McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc All Rights Reserved LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 7, YOU SHOULD BE ABLE TO: LO1 Describe the nature and scope of world trade from a global perspective and its implications for the United States LO2 Identify the major trends that have influenced the landscape of global marketing in the past decade Identify the environmental factors that shape global marketing LO3 efforts 7-2 LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 7, YOU SHOULD BE ABLE TO: LO4 Name and describe the alternative approaches companies use to enter global markets LO5 Explain the distinction between standardization and customization when companies craft worldwide marketing programs 7-3 MATTEL’S GLOBAL MARKETING IS MORE THAN CHILD’S PLAY Slide 7-5 DYNAMICS OF WORLD TRADE LO1 WORLD TRADE FLOWS  Global Perspective • Countertrade • Trade Feedback Effect  United States Perspective • Gross Domestic Product (GDP) • Balance of Trade 7-5 DYNAMICS OF WORLD TRADE • World Trade Flows – Dollar value of world trade has more than doubled in past decade and will exceed $12.5 trillion in 2009 – Manufactured gods and commodities account for 75 percent of world trade – Service industries represent the other 25 percent Slide 7-6 DYNAMICS OF WORLD TRADE • World Trade Flows – Reflects interdependencies among industries, countries, and regions – Manifests in country, industry, and regional exports and imports Slide 7-6 DYNAMICS OF WORLD TRADE • Global Perspective – U.S., Europe, Canada, China, and Japan account for more than twothirds of world trade – Approximately 15 – 20 percent of world trade involves countertrade – A country’s imports affect its exports, and vise versa – trade feedback effect Slide 7-6 DYNAMICS OF WORLD TRADE • United States Perspective – Gross domestic Product (GDP) – Balance of Trade – Exports vs Imports – Three largest importers of U.S goods and services are Canada, Mexico, and Japan – The four largest exporters to U.S are Canada, China, Mexico, and Japan Slide 7-6 FIGURE 7-1 World trade flows for goods and commodities within and between geographic regions ($ billions U.S.) 7-10 Values Values are a society’s personally or socially preferable modes of conduct or states of existence that tend to persist over time 7-89 Customs Customs are what is considered normal and expected about the way people things in a specific country 7-90 Foreign Corrupt Practices Act (1977) The Foreign Corrupt Practices Act (1977) is a law, amended by the International Anti-Dumping and Fair Competition Act (1998), that makes it a crime for U.S corporations to bribe an official of a foreign government or political party to obtain or retain business in a foreign country 7-91 Cultural Symbols Cultural symbols are things that represent ideas and concepts 7-92 Semiotics Semiotics is a field of study that examines the correspondence between symbols and their role in the assignment of meaning for people 7-93 Back Translation Back translation is the practice where a translated word or phrase is retranslated into the original language by a different interpreter to catch errors 7-94 Consumer Ethnocentrism Consumer ethnocentrism is the tendency to believe that it is inappropriate, indeed immoral, to purchase foreign-made products 7-95 Bottom of the Pyramid Bottom of the pyramid is the largest but poorest socioeconomic group in the world consisting of billion people who reside in developing countries and live on less than $2 per day 7-96 Microfinance Microfinance is the practice of offering small, collateral-free loans to individuals who otherwise would not have access to the capital necessary to begin small businesses or other income-generation activities 7-97 Currency Exchange Rate A currency exchange rate is the price of one country’s currency expressed in terms of another country’s currency 7-98 Exporting Exporting is a global market-entry strategy in which a company produces goods in one country and sells them in another country 7-99 Joint Venture Joint venture is a global market-entry strategy in which a foreign company and a local firm invest together to create a local business in order to share ownership, control, and profits of the new company 7-100 Direct Investment Direct investment is a global market-entry strategy that entails a domestic firm actually investing in and owning a foreign subsidiary or division 7-101 Dumping Dumping occurs when a firm sells a product in a foreign country below its domestic price or below its actual cost 7-102 Gray Market A gray market is a situation where products are sold through unauthorized channels of distribution Also called parallel importing 7-103 ... World is one market Marketing Strategy  Global Marketing Multinational Firms  Multidomestic Strategy  Global Brand Marketing Strategy Slide 7-21 FIGURE 7-A Global companies and marketing strategy... strategy 7-27 MARKETING IN A BORDERLESS LO3 ECONOMIC WORLD TREND 3 GLOBAL CONSUMERS  Global Consumers 7-28 MARKETING MATTERS The Global Teenager—A Market of 500 Million Voracious Consumers with... TREND 3 GLOBAL COMPETITION • A New Reality: Global Competition among Global Companies for Global Consumers  Global Competition • Divisions or Subsidiaries  Strategic Alliances 7-25 MARKETING