Class#3.2 Slides Shown In Class
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Transcript of Class#3.2 Slides Shown In Class
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THE INTERNATIONAL TRADINGENVIRONMENT
Session 2
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GLOBAL TRADE FLOWS
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PERCENTAGE OF THE TOTAL OF WORLD EXPORTS IN MERCHANDISE (2007)
Country
Germany
United States
China
Japan
France
Netherlands
Britain
Italy
Canada
Belgium
Percentage %
9.3
8.7
7.3
3.4
4.4
3.9
3.7
3.5
3.4
3.9Source: WTO.org
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% Changes On Previous Year:CONSUMER PRICES AND REAL GDP/GNP 2007
Country
ArgentinaAustraliaBelgiumBrazilCanadaChinaCzech RepFranceGermanyHong KongIndiaItalyJapanMalaysia
% inflation rate9.82.81.83.72.02.13.31.41.42.56.11.90.43.4
% growth rate6.32.92.13.32.4
10.44.82.01.65.09.21.21.95.2
Source: The Economist (2007)
Country
MexicoNetherlandsPolandRussiaSingaporeSouth AfricaSouth KoreaSpainTaiwanThailandTurkeyUKUSAVenezuelaEU
% inflation rate3.81.72.59.21.05.62.32.71.53.68.62.22.217.02.0
% growth rate3.22.34.76.55.04.24.23.03.94.34.02.42.25.52.0
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Trade Balance in Merchandise Trade 2007
Source: World Bank: World Development Indicators (2007)
US $ Billion
Argentina
Australia
Brazil
China
Germany
Hong Kong
Japan
Mexico
Malaysia
+12.4
-9.4
+46.1
+177.5
+203.0
-17.9
+79.6
-5.8
+28.6
Netherlands
Poland
Russia
Spain
Taiwan
Turkey
UK
USA
EU
+39.4
-4.1
+140.8
-112.8
+21.3
-53.2
-152.2
-837.2
-15.7
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COMPARATIVE ADVANTAGE
• Achieving Comparative Advantage – sustained period of
investment– lower labour cost– proximity to raw
materials– subsidies to help native
industries– building expertise in
certain key areas
• Building National Advantage (Porter, 1990)
– factor conditions– demand conditions– related and supporting
industries– firm strategy, structure
and rivalry
Source: Porter (1990) The Competitive Advantage of Nations
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Market Entry Barriers
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WORLD TRADING INSTITUTIONS
• Initiatives from the Bretton Woods Agreement, 1944– World Bank (IBRD)
• Currently 150 member countries• Provides financial and technical help for the development
of poorer countries
– International Monetary Fund (IMF)• Provides short-term international liquidity to countries
with Balance of Payments difficulties
– World Trade Organisation (WTO)• Evolved from GATT (treaty)
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WORLD TRADE ORGANISATION
• The WTO promotes trade by:
– Working to reduce tariffs– Prohibiting import/export bans and quotas– Eliminating trade discrimination– Eliminating non tariff barriers
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Trade liberalization ‘rounds’Latest two
• The Doha Round– Commenced 2001– Called the ‘development round’
• +75% of WTO members are developing countries• LDC's face greater barriers than DC's• Key problem areas - textiles & agriculture
– Accounting for 70% of LDC exports
– Ave.tariff on textiles are <20% against <3% on industrialised goods– In EU & US agricultural subsidies = $1 billion per day
• 6x annual amount spent by them on aid• The Uruguay Round
– 107 participants– Most complex ever attempted
• 15 sectors• US$1 trillion of trade
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MAIN TYPES OF TRADE ASSOCIATIONS
Type
Economic co-operation
Bi-lateral or multi-lateral trade treaty
Sectoral free trade agreement
Trade preference agreement
Free trade area (or agreement)
Customs union
Common market
Economic union
Political
Common external tariff
No
No
No
No
No
Yes
Yes
Yes
Yes
Free movement of capital and people
No
No
No
No
No
Possibly
Yes
Yes
Yes
Example
Canada - EC framework agreement, APEC
The Peru, Chile accord
The multi-fibre agreement
South African Development Cone (SADC)
ASEAN NAFTA Mercosur
Economic Community of West African States
European Single Market
European Monetary Union
Would resemble federal states (e.g. US, Canada, Germany)
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REGIONAL TRADING AREAS OF THE WORLD
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MAJOR CHANGES IN THE SINGLE EUROPEAN MARKET
• Removal of tariff barriers
• Removal of technical barriers
• Public procurement• Free movement of
labour and workers’ rights
• Opening up of professions
• Financial services• Transport, haulage
and coastal carriage• Company law• Fiscal barriers• The environment
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European Monetary UnionSTRATEGIC IMPLICATIONS
• Price and wage transparency
• Consumers can shop for ‘best deals’
• Exploitation of regional price differences
• Pressure on margins
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TRADE AREAS
• NAFTA: free trade area– US, Canada, Mexico– World’s richest single market
• Mercosur: customs union– Brazil, Paraguay, Uruguay and Argentina
• APEC: forum of 21 countries bordering the Pacific
• ASEAN: free trade area (to complete ‘AFTA’ by 2015?)– Thailand, Indonesia, Singapore, Brunei, Malaysia &
Philippines, Vietnam, Myanmar, Cambodia and Laos
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SOCIAL AND CULTURAL CONSIDERATIONS
Session 3
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CULTURE DEFINEDin an international marketing context
• The sum total of learned beliefs, values and customs that serve to direct customer behaviour in a particular country market
