Global Business

Rachel Farrell, Aoife Healion, SHS, Tullamore

What is a
Global Company?
A business that operates all over the
world.
Treat the world as one country.
Locate in low wage countries.
Purchase raw materials from cheapest
country.
Borrow from cheapest country.
Move managers around.

Examples

Coca-Cola
Toyota
McDonalds
Nike

Reasons for the

development of Global Co.s
Increase Sales: Higher profits.
(home market saturated)

Mass Produce: Economies of Scale.

Developments in ICT: Communication is
faster & easier.
Deregulation: WTO reducing barriers to
trade.

Global Marketing
Selling the same product in the same
way all over the world using the
global marketing mix (4 Ps).
Concentrates on similarities across
world markets.
Uses the
Standardised Marketing Mix.

Adapted Marketing Mix

SMM may have to be adjusted to
meet local tastes, cultures etc.
Eg. RHD cars in Ireland & UK
LHD rest of world.

Global Product
Try to use same brand name world wide.

Eg. Jif to Cif, Marathon to Snicker.

Barbie doll modified for Japan!!!
McDonalds dont sell beef in India!!

Global Price
The price may vary around the world
due to:
Higher standard of living = higher price.
Higher transport costs = higher price.
Taxes & tariffs = higher price.
More competition = lower price.

Global Promotion
Special Events = economies of scale:
Olympic Games
World Cup
Not always possible to use identical promotion:
Proctor & Gamble had to withdraw bathroom tv
add in Japan.
In Germany come to life with coke = come out
of the grave with coke!!!!!!

Global Place
Channels of distribution is longer.
Manufacturer-exporter-importeragents and distributors .
More time consuming and expensive.

Global Place continued

Many global businesses rely on local
agents and distributors to deliver.
CocaCola allows local businesses to
produce & sell its product under
licence.
Less expensive but involves loss of
control over quality.

Why is Global Marketing

important?

Economies of Scale:

The more products that are

made/advertised the cheaper per unit to
make/promote.

Home market may be saturated:

Continued.
Standard Marketing Mix may not
always work.
Cultural differences must be
recognised.
Adapted Marketing Mix takes these
differences into consideration.

Role of ICT in International

Trade
1. Increase sales:
e-commerce is using the internet to sell
products all around the world either
through websites or e-bay.
2. Advertising:
Using Google to advertise globally.

3. Faster & cheaper

communications
E-mail is faster than snail mail.
Businesses can e-mail documents
worldwide for a flat monthly fee.
EDI: Electronic Data Interchange,
sending standardised documents to other
firms that you deal with regularly.

4. Decision-making
WWW is a vast library of information.
Managers can access information it
needs about trading partners.
More informed decisions can be made

5. Reduced Costs
Video-conferencing allows virtual
face-to-face meetings without travel.
Live pictures & sound are sent via the
internet or satellite.
This reduces cost as no flights or
accommodation is needed.
e-banking reduces fees.

Try this yourself!!

Explain 3 opportunities of global marketing
for Irish business:
Hint: Less dependent on home market,
economies of scale, avail of low cost wages
Explain 3 threats of global marketing for
Irish business:
Hint: Language, transport, competition

Transnationals (TNC)
Large business with headquarters in one
country and branches in many others.
May move operations from one country to
another in response to market conditions.
IDA offers incentives to foreign TNCs to set
up here.
Eg. INTEL, IBM, Coca Cola, Nestle,
Unilever.

Unilever

Impact of TNCs in
Ireland

Advantages of TNCc
Disadvantages of TNCs

Impact of TNCs in
Ireland

Advantages of TNCs
Jobs are created directly & indirectly.
Taxes revenue from corporation tax , Vat and
PAYE increase.
Import substitution: TNCs source raw materials
in Ireland
Exports increase improving the balance of trade.
Effeciency & quality are improved in order to
compete on the world stage, benefits consumers.

Disadvantages of TNCs
Powerful TNCs try to influence indusrial
relations & tax policy by threatening to
withdraw.
Closures of TNCs causes massive
unemployment.
Grants are lost if TNCs move.
Profits are transferred out of the host
country

Why do some businesses

become TNCs?
Less dependent on the home market, inc
sales/pr.
Avail of low labour costs in some countries such
as Poland, Hong Kong..
Reduce warehouse costs by making & selling in
same country.
Overcome trade barriers, Japanese car
manufacturers set up in Ireland so they can sell
to EU without import duties being imposed.

Reasons for the development

of TNCs in Ireland
TNCs locate in Ireland for the following reasons.
EU: Access to EU markets, Ireland only English speaking
country using the euro.
Infrastructure: Improved roads, telceommunication &
skilled work force.
Incentives: Low corporation tax 12 % and grants.
Economic & political stability: National wage agreements,
good industrial relations.???????????????

Factors that influence the

location of a new factory.

Infrastructure
Incentives such as grants and low tax
Skilled workforce
Support services
Availability of raw materials
Proximity of markets

Exam Questions
Short
Long
2000 Q. 10 TNC 2008 Q. 2. TNC
2007 Q. 3. (b) GM
2006 Q. 3. (c) GM
2004 Q. 3. (a), (b) GM, TNC
2002 Q. 3. (b) GM
2000 Q. 3. (a) GM