International marketing

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  • 1. SEMINAR ON INTERNATIONAL MARKETING APM-II www.StudsPlanet.com
  • 2. IN T R O D U C T IO N : - In te rn a tio n a l m a rk e tin g re c e iv e d in c re a se d a tte n tio n fro m G o v e rn m e n ts a n d B u sin e ss firm s in th e la s t fo u r d e c a d e s . I.M . h a s d is tin c t c h a ra c te ristic s 1 . It is s im ila r to d o m e s tic m a rk e tin g in te rm s o f te c h n ic a l fa c to rs, 2 . M a rk e tin g c o n sists o f tw o fa c to rs. a . T e c h n ic a l: - th e s e a re u n iv e rs a l, P r o d u c t P r ic e B r a n d e tc . b . S o c ia l: - T h e s e a re u n iq u e h u m a n e le m e n ts a n d h u m a n b e h a v io r, C u s to m s, A ttitu d e s , a n d V a lu e s e tc . www.StudsPlanet.com
  • 3. Important Definitions of International Marketing: - PHILIPS KOTLER: -“A human activity directed as satisfying needs and wants through exchange system”. TERPASTRA: - I.M. As “Marketing carried on across National boundaries”. HERS AND COTEORA:-I. M. iss the performance of business activities that direct the flow of goods and services to consumer or users in more than one nation”. CONTROLLABLE: - The producer can control those are called as controllable factors such as: -[a] Price [b] Place [c] Product [d] Promotion:- N-CONTROLLABLE: -Some of them are beyond the control. HENCE: those are non- controllable factors. Such as 1. Social factors:- [A] Political situation [B] Financial system [C] Marketing infrastructure [D] Cultural factors [E] Language [F] Climate Commercial policy element such as a. Tariffs b. quotas c. licensing d. Non-tariffs. E. Currency restrictions. www.StudsPlanet.com
  • 4. 3. Competition: Competition with the producers in the importing country; Competition with the exporters from the competing country; Competition with the other exporters from ones own country 4.Logistics: - Availability of specific Transportation and Infrastructure facilities and the cost of transportation. 5. Risks:- a. Political Risks b. Commercial Risks c. Natural Risks d. Acts of enemies etc., www.StudsPlanet.com
  • 5. INTERNATIONAL MARKETING V/S DOMESTIC MARKETING SIMILARITIES 1. Fundamental necessity it needs to satisfy the basic needs of customers 2. Creating popularity and good will 3. R&D department Non human factors are 4Ps i.e. Price, Product, Place and Promotion DIFFERENCES 1. Different Political systems; a. Imposition of Tariffs and Custom Duties; b Quantitative Restrictions; c. Exchange Control; d. More local charges 2 Different legal systems:- 3. Different Monetary Systems 4. Differences in Market Characteristics 5. Variations in Procedures and/or Documentation Systems www.StudsPlanet.com
  • 6. INTERNATIONAL MARKETING AND EXPORT MARKETING Both are used inter changeably without differences SCOPE;- 1. Setting Branches in foreign countries by Direct Investment; 2. Entering in to Licensing Arrangement with foreign market; 3. Setting up of Joint Ventures and Collaborations 4. Offering Turn-key Projects and Constancy Services APPROACH;- 1. Approach towards the Company Orientation; 2. Every Govt./country takes care about its Home Country; 3. Gives more important to Domestic Operations. www.StudsPlanet.com
  • 7. IMPORTANCE OF I. M. DAVID RICARDO International Trade takes place due to cost differences and productions cost differences HARBLER The differences in Opportunity Cost of Production of commodities between nations are the base for I.T. 1. To meet Domestic needs:- No country to day can survive in isolation. The Developing countries need imports of capital, raw materials, and Technical knowledge for rapid Industrial Development. 2. Economic Development With out making Exports can’t achieve economic development. 3. Profitable uses of natural resources:- Exports earnings should be utilized in domestic industrial development. 4. Facing Competition: - Competitions improves the exports and quality 5. Employment potential: - It improves the employment potential, Ex: - In developing countries UN employment is serious problem 6. Insufficiency of Domestic demand 7. To utilize installed capacity. 8. Relative profitability. 9. Increased productivity 10.Social responsibility. 11.Technological improvements. www.StudsPlanet.com
