T IO N A L O E M G O V E R N -
S A LES S A LES M A N A G E R S ALES A C C O U N TS M E N T
M A N A G E R S M A N A G E R M A N A G E R
OUTSIDE SALES INSIDE SALES OUTSIDE SALES
ADVANTAGES ISSUES DISADVANTAGES

-DRIVEN BY CUSTOMER -RECLASSIFICATION OF -REQUIRES A LOT OF
TYPE ACCOUNTS COORDINATION
-SPECIALIZED SALES -WHO GETS THE -INFORMATION IS
SKILLS ACCOUNT FIRST? WIDELY DISSEMINATED
-VERY DIFFICULT FOR -PRICE STRATEGY AND -HEAVY LOAD ON
COMPETITVE ANALYSIS IMPLEMENTATION MARKETING
COMMUNICATION

COMPLEX STRUCTURE - 2
VP
M A R K E T IN G
N A T IO N A L D IR E C T G RO UP M A JO R M A R K E T IN G
SALES M A R K E T IN G PRO DUC T ACCO UNTS CO M M UN .
M ANAG ER M ANAG ER M ANAG EM ENT M ANAG ER M ANAG ER
D IR E C T RESELLER TELESALES IN T E R N E T N A T IO N A L O EM G O VERN-

SALES SALES M ANAG ER SALES ACCO UNTS M EN T
M ANAG ERS M ANAG ER M ANAG ER
THIS BECOMES EVEN MORE

COMPLEX WITH
-MANUFACTURERS REPRESENTATIVES
-CUSTOMER SERVICES
-TECHNICAL SALES SUPPORT
-INTERNATIONAL SALES AND SUPPORT
WHERE DO YOU THINK CUSTOMER SERVICES SHOULD REPORT?

THE VALUE OF EXPORTING
Higher revenues, AUPs, and profits
Increased volume
Potentially lower AUC
Potential tax advantages
May extend product life cycles
WHY DONT MORE FIRMS EXPORT?
They are preoccupied with domestic issues / content
with domestic business.
International misconceptions
Fear of the unknown
Horror stories because of lack of knowledge.
I lost money.
I did not get quick results.
It costs too much.

INTERNATIONAL ORGANIZATION:
REQUIRED COMPETENCIES
Knowledge of economic geography markets,
segments, and customers
Knowledge of industry and competitive forces
Knowledge of the country and region

INTERNATIONAL CORPORATE
CULTURE
An multi-national corporation [MNC]
knows changing its culture is an
important part of improving its global
competitiveness.
MNC Managers accept and embrace the

mission, thus forming a corporate culture.
Changing the culture of an organization

can be a long and difficult process.
EXPORTERS CHECKLIST:
THE FIRM
Why does the firm want to pursue exports?
Is senior management committed to a multi-year effort
to succeed in international business?
Including travel, trade shows, samples,
different collateral, IP protection, , ?
What are managements expectations for the export
effort?
Are they reasonable [size and time]?
Online Course
SECTION 3B
KEYS TO SUCCESS AND HANDLING INQUIRIES
ALAN L. WHITEBREAD
KEYS TO SUCCESS:
KNOWLEDGE
Language, customs, lifestyles, culture,
Control with limited flexibility
Meeting standards and regulations
Competence in international trade
KEYS TO SUCCESS:
COMMITMENTS AND GOALS
The long-term commitment of senior management
A realistic set of goals
A logical and defendable marketing plan
Always protect all your intellectual property
KEYS TO SUCCESS:
BUSINESS RELATIONSHIPS
Be patientit takes time to establish yourself, develop
trust, and build relationships.
Be very careful selecting international resellers and /

or representatives.
KEYS TO SUCCESS:
MARKETING AND SALES
FOCUS - do not chase every opportunity.
Build programs that provide resellers with the support
tools to do a great job.
Communicate with your customers in the language of
their preference frequently!
Seek expert advise and assistanceespecially in the
specialized fields of
contract law, IP, packaging and labeling, documentation,
language,
KEYS TO SUCCESS:
INTERNATIONAL NEGOTIATIONS
Secular-rational values
[modern, rational, non-religious]
Western Europe
Eastern Europe
Survival values Self-expression

values
U.S.
Australia
Canada
South America
The longer the arrow, the
Africa greater the difference in
Middle East values.
Traditional values
[religion, prior behavior]
KEYS TO SUCCESS:
PRINCIPLES OF NEGOTIATIONS
Conflicts of interests are likely.
Why?
All parties are seeking resolution.

Why?
Seek an acceptable solution for all.

