International Marketing

INTERNATIONAL MARKETING

Mr. RUPESH DAHAKE (LECTURER) SCHOOL OF MANAGEMENT STUDIES NAGPU

What is International Marketing?

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Is a carrying on marketing outside the national boundaries.

 International marketing: the performance of business activities that direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit.

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Marketing is the process of determining the consumer needs, converting them into products or services to satisfy the user needs and earning profit there from.

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The essentials of modern marketing:Consumer orientation Optimum use of resources More desired profitability Society oriented

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Global Marketing Integration Fords made in Mexico with Japanese parts, Honda, Toyota, BMW, and Mercedes Benz open USA plants. Honda manufacturing cars in USA, TI manufacturing semiconductors in Japan. Macintosh’s PowerBook 100 designed and manufactured by Sony.

International Marketing Concept:

In international marketing activities performed international level. This activities involved as follows:

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Purchases or manufacturing and selling to foreign customers

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Marketing specialized activates is product planning, packing, branding, pricing, advertising, distribution and providing after sales services.

The International Marketing Task Foreign environment (uncontrollable)

1

Political/legal forces

Domestic environment (uncontrollable)

2

7 Cultural forces

Political/ legal forces

(controllable) Price

Country market C environment (uncontrollable)

Economic forces

Competitive Competitive Forces structure

Product

3 6 Geography and Infrastructure

Country market A environment (uncontrollable)

Promotion Channels of distribution

Level of Technology

Economic climate

5

4 Structure of distribution

Country market B environment (uncontrollable )

Main Functions in International Marketing 

Choosing the basic route for international marketing

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Market selection and product selection

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Selection of distribution channels

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Developing pricing strategy

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International marketing communication

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Organizational adaptations

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Handling business ethics

Why International Marketing?          

Market saturation Rise of new markets Foreign competition Opportunities through foreign aid programmes. To utilized full capacity To off set the business down-turns. To save cost To take advantage of tax concessions To develop and test new products To have access to international technology.

International Trade           

Diversity Patriotism Heterogeneity Varied economic climate Role of policies Government intervention Transport cost Business risks Remittances Mobility of factors Multiple chain of intermediaries

ECONOMIC ENVIRONMENT OF INTERNATIONAL MARKETING 

a. Gross National Product.

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b. Per Capita Income.

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c. Purchasing power of the consumers.

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d. Rate of Economic Growth.

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e. Level and degree of industrialization.

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f. The form of marketing channels and related infrastructure

INTERNATIONAL INSTITUTIONS

Case: Agricultural subsidies and development 

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Rich nations spend more than $300 billion a year to subsidize their farmers Subsidies create surplus production Surplus production leads to dumping and depressed prices UN estimates producers in developing nations lose $50 billion export revenue because of depressed prices 11

Agricultural subsidies and development 

Rich countries of the developed world subsidize farm products  Reasons

To keep commodity prices low  To favor politically active farmers 

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Consequences  Surplus

production  Depressed world prices (a result of surplus)

12

Instruments of trade policy   

Tariffs - oldest form of trade policy Good for government Protects domestic producers  Reduces



efficiency

Bad for consumers  Increases

cost of goods

Instruments of trade policy-subsidies 

Government payment to a domestic producer  Cash

grants  Low-interest loans  Tax breaks  Government equity participation in the company  

Subsidy revenues are generated from taxes Subsidies encourage over-production, inefficiency and reduced trade

Instruments of trade policy - Quota 

Import quota  Restriction

on the quantity of some good imported into a country

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Voluntary export restraint (VER)  Quota

on trade imposed by exporting country, typically at the request of the importing country

GATT 1947: General Agreement on Tariffs and Trade (GATT): an international agreement among member countries that is a code of conduct dealing with Tariffs among members (called “contracting parties”) •Objective is to liberalize trade by eliminating tariffs, subsidies, & import quotas • Goal was to remove international trade barriers through: • reduce tariffs • preventing trade advantages of specific countries, i.e. a country must give the same consideration to all contracting parties • limits the use of import quotas • grants special trade privileges to developing nations

Other Considerations: • General Agreement on Tariffs and Trade (GATT): • International law did not recognize GATT as an organization since it was a negotiation forum among agreeing parties • Headquartered in Geneva, Switzerland with a “secretariat” office at the UN in New York • Items considered by a “council of Representatives” elected by GATT members and a meeting (generally called a Round of GATT) held once a year. • GATT was the primary guiding document dealing with trade/tariffs until the creation of the World Trade Organization (WTO) in 1994, and the GATS and TRIPS. GATT rolled into WTO.

