Influences on Global Trade
decline of protectionism; formal economic integration & free trade; global competition; emergence of marketspace; economic espionage
shielding industries from foreign competition by imposing
-tariffs (import taxes) to raise prices
-quotas (quantity restrictions) to protect domestic market share
World Trade Organization: governing body for global trade
Influence, Integration & Free Trade
European Union: european nations that have eliminated barriers and enabled free flow of trade across their borders
NAFTA: lifted trade barriers betwn Mexico, US, Canada
Influence, Global Competition for Global Consumers
when firms take their business interactions worldwide; broadens competitive landscape for marketers
International Firms: engage in trade in different countries as an extension of the brand in the home country
Multinational Firm: use multidomestic marketing strategy, meaning they have different brands/products,etc in different countries
Transnational Firm: emphasizes cultural similarities, only alters marketing plan when cultures differ
Global Brand: brand marketed under the same name in multiple countries with similar and coordinated marketing programs
Consumer groups living in many countries or regions of the world that have similar needs (ex. middle income class, youth market, elite)
Influence, Emergence of a Networked Global Marketspace
the use of internet technology for trade
Influence, Prevalence of Economic Espionage
collection of trade secrets/info about competitors
Global Environmental Scan
cultural, economic, political, and regulatory
cross-cultural analysis: study of similarities and differences between nations & societies
Values: socially preferable modes of conduct (ex cow meat is sacred in India)
Customs: norms and expectations for doing things (ex men in France use more cosmetics than women)
Foreign Corrupt Practices Act, 1977: crime to bribe gov officials for benefits in trade
Cultural Symbols: represent ideas or concepts in a certain culture (ex. thumbs up is offensive in Russia)
Language: back translation ensures that no barriers are set in translation of messages
Assessment of Economic infrastructure: country’s positioning in regard to communication, transportation, finances, etc
Consumer Income and Purchasing Power: considering avg per-household income
Currency Exchange Rates
Political Regulatory Climate
Political Stability: affects of internal strife, etc
Trade Regulations: often barriers of trade
Global Market Entry Strategies
*least risk/cost* Exporting: producing products in one country and selling them in another, indirect exporting: firm sells thru an intermediary; direct exporting, without intmds
Licensing: right to intellectual product property for fee (franchising)
Joint Venture: foreign and local firm invest together to create and share local business
*highest risk/cost* Direct Investment: a domestic firm invests in and owns foreign subsidiary
has resulted in more open borders, allowing French tire maker Michelin to close 180 of its European distribution centers and it now uses just 20 to serve all EU countries.
One argument for protectionism is that it
arguments: limits outsourcing of jobs, protects political security, discourages dependency on other nations, promotes development of domestic industries
The fact that American women use more cosmetics than American men while French men use twice as many cosmetics as French women is an example of differences in the nations’
A French cooperative allows General Mills to sell Yoplait in the United States in return for a fee, a global market entry strategy known as what?
On which segment of global consumers have Adidas, Coca-Cola, and Apple capitalized?
global youth market
The Foreign Corrupt Practices Act of 1977 made what practice illegal?
bribery of government officials for trade benefits
Once a company has decided to enter the global marketplace, it must select a means of market entry. As the firm moves from exporting to direct investment, the amount of financial commitment, risk, marketing control, and profit potential__________.
Governments such as China’s may require or strongly encourage a(n) __________ before it allows a foreign company to enter its market.
Joint venture; China and P&G
Back translation is
the practice where a translated word or phrase is retranslated into the original language by a different interpreter to catch errors
Which of the following statements about global brands is most accurate?
A global brand uses the same product formulation or service concept across multiple countries and cultures.
Proctor & Gamble markets its popular multipurpose cleaner as Mr. Clean in North America and Asia but uses several different brand names like Maestro Limpio and
Mr. Proper in other parts of the world. These differences arise because P&G is a(n) __________ firm.