Do not seek the best solution for one.
Why?
KEYS TO SUCCESS:
NEGOTIATION PERSPECTIVES
1. Detail the situation by likely scenarios.
2. Develop and rank alternative outcomes.
3. Determine the rules of the game.
4. What process do we want to use?
5. What type[s] of interaction do we want?
6. What tactics will be employed?
7. How will power be used?
KEYS TO SUCCESS:
NEGOTIATION TYPES
Heavy-handed
Collaborative
Sharing
Accommodating
Competitive
COMPETITIVE NEGOTIATION
Competitive negotiation is composed of three major

areas.
Characteristics involve how the negotiation is to proceed.
Tactics are the tools you use to accomplish you goals.
Expressions are ways of expressing your desires
CHARACTERISTICS
[Control is key, type of behavior to be used, how to
force concessions, ]
TACTICS
[Bluffs, promises, rewards, threats, ]
EXPRESSIONS
[Using words to deliver strong messages, ]
COMPETITIVE NEGOTIATION
That is not the response we How do you effectively
need. You will have to do respond to each of these?
better if we are to continue
doing business with you.
There does not appear to be

a quick solution to this
issue, so accept our offer
this time and we will accept
yours the next time.
This is a large amount of

business that will help drive
your costs down. We should
see more of that reflected in
our price.
WHY ARE THESE STATEMENTS NOT
TRUE FOR AN AMERICAN BUSINESS?
We can sell our products to anyone we want,
anywhere in the world.
We know our customers and how to contact them.

That is all that the law requires.
We only sell our products domestically so export laws

do not apply.
We sell to many countries around the world so we are

exempt from U.S. export control laws.
Once our buyer pays us we do not have to be

concerned about what they do with the product.
3PLs do our international shipping so they [not us]
are responsible for any violations.
We do not make anything dangerous so the Export

Administration Regulations do not apply.
We keep the necessary important records for our
business. The government does not care about minor
details.
We do not pay bribes to foreign officials so FCPA does

not apply; but we provide almost any entertainment
they want when they are here.
SPECIAL NOTICE!
As an American business, you have a legally required
obligation to know your customer, and potentially who
your customer sells it to, plus how the product will be
used!
EXPORT ASSISTANCE
US DEPARTMENT OF COMMERCE
US Foreign and Commercial Service
Product / Service / Industry Specialists
Country Desk Officers
Collect data regarding regulations, tariffs, business practices, economic
and political developments, market size and growth and trade data
Country Service Posts / Commercial Service Offices
Foreign U.S. DOC offices that can provide business assistance.
Bureau of Industry and Security
Mission: Advance U.S. national security, foreign policy, and economic
objectives by ensuring an effective export control and treaty compliance
system and promoting continued U.S. strategic technology leadership.
See http://www.bis.doc.gov
National Institute of Standards and Technology [NIST]
Manufacturing Extension Program
See http://www.mep.nist.gov/about-mep/overview.html
National Oceanographic and Atmospheric Administration [NOAA]
EXPORT ASSISTANCE
International Trade Administration

Mission: to create prosperity by
strengthening the competitiveness of U.S.
industry, promoting trade and investment,
and ensuring fair trade and compliance with
trade laws and agreements.
See http://www.trade.gov/index.asp
SBAs SBDC International Trade Centers [ITC] and U.S. Export
Assistance Centers [USEAC]
A resource listing may be found at
http://www.sba.gov/gopher/Business-
Development/International-Trade/Guide-To-Exporting/trad14.txt
http://www.sba.gov/oit/export/useac.html
EXPORT ASSISTANCE
World Trade Centers [WTC]
bring businesses and government agencies together to
increase foreign trade.
It is an information hub for
market research, WTCA OnLine matchmaker, trade shows
& exhibit space, business services, trade education,
group trade missions, and WTC clubs.
See http://world.wtca.org/portal/site/wtcaonline
State government agencies
Local trade associations
EXPORT ASSISTANCE
US DEPARTMENT OF AGRICULTURE
Agriculture commodity & marketing programs

Dairy
Grain & Feed
Tobacco, Cotton, & Seed
Forest Products
http://www.fas.usda.gov/outreach/Matrix.pdf
EXPORT ASSISTANCE
US DEPARTMENT OF AGRICULTURE
US DEPARTMENT OF STATE
US DEPARTMENT OF THE TREASURY
US AID
OVERSEAS PRIVATE INVESTMENT CORPORATION
[OPIC]
EXIMBANK
EXPORT ADMINISTRATION
REGULATIONS [EAR]
The EAR is the complete set of rules and regulations
that control what can be exported, to whom, and what
documents are required for compliance.
REGULATIONS [EAR]
U.S DEPARTMENT OF COMMERCE
-Bureau of Industry and Security [BIS] controls EAR
including dual-use items.
-The Census Bureau controls the balance of the
export process, i.e. SEDs, etc.
-U.S. Patent and Trademark Office
U.S. TREASURY DEPARTMENT