Development of the world trading system 



Used ‘Rounds of talks’ to gradually reduce trade barriers Uruguay Round GATT 1986-93  Mutual

tariff reductions negotiated  Dispute resolution only if complaints were received

World Trade Organization Location: Geneva, Switzerland Established: 1 January 1995 Created by: Uruguay Round negotiations (1986-94) Membership: 146 countries (as of 4 April 2003) Budget: 154 million Swiss francs for 2003 Secretariat staff: 550 Head: Supachai Panitchpakdi (director-general) (2003)

Functions: • Administering WTO trade agreements • Forum for trade negotiations • Handling trade disputes • Monitoring national trade policies • Technical assistance and training for developing countries • Cooperation with other international organizations

The World Trade Organization   

The WTO was created during the Uruguay Round of GATT to police and enforce GATT rules Most comprehensive trade agreement in history Formation of WTO had an impact on  Agriculture subsidies (stumbling block: US/EU)  Applied GATT rules to services and intellectual property (TRIPS)  Strengthened GATT monitoring and enforcement

The WTO   

 

145 members in 2003 Represents 90% of world trade 9 of 10 disputes satisfactorily settled Tariff reduction from 40% to 5% Trade volume of manufactured goods has increased 20 times

The WTO 

Policing organization for:  GATT  Services  Intellectual

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property

Responsibility for trade arbitration:  Reports

adopted unless specifically rejected  After appeal, failure to comply can result in compensation to injured country or trade sanctions

WTO at work 

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280 disputes brought to WTO between 1995 and 2003 196 handled by GATT during its 50 year history US is biggest WTO user  Big

wins - beef - bananas  Big loss - Kodak

The WTO -achievements 

Telecommunications (1997)  68

countries (90%) of world telecommunications revenues  Pledged to open their market to fair competition 

Financial Services (1997)  95%

of financial services market  102 countries will open, their markets to varying degrees

WTO in Seattle 

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Millennium round was aimed at further reduction of trade barriers in agriculture and services WTO meeting disrupted by  Human

rights groups  Trade unions  Environmentalists  Anti globalization groups

UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT

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Was established in 1964 as permanent inter Govt. body.

Objective:

Dealing with Trade, Investment and Development issue.

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Maximizing the Trade, Investment and Development opportunities in Developing nations.

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To assist developing nations.

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Conducting a conferences related on international market, multinational Co-operation, remove the disparity between developing and developed nations.

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UNCTED provide the forum.

Primary Objective:

Formulate policies relating to aspect of development.

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Meeting or conference meets once in four year.

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1st meeting was held in 1964 at Geneva.

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UNCTED make GSP (Generalized system of preference)

INTERNATIONAL MONETORY FUND

The International Monetary Fund (IMF) is an international organization that oversees the global financial system

Headquarters

Washington, D.C., USA

Managing Director

Dominique Strauss-Kahn

Central Bank of Currency Base borrowing rate Website

Special Drawing Rights 3.49% for SDRs[1] http://www.imf.org/

History 

The International Monetary Fund was created in July 1944, originally with 45 members

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The IMF was formally organised on December 27, 1945, when the first 29 countries signed its Articles of Agreement.

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The IMF describes itself as "an organization of 186 countries

Objective:   

To promote international monetary co-operation. Foster global monetary cooperation secure financial stability promote high employment and sustainable economic growth, an reduce poverty

Functions:

Short term credit institutions.

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Acts as a mediator and referee.

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Dispensation of justice

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Technical Assistance

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Publication

ORGANIZATION AND MANAGEMENT 

Every member country is required to subscribed to the capital of the fund at fixed quota.

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Contribution collected in the form of gold as well as currency(domastic)

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Most are represented by other member states on a 24member Executive Board but all member countries belong to the IMF's Board of Governors

Data dissemination systems

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For those member countries having or seeking access to international capital markets.

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General Data Dissemination System (GDDS)

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Special Data Dissemination Standard (SDDS).

Members' quotas and voting power, and Board of Governors IMF member country

Quota: millions of Quota: SDRs percentage of total

Governor

17.09Timothy F. Geithner Ben Bernanke

United States

37149.3

Japan

13312.8

6.13Kaoru Yosano

13008.2

Germany

Alternate Governor

Votes: number

Votes: percentage of total

371743

16.79

Masaaki Shirakawa

133378

6.02

5.99Axel A. Weber

Peer Steinbrück

130332

5.88

10738.5

4.94Christine Lagarde

Christian Noyer

107635

4.86

10738.5

4.94Alistair Darling

Mervyn King

107635

4.86

8090.1

3.72Zhou Xiaochuan

Hu Xiaolian

81151

3.66

4158.2

1.91Pranab Mukherjee

D. Subbarao

41832

1.89

France

United Kingdom China India

WORLD BANK (INTERNATIONAL BANK OF RECONSTRUCITON AND DEVELOPMENT)

World Bank Formation

27 December 1945

Type

International organization

Legal status

Treaty

Purpose/focus

Crediting

Membership

186 countries

President

Robert B. Zoellick

Main organ

Board of Directors[1]

Parent organization

World Bank Group

Website

http://www.worldbank.org/

The World Bank headquarters in Washington, D.C.

