International Marketing

CHAPTER 1
The Scope and Challenge of International Marketing

Top 10 U.S. Players in the Global Game

Company
Foreign Revenues ($ Mil) Foreign Foreign Foreign Revenues Profits Assets (% of Total) (% of Total) (% of Total)

ExxonMobil
1-4

115,464
50,377 50,138 46,485

71.8
57.5 30.8 26.3

62.7
49.6 N/A 55.3

63.9
43.7 44.2 38.0

IBM Ford Motor General Motors

General Electric
Texaco Citigroup Hewlett-Packard

35,350
32,700 28,749 23,398

31.7
77.1 35.1 55.2

22.8
54.1 N/A 58.0

47.4
45.2 41.0 51.5

Wal-Mart Stores
Compaq Computer
Irwin/McGraw-Hill

22,728
21,174

13.8
55.0

8.2
101.4

36.0
28.2

SOURCE: Adapted from Brian Zajac, Global Giants. Forbes, July 24, 2000

Foreign Acquisitions of U.S. Companies

U.S. Companies
Bestfoods (foods) Ben & Jerrys (ice cream) Alpo (pet food) Pillsbury (food) Burger King (fast food) Random House (publishing) Chrysler (autos) TV Guide (magazine) New York Post (newspaper) LA Dodgers (sports) Arco (gasoline) CompUSA (retailing) Seagram (alcoholic beverages)

Foreign Owner
U.K. U.K. Swiss U.K. U.K. Germany Germany Australia Australia Australia U.K. Mexico France

1-2

Irwin/McGraw-Hill

SOURCE: Adapted from Kuri Badenhausen. Name Game, Forbes. Jul 24, 2000

Leading World Trading Countries, 1997 ($ billions)

Country* EU-15 U.S.A. Germany Japan United Kingdom France Italy Canada Netherlands Belgium/Luxembourg China Spain South Korea Mexico Switzerland Exports $2,723.5 948.6 620.6 422.6 372.6 377.2 309.7 248.2 238.4 268.0 202.3 158.0 156.3 121.7 105.5 Imports $2,565.4 1,058.8 584.7 384.4 386.5 339.0 267.9 240.2 216.5 196.5 174.7 156.0 114.9 121.9 95.5 Total $5,289.9 2,007.4 1205.3 771.0 759.1 716.2 577.6 488.4 454.9 406.5 337.0 314.0 271.2 243.6 201.4

3-12

Irwin/McGraw-Hill

SOURCE: Statistic Report of Import and Export Trade 1999. Ministry of foreign Trade and Economic Cooperation, China and National Accounts, Foreign Trade by Commodities, OECD 2000.

Domestic Policy Repercussions

Influences in the U.S.

1 out of every 3 U.S. farm acres is producing for export 1 of every 6 U.S. manufacturing jobs produces for export $1 of every $7 of U.S. sales goes abroad 1 of every 3 cars, 9 out of 10 TVs, 2 out of 3 suits, and every VCR sold in the U.S. is imported. Travel and tourism is the #1 source of U.S. foreign exchange. $1 of every $4 of U.S. bonds & notes is issued to foreigners.

The Scope and Challenge of International Marketing

I.
II.

The Internationalization of U.S. Business International Marketing

International Marketing - is concerned with planning and conducting transactions across international borders to satisfy the objectives of individuals and organizations.

The Scope and Challenge of International Marketing

- Q: Why Study International Marketing? - A: There is a trend toward a global economy.
No longer enough to look at domestic market Markets across the world being sought after by more competitors Explosion of international trade Global linkages become important

The Scope and Challenge of International Marketing

If we only distributed pictures in the U.S., wed lose money. It takes the whole world now to make the economics of movie-making work
- William Mechanic President, 20th Century Fox

The Scope and Challenge of International Marketing

Half the people in the world have yet to take their first picture. The opportunity is huge, and its nothing fancy. We just have to sell yellow boxes of film.
- George M.C. Fisher CEO, Eastman Kodak Company

Invented Here, Made Elsewhere

U.S. Invented Technology
Phonographs
1-3 1% 9 0% 9 0%

Color TVs Audiotape Recorders Videotape Recorders

0%

1 0%
4 0% 1 0% 1%

1970 NOW 9 9%

Machine Tools
Telephones

3 5% 9 9% 2 5% 8 9% 6 4% 9 8% 7 4%

Semiconductors
Computers
0
Irwin/McGraw-Hill

20

40

60

80

100

World Trade Flows

( in billions of dollars )
WESTERN EUROPE
Intra-Trade: 1,230 Exports: 481 Imports: 473

160
162
AMERICAS
Intra-Trade: 221 Exports: 364 Imports: 455

170

128
ASIA

253
191

143 160

Intra-Trade: 394 Exports: 491 Imports: 360

40

44

72
REST OF WORLD
Intra-Trade: 57 Exports: 255 Imports: 303

68

Source: International Trade Statistics General Agreement on Tariffs and Trade Geneva 1993

1992

The Scope and Challenge of International Marketing

III. Comparing Domestic and International Marketing
Similarity:
- Both carry out transactions that meet the needs of individuals and organizations

Differences:
- International markets have greater growth potential - Some tasks associated with international marketing not included (or less intense ) than in domestic marketing (e.g., cultural research, political factors, exchange rates, trade laws, long distance distribution.)

The Scope and Challenge of International Marketing

Why U.S. Share of Trade is Declining:
- Lack of awareness of importance of world markets - More intense foreign competition (more modern production facilities and lower costs than in past)

How the U.S. Can Compete (given high labor costs):

Modernization and automation (investment in R&D) Focus on high capital/labor ratio industries Manage services Use foreign labor in manufacturing industries Do effective marketing research

The Scope and Challenge of International Marketing

IV. Being International V. International Marketing Concepts

International Marketing Concepts

Concept
Domestic Market Extension Multi-Domestic Market Global Marketing

EPRG Schema

(Ethnocentric) (Polycentric) (Regio/Geocentric)

The Scope and Challenge of International Marketing

Figure 1.1: International and Global Marketing Multi-Country Marketing Global Marketing

The Scope and Challenge of International Marketing

International Business

International Marketing International Trade

International Management

Figure 1.2: International and Global Marketing and Related Fields of Study

International Finance

The Scope and Challenge of International Marketing

International Business
International Marketing International

Figure 1.2: International and Global Marketing and Related Fields of Study
International Management

Global Marketing

Trade

International Finance