-Office of Foreign Assets Control [OFAC] oversees
embargo and sanction lists OFAC regulations.
REGULATIONS [EAR]
U.S. STATE DEPARTMENT
-Directorate of Defense Trade Controls (DDTC)
controls defense articles, defense services, and
related technical data including most space related
agencies ITAR
OTHER U.S. GOVERNMENT AUTHORITIES

-U.S. DEPARTMENT OF HOMELAND SECURITY.
-Customs and Border Protection [CBP]
-U.S. DEPARTMENT OF ENERGY
-NUCLEAR REGULATORY COMMISSION
BUREAU OF INDUSTRY AND SECURITY
Export Administration Regulations [EAR] Part 734
Items subject to the EAR include all
Items moving into or through the U.S., and
U.S. origin items, parts, and components, and
In quantities exceeding de minimus levels, and
Certain items produced outside the U.S. using U.S.
origin technology.
Items excluded from the EAR are exclusively
controlled by other U.S. departments or agencies.
The complete export regulations administration
database may be found at
http://www.access.gpo.gov/bis/ear/ear_data.html
Dual-Use Product
A dual-use product is any item that may have both
commercial and military or proliferation applications.
Purely commercial items without an obvious military

use are also subject to the EAR due to potential
alternative uses.
Export Administration Regulations
[EAR]
KNOWING VIOLATIONS
Corporation - A fine of up to the greater of $50,000 or
five times the value of the exports for each violation.
Individual - A fine of up to the greater of $50,000 or five

times the value of the exports or imprisonment for up to
five years, or both, for each violation.
WILLFUL VIOLATIONS
Corporation - A fine of up to the greater of $1,000,000 or
five times the value of the exports for each violation.
Individual - A fine of up to $250,000 or imprisonment for

up to ten years, or both, for each violation.
Export Administration Regulations
[EAR]
ADMINISTRATIVE SANCTIONS
Denial of export privileges [Denied Persons List]
See http://www.bis.doc.gov/DPL/Default.shtm for more
details
The exclusion from practice; and / or
The imposition of a fine of up to $12,000 for each

violation, except that the fine for violations involving
items controlled for national security reasons is up to
$120,000 for each violation.
Office of Antiboycott Compliance
U.S. companies receive requests to engage in
activities that further or support the boycott of Israel
or blacklisted companies.
Compliance with such requests may be prohibited by

the Export Administration Regulations [EAR] and may
be reportable to the Department of Commerce.
See
http://www.bis.doc.gov/complianceandenforcement/antiboy
cottcompliance.htm for more details
Red Flag Indicators - 1
The customer or its address is similar to one of
the parties found on the US DOCs Denied
Persons List [DPL].
The product's capabilities do not fit the buyer's

line of business.
Routine installation, training, or maintenance

services are declined by the customer.
Level of product sophistication far greater than

usual in the intended country.
Red Flag Indicators - 2
A freight forwarding firm is listed as the product's
final destination.
When questioned, the buyer is evasive and

especially unclear about whether the purchased
product is for domestic use, for export, or for re-
export.
Cash only transactions.
See
http://www.bis.doc.gov/complianceandenforcement/redflagindicators.htm
for more examples.
Entity List
The Export Administration Regulations [EAR]
provide that the Bureau of Industry and Security
may inform exporters, individually or through
amendment to the EAR, that a license is
required for exports or reexports to certain
entities. This is known as the Entities List.
These end users have been determined to

present an unacceptable risk of diversion to
developing weapons of mass destruction or the
missiles used to deliver those weapons.
http://www.bis.doc.gov/Entities/Default.htm
Unverified List
The Unverified List includes names and countries of
foreign persons who in the past were parties to a
transaction with respect to which BIS could not
conduct a pre-license check (PLC) or a post-
shipment verification (PSV) for reasons outside of
the U.S. Governments control. Any transaction to
which a listed person is a party will be deemed by BIS
to raise a red flag with respect to such transaction
within the meaning of the guidance set forth in
Supplement No. 3 to 15 C.F.R. Part 732. The red flag
applies to the person on the Unverified List regardless
of where the person is located in the country included
on the list.
http://www.bis.doc.gov/enforcement/unverifiedlist/unverified_parties.html
OFFICE OF FOREIGN ASSETS CONTROL [OFAC]
Sanctions Program and Country Summaries
Sanctions Program and Country Summaries
Balkans
Overview of Sanctions
Guidelines and Information
Burma (Myanmar)
Guidelines and Information
Cuba
http://www.treasury.gov/offices/enforcement/ofac/programs/
U. S. DEPARTMENT OF STATE
List of Debarred Parties
Persons or entities with which no American person or
entity can conduct business.
http://www.pmddtc.state.gov/compliance/debar.html
http://www.state.gov/index.htm is for all DOS items.
One of several lists that are combined as the Excluded

