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Chapter 1. Introduction to international marketing. What is international marketing? The process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organisations A tool to improve domestic and global position

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Chapter 1

Chapter 1

Introduction to international marketing

  • What is international marketing?

  • The process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organisations

  • A tool to improve domestic and global position

  • Subject to constantly changing macro-environmental factors

  • The international marketplace

  • ‘A powerful force drives the world towards a converging commonality, and that force is technology’ (Levitt 1983)

  • Globalisation is creating a ‘borderless economy’

  • Production becomes more efficient

  • The international marketplace

    • Strong drive towards uniformity and homogeneity

    • iPod: designed in America, assembled in China, and parts are sources from South Korea, Taiwan, Japan and Singapore

    • The factory floor spans the world

  • The international marketplace

  • Location is important to internationally orientated firms

  • Australia's ‘tyranny of distance’:

    • diminished by technological advances in transportation and communications

  • The locus of world power shifts (e.g. the rapid economic growth in Asia, see Fig 1.4 next slide)

The international marketplace

Car industry –

China stepping up to the plate?

Click to play video

  • The international marketplace

  • Timing is an important issue

  • Economic growth varies by country and period

  • Growth tends to slow down as an economy matures

  • International marketing questions

  • Should I obtain my supplies domestically or from abroad?

  • What marketing adjustments are or will be necessary?

  • What threats from global competition should I expect?

  • How can I work with these threats to turn them into opportunities?

  • What are my strategic global alternatives?

The international marketplace

What Thomas Friedman means when he says ‘the world is flat’

Click to play video

  • The importance of world trade

  • Trading blocs have emerged (e.g. NAFTA).

  • Encourages trade

  • Firms go global or risk losing domestic markets to overseas competitors

  • Impacts domestic policy making

  • Global linkages

  • Countries, institutions and individuals are all linked

  • Great pressure to quickly gather, manipulate, analyse and disseminate information

  • Asian Economic Crisis

  • Global Financial Crisis

Global linkages:

The 2008 financial crisis

  • Global linkages

  • World trade opens up entirely new business horizons

  • Technological innovation effects all business activities

  • Firms can operate in a ‘market space’ rather than a marketplace

  • Global linkages

  • Economic interdependence is not stable

    • for example, the decline of the United Kingdom’s relative importance to Australia

  • Pace of change is accelerating

  • The role countries play is changing

Low interest rates that result in an outflow of funds are unsustainable

Many domestic issues have become international concerns

In 2006 the WTO core subject was subsidies

Domestic policy repercussions

Protectionist measures: unsustainable

benefits some i.e. Australian and New Zealand agriculture

harms others i.e. Indian agriculture

Policies have international repercussions

Politicians take into account the domestic effects of international commitments

Domestic policy repercussions

Currency flows: unsustainable

independent of trade

set exchange rates (values of currencies relative to each other)

outnumber trade flows 100:1

Exchange rates determine the level of trade

Domestic policy repercussions

Policy makers seek to restrict global trade to regain power and influence events with:



other import regulations

The usefulness of these measures are often restrained by international agreements (i.e. WTO)

Domestic policy repercussions

EU protectionism row escalates and influence events with:

Domestic policy repercussions

Click to play video

Anticipating the actions of global competitors and influence events with:

Continual development of strategy requires:

technological innovation

process improvements


Challenges in international marketing

Enhancing market position and influence events with:

Awareness of global developments

Adaptation to market conditions

Social effects of globalisation are often questioned (e.g. G8 protests)

Challenges in international marketing

Climate change and influence events with:

Changing consumer attitudes

G20 Summit

Heightened ethical concern

The popularisation of green promotion

Challenges in international marketing

Wal-Mart's green revolution and influence events with:

Challenges in international marketing

Click to play video

Between 1999–2008 world trade nearly trebled (US$5.7 trillion–US$16.1 trillion)

For many countries exports exceed GDP (see Fig. 1.5)

Emerging economies (i.e. China and India)

New technologies

Opportunities in international marketing

Opportunities in international marketing trillion–US$16.1 trillion)

Firms can reach more customers trillion–US$16.1 trillion)

Market saturation can be avoided

Multinational agreements combine strengths

Firms engaged in international marketing outperform their domestic counterparts

Opportunities in international marketing

Lowers the risk of insolvency trillion–US$16.1 trillion)

Higher wages

Consumers have more variety

Firms can learn from their competitors

Global employee recruitment

Opportunities in international marketing

SMEs are ‘born global’ trillion–US$16.1 trillion)

Isolation is impossible

Exploiting international opportunities requires careful exploration

Opportunities in international marketing

The trillion–US$16.1 trillion)Maasai go mobile

- an African journey with Jonathan Dimbleby

Opportunities in international marketing

Click to play video