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COMPONENTS OF CULTURE #1
Beliefs:
A large number of mental and verbal processes which reflect our knowledge and assessment of products and services
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COMPONENTS OF CULTURE #2
Values:
The indicators consumers use to serve as guides for what is appropriate behaviour, they tend to be relatively enduring and stable over time and widely accepted by members of a particular market
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CULTURAL VALUES AND THEIR RELEVANCE TO CONSUMER BEHAVIOUR
Value
Achievement & success
Efficiency & practicality
Progress
Material comfort
Individualism
External conformity
Youthfulness
Features
Success flows from hard work
Admiration of things that solve problemsPeople can improve themselves
The ‘good life’
Being oneself
Uniformity of observable behaviour
State of mind that stresses being young at heart
Relevance to behaviour
Justification for acquisition of goods
Stimulates purchase of well functioning productsReady acceptance of ‘new’/‘improved’ products
Fosters acceptance of convenience/luxury productsStimulates acceptance of customised or unique products
Stimulates interest in products used by others
Stimulates acceptance of products that promote youthfulness
Source: Schiffman, L.G. & Kanuk, L. L. (2000)
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COMPONENTS OF CULTURE #3
Customs:
Overt modes of behaviour that constitute culturally approved or acceptable ways of behaving in specific situations. Customs are evident at major events in ones life eg birth, marriage, death and at key events in the year e.g. Christmas, Easter, Ramadan, etc.
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Layers of CultureHofstede (2003)
• A national level– according to one’s country which determines our basic
cultural assumptions.• A regional/ethnic/religious/linguistic affiliation level
– determining basic cultural beliefs.• A gender level
– according to whether a person was born as a girl or as a boy.
• A generation level– which separates grandparents, parents and children.
• A social class level– associated with educational opportunities, a person’s
occupation or profession.
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A CULTURAL FRAMEWORK
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THE MAIN SILENT LANGUAGES IN OVERSEAS BUSINESS #1
Source: Hall & Hall (1987)
Silent Language Implications For Marketing & Business
- Appointment scheduling- The importance of being ‘on time’- The importance of deadlines
- Sizes of offices- Conversational differences between people
- The relevance of material possessions- The interest in the latest technology
Time
Space
Things
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THE MAIN SILENT LANGUAGES IN OVERSEAS BUSINESS #2
Silent Language Implications For Marketing & Business
- The significance of trusted friends as social insurance in times of stress and emergency
- Rules of negotiations based on laws, moral practices or informal customs
Friendship
Agreements
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CULTURAL INFLUENCES ON BUYER BEHAVIOUR
Adapted from Jeannete & Hennessey; 2004
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ASSUMPTIONS TO BE QUESTIONED BY INTERNATIONAL MARKETING MANAGERS
• Maslow’s Hierarchy of Needs is consistent across cultures
• The buying process in all countries is an individualistic activity
• Social institutions and local conventions are similar across cultures
• The consumer buying process is consistent across cultures– consumer involvement– perceived risk– cognitive style
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ELIMINATINGSELF–REFERENCE CRITERIA
• Define in terms of home country cultural traits, habits and norms
• Define in terms of foreign cultural traits, habits and norms
• Isolate and analyse SRC influences and see how if effects the problem
• Redefine the problem without the SRC influence
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THE CONTEXTUAL CONTINUUM OF DIFFERING CULTURES
Source: Usiner et al (2005))
SwissGermans
ScandinaviansNorth Americans
English
Italians/Spanish
Latin Americans
Arabs
Japanese
Low
Context
High
ImplicitExplicit Messages
French
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HOFSTEDE’S CRITERIA (2001)
• Individualism– Affects the way people live together
• Power distance– Dealing with human inequality
• Uncertainty avoidance– Managing future uncertainty
• Masculinity– Male / female stereotyping
• Confucian dynamism– Universalistic or particularistic
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POWER DISTANCE/INDIVIDUALISM DIMENSIONS ACROSS CULTURES
Source: Hofstede (2003)
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COMMUNICATION TYPOLOGIES
• Direct vs Indirect– Degree of explicitness of verbal messages
• Elaborate vs Succinct– Quantity of talk people feel comfy with
• Personal vs Contextual– The role of speaker and relationships
• Instrumental vs Affective– The orientation of the speaker
Gudykunst et al; 2005
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LINEAR MODEL OF THE NEGOTIATION PROCESS
Non-task discussion
Task-related exchange of information
Persuasion
Concession and agreement
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MINIMISING CULTURAL IMPACTIN NEGOTIATIONS
• Adaptation– Demonstrate awareness of cultural differences
• Interpreters– Influence meaning
• Cultural Blocks– Not everything translates
• Stereotype– Important to avoid
• Inter-cultural preparation
Source: Usiner and Lee (2005)