Parties List System [EPLS] at www.epls.gov by GSA.
THE SALES CYCLE AND
MARKETING
PROSPECT FUNNEL
DEPARTMENT LEADS PROSPECT EFFECTIVENESS
VS. COLD CALLS
APPROACH & QUALIFY
NEEDS &
PRESENT
VALUE
FAB DEMONSTRATE QUALIFIED !
HANDLE OBJECTIONS
REAL, FALSE, STALLS
HOT PROSPECT
TRIAL & ACTUAL CLOSE CLOSE CUSTOMER
COGNITIVE DISSONANCE FOLLOW-UP
CONTINUING
CUSTOMER

Online Course
SECTION 4A
ECONOMIC GEOGRAPHY - 1
ALAN L. WHITEBREAD
ECONOMIC ENVIRONMENT
Economic potential
Markets in every region of the world are potential
targets for most firms.
Need to find people and / or firms willing and able to buy
Understand the purchasing power of developed vs.
underdeveloped nations
It is a selection process.
The extent of development in a nation or region is
especially important.
ECONOMIC ENVIRONMENT
Economic analysis
There is a tremendous amount of statistics, charts,
graphs, reports, etc. are available
www.cia.gov
www.census.gov
U.S. Department of Commerce Country Commercial
Guides may be found at
http://www.buyusa.gov/home/export.html
Most governments
International organizations
UN
World and regional development banks
Many, many more good sources of information
UNCTAD
United Nations Conference on Trade and Development
[UNCTAD] Trade Analysis and Information System
[TRAINS]
TRAINS based on UN Tariff and Market Access database
[UN TARMAC] at http://www.unctad-trains.org
Imports, tariffs, para-tariffs and non-tariff measures at the
national tariff level At the detailed commodity level of the
national tariff [HS 6-digit minimum]
Approximately 119 member nations
COMTRADE [UN Statistics Division] - World Integrated
Trade Solution [WIT]S is the name of the software that
integrates information from [ http://wits.worldbank.org/wits ]
Exports and imports by detailed commodity code and
partner country with values in USD
Started in 1962, approximately 130 nations
UNCTAD
WTO maintains
Integrated Database [IDB]
Consolidated Tariff Schedule [CTS]
MFN applied, preferential and bound tariffs at the national
level, imports in value and quantity
ECONOMIC DRIVERS
Key elements of world trade are
Capital flows
Volume of capital movements
>$100,000,000,000 per year on the London Exchange
Productivity growth
Output continues to grow faster than employment in
developed countries.
What do each of these mean for global employment?
ECONOMIC DRIVERS
Key elements of world trade
Use of natural resources
Selling a countrys resources
What are the short term and long term implications?
U.S. buying [not using its] resources
What are the long term implications?
Concentration of income
Developed countries have a disproportionate [and
proportionately growing] share of total wealth
What is your most likely world scenario 30-50 years in the
future?
COMPARING COUNTRIES
What are the bases for comparison?
What are the key factors in the comparison?
How will a decision be made?

INCOME GAPS
Annual
per
capita
income Developed nations per capita income
The difference
in 2050 is more
than twice the
amount in 2005.
Developing nations per capita income
2000 2025 2050
What are the implications of this projection?

COMPARING COUNTRIES
Malaysia Indonesia Singapor Thailand
e
Population [millions] 22.6 231.3 4.5 62.3
GDP / capita $3,640 $680 $24,740 $1,970
GDP [$billions] 82.264 157.284 111.330 122.731
Computers / 100 13 1 51 3
people
SOURCES: World Bank, World Health Organization, International

Telecommunications Union, and the International Road Federation,
CIA WorldFactbook 2002
COMPARING COUNTRIES
Malaysia Indonesia Singapor Thailand
e
Population [millions] 22.6 231.3 4.5 62.3
GDP / capita 3,640 680 24,740 1,970
Mobile phones / 100 31 3 72 12

people
KWH per capita 2,474 345 6,641 1,352
Cars / 1000 people 147 12 122 27
SOURCES: World Bank, World Health Organization, International

Telecommunications Union, and the International Road Federation, CIA
WorldFactbook 2002
SUBJECTIVE COMPARISONS
When you are analyzing non-numeric data you have
several different issues to consider.
A fixed point of reference is critical.
Non-numeric data is hard to compare.
You must develop a meaningful scale.

