INTERNATIONAL

MARKETING

Mr. RUPESH DAHAKE (LECTURER)

SCHOOL OF MANAGEMENT STUDIES NAGPU
 What is International Marketing?
 Is a carrying on marketing outside the national boundaries.

 International marketing: the performance of business activities

that direct the flow of a company’s goods and services to
consumers or users in more than one nation for a profit.

 Marketing is the process of determining the consumer needs,

converting them into products or services to satisfy the user
needs and earning profit there from.

 The essentials of modern marketing:-

 Consumer orientation
 Optimum use of resources
 More desired profitability
 Society oriented
Global Marketing Integration
Fords made in Mexico with Japanese parts,
Honda, Toyota, BMW, and Mercedes Benz
open USA plants.
Honda manufacturing cars in USA, TI
manufacturing semiconductors in Japan.
Macintosh’s PowerBook 100 designed and
manufactured by Sony.
International Marketing Concept:-
 In international marketing activities performed
international level. This activities involved as follows:

 Purchases or manufacturing and selling to foreign

customers

 Marketing specialized activates is product planning,

packing, branding, pricing, advertising, distribution and
providing after sales services.
 The International Marketing
Task Foreign environment
(uncontrollable)

Political/legal 1 Economic Country market

forces forces C
environment
Domestic environment (uncontrollable)
(uncontrollable)
2
7
Political/ Competitive Competitive
Cultural legal (controllable) structure Forces
forces forces
Price Product Country market A
environment
(uncontrollable)
3
Promotion Channels of
distribution
6

Level of Country market

Geography
and Economic climate Technology B
Infrastructure environment
4 (uncontrollable
5 )
Structure of
distribution
Main Functions in International Marketing

 Choosing the basic route for international marketing

 Market selection and product selection

 Selection of distribution channels

 Developing pricing strategy

 International marketing communication

 Organizational adaptations

 Handling business ethics

Why International Marketing?
 Market saturation
 Rise of new markets
 Foreign competition
 Opportunities through foreign aid programmes.
 To utilized full capacity
 To off set the business down-turns.
 To save cost
 To take advantage of tax concessions
 To develop and test new products
 To have access to international technology.
International Trade
 Diversity
 Patriotism
 Heterogeneity
 Varied economic climate
 Role of policies
 Government intervention
 Transport cost
 Business risks
 Remittances
 Mobility of factors
 Multiple chain of intermediaries
ECONOMIC ENVIRONMENT OF INTERNATIONAL MARKETING

 a. Gross National Product.

 b. Per Capita Income.

 c. Purchasing power of the consumers.

 d. Rate of Economic Growth.

 e. Level and degree of industrialization.

 f. The form of marketing channels and related

infrastructure
INTERNATIONAL INSTITUTIONS
Case: Agricultural subsidies and development
 Rich nations spend more than $300
billion a year to subsidize their farmers
 Subsidies create surplus production
 Surplus production leads to dumping and
depressed prices
 UN estimates producers in developing
nations lose $50 billion export revenue
because of depressed prices

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Agricultural subsidies and development
 Rich countries of the developed world
subsidize farm products
 Reasons

 To keep commodity prices low

 To favor politically active farmers

 Consequences
 Surplusproduction
 Depressed world prices (a result of surplus)

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 Instruments of trade policy

 Tariffs - oldest form of trade policy

 Good for government
 Protects domestic producers
 Reduces efficiency
 Bad for consumers
 Increases cost of goods
Instruments of trade policy-subsidies

 Government payment to a domestic producer

 Cash grants
 Low-interest loans

 Tax breaks

 Government equity participation in the company

 Subsidy revenues are generated from taxes

 Subsidies encourage over-production, inefficiency
and reduced trade
Instruments of trade policy - Quota

 Import quota
 Restrictionon the quantity of some good
imported into a country
 Voluntary export restraint (VER)
 Quota on trade imposed by exporting
country, typically at the request of the
importing country
GATT

1947: General Agreement on Tariffs and Trade (GATT): an

international agreement among member countries that is a
code of conduct dealing with Tariffs among members (called
“contracting parties”)
•Objective is to liberalize trade by eliminating tariffs, subsidies,
& import quotas
• Goal was to remove international trade barriers through:
• reduce tariffs
• preventing trade advantages of specific countries, i.e.
a country must give the same consideration to all
contracting parties
• limits the use of import quotas
• grants special trade privileges to developing nations
 Other Considerations:
• General Agreement on Tariffs and Trade (GATT):
• International law did not recognize GATT as an
organization since it was a negotiation forum among
agreeing parties
• Headquartered in Geneva, Switzerland with a “secretariat”
office at the UN in New York
• Items considered by a “council of Representatives” elected
by GATT members and a meeting (generally called a
Round of GATT) held once a year.
• GATT was the primary guiding document dealing with
trade/tariffs until the creation of the World Trade Organization
(WTO) in 1994, and the GATS and TRIPS. GATT rolled into
WTO.
Development of the world trading system
 Used ‘Rounds of talks’ to gradually
reduce trade barriers
 Uruguay Round GATT 1986-93
 Mutual tariff reductions negotiated
 Dispute resolution only if complaints
were received
 World Trade Organization
Location: Geneva, Switzerland
Established: 1 January 1995
Created by: Uruguay Round negotiations (1986-94)
Membership: 146 countries (as of 4 April 2003)
Budget: 154 million Swiss francs for 2003
Secretariat staff: 550
Head: Supachai Panitchpakdi (director-general) (2003)

