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DRIVING FORCES AFFECTING GLOBAL INTEGRATION & GLOBAL MARKETGING. Multilateral economic agreements. Converging market needs & the information revolution. Transportation & communication improvements. Product development costs. p. 56.

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slide1

DRIVING FORCES AFFECTING GLOBAL INTEGRATION & GLOBAL MARKETGING

Multilateral economic agreements

Converging market needs & the information revolution

Transportation & communication improvements

Product development costs

p. 56

slide2

DRIVING FORCES AFFECTING GLOBAL INTEGRATION & GLOBAL MARKETGING

Quality

World economic trends

Leverage

p. 59

asean
ASEAN

The Association of Southeast Asian Nations, commonly abbreviated ASEAN is a geo-political and economic organization of ten countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand.

Since then, membership has expanded to include Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam.

Its aims include the acceleration of economic growth, social progress, cultural development among its members, the protection of the peace and stability of the region, and to provide opportunities for member countries to discuss differences peacefully.

ASEAN- Other Countries

ASEAN has concluded free trade agreements with PR China, Korea, Japan, Australia, New Zealand and most recently India.

The agreement with People's Republic of China created the ASEAN–China Free Trade Area (ACFTA), which went into full effect on January 1, 2010. In addition, ASEAN is currently negotiating a free trade agreement with the European Union.

product development costs
Product development costs

Cost of developing a new drug in 1976- $54M

Cost of developing a new drug in 2009-$400 Million

Such huge investments can be recovered only in global market place.

Refer Table 1-10 on Page 58

quality
Quality

Global marketing strategies generate greater opportunities and greater revenue which intern support design and manufacturing quality.

leverage
Leverage
  • Global companies possess the unique opportunities to develop leverage.
  • It means the type of advantage that a company enjoys by virtue of the fact that it has experience in more than one country.
    • Experience transfer
    • Scale of Economies
    • Resource Allocation
    • Global strategy
leverage experience transfers
Leverage: Experience Transfers

A global company can leverage its experience in any market in the world.

It can draw on management practices, strategies, products, advertising appeals, or sales or promotional ideas that have been tested in actual markets and apply them in other comparable markets.

ABB- 1400 subsidiaries in 140 countries.

Very famous for running the operations with the minimum number of staff

leverage scale of economies
Leverage: Scale of Economies

The global company can take advantage of its greater manufacturing volume to obtain traditional scale advantages within a single factory.

Also, finished products can be produced by combining components manufactured in scale-efficient plants in different countries.

The larger scale of the global company also creates opportunities to improve corporate staff competence and quality.

leverage resource allocation
Leverage : Resource Allocation

A major strength of the global company is its ability to scan the entire world to identify people, money, and raw materials that will enable it to compete most effectively in world markets.

Global companies utilizes the resources where there is the greatest opportunity to serve a need at a profit

leverage1
Leverage

Global strategy.

  • The global company's greatest single advantage can be its global strategy.
slide16

RESTRAINING FORCES AFFECTING GLOBAL INTEGRATION & GLOBAL MARKETGING

Management myopia & Organizational culture

Opposition to globalization

National controls – (to protect local industries)

p. 62

management myopia
Management myopia
  • Management ignores (will not see) the opportunities to peruse global marketing.
  • Global marketing does not work without a strong local team that can provide information about the local market conditions.
summary
Summary
  • Global marketing is the process of focusing resources on global marketing opportunities
  • Goal is to create customer value & competitive advantage by maintaining focus
  • Four classifications of management orientation: ethnocentric, polycentric, regiocentric, geocentric
  • Global marketing importance is shaped by a variety of driving & restraining forces
looking ahead to chapter 2
Looking Ahead to Chapter 2

The global economic environment

introduction
Introduction
  • This chapter includes
    • An overview of the world economy
    • A survey of economic system types
    • The stages of market development
    • The balance of payments
the world economy an overview
The World Economy—An Overview
  • In the early twentieth century economic integration was at 10%; today it is 50%
  • EU and NAFTA are very integrated
  • Global competitors have displaced or absorbed local ones
5 important changes in the world economy
5 important changes in the World Economy
  • Capital movements have replaced trade as the driving force of the world economy
  • Production has become uncoupled from employment
  • The world economy, not individual countries, is the dominating factor
  • 75-year struggle between capitalism and socialism has almost ended
  • E-commerce diminishes the importance of national barriers and forces companies to reevaluate business models
economic systems
Economic Systems

Resource Allocation

Market Command

Private

Resource

Ownership

State

Centrally planned capitalism

Market capitalism

Market socialism

Centrally planned socialism

market capitalism
Market Capitalism
  • Individuals and firms allocate resources
  • Production resources are privately owned
  • Driven by consumers
  • Government’s role is to promote competition among firms and ensure consumer protection