SUBJECTIVE COMPARISONS:
How would you compare these?
Egypt Mexico Netherland
s
Describe ? ? ?
the level of
technology
Describe ? ? ?
the culture
? Select from: primitive, simple, moderate, advanced
Online Course
SECTION 4B
ECONOMIC GEOGRAPHY - 2
ALAN L. WHITEBREAD
COUNTRY ECONOMIC STRUCTURE:
Combining two scales
$35,000+
INDUSTRIALIZED G8 PER CAPITA
INCOME
INDIA $19,999
INDUSTRIALIZING
MEXICO
RAW MATERIAL BRUNEI - OIL $11,999

EXPORTING
COSTA RICA - BANANAS
AFGHANISTAN $5,00
SUBSISTENCE
0
ETHIOPIA
$100
The World Bank scale can be found at Data & Statistics: Country Classification at
http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK:20420458~menuPK:64
133156~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html
SUBSISTENCE ECONOMIES
AFGHANISTAN
ETHIOPIA
PEOPLE =
INCOME =
LIVING CONDITIONS =
INFRASTRUCTURE =
VALUE-ADDED CAPABILITIES =
STAGE OF PER CAPITA
DEVELOPMENT INCOME
It is common for
lesser developed
nations to be in very
G8 different positions on G8
different scales.
INDIA BRAZIL
MEXICO MEXICO
BRUNEI - OIL CHINA
COSTA RICA - INDONESIA
BANANAS
AFGHANISTAN CHAD
ETHIOPIA INDIA
PURCHASING POWER PARITY (PPP)
CONCEPT
The exchange rate should approximate a rate that
equalizes the price of an identical basket of goods and
services in different nations.
PURCHASING POWER PARITY (PPP)
THE WAY IT WORKS
A McDonalds Big MacTM is produced in about 120
countries.
The Big Mac PPP is the exchange rate that would have a
hamburger cost the same in every country.
Comparing these prices with actual rates tends to signal
if a currency is undervalued or overvalued.
Purchasing Power Parity

Divide the local price by the American price.
COMMUNICATIONS INFRASTRUCTURE
Telephone Companies
Internet Service Providers
Cable Systems
Satellite Systems
UTILITIES INFRASTRUTURE
Energy
Water
Sewer
Environmental
Garbage / landfill
Recycling
U.S. Census Bureau, international Data Base, April 2005 version
o
o
Why are they different?

What does each scenario imply
on a global basis? to your firm?
POPULATION PYRAMIDS
http://www.census.gov/ipc/www/idbpyr.html
Online Course
SECTION 5A
GLOBAL STRATEGY, PLANNING, AND PROGRAMS
ALAN L. WHITEBREAD
COMPETITIVE ANALYSIS & STRATEGY
Industry Analysis
National Competitive Advantages
Competitive Advantage & Strategic Models
Strategic Positions
Role of Competitive Innovation
PORTERS FIVE FORCES MODEL:
Industry Analysis
What is the
threat of
significant new
entrants?
What is the What is the What is the

bargaining amount of rivalry bargaining
power of your among existing power of your
key suppliers? competitors? key customers?
What is the
threat of
substitute
products and/or
services?
See Michael E. Porter, Competitive Strategy, New York Free Press, 1980, for
more information.
DIMENSIONS OF GLOBAL
COMPETITION
Success in global markets is determined by your
ability to establish competitive advantages
On a regional or national level
On an industry level
And on a firm level
You must clearly understand

Competitive forces in the industry and
Your firms position within an industry
NATIONAL COMPETITIVE ADVANTAGE
All forces interact in various ways in different situations.
STRATEGY,
STRUCTURE,
AND RIVALRY
In country
FACTORS THAT
DEMAND
AFFECT THE
FUNCTIONS AND
BUSINESS
CHARACTERISTICS
The nations
In country
position in
factors of
production. RELATED AND
SUPPORTING
INDUSTRIES
In country
COUNTRY-SPECIFIC ADVANTAGES
INCLUDE
COST ADVANTAGE
Due to materials or supply chain advantages
LABOR ADVANTAGE
Especially in underdeveloped nations
SHIPPING HUB
Netherlands for Europe
INFRASTRUCTURE
Especially industrialized nations
RELATED / SUPPORTING INDUSTRIES
COUNTRY-OF-ORIGIN
May be significant
COUNTRY-SPECIFIC ADVANTAGES:
DEMAND CONDITIONS
Important domestic-market demand components
include
Size of domestic demand
Composition of domestic demand
The forces behind, and pattern of, domestic demand
growth
How will domestic customers pull the products into
foreign markets?
Are you increasing your domestic sales?
COUNTRY-SPECIFIC ADVANTAGES:
RELATED & SUPPORTING INDUSTRIES
AN ADVANTAGE WHEN THE FIRMS HOME COUNTRY /
MARKET HAS INTERNATIONALLY COMPETITIVE
INDUSTRIES
Industries that are related to or in direct support;

