MARKETING ACROSS THE GLOBE

Competing on Global Basis

Blunders in International Market

NAFTA Includes Canada, the United States, and

Mexico.
North American Free Trade Agreement (NAFTA) The world's largest free-trade zone. Combined population of 360 million Combined economy of $6 trillion. Tariffs on many items disappeared Many licensing requirements and quotas were lifted. The first industries to benefit were autos, textiles, capital goods, financial services, construction equipment, electronics, telecommunications, and petrochemicals.

European Union / European Community / Common Market

Twelve countries that have lifted most internal trade barriers. Its members are Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Denmark, Ireland, Spain, the United Kingdom, Portugal, and Greece. The European Union has been evolving for nearly four decades. Combined population of 375 million Purchasing power almost equal to the United States Full of diversity. There is potential for a protectionism movement by the European Union against outsiders. Rivalry is very intense in the EU.

Mercosur Includes Brazil, Argentina, Uruguay, and Paraguay

APEC

Includes 21 countries alongwith NAFTA members, Japan, and China. Working to create a pan-Pacific free trade area under Asia Pacific Economic Cooperation forum.

GLOBAL MARKET-ENTRY STRATEGIES

Exporting
Sell domestically produced products in another country. Least complicated Least risky Can sell directly to foreign importers or buyers Can sell to independent exporting intermediaries located at home. Export Merchant The most common intermediary Usually treated like a domestic customer by the domestic manufacturer. Assumes all risks Sells internationally for its own account.

Export Agent or Plays the traditional broker's role by bringing the buyer and seller Broker together without taking title to or possession of the goods. An export broker operates primarily in agriculture and raw materials. An export agent may be a foreign sales agent-distributor living in the market country, or a resident agent in the manufacturer's home country for foreign buyers

Licensing
Licensor agrees to let another firm legally use any or all:
manufacturing process, trademarks, patents, trade secrets, other proprietary knowledge.

The licensee agrees to pay a fee or royalty.

Variations of licensing
Contract Manufacturin Foreign firm manufactures products according to stated g specifications. Product is then sold in the foreign country exported back.

Contract Assembly Foreign firm assembles (not manufactures) parts and components that have been shipped to that country. Franchising Contract between franchisor and franchisee Allows the franchisee To operate a certain type of business Under an established name According to specific rules. Franchising is one of the fastest-growing market-entry strategies. Over 350 U.S. franchisors operate more than 32,000 outlets in foreign countries.

Joint Ventures
A joint venture occurs when a foreign company and a local firm invest together to create a local business. Two companies share ownership, control, and profits of the new company.
Advantages of joint ventures: Disadvantages of joint ventures

One company may not have the necessary financial, physical, or managerial resources to enter a foreign market alone. A government may require or encourage a joint venture. Gives management a voice in company affairs that it might not have under licensing.

The two companies may disagree about policies or courses of action. Government bureaucracy may bog down the effort. Financially risky The partner that learns the fastest comes to dominate the relationship and can then rewrite its terms.

Direct Investment
Active ownership of any of the below:
Foreign company Overseas manufacturing facilities Overseas marketing facilities

A firm may want to acquire an existing foreign firm in order to acquire personnel or some other valuable resource. The U.S. is a popular place for direct investment by foreign companies.

Why???
Economies of Scale Branding Add revenue sources and growth markets Reduce dependence on your home market

When???
The firm should take a look at their own Strengths and Weakness, vis--vis competition and then take the following decisions: To go overseas or not If yes, which market(s) to enter? The mode of entering the desired market(s) Having own offices Technology Transfers

Cultural Diversity
cross-cultural Study of similarities and differences among analysis consumers in two or more nations or societies. Involves an understanding values customs symbols language.

1. Values
Represent personally or socially preferable modes of conduct or states of existence that are enduring.
Affect consumption-specific values Affect product-specific values.

2. Customs
Norms and expectations about the way people do things Giving token business gifts is popular in many countries where they are expected and accepted. Bribes, kickbacks, and payoffs to commit an improper act is considered corrupt in any culture. Prevalence of bribery has led to an agreement among the worlds major exporting nations
Patterned after the Foreign Corrupt Practices Act 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.

3. Cultural symbols
Things that represent ideas and concepts Different cultures ascribe different meanings to things Semiotics examines the correspondence between symbols and their role in the assignment of meaning for people.

4. Language

Know the native tongues Know the idioms and nuances of a language. Unintended meanings of brand names and messages range from the absurd to the obscene Back translation - Translated word or phrase is retranslated into the original language by a different interpreter to catch errors.

USA-JAPAN Business Cultures

Japan Formal Indirect business Prolonged Bargaining More stability in the jobs USA Informal Direct business Hard Bargaining Top management shifts

QUERIES