Functions:
• Administering WTO trade agreements
• Forum for trade negotiations
• Handling trade disputes
• Monitoring national trade policies
• Technical assistance and training for developing countries
• Cooperation with other international organizations
The World Trade Organization

 The WTO was created during the Uruguay Round

of GATT to police and enforce GATT rules
 Most comprehensive trade agreement in history
 Formation of WTO had an impact on
 Agriculture subsidies (stumbling block: US/EU)
 Applied GATT rules to services and intellectual
property (TRIPS)
 Strengthened GATT monitoring and
enforcement
The WTO
 145 members in 2003
 Represents 90% of world trade
 9 of 10 disputes satisfactorily
settled
 Tariff reduction from 40% to 5%
 Trade volume of manufactured
goods has increased 20 times
The WTO
 Policing organization for:
 GATT
 Services
 Intellectual property
 Responsibility for trade arbitration:
 Reports adopted unless specifically rejected
 After appeal, failure to comply can result in
compensation to injured country or trade
sanctions
 WTO at work
 280 disputes brought to WTO
between 1995 and 2003
 196 handled by GATT during its 50
year history
 US is biggest WTO user
 Big wins - beef - bananas
 Big loss - Kodak
The WTO -achievements

 Telecommunications (1997)
 68 countries (90%) of world
telecommunications revenues
 Pledged to open their market to fair
competition
 Financial Services (1997)
 95% of financial services market
 102 countries will open, their markets to
varying degrees
 WTO in Seattle

 Millennium round was aimed at

further reduction of trade barriers in
agriculture and services
 WTO meeting disrupted by
 Human rights groups
 Trade unions

 Environmentalists

 Anti globalization groups

 UNITED NATIONS CONFERENCE ON
TRADE AND DEVELOPMENT

 Was established in 1964 as permanent inter Govt. body.

Objective:-

 Dealing with Trade, Investment and Development issue.

 Maximizing the Trade, Investment and Development opportunities in

Developing nations.

 To assist developing nations.

 Conducting a conferences related on international market,

multinational Co-operation, remove the disparity between developing
and developed nations.

 UNCTED provide the forum.

Primary Objective:-
 Formulate policies relating to aspect of development.

 Meeting or conference meets once in four year.

 1st meeting was held in 1964 at Geneva.

 UNCTED make GSP (Generalized system of preference)

INTERNATIONAL MONETORY FUND

The International Monetary Fund (IMF) is an

international organization that oversees the
global financial system
Headquarters Washington, D.C., USA
Managing Director Dominique Strauss-Kahn
Central Bank of
Currency Special Drawing Rights

Base borrowing rate 3.49% for SDRs[1]

Website http://www.imf.org/
History
 The International Monetary Fund was created in July 1944,
originally with 45 members

 The IMF was formally organised on December 27,

1945, when the first 29 countries signed its Articles of
Agreement.

 The IMF describes itself as "an organization of 186 countries

 Objective:-

 To promote international monetary co-operation.

 Foster global monetary cooperation
 secure financial stability
 promote high employment and sustainable economic growth, an
reduce poverty
Functions:-
 Short term credit institutions.

 Acts as a mediator and referee.

 Dispensation of justice

 Technical Assistance

 Publication
ORGANIZATION AND MANAGEMENT

 Every member country is required to subscribed to the

capital of the fund at fixed quota.

 Contribution collected in the form of gold as well as

currency(domastic)

 Most are represented by other member states on a 24-

member Executive Board but all member countries
belong to the IMF's Board of Governors
Data dissemination systems

 For those member countries having or seeking access

to international capital markets.

 General Data Dissemination System (GDDS)

 Special Data Dissemination Standard (SDDS).

 Members' quotas and voting power,
and Board of Governors
IMF member Quota: millions of Quota: Governor Alternate Votes: number Votes:
country SDRs percentage of Governor percentage of
total total
United States 37149.3 17.09Timothy F. Geithner Ben Bernanke 371743 16.79

Japan 13312.8 6.13Kaoru Yosano Masaaki Shirakawa 133378 6.02

13008.2 5.99Axel A. Weber Peer Steinbrück 130332 5.88

Germany

10738.5 4.94Christine Lagarde Christian Noyer 107635 4.86

France

10738.5 4.94Alistair Darling Mervyn King 107635 4.86

United Kingdom

China 8090.1 3.72Zhou Xiaochuan Hu Xiaolian 81151 3.66

India 4158.2 1.91Pranab Mukherjee D. Subbarao 41832 1.89

 WORLD BANK
(INTERNATIONAL BANK OF RECONSTRUCITON AND DEVELOPMENT)

World Bank
Formation 27 December 1945
Type International organization
Legal status Treaty
Purpose/focus Crediting
Membership 186 countries
President Robert B. Zoellick
Main organ Board of Directors[1]
Parent organization World Bank Group
Website http://www.worldbank.org/
The World Bank headquarters in Washington, D.C.