Suppliers providing inputs to downstream industries;
That function so that contact and coordination gives
access to foreign markets; and / or
Have clusters of geographic concentrations of
interconnected companies in a particular field
FIRM STRATEGY, STRUCTURE, AND
RIVALRY
Differences in management styles, skill sets, and
strategic perspectives create advantages and
disadvantages.
Domestic rivalry has a strong influence on competitive
advantage because it
keeps an industry dynamic, and
creates pressure on all firms to improve and innovate.
The intensity of competition and quality of
competitors are important.
FIRM-SPECIFIC ADVANTAGES
INTELLECTUAL PROPERTY
KNOWLEDGE MANAGEMENT
BRAND EQUITY
CONTROL OF MATERIALS / COMPONENTS
DISTRIBUTION CONTROL
CAPACITY
TECHNOLOGY
HUMAN RESOURCES
OTHER FORCES
GOVERNMENT
Buyer of products and services
Maker of policies on
Labor
Capital formation
Product standards
Environmental issues
Nature of competition
Tax
How do various governments affect your organization?
COMPETITIVE ADVANTAGE OF THE FIRM:
PORTERS THREE GENERIC STRATEGIES
COMPETITIVE ADVANTAGE
Customer Perceived Uniqueness Low Cost Position
C
O
OVERALL COST
M DIFFERENTIATION LEADERSHIP
INDUSTRY
P
WIDE Focus on differentiation Hard to keep
E
and perceived value long term
T
I
V
E MARKET
NICHE
SEGMENT
Understand segments and focus attack.
S ONLY
C No direct battles with major competitors
O
P
THREE STRATEGIC POSITIONS
VARIETY-BASED
Engage in a limited number of activities related to
delivering a product.
NEEDS-BASED
Engage in a specific customer segment with a relatively
broad set of needs.
ACCESS-BASED
Uniquely or preferentially reach a specific market
[segment or sub-segment].
STRATEGIC PERSPECTIVES
Advantage: there is less risk if several advantages exist.
Gaps exist and present opportunities in competitive

offerings which are focused on specific market areas.
Changing the rules: refuse to play by the rules set by

industry leaders-set your own rules [dangerous]!
Collaboration: use know-how developed by other

companies to innovate quicker.
THE PRODUCT LIFE CYCLE OVERVIEW
Introduction Growth Maturity

TOTAL
S
ALES
Country 1
+ Country
2
Country 1
Country 1 In Decline
Country 2
TIME
Manage the Marketing Mix (4Ps) The marketing mix may be different in each
country or market and each stage of the product life cycle.
INTERNATIONAL MARKET TERMS
Multinational
Composed of any combination of regional and/or
country markets
Regional
Composed of multiple countries in a defined geographic
area
Country
A single country
INTERNATIONAL PRODUCT MARKETS
Multinational
Sell product[s] around the world or in multiple regions
with only cosmetic changes.
Regional
Sells product[s] to multiple countries in a defined
geographic area with only cosmetic changes.
Country
Sells product[s] throughout a country with few if any
changes.
Local
Sells a specific product for a defined locale.
IMPLEMENTING SUPERNATIONAL
PROGRAMS
Coordination of market activities
Regional [multiple nations]
National
State equivalent
Local
Provide acceptable levels of decision-making for
program flexibility and speed.
Monitor progress
REQUIREMENTS FOR A GLOBAL
PROGRAM
STANDARDS
Company name, logo, and placement of these items
Compare General Electric items around the globe
A standard brand or trademark
Usually with some modifications see Coca-Cola and
McDonalds
A leadership position
THE MANY DIMENSIONS OF MANAGING
WORLD MARKETING ACTIVITIES
MARKETING MARKETING
PROGRAMS MIX
SUPPLY CHAIN SYSTEMS AND

