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Chapter 1

The Scope and Challenge of International Marketing

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Foreign Acquisitions of U.S. Companies

U.S. Company Foreign Owner

J. Walter Thompson (Advertising) Britain

Spiegel (Catalog retailing) Germany

Mack Trucks (Automotive) France

Giant Food Stores (Supermarkets) Netherlands

Pillsbury, Hueblein (Food, Drink) Britain

CBS Records (Music and Entertainment) Japan

Magnavox (Television) Netherlands

Carnation (Coffee-Mate, Friskies pet food) Switzerland

Chesebrough-Pond’s (Vaseline) Netherlands

Vermont American (Garden Tools) Germany

Northwest Airlines (Travel) Netherlands

SOURCE: Adapted from “Soon to Be Extinct: American TV Brands.,” U.S. News & World Report,July 31, 1995, p. 13, and Gustavo Lombo, “Creating American Jobs,” Forbes, July 28, 1997. P.222.

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Invented Here, Made Elsewhere

U.S. Invented Technology

Phonographs

Color TVs

Audiotape Recorders

Videotape Recorders

Machine Tools

Telephones

Semiconductors

Computers7 4%

9 8%6 4%

8 9%2 5%

9 9%3 5%

9 9%1%

1 0%0%

4 0%1 0%

9 0%1%

9 0%

0 20 40 60 80 100

1 9 7 0

N O W

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Some of the Big U.S. Players in the Global Game*

Company Foreign Revenues% of Total

Foreign Profits% of Total

Foreign Assets% of Total

Ei du Pont de Nemours 43.1 28.9 40.6

Proctor & Gamble 50.1 36.9 40.5

Coca-Cola 67.1 67.8 37.7

Intel 58.4 38.4 20.2

Motorola 45.0 92.4 37.7

Johnson & Johnson 49.6 46.1 45.3

Sara Lee 39.7 53.8 51.3

Colgate-Palmolive 71.6 83.6 60.4

Gillette 63.1 41.1 62.6

Compaq Computer 46.5 51.7 31.4

McDonald’s 57.0 49.6 55.0

Avon Products 65.3 58.9 59.0

RJR Nabisco 36.2 53.8 20.2

*1996 data.SOURCE: Adapted from Brian Zajac, “Buying American,” July 28, 1997, p218.

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7

The International Marketing Task

Political/legalforces

Economicforces

1

2

Environmentaluncontrollablescountry market A

Environmentaluncontrollablescountrymarket B

Environmentaluncontrollablescountrymarket C

Competitivestructure Competitive

Forces

Level of Technology

Price Product

Promotion Channels of distribution

Geography and

Infrastructure

Foreign environment(uncontrollable)

Structure ofdistribution

Economic climate

Cultural forces

3

45

6

7Political/

legalforces

Domestic environment(uncontrollable)

(controllable)

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Cross Cultural Analysis to Isolatethe SRC Influences

Step 1: Define the business problem or goal in home-country cultural traits, habits, or norms.

Step 2: Define the business problem or goal in foreign-country cultural traits, habits, or norms. Make no value judgements.

Step 3: Isolate the SRC Influence in the problem and examine it carefully to see how it complicates the problem.

Step 4: Redefine the problem without the SRC influence and solve for the optimum

business goal situation.*

*James A. Lee, “Cultural Analysis in Overseas Operations, “Harvard Business Review, March-April 1996, p.106-11.

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Being Globally Aware

To be Globally Aware is to be: Objective Tolerant of Cultural Differences

Knowledgeable of:CulturesHistoryWorld Market PotentialsGlobal Economic, Social and Political Trends

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Stages of International Marketing Involvement

1. No Direct Foreign Marketing

2. Infrequent Foreign Marketing

3. Regular Foreign Marketing

4. International Marketing

5. Global Marketing

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International Marketing Concepts

Domestic Market Extension (Ethnocentric)

Multi-Domestic Market (Polycentric)

Global Marketing (Regio/Geocentric)

Concept EPRG Schema

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Trends in Global Business

Internationalization of U.S. Markets

Internationalization of U.S. Business

Growth of Regional Trade Areas

EU, NAFTA, AFTA, APEC

Move toward free market system by countries in

Latin America, Asia, Eastern Europe

Large Emerging Markets such as

Argentina, China, South Korea, Poland, India

Evolving global middle income households

GATT and World Trade Organization

The TRIAD

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New and Future (Possible) Multinational Market Groups or Trading Blocks of the 21st Century

European Union

European Economic Area (EC and EFTA)

North American Free Trade Area

Southern Cone-Mercosur

Asean Free Trade Area (AFTA)

Commonwealth of Independent States (CIS)

Central European Free Trade Area (CEFTA)

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New and Future (Possible) Multinational Market Groups or Trading Blocks of the 21st Century

Western Hemisphere Free Trade Areas (WHFTA) Canada to Argentina

Asia-Pacific Economic Cooperation (APEC) Pacific Rim Countries including U.S.

U.S./ Canada/Mexico/Japan

South American Free Trade Area (SAFTA) Andean Pact and Mercosur

Chinese Economic Area (CEA) Hong Kong, Taiwan, Coastal Provinces of So. China

U.S./European Union

Many possibilities of Republics of Russia, Baltic States

Possible Regional Trade Groups