  • 8. INTERNATIONAL MARKETING ENVIORNMENT Environmental Analysis is an important job of a Marketer. Every Market Demand is determined by the number of people, their ability to buy and buying behavior. The differences in Culture, the Economic Environment and Political Legal factors are Very important. 1. Social and Cultural Factors:- Culture is a set of shared values passed down from generation to generation. How these influence the companies International Marketing programs. 1. Family 2. Social customs, beliefs, and behavior 3. Education 4. Language differences, body language, etc 5. Religion faiths and tenets Economic Environment:- In I.M. a company must closely examine the Economic Conditions of different countries. a. Infrastructure. b. Stages of Economic Development.www.StudsPlanet.com
  • 9. 3.POLITICAL AND LEAGAL FACTORS:- The primary Political Consideration of I.M. is the Stability of Govt and its attitude towards, business, its policies and Free Trade. TRADE BARRIERS: - The major legal forces affecting I.M. are barriers those are created by Govt. a. TARIFFS: - Taxes, Duties, Cess, etc. imposed on a product entering a country used for domestic production. b. NON TARIFFS: Import Quotas, Licenses, Permits, etc. These are Quantitative Restrictions on a particular product that can be brought in to a country. c. LOCAL CONTENT LAWS:- ex;- To sell Japanese cars in Taiwan, the final product must be assembled in Taiwan only. It provides employment in their country. d. BOYCOTTS:- It is refusal to buy a products from a particular company or country,. TRADE AGREMENTS:-Trade Agreements reduce Trade Barriers by giving Preferential Treatment to firms in the member countries . They may put restrictions on rest of the world. a. THE GENERAL AGREMENT ON TRADE AND TARIFF. ( GATT) 1948. www.StudsPlanet.com
  • 10. Political and Economic Alliance was evolved among six countries France, Belgium, Italy, West Germany, Luxemburg and Netherlands. a. THE EUROPIAN FREE TRADE ASSOTION:-1960 It is single market system between the members. b. THE NORTH AMERICAN F.T.A.:- 1989 The Govts of Canada and U.S.A. entered in agreement with an intention to eliminate Trade Barriers among themselves. e. THE ASSOCIATION OF SOUTH EAST ASIAN NATIONS (ASEAN) :- 1967 This is an important Regional Economic Grouping in the World Trade among Malaysia, Philippines Singapore and Thailand that started progressing since 1970. www.StudsPlanet.com
  • 11. MULTINATIONAL CORPORATIONS A. The major participants in the world economy are the M.N.Cs B. The M.N.Cs are the powerful force both as a catalyst and as an assistant in the process of integrating the world economy. C. It is truly world wide enterprise. D. The nucleus of M.N.Cs activity is the international market place. THE CONCEPT OF M.N.C.s There is no Universal Accepted definition for M.N.C. “ The generally U.S.A. defines the M.N.C signified that the activites of the corporation or enterprise involve more than one nation” Raymond Vernon of Harvard University “ A parent Corporation that controls a large cluster of corporation of various parts of the world.” The Govt of Canada says that “ MNC as a single business enterprise which exist in atlas four or five national economies.www.StudsPlanet.com
  • 12. CHARACTERICS OF M N C. 1. International Operations; 2. Collective transfer of resources; 3. Ownership with control; 4. The company has a Direct Investment base in several countries 5. Usually earns 20 to 50 % from net profits. 6. The management makes policy decisions over them (country] TYPES OF MNCs 1. Colonial Companies :- Presently not in existence, collapsed after Second World War. 2. Resources based Companies:- These companies are more or less descendants of colonial companies. 3. Public Utility Companies:- These companies are either natural monopolies or serve the monopolistic buyer. 4. Manufacturing Companies:- These are important group of companies and MNCs since 1950. In the quality of the goods. Abundance of wealth and capital, and latest technology. 5. Service Industry :- These Industries are welcomed by many nations to meet international quality. Ex:- Tourism & Hotel Industry, Medical Services, Air Passenger Services Industry, etc/ www.StudsPlanet.com
  • 13. MNCs CROSS TO ACHIEVE HIGHER GROWTH Over 77,000 MNCs with about 7.7 lakh foreign affiliates across the world. (World Investment Report 2007) 1. MNCs Exports their product to different countries; 2. MNCs establish Sales Organization abroad; 3. MNCs possess Patents Rights; 4. MNCs establish Manufacturing Facilities in foreign countries; 5. MNCs localize and multinationals management 6. MNCs Multinationals ownership of corporate stock. THE GROWTH OF MNCs The growth of MNCs depends on no of markets. During 18th century Alfred Nobel, the Swedish Inventor, established a manufacturing unit in Hamburg. The prime motive behind that was to avoid long transportation and prohibitive costs involved thereto. So this Idea motivated no of others . Ex:- 1. L.M. Ericson, 2. Imperial 3. Nestle 4. Phillips. 5. B.P.L, 6. Toyota., www.StudsPlanet.com