OR TRANSACTIONS
VALUE CHAIN
MANAGEMENT
OPERATIONS LOGISTICS
MARKETING MIX
Which products?
Which channels of distribution?
What promotions?
What price structures?
SYSTEMS AND TRANSACTIONS
What types of transactions?
Purchase order, internet, verbal,
By each, or case, or pallet, or truck,
What terms of sale?
Cash, check, credit card, letter of credit
How will they be supported?
What systems are required?
MARKETING PROGRAMS
What is the scope of each program?
What is the timing of each program?
What are the implementation changes due to the
defined area?
OPERATIONS
Which manufacturing facilities will support this?
What sourcing issues must be met?
How do we link sales forecasts, manufacturing
schedules, and logistics functions for this product
[set]?
How do we get enough product to our customers for
the product launch?
LOGISTICS
Is the supply steady or erratic?
What are the delivery requirements?
How much inventory?
Where should the inventory be located?
What are expected delivery times?
What does this do to our vendors?
What potential problems exist?
SUPPLY CHAIN
Ad agencies
PR firms
Promotional firms
BUSINESS PLAN CONTENTS
Executive Overview
Marketing Opportunity
USP, FABs
Product Development
Cost, time, risk analysis, other issues
Go to Market Strategy
Launch, Roll-out
Detailed Financial Analysis
MARKETING
Customer Analysis: the need
Competitive Analysis
Company Analysis
Market segments and target markets
The Marketing Mix
Roll-out Plan
Summary of benefits
PRODUCT DEVELOPMENT
Summary of issues
Significant hurdles
Remaining items
ROLL-OUT PLAN
Detailed introduction to the market
Possibly in stages
Gantt chart[s]
Department agreement
Remaining special concerns

THE MARKETING BUDGET
Gantt Chart
CAMPAIGN TIMELINE: SMALLER COMPANY
Week Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
RESEARCH
Customer/Prospect Research
CAMPAIGN CREATION & MANAGEMENT

Brainstorming
Creation
Presentation to Top Execs
Meeting and Assignments
Ongoing Weekly Status Meetings
ADVERTISING: PRINT
Create Media Plan (Print and Online)
Buy Print Media
Design
Photography and/or illustration
Production
Copywriting and Review
Final Negatives, Insertion Orders
Ship Negatives and Orders to Publications
FINANCIAL ANALYSIS
Comprehensive set of financials
Statements
Line item detail
Possible stage evaluation and review
Detailed capital requirements
Human resources
Project analysis
DCF, IRR, ?
BUDGETING
Top-down or bottom-up approach
Expected units
Expected revenues and sources
Avg. selling price, gross margin
Estimated average standard costs
Marketing expenses
Line item detail by area
Implementation
Timing issues and other schedules
Projected pre-tax income
Online Course
SECTION 5B
GLOBAL STRATEGY, PLANNING, AND PROGRAMS
ALAN L. WHITEBREAD
U.S. LAW
The Webb-Pomerene Act of 1918 allows U.S. firms to
join forces in export activities. These activities will
not be subject to the Sherman Act.
EXPORT PROMOTION
International Partner Search [USDOC]
The U.S. Commercial Services International Partner
Search will put our trade specialists in over 60 countries
to work finding you the most suitable strategic partners.
You provide your marketing materials and background
on your company. We use our strong network of
international contacts to interview potential partners
and provide you with a list of up to five pre-qualified
partners.
http://www.export.gov/salesandmarketing/IPS.asp
EXPORT PROMOTION
Gold Key Service [USDOC]
Representatives of U.S. businesses planning to
visit a country to explore business / investment
prospects are encouraged to use the custom-
tailored "Gold Key Service" provided by the U.S.
Embassys Commercial Section. This service
combines orientation briefings, introductions to
potential business partners, assistance in
developing a sound marketing strategy, and
effective follow-up. The service has a small fee.
Companies interested in this service are requested
to contact the U.S. Embassy's Commercial Section
well in advance of their arrival.
http://www.export.gov/salesandmarketing/gold_key.
asp
HARMONIZED TARIFF SYSTEM [HTS]
IMPORTS
The HTS assigns 6-digit codes for general categories.
All definitions must conform to the first 6-digit
framework.
The harmonized code number is also used to assist
customs with duty assessments.
It is helpful, and in some countries required, to have
the code included on the commercial invoice.
FOR CLASSIFICATIONS AND RATES GO TO
http://www.usitc.gov/tata/hts/
DETERMINING AN HS CODE:
1 Liter Frozen Orange Juice in a Container
20 Chapter 20 - Preparations of vegetables, fruit, nuts or other
parts of plants
2009 Fruit juices (including grape must) and vegetable juices, not
fortified with vitamins or minerals, unfermented and not
containing added spirit, whether or not containing added
sugar or other sweetening matter:
Orange juice:
2009.11 Frozen:
2009110020 In containers each holding less than .946 liter

liters
2009110040 In containers each holding .946 liter or more but
not more than 3.785 liters . . . . . . . .liters
2009110060 In containers of more than 3.785 liters liters
SCHEDULE HTS
All of the imports of the U.S. are based on the
Harmonized Tariff System [HTS] which is based on
the Harmonized Commodity Description and Coding
System (HS), administered by the World Customs
Organization in Brussels.
The 4- and 6-digit HS product categories are

required. In advanced economies like the U.S. they
are also subdivided into 8-digit unique rate lines and
10-digit non-legal statistical reporting categories.
Import codes are administered by the U.S.

