The Scope of International Marketing Chapter 1 Our

The Scope of International Marketing Chapter 1

"Our vision has been described to you for a decade. We believed that only businesses that were number-one or number-two in their markets could win in the increasingly competitive global arena. Those that could not were to be fixed, closed or sold. " John F. Welch, Jr. Chairman and CEO, General Electric

Globalization of Business and Markets F Until recently, competition for U. S. markets was only among U. S. businesses with the same relative cost of money, labor and product èU. S market now includes competitors from all over the world

Why internationalization? F Saturation of U. S. markets

Foreign Acquisitions of U. S. Companies U. S. Company Foreign Owner Keebler (Cookies and other foods) Britain J. Walter Thompson (Advertising) Britain Spiegal (Catalog retailing) Germany Mack Trucks (Automotive) France Giant Food Stores (Supermarkets) Netherlands Pillsbury, Burger King, Pearle Vision Britain CBS Records (Music and Entertainment) Japan Carnation (Coffee-Mate, Friskies pet food) Switzerland Chesebrough-Pond’s (Vaseline) Netherlands SOURCE: Adapted from “The 100 Largest Foreign Investments in the U. S. , ” Forbes, July 18, 1994, pp. 266 -270.

Why internationalization? F Saturation F Higher of U. S. markets ROI in foreign markets

Some Big U. S. Players in the Global Game* Foreign Revenues % of Total Foreign Profits % of Total Foreign Assets % of Total Ei du Pont de Nemours 51. 4 99. 8 37. 3 Proctor & Gamble Coca-Cola Eastman Kodak Motorola Johnson & Johnson Sara Lee Colgate-Palmolive Gillette Compaq Computer Mc. Donald’s Avon Products 52. 1 67. 0 48. 8 43. 9 49. 1 35. 5 64. 5 67. 5 49. 0 46. 9 32. 0 65. 1 67. 8 41. 5 84. 8 54. 6 41. 3 67. 0 61. 4 63. 6 45. 1 59. 9 40. 7 48. 6 32. 4 34. 6 43. 9 45. 0 46. 9 65. 7 40. 5 46. 9 48. 3 Company *1993 data. SOURCE: Adapted from “The 100 largest Multinationals: Getting the Welcome Carpet, ” Forbes, July 18, 1994, pp. 276 -279.

Why internationalization? F Saturation F Higher of U. S. markets ROI in foreign markets F Establish early position in world markets

Share of Global Sales (1987 -92) Industry Energy Equipment & Services Aerospace & Military Technology Data Processing & Reproduction Electronic Components & instruments Beverages & Tobacco Health & Personal Care Leisure & Tourism Forest Products & Paper Energy Source Metals-Nonferrous Recreation & other Consumer Goods Food & hh Products Electrical & Electronics Chemicals Industrial Components Automobiles Machinery & Engineering Appliances & hh Durables Metals-Steel ALL INDUSTRIES (SALES) ALL INDUSTRIES (PROFITS) U. S. 93% 76 73 62 63 49 46 51 46 30 33 33 21 28 24 37 19 8 10 37% 48% Japan Europe 1% 15 22 36 16 20 16 17 13 31 61 22 51 30 45 35 46 67 57 32% 16% 6% 23 5 2 20 31 38 32 41 39 6 46 28 42 31 28 35 26 33 31% 37%

Invented Here, Made Elsewhere U. S. Invented Technology Phonographs 9 0% 1% 9 0% Color TVs 1 0% 1970 4 0% Audiotape Recorders 0% Videotape Recorders 1% NOW 1 0% 9 9% Machine Tools 3 5% Telephones 9 9% 2 5% 8 9% Semiconductors 6 4% Computers 9 8% 7 4% 0 20 40 60 80 100

“Every American company is international, at least to the extent that its business performance is conditioned in part by events that occur abroad”

Definition of International Marketing F The performance of business activities that direct the flow of a company’s goods and services to consumers or users in more than nation for profit.

What’s the difference between international marketing and domestic marketing? F The environment in which marketing strategies have to be implemented

The International Marketing Task Foreign environment (uncontrollable) 1 Economic Political/legal forces Domestic environment (uncontrollable) 2 7 Competitive (controllable) structure Competitive Forces Political/ legal Cultural forces Price Product 7 6 Geography and Infrastructure Channels of Promotion distribution 4 Structure of distribution Environmental uncontrollables country market B Level of Technology Economic climate 5 3 Environmental uncontrollables country market A Environmental uncontrollables country market C