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Copyright © 2003 by Nelson, a division of Thomson Canada Limited.
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M A R K E T I N G
GlobalMarketing
20
Copyright © 2003 by Nelson, a division of Thomson Canada Limited.
Chapter
Objectives
1. Discuss some of the fundamental concepts that underlie international business.
2. Identify aspects of marketing strategy that are important in the global marketplace.
3. Outline the environment for international business.
4. Explain how the marketing mix may be affected by competition in a global environment.
5. Outline various approaches to global marketing that are taken by companies.
6. Discuss the various modes of entry into international markets.
7. Discuss the different types of trade agreements.
8. Discuss NAFTA.
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Chapter
Balance of Trade and Payments
Balance of Trade
• The relationship between a country’s exports and its imports.
Balance of Payments
• The flow of money into or out of a country.
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Chapter
Exchange Rate
• The rate at which a nation’s currency can be exchanged for other currencies or gold.
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Chapter
Devaluation
• Situation in which a nation reduces the value of its currency in relation to gold or some other currency.
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Chapter
Revaluation
• Situation in which a country adjusts the value of its currency upward.
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Chapter
Absolute Advantage
• A nation has an absolute advantage in the marketing of a product if it is the sole producer or can produce a product for less than anyone else.
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Chapter
Comparative Advantage
• A nation has a comparative advantage if it can produce a given product more efficiently per unit of output than it can produce other products.
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Chapter
Company Approaches to Global Marketing (1 of 2)
• Ethnocentric Company– Firm that assumes that its way of doing business in
its home market is the proper way to operate, and tries to replicate this in foreign markets.
• Polycentric Company– Firm that assumes that every country is different
and that a specific marketing approach should be developed for each separate country.
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Chapter
Company Approaches to Global Marketing(2 of 2)
• Regiocentric Company– Firm that recognizes that countries with
similar cultures and economic conditions can be served with a similar marketing mix.
• Geocentric Company– Firm that develops a marketing mix that
meets the needs of target consumers in all markets.
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Chapter
Modes of International Activity
• Indirect Exporting and Importing
• Direct Exporting and Importing
• Licensing
• Joint Venture
• Foreign Production and Marketing
• Multinational Enterprise
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Chapter
Indirect International Trade
• Exporting and/or importing only through other domestic companies that trade internationally.
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Chapter
Direct International Trade
• Exporting directly to markets and/or importing directly from suppliers in other countries.
20Global Marketing
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Chapter
Licensing
• Granting authority to produce and sell a product developed in one country in another.
20Global Marketing
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Chapter
Joint Venture
• A partnership of firms from different countries, often to set up a local business in a country that is foreign to one of the partners.
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Chapter
Direct Investment
• The ownership and management of production and/or marketing facilities in a foreign country.
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Chapter
Multinational Corporation (MNC)
• A corporation that produces and markets goods and services in several countries.
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Chapter
Culture
• An integrated system of learned behaviour patterns that are distinguishing characteristics of the members of any given society.
20Global Marketing
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Chapter
Local Content Laws
• Laws specifying the portion of a product that must come from domestic sources.
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Chapter
Cartel
• The monopolistic organization of a group of firms.
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Chapter
Friendship, Commerce and Navigation (FCN) Treaties• Treaties that address many aspects of
commercial relations with other countries; such treaties constitute international law.
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Chapter
World Trade Organization (WTO)
• The international body that deals with the rules of trade between nations.
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Chapter
Principles of the Trading System
• Without discrimination
• Freer
• Predictable
• More competitive
• More beneficial for less developed countries
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Chapter
Integration of World Markets (1 of 2)
• Free Trade Area– Areas established by agreement among two
or more nations within which participants agree to free trade of goods and services among themselves.
• Customs Union– Agreement among two or more nations that
establishes a free trade area, plus a uniform tariff with nonmember nations.
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Chapter
Integration of World Markets (2 of 2)
• Common Market– A customs union that also allows factors of
production such as labour, capital, and technology to flow freely among members.
• Economic Union– A common market that also requires members
to harmonize monetary policies, taxation, and government spending. In addition, a common currency is used by members.
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Chapter
North American Free Trade Agreement (NAFTA)• The agreement establishing a free
trade area among Canada, the United States, and Mexico that followed the FTA.
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Chapter
Free Trade Agreement (FTA)
• The agreement establishing a free trade area between Canada and the United States that preceded NAFTA.
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Chapter
Trade Restrictions
• Tariff– A tax levied against products imported from
abroad.
• Import Quota– A limit set on the amount of products that may
be imported in a certain category.
• Embargo– A complete ban on importing a particular
product.
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Chapter
Tariff
• A tax levied against products imported from abroad.
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Chapter
Import Quota
• A limit set on the amount of products that may be imported in a certain category.
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Chapter
Embargo
• A complete ban on importing a particular product.
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Chapter
Exchange Control
• Requirement that firms gaining foreign exchange by exporting must sell their foreign exchange to the central bank or agency, and importers must buy foreign exchange from the same organization.
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Chapter
Dumping
• Practice of selling products at significantly lower prices in a foreign market than in a nation’s own domestic market.
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Chapter
Import Quota
• A limit set on the amount of products that may be imported in a certain category.
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