Marketing Chapter 5

global marketing

Marketing that targets markets throughout the wrodl. Has become an imperative for businesses.

strategic alliances

Multinational partnerships

European Union (EU)

One of the world's most important free trade zones and now encompasses most of Europe. It is a free-trade zone consisting of 28 European countries. -It is also a political and economic community.

Mercosur

The largest Latin American trade agreement; includes Argentina, Bolivia, Brazil, Chile, Columbia, Ecuador, Paraguay, Peru, Uruguay, and Venezuela

Licensing

The legal process whereby a licensor allows another firm to use its manufacturing process, trademarks, patents, trade secrets, or other proprietary knowledge.

buyer for export

The most common intermediary between companies and foreign buyers. An intermediary in the global market that assumes all ownership risks and sells globally for its own account. Usually treated like a domestic customer by the domestic manufacturer.

exchange rate

The price of one country's currency in terms of another country's currency.

dumping

The sale of an exported product at a price lower than that charged for the same or a like product in the "home" market of the exporter Regarded as a form of price discrimination.

Gross domestic product (GDP)

The total market value of all final goods and services produced in a country for a given time period.

capital intensive

Using more capital than labor in the production process. Critics of multinationals say that the wrong kind of technology is transferred to developing nations. This does not substantially increase employment.

External environment faced by global marketers

1. Culture 2. Economic factors 3. The global economy 4. Doing business in China and India 5. Political structure and actions

Benefits of globalization

1. Expands economic freedom 2. Spurs competition 3. Raises the productivity 4. Raise the living standards of people

Negatives of global trade

1. Millions of Americans have lost jobs due to imports, production shifts abroad, or outsourcing of tech jobs. 2. Million of others fear losing their jobs, especially as those companies which are operating under competitive pressure. 3. Employers often threaten to outsource jobs if workers do not accept pay cuts. 4. Service and white-collar jobs are increasingly vulnerable to operations moving offshore.

Benefits of globalization (less developed countries)

1. Offers access to foreign capital 2. Global export markets 3. Advanced technology while breaking the monopoly of inefficient and protected domestic producers.

Methods to enter the global marketplace

1. Strategic alliances 2. Exporting 3. Licensing 4. Franchising 5. Contract Manufacturing 6. Joint Venture 7. Direct Investment

multinational corporation

A company that is heavily engaged in international trade, beyond exporting and importing. This company moves resources, goods, services, and skills across national boundaries without regard to the country in which its headquarters is located.

countertrade

A form of trade in which all or part of the payment for goods or services is in the form of other goods or services. It is a form of barter

Group of Twenty (G-20)

A forum for international economic development that promotes discussion between industrial and emerging market countries on key issues related to global economic stability.

Exchange control

A law compelling a company earning foreign exchange from its exports to sell it to a control agency (usually a central bank) Some countries with this are Argentina, Brazil, China, Iceland, North Korea, Russia, and Venezuela.

Quota

A limit on the amount of a specific produce that can enter a country. Several U.S. companies have sought these as a means of protection from foreign nations

Exporting

A method to enter the marketplace. Selling domestically produced products to buyers in other countries. This is the least complicated and least risky method.

blog

A publicly accessible Web page that functions as an interactive journal, where readers can post comments on the author's entries.

floating exchange rates

A system in which prices of different currencies move up and down based on the demand for and the supply of each currency.

tariff

A tax levied on the goods entering a country. Because this is a tax, it will either reduce the profits of the firms paying it or raise prices of the imported goods and makes it easier for domestic firms to compete.

Dominican Republic-Central America Free Trade Agreement (CAFTA-DR)

A trade agreement instituted in 2005 that includes Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States.

Uruguay Round

A trade agreement to dramatically lower trade barriers worldwide; created the World Trade Organization.

General Agreement on Tariffs and Trade (GATT)

A trade barrier that contained loopholes enabling countries to avoid barrier reduction agreements. WTO replaced this.

World Trade Organization

A trade organization that replaced the old GATT

Contract manufacturer

Firms that do not want to become involved in licensing or to become heavily involved in global marketing may engage in this. It is private label manufacturing by a foreign company. After establishing a solid base, the domestic firm may switch to a joint venture or direct investment.

direct foreign investment

Active ownership of a foreign company or of overseas manufacturing or marketing facilities. Greatest potential reward and greatest potential risk for entering the global marketplace

North American Free Trade Agreement (NAFTA)

An agreement between Canada, the US, and Mexico that created the world's then-largest free trade zone. Main impact was to open the Mexican Market to U.S. companies.

Trade agreement

An agreement to stimulate international trade. The largest Latin American one is Mercosur

Export agents

An intermediary who acts like a manufacturer's agent for the exporter; the export agent lives in the foreign market.

Export broker

An intermediary who plays the traditional broker's role by bringing buyer and seller together. The manufacturer retains title and assumes all the risks. They operate primarily in agricultural products and raw materials.

World Bank

An international bank that offers low-interest loans, advice, and information to developing nations.

International Monetary Fund

An international organization that acts as a lender of last resort, providing loans to troubled nations, and also works to promote trade through financial cooperation.

Generation 2 (G2)

China's younger emerging middle class. Encompasses nearly 200 million consumers and accounts for 5% of the country's urban consumption. Comprised of teenagers and adults in their early 20s.

global marketing standardization

Production of uniform products that can be sold the same way all over the world. A notion put forth by Ted Levitt. Communication and technology have made the world smaller so that almost all consumers everywhere want all the things they have heard about, seen, or experienced. This idea presumes that the markets throughout the world are becoming more alike. Firms that practice this produce "globally standardized products" Eg. Smartphones and tablets (except for the languages displayed

global vision

Recognizing and reacting to international marketing opportunities, using effective global marketing strategies. and being aware of threats fro, foreign competitors in all markets.

inshoring

Returning production jobs to the United States.

outsourcing

Sending U.S. jobs abroad.

Boycott

The exclusion of all products from certain countries or companies. Governments use these to exclude companies from countries with which they have a political dispute.

Joint venture

When a domestic firm buys part of a foreign company or joins with a foreign company to create a new entity. A quick and relatively easy way to go global and to gain needed expertise. They can be very risky.

multidomestic strategy

When multinational firms enable individual subsidiaries to compete independently in domestic markets. Companies with separate subsidiaries in other countries. It is basically how multinational firms use SBUs.

Market grouping (common trade alliance)

When several countries agree to work together to form a common trade area that enhances trade opportunities. Best known one of these is the EU

Barter

swapping goods for goods