Eg: United States

centrally planned socialism
Centrally Planned Socialism
  • Opposite of market capitalism
  • State holds broad powers to serve the public interest; decides what goods and services are produced and in what quantities
  • Government owns entire industries and controls distribution
  • Demand typically exceeds supply
  • Eg: North Korea, Venezuela etc.
centrally planned capitalism
Centrally Planned Capitalism
  • Economic system in which command resource allocation is used extensively in an environment of private resource ownership
  • Examples
    • Sweden
    • Japan
economic freedom
Economic Freedom
  • Rankings of economic freedom among countries
    • free, mostly free, mostly unfree, repressed
  • Variables considered include such things as:
    • Trade policy
    • Taxation policy
    • Capital flows and foreign investment
    • Banking policy
    • Wage and price controls
    • Property rights
    • Black market
economic freedom1
Economic Freedom
  • Free
    • Hong Kong
    • Singapore
    • Ireland
    • Luxembourg
    • Iceland/U.K.
    • Estonia
    • Denmark
    • Australia/New Zealand/United States
  • Repressed
    • Cuba
    • Belarus
    • Libya/Venezuela
    • Zimbabwe
    • Burma
    • Iran
    • North Korea
slide30

13

Stages of Economic Development (p. 80-93)

BIG EMERGING MARKETS (BEMs)

  • China
  • India
  • Indonesia
  • South Korea
  • Brazil
  • Mexico
  • Argentina
  • South Africa
  • Poland
  • Turkey

B R I C

  • Brazil
  • Russia
  • India
  • China
slide31
BRIC
  • Since the four BRIC countries are developing rapidly, by 2050 their combined economies could eclipse the combined economies of the current richest countries of the world.
  • These four countries, combined, currently account for more than a quarter of the world's land area and more than 40% of the world's population.
low income countries
Low-Income Countries
  • GNP per capita of $825 or less
  • Characteristics
    • Limited industrialization
    • High percentage of population involved in farming
    • High birth rates
    • Low literacy rates
    • Heavy reliance on foreign aid
    • Political instability and unrest
    • Concentrated in Sub-Saharan Africa
    • India is the only BRIC country
lower middle income countries
Lower-Middle-Income Countries
  • GNI per capita: $826 to $3,255
  • Characteristics
    • Rapidly expanding consumer markets
    • Cheap labor
    • Mature, standardized, labor-intensive industries like textiles and toys
  • BRIC nations are China and Brazil
upper middle income countries
Upper-Middle-Income Countries
  • GNP per capita: $3,256 to $10,065
  • Characteristics
    • Rapidly industrializing, less agricultural employment
    • Increasing urbanization
    • Rising wages
    • High literacy rates and advanced education
    • Lower wage costs than advanced countries
  • Also called newly industrializing economies (NIEs)
  • Examples: Malaysia, Chile, Venezuela, Hungary, Ecuador
high income countries
High-Income Countries
  • GNI per capita: $10,066 or more
  • Also know as advanced, developed, industrialized, or postindustrial countries
  • Characteristics
    • Sustained economic growth through disciplined innovation
    • Service sector is more than 50% of GNI
high income countries1
High-Income Countries
  • Importance of information processing and exchange
  • Ascendancy of knowledge over capital, intellectual over machine technology, scientists and professionals over engineers and semiskilled workers
  • Future oriented
  • Importance of interpersonal relationships
g 8 the group of eight
G-8, the Group of Eight
  • Goal of global economic stability and prosperity
    • United States
    • Japan
    • Germany
    • France
    • Britain
    • Canada
    • Italy
    • Russia (1998)

2007 G-8 leaders in Germany

assignment 2
Assignment-2
  • Study about the Association of South East Asian Nations (ASEAN) and its marketing issues and opportunities.
  • Submit the assignment in the class and one group shall present the topic in the class.
oecd the organization for economic cooperation and development
OECD, the Organization for Economic Cooperation and Development
  • 30 nations
  • Post–World War II European origin
  • Canada, United States (1961), Japan (1964)
  • Promotes economic growth and social well-being
  • Focuses on world trade, global issues, labor market deregulation
the triad
The Triad
  • United States, Western Europe, and Japan
  • Represents 75% of world income
  • Expanded triad includes all of North America and the Pacific Rim and most of Eastern Europe
  • Global companies should be equally strong in each part
product saturation levels
Product Saturation Levels
  • The percentage of potential buyers or households who own a product
  • India: 20% of people have telephones
  • Autos: 1 per 20,000 Chinese; 21 per 100 Poles; 49 per 100 EU citizens
  • Computers: 1 PC per 6,000 Chinese; 11 PCs per Poles; 34 PCs per EU citizen
  • Cars: 8 out of 1000 Indians while 188 out of 1000 Russians and 565 out of 1000 Germans