 The World Bank is an

international financial institution
that provides
leveraged loans[2] to
poorer countries for
capital programs with a
goal of reducing
poverty.

 Memberships:- 2%
gold and rest in dollars
 OBJECTIVES
• Build capacity

• Infrastructure creation:

• Development of Financial Systems:

•

• Combating corruption:

• Research, Consultancy and Training:

Functions:
 To conduct the survey mission in members country.

 To established economic development institute.

 To provide a co-finance.

 To established machinery to settlement of disputes.

 World focus on urban development and population

planning and tourism of members country.

 Clean Technology Fund management

WORLD BANK OFFER:-
 LOAN

 GRANT

 TECHINICAL ASSISTANT
 Areas of operation
 Agriculture and Rural Development
 Conflict and Development Poverty Reduction
 Development Operations and Activities Poverty
 Economic Policy Private Sector
 Education
 Energy
Public Sector Governance
 Environment Rural Development
 Financial Sector Social Development
 Gender Social Protection
 Governance
Trade
 Health, Nutrition and Population
 Industry Transport
 Information and Communication Technologies Urban Development
 Information, Computing and Water Resources
Telecommunications
 International Economics and Trade Water Supply and Sanitation
 Labor and Social Protections
 Law and Justice
 Macroeconomic and Economic Growth
 Mining
 FREE TRADE ZONE

 Free Trade Zone, popularly known as FTZ, is an area where

goods may be traded without any barriers imposed by customs
authorities like quotas and tariffs.

 Free Trade Zone, popularly known as FTZ, is an area where

goods may be traded without any barriers imposed by customs
authorities like quotas and tariffs

 The Free Trade Zone can be defined as a labor-intensive

manufacturing hub, which involves the import of
components and raw materials, and the produced goods
are exported to different countries.
FACTS ABOUT THE FTZ
 There were around 3000 free trade zones across 116
countries in the year 1999.

 where nearly 43 million people were working.

 These FTZs produce various goods such as shoes,

clothes, sneakers, toys, convenient foods items,
electronic goods, etc.
UAE Free Trade Zone
Dalian Free Trade Zone
 Orlando Free Trade Zone

Tianjin Port Free Trade Zone

HISTORY OF FTZ
 Free Trade Zones in the world are found in South
America in 1920.

 During the 60s and the 70s there was a rapid surge in
the development of FTZs across the world.
FREE TRADE ZONE DEVELOPMENT
PLACE

 Geographically advantageous for trade.

 Places near international airports, sea-port,

Railway network.

 Most FTZ developed in developing nations.

WHY FTZ?
 LOW TRADE BARRIERS .

 TAX CONCESSION.

 LOW COST OF PRODUCTION.

 LOW BUREAUCRACY .
PURPOSE FTZ

 Development of export oriented

units.

 Foreign exchange earnings.

 Generation of employment.
 FTZ IN INDIA
Free Trade Zones ( Under Ministry of Commerce )

Special Economic Zones

Director General of Foreign Trade

Central Board of Excise & Customs

Falta Export Processing Zone Santa Cruz Electronics Export Processing Zone

Madras Export Processing Zone Visakhapatnam Export Processing Zone

NOIDA Export Processing Zone Cochin Export Processing Zone

Navi Mumbai Special Economic Zone AP Special Economic Zone

Kandla Free Trade Zone Surat Special Economic Zone

 Common Market

Definition
 Group formed by countries within a geographical area to
promote duty free trade and free movement of labor and
capital among its members. European community (as a
legal entity within the framework of European Union) is the
best known example. Common markets impose
common external tariff (CET) on imports from non-member
countries.
Bilateral trade agreement (BTA)
 A Bilateral trade agreement (BTA) is a
trade agreement between any two
countries, usually in order to reduce
tariffs and quotas on items traded
between themselves. A BTA may be either
preferential, wherein benefits and
obligations apply only to the two
signatories, or most-favored, which
applies terms that are already given to
other nations under similar agreements.
Bilateral trade agreement (BTA)
EXAMPLE
 India has bilateral agreements with
the following countries and blocs:
 ASEAN[3]

 SriLanka[4]
 Thailand (separate from FTA agreement

with ASEAN)[5]
 Malaysia (separate from FTA agreement

with ASEAN)
COMMODITY AGREEMENTS
 Commodity agreements are international
agreements designed to stabilize
commodity prices in the interest of
producers and consumers. They can
include mechanisms to influence market
prices by adjusting export quotas and
production when market prices reach
certain trigger price levels. They
sometimes employ buffer stocks which
release stocks of commodities onto the
market when prices rise to a certain level
and build them up when they fall.
Non-tariff barriers

 Non-tariff barriers to trade

(NTB's) are trade barriers that
restrict imports but are not in the
usual form of a tariff.
EXAMPLE