Housekeeping • Web site is ready • www.jou.ufl.edu/faculty/jvillegas/iad/ • Monday • Read article on Web site
Why companies go abroad? • ALREADY, the ______ buy more cellphones than consumers anywhere else. They buy more film than the Japanese. They now buy as many vehicles as the Germans (New York Times 01/05).
Here’s how it starts. Step 1: Terms • Explain various forms of marketing strategies and company structures. • Understand the concept of globalization. • Answer the question – why companies go abroad? • Introduce models of thinking about the world.
Definitions in Int’l Business & Advertising • Globalization – What is it? • In 1983 an article appeared in the Harvard Business Review that generated controversy.
Theodore Levitt (1983) • Defined globalization. • “The crystallization of the entire world as a single place”. • Ignored regional and national differences. • Companies must operate as if the world was only one market. • Companies should sell the same product the same way everywhere.
Rationale for the “One Market” World • Consumers around the world are motivated by the same desires: • Modernity • Quality • Value • New technology and standardized methods of production make global marketing programs feasible. • Levitt argues for STANDARDIZATION
Potential Pitfalls • Challenges of different languages: • Translations • Colloquialisms • Challenges of concept development: • Different definitions and meanings
Why Companies Go Abroad? • Saturated domestic markets. • Higher profit margins in foreign markets. • Increased foreign competition at home. • Trade deficits. • Emergence of new markets.
Types of Marketing Strategies • International Marketing • The extension of the home country strategy and plan to the world. • Multinational Marketing • Development of a strategy for each country.
Types of Marketing continued • Global Marketing • Integrates both the international and multinational approach. • Objective is to create the greatest value for customers and the greatest competitive advantage for the company.
Types of Marketing continued • Transnational Marketing • Centralizes some resources at home and others abroad. • Also distributes some resources to local operations in different countries. • This forms extends, adapts and creates a marketing mix.
Domestic or national Companies • Focuses on serving consumers in the home country. • Term often associated with home or domestic market – Ethnocentric. • Ethnocentric means home-country oriented. Tendency to look inward – highly nationalistic.
International Companies • A company that does some business in another country. • It must adapt marketing mix to accommodate new markets.
Multinational Companies • When a company decides to respond to market differences. • Creates a multinational strategy. • A unique strategy for each country. • Recognizes differences in countries. • POLYCENTRIC – host-country oriented. • An outward versus an inward perspective
Global Companies • Focus on building cost advantages through centralized global-scale operations. • Strategic assets, resources, responsibilities and decisions are centralized. • Mentality is to treat operations in other countries or regions as a delivery pipeline.
Transnational Companies • Uses global resources to serve global customers. • Efficiency = global competitiveness. • Some functions centralized, others local. • Gives customer the illusion of being local.
Newer Forms of Transnationals • Virtual or modular corporation • Temporary network of independent companies • Modular corporations – trend of the 90’s • Modulars focus on core competency and outsource the rest.
FRAMEWORK FOR THINKING ABOUT THE WORLD FOUR MODELS OF WORLD ECONOMY AND WORLD ORDER
1st, 2nd and 3rd World Order • 1st – US • 2nd – Russian • 3rd – everyone else • Product of the Cold War. • Two superpowers tried to dominate the globe. • What’s wrong with this picture?
The North-South Divide • Divides world into two parts. • Developed world – mainly the North. • Developing world – mainly the South. • What wrong with this picture?
21st Century Model • One macro-structure • One market – one world • Underscores the Levitt’s concept • Globalization of media • Spread of capitalism • Western imperialism • Global insecurity
Core Perspective of the World • Immanuel Wallerstein (1974) describes the history of the capitalist world economy from Middle Ages to present. • He differentiates the world economy into 3 zones: • 1) Core (states) – high income areas • 2) Semi-periphery - middle/low income • 3) Periphery – low income areas
Core Perspective continued • A FLUID MODEL THAT CAPTURES HISTORY. • Core states tend to be replaced over time with other countries. • Technological advances play the most important role in changing status.
International Resources • Centers: • International Center • http://www.ufic.ufl.edu/ • Center for Latin American Studies • http://www.latam.ufl.edu/
International Resources • NOTE: Access to UF’s online resources require direct access or the use of a proxy server • http://www.uflib.ufl.edu/access.html
e-International Resources • A great first step is the Business Reference site • http://web.uflib.ufl.edu/cm/business/subjects/internat.htm • Databases (Numerical info) • Country profiles • CIA Factbook http://www.odci.gov/cia/publications/factbook/ • Economist Intelligence Unit (BR) • Lexis-Nexis (BR)
e-International Resources • Market data • Euromonitor (BR) • TableBase • Strategis - Market Research Reports • Company data • Dow Jones • Thomson Analytics
e-International Resources • Articles (In depth info about countries, products and companies) • The key is in the keywords • Lexis-Nexis • Factiva • ABI-Inform
International Resources • Books, publications • International business/advertising books • IB journals • Magazines, TV, etc.