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The World Bank is an international financial institution that provides leveraged loans[2] to poorer countries for capital programs with a goal of reducing poverty.

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Memberships:- 2% gold and rest in dollars

OBJECTIVES •

Build capacity

•

Infrastructure creation:

•

Development of Financial Systems:

• •

Combating corruption:

•

Research, Consultancy and Training:

Functions: 

To conduct the survey mission in members country.

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To established economic development institute.

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To provide a co-finance.

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To established machinery to settlement of disputes.

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World focus on urban development and population planning and tourism of members country.

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Clean Technology Fund management

WORLD BANK OFFER:

LOAN



GRANT

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TECHINICAL ASSISTANT

Areas of operation                   

Agriculture and Rural Development Conflict and Development Development Operations and Activities Economic Policy Education Energy Environment Financial Sector Gender Governance Health, Nutrition and Population Industry Information and Communication Technologies Information, Computing and Telecommunications International Economics and Trade Labor and Social Protections Law and Justice Macroeconomic and Economic Growth Mining

Poverty Reduction Poverty Private Sector Public Sector Governance Rural Development Social Development Social Protection Trade Transport Urban Development Water Resources Water Supply and Sanitation

FREE TRADE ZONE 

Free Trade Zone, popularly known as FTZ, is an area where goods may be traded without any barriers imposed by customs authorities like quotas and tariffs.

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Free Trade Zone, popularly known as FTZ, is an area where goods may be traded without any barriers imposed by customs authorities like quotas and tariffs

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The Free Trade Zone can be defined as a labor-intensive manufacturing hub, which involves the import of components and raw materials, and the produced goods are exported to different countries.

FACTS ABOUT THE FTZ 

There were around 3000 free trade zones across 116 countries in the year 1999.

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where nearly 43 million people were working.

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These FTZs produce various goods such as shoes, clothes, sneakers, toys, convenient foods items, electronic goods, etc.

UAE Free Trade Zone

Dalian Free Trade Zone

Orlando Free Trade Zone Tianjin Port Free Trade Zone

HISTORY OF FTZ 

Free Trade Zones in the world are found in South America in 1920.

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During the 60s and the 70s there was a rapid surge in the development of FTZs across the world.

FREE TRADE ZONE DEVELOPMENT PLACE 

Geographically advantageous for trade.

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Places near international airports, sea-port, Railway network.

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Most FTZ developed in developing nations.

WHY FTZ? 

LOW TRADE BARRIERS .

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TAX CONCESSION.

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LOW COST OF PRODUCTION.

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LOW BUREAUCRACY .

PURPOSE FTZ 

Development of export oriented units.

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Foreign exchange earnings.

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Generation of employment.

FTZ IN INDIA Free Trade Zones ( Under Ministry of Commerce ) Special Economic Zones Director General of Foreign Trade Central Board of Excise & Customs Falta Export Processing Zone

Santa Cruz Electronics Export Processing Zone

Madras Export Processing Zone

Visakhapatnam Export Processing Zone

NOIDA Export Processing Zone

Cochin Export Processing Zone

Navi Mumbai Special Economic Zone

AP Special Economic Zone

Kandla Free Trade Zone

Surat Special Economic Zone

Common Market

Definition 

Group formed by countries within a geographical area to promote duty free trade and free movement of labor and capital among its members. European community (as a legal entity within the framework of European Union) is the best known example. Common markets impose common external tariff (CET) on imports from non-member countries.

Bilateral trade agreement (BTA) 

A Bilateral trade agreement (BTA) is a trade agreement between any two countries, usually in order to reduce tariffs and quotas on items traded between themselves. A BTA may be either preferential, wherein benefits and obligations apply only to the two signatories, or most-favored, which applies terms that are already given to other nations under similar agreements.

Bilateral trade agreement (BTA)

EXAMPLE 

India has bilateral agreements with the following countries and blocs:  ASEAN[3]  Sri

Lanka[4]  Thailand (separate from FTA agreement with ASEAN)[5]  Malaysia (separate from FTA agreement with ASEAN)

COMMODITY AGREEMENTS 

Commodity agreements are international agreements designed to stabilize commodity prices in the interest of producers and consumers. They can include mechanisms to influence market prices by adjusting export quotas and production when market prices reach certain trigger price levels. They sometimes employ buffer stocks which release stocks of commodities onto the market when prices rise to a certain level and build them up when they fall.

Non-tariff barriers

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Non-tariff barriers to trade (NTB's) are trade barriers that restrict imports but are not in the usual form of a tariff.

EXAMPLE