  • 14. ADVANTAGES OF MNCs:- The MNCs are invaluable Dynamic Forces and instrument for wider distribution of Capital Technology and Employment. 1.Increase employment Income and Investment; 2.MNCs become vehicles for technology; 3.Managerial revolution in the Home country; 4.The MNCs helps to increase the exports and decrease the Imports; 5.MNCs work for equalizing cost of factor production; 6.MNCs encourage the domestic companies. www.StudsPlanet.com
  • 15. ARGUMENTS AGAINST MNCs MNCs are facing no of criticisms. 1. These are designed for world wide profit maximization, Not for the development of L.D.Cs. 2. MNCs can control the domestic companies,. 3. They may effect on B.O.P. of nation. 4. MNCs may effect the growth of employment. 5. MNCs are responsible for fast depletion of Natural resources. www.StudsPlanet.com
  • 16. MANAGEMENT RISKS IN INTERNATIONAL MARKETING Risk is a common feature in day to day life and business environment in . particular. In Business and over a period of time the no of risks and variety of risks increases due to increasing complexities of business. Hence there is a need to avoid the risk and overcome the same in order to be successful. COMMERCIAL RISKS:- 1. Commercial risks arise due to lack of knowledge in I.B.E., 2. Market may be affected by the entry of new competitors. 3. Price may be affected by exchange rates. 4. Changes in import duties or tariffs barriers. POLITICAL RISKS:- Political risks due to changes in Govt., change in policies and rules & regulations 1. Civil wars between any no of countries. 2. Capture of cargo by enemies 3. Changes in freight charges may also effect seriously. www.StudsPlanet.com
  • 17. LEGAL RISKS:- . 1. Commercial laws differ across the countries. 2. Complexities and expenditures on Legal proceedings differ from country to country and hence they are complicated and more expensive. CARGO RISKS (TRANSIT RISKS, MARINE RISKS):- 1. Export and import cargoes are susceptible to Marine or Transit Risks involving risks such as damage to the goods by Fire, Storm, Collision, Theft, Pilferage, Piracy, etc. 2. Sometimes in situations of emergency and in order to save human lives on board the ship, cargo/ articles overboard have to be thrown in the sea usually to lighten the ship, hence loss. CREDIT RISKS. In I.M one has to face credit risks. These always occurs due to default of exporters. Many credit risks are covered by Insurance companies. And E.C.G.C. FOREIGN EXCHANGE FLUCTUATION RISKS:- 1. Excess demand and supply of particular currency lead to fluctuation. 2. Domestic economic policies and monetary system also affect. www.StudsPlanet.com
  • 18. Major documents for export divided into 1. PRINCIPLE COMMERCIAL DOCUMENTS. 2. AUXILLIARY DOCUMENTS 3. REGULATORY DOCUMENTS AND DOCUMENTS FOR CLAIMING EXPORT ASSISTANCE. PRINCIPLE COMMERCIAL DOCUMENTS: - These documents are used all over the world by the exporters and form the essential link in foreign trade between the exporter and importer. It may also include Regulatory Documents, those are required under various laws viz.Foreign Exchange Regulation/Management) Act. 1. EXPORT INVOICE 2. BILL OF LADING 3. BILL OF EXCHANGE www.StudsPlanet.com
  • 19.   AUXILIARY DOCUMENTS: - Auxiliary documents are documents, which are required in any  shipment or for that matter used in the preparation of the  principle documents. These include documentary letters of credit certificate of  management. 1. TYPES OF L/Cs 2. ADVANTAGES OF L/Cs 3. DISADVANTADGES OF L/Cs www.StudsPlanet.com
  • 20. DOCUMENTS FOR CLAIMING FOR EXPORT  ASSISTANCE    Exports  should  complete  certain  formalities  and  proceedings  laid  down  and  furnish  requisite  information  on  various  forms  and  documents prescribed by the Govt.      a.  Application for the registration.  b.  Import license for raw materials, intermediates components, and  spares.  c.  Cash assistance as selected export products.  d.  Drawback of import and excise duties.  e.  General surety for exciting bond.  f.  Transport assistance.      www.StudsPlanet.com
  • 21. www.StudsPlanet.com