International Trade Commission [USITC].
SCHEDULE B CODES
Administered by the U.S. Bureau of the Census
Schedule B export codes
http://www.census.gov/foreign-trade/schedules/b
[browse]
Schedule B numbers must be reported on the
Electronic Export Information [EEI] form in the U.S.
Customs and Border Patrol Automated Export System
[AES].
For how to correctly complete an EEI form go to
http://www.cbp.gov/xp/cgov/trade/automated/aes/
SHIPPERS EXPORT DECLARATION
[SED] U.S. FORM 7525V
This export form is required for
any shipment covered under a "validated license; or
mail shipments over $500; or
all other shipments valued over $2,500
And for shipments to Puerto Rico, the U.S. Virgin Islands,

and former Pacific Trust Territories if they meet any of the
above conditions.
It must be filed via AES Direct a free service of the

U.S. Customs and Border Patrol.
See http://export.gov/logistics/eg_main_018121.asp
for additional export information!
SHIPPERS EXPORT DECLARATION
[SED] U.S. FORM 7525V
It is strongly recommended that you always include
the following statement on your SED or in your
Automated Export System [AES] document and all
physical copies.
The commodities, technology or

software were exported from the United
States in accordance with the Export
Administration Regulations. Diversion
contrary to U.S. laws is prohibited.
THE RIGHT HS / SCHEDULE B
CODE
It must be correct!
Can be 6 to 10 digits
IF IT IS WRONG
MANY BAD THINGS CAN HAPPEN if the error
is discovered
-OUTBOUND
- INBOUND
- FINANCIAL INSTRUMENT
EXPORT COMMODITY CONTROL LIST
10 categories including
Defense articles & services / national security
Dangerous drugs and narcotics
Endangered plants and wildlife
Chemicals
Radioactive materials
Explosives
and more!
Export Administration Regulations are at

http://www.access.gpo.gov/bis/ear/ear_data.html

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CERTIFIED GLOBAL BUSINESS PROFESSIONAL

BUSINESS TOOLS AND THE WORLD MARKETPLACE

Many full or partial lecture slides plus other support

Human resources Marketing Capital

Environment Trade Competition

Peter Drucker, one of the great management

Myopia: defining your business too narrowly

You can always get sales!

Sustainable Very long term [5+ years]

NOT CORE COMPETENCIES

For instance, some of General Electrics business

broadly defines what the entity should be like in 10-20

This statement needs to become part of the entitys

CONSIDER THE FOLLOWING

STRENGTHS LEVERAG OPPORTUNITIE

WEAKNESSES PROBLEMS THREATS

STARS QUESTION MARKS

Invest heavily Decide quickly

CASH COWS DOGS

Milk for $$$ Divest or discontinue

Strong Medium Weak

SBU going where we SBU losing ground

The arrow indicates the movement

Change is often resisted overtly and covertly.

Change is a way of life.

Change is why we have developed to where we

C R&D JOINT VENTURE

These show ways to grow your business generally go from

Features Expand Stimulate How to

Brands Intensify Attract non- Penetrate /

Market Use more

THE WORLD MARKETPLACE

China traded along the Silk Road more than

The Roman Empire

A limited view of the world

Textiles, carpets, ivory, gold, spices and ceramics

Death of the Prophet Muhammad 632

1500-Europe lags culturally and economically

It is the governments responsibility to create an

One man draws out the wire, another straightens it,

Hypothetical Example: (for a given level of resource input)

Therefore: What should the US produce and what should Japan

Relative production costs are more meaningful in

Computers 20 10 20:10 or 2:1

Automobiles 30 20 30:20 or 1.5:1

Therefore: What should the U.S. produce and what should

INDUSTRIAL REVOLUTION [15th 16th

INDUSTRIAL REVOLUTION [17th 20th

British open markets for the products of new

Advances in communications and transportation

The former Soviet

Africa is 11.6 million

SINGAPO HONG KONG

Notice the difference in population and per capita income.

RAW MATERIAL BRUNEI - OIL $11,999

Review all hot spots for the current day.

This is one of many private and public groups that

Culture is like an icebergeasy to observe the

Cultural relativism is the idea that any

Ethnocentrism describes looking at the

Culture is a shared meaning system and set of social

Culture is slowly learned over a lifetime.

Culture is the set of generations of experiences over

Use examples from your travels.