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The Global Marketplace

Global Analysis. The Global Marketplace. The Global Marketplace: Objectives. List forms of international trade Identify political, economic, socio-cultural and technological factors that affect international business.

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The Global Marketplace

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  1. Global Analysis The Global Marketplace

  2. The Global Marketplace: Objectives • List forms of international trade • Identify political, economic, socio-cultural and technological factors that affect international business

  3. How many products that you use are made in foreign countries? How many products made in the United States are sold in foreign countries? When you answer those two questions you will realize that the world is now a global marketplace. Global Analysis

  4. The Global Marketplace Why It's Important The global marketplace makes all the people and businesses in the world potential customers, as well as potential employees or employers. Many familiar products are produced by foreign-owned companies that have operations in the United States. In this chapter you will explore the key concepts that govern international trade and help create the global marketplace.

  5. The Global Marketplace Defining International Trade International trade involves the exchange of goods and services between nations. Imports are goods and services purchased from other countries. Conversely, exports are goods and services sold to other countries. These exchanges occur between businesses but are controlled by the governments of the countries involved.

  6. Doing Business Internationally • Importing • Exporting • Licensing • Contract Manufacturing • Joint Ventures • Foreign Direct Investment • Multinationals and Mini-Nationals

  7. Purchasing goods from a foreign country. Must meet same standards as domestic products Quota can limit entry of certain goods into the country U.S. businesses usually hire customs brokers—specialists licensed by the U.S. Treasury Department Importing

  8. Exporting • Goods and services sold to other countries • US company wishes to enter into the global marketplace with minimal risk and control • Help from US government • Internet export portal • BuyUSA website

  9. Licensing • Involves letting another company (licensee) use a trademark, patent, special formula, company name, or some other intellectual property for a fee or royalty. • Franchising

  10. Contract Manufacturing • Involves hiring a foreign manufacturer to make your products, according to your specification. • Benefit: lower wages, which allow companies to be more competitive in their pricing. • Downfall: proprietary information must be given to these companies

  11. Joint Ventures • Joint Venture: a business enterprise that companies set up together • Viacom Inc. & Shanghai Media Group

  12. Foreign Direct Investment • Foreign direct investment (FDI) is the establishment of a business in a foreign country. • Sometimes that may involve no more than setting up an office with a staff to maintain a presence in that country. Higher levels of direct investment involve acquisitions of existing foreign companies and construction of facilities such as manufacturing plants and retail stores.

  13. Multinationals & Mini-Nationals • Multinationals are large corporations that have operations in several countries • Mini-nationals are midsize or smaller companies that have operations in foreign countries

  14. Global Environmental SCAN • Political Factors • Government Stability • Trade Regulations & Laws • Economic Factors • Infrastructure • Labor Force • Employee Benefits • Taxes • Standard of Living • Foreign Exchange Rate • Socio-Cultural Factors • Language & Symbols • Holidays & Religious Observances • Social & Business Etiquette • Technological Factors

  15. Political factors • Political factors include a government’s stability, its trade regulations and agreements, and any other laws that impact a company’s operation. • A government’s stability is an important factor when considering international business operations

  16. Trade Regulations and Laws • A business must keep abreast of new trade regulations, which can force companies to reconsider doing business in a country. • Domestic law must be followed by foreign marketers.

  17. Economic Factors • Infrastructure • Labor Force • Employee Benefits • Taxes • Standard of Living • Foreign Exchange Rate

  18. Socio-Cultural Factors • Language and Symbols • Holidays and Religious Observances • Social and Business Etiquette

  19. Technological Factors • Technology is changing the ways that businesses can get involved in international trade. • Studying a country’s technology means taking into consideration even the most basic factors such as measurement systems and electric voltage standards

  20. Global Marketing strategies • Globalization • Adaptation • Product Adaptation • Promotion Adaptation • Customization

  21. A new form of customization: Transcreation

  22. Global Marketing strategies

  23. Global Analysis The Global Marketplace

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