globalisation

1. GLOBALISATION OF BUSINESS
AND FOREIGN MARKET
Dissertation submitted in partial fulfilment of the requirements for the award of
the Degree of BBA (Bachelor In Business Management)
of
SHRI GURU RAM RAI UNIVERSITY
by
Sakshi Thapliyal
Enrolment No. – R190425096
Under the guidance of
Mr.Sandeep Badoni
SCHOOL OF MANAGEMENT AND COMMERCE STUDIES
SHRI GURU RAM RAI UNIVERSITY

2. Certificate of Originality
This is to certify that the dissertation titled globalisation of business and
foreign market is an original work of sakshi thapliyal and is being submitted
in partial fulfilment for the award of bachelor’s in business management of Shri
Guru Ram Rai University Patel Nagar, Dehradun under my supervision.
DATE: SIGNATURE OF GUIDE

3. Declaration by the Student
I hereby declare that globalisation of business and foreign market is the
result of the project work carried out by me under the guidance of Mr.Sandeep
Badoni in partial fulfilment for the award of Bachelor In Business Management
by Shri Guru Ram Rai University.
DATE
SIGNATURE OF STUDENT

4. Acknowledgment
The satisfaction and euphoria that accompanythe successfulcompletion ofany task
is incomplete without the mention of people who made it possible.
So, I take this as a great opportunity to pen down a few lines about the people to
whom my acknowledgment is due.
It is with the deepest sense of gratitude that I wish to place on record my sincere
thanks to my project guide Mr. Sandeep Badoni for providing me inspiration,
encouragement, guidance, help and valuable suggestions throughout the project.
I hereby would like to thank one and all, from the bottom of my heart, those who
have helped me & constantly motivated me for writing this project report.

5. Preface
Globalization is traditionally viewed as a process through which a firm moves
from operating solely in its domestic marketplace to international market. The
exact definition of internationalization is very difficult to obtain as it is a
continuous process ofactivities. internationalization can be seen as a process or
a chain of development, and a company under internationalization goes through
a learning process.This process will gradually increase a company’s market and
establishment knowledge
The marketing principles and concepts are universally applicable then why
international marketing is considered complex and diverse. International
marketing is defined as the performance of business activities designed to plan,
price, promote, and direct the flow of a company’s goods and services to
consumers or users in more than one nation for a profit. This means that the
international marketing activities take place in more than one country. The
apparent, “in more than one country,” accounts for the complexity and diversity
found in international marketing operations.

6. ABSTRACT
Building on international business, strategic management, and marketing literature, this
dissertation advances prior knowledge on globalization and business by analyzing different
effects of globalization on firms. Globalization—the process of increasing social, cultural,
political, and economic interdependence—has resulted in several changes in business
environment. Global market opportunities and threats are major effects of globalization.
While the former refers to the increases in market potential, trade and investment potential,
and resource accessibility, the latter refers to the increases in number and level of
competition, and the level of uncertainty. Two empirical studies included in this dissertation
explore how these effects influence firms’ international marketing activities and performance.
The first empirical study investigates the effects of globalization on firm performance. The
second study examines the role of firms’ cooperation in alliances in enhancing their
performance amid globalization by specifically focusing on co-marketing alliances and
international marketing performance of firms. Conceptual models are developed based on
environment-organization literature, transaction cost economics, and market power
perspective.
Results from both empirical investigations lend support to theoretical conjectures.
Specifically,the first study found that while firm performance is enhanced by increased
market opportunities evoked by globalization, it is also hampered by growing competitive
threats. Moreover, the second study indicates that globalization drives more collaboration in
international marketing activities among firms in co-marketing alliances, and such
cooperation enables firms to enhance their international marketing effectiveness.
Thus, central contributions of this dissertation include: first, it classifies the effects of
globalization on firms into global market opportunities and global competitive threats;
second, it integrates literature on international business, strategic management, and marketing
to address the effects of globalization on firms’ marketing conduct and outcomes; third, it
demonstrates the generalizability of the transaction cost economics, the market power
perspectives, and the literature on environment-organization interfaces in the domain of
globalization; fourth, it confirms that globalization acts as a two-edged sword and that
alliance cooperation presents a viable alternative for firms to navigate successfully in this
new competitive landscape.

7. INDEX
CHAPTER 1 (Page no. 9-15)
1.1 Introduction
1.2 Globalization
CHAPTER 2 (Page no. 16-19)
2.1 Need Of Globalization Of Business
Chapter 3 (Page no.20-22)
3.1 Deciding The Market For Global Business
3.2 EPRG Framework
Chapter 4 (Page no .23-24)
4.1 Globalization And Marketing Co-Operation
Chapter 5 (Page no .25-33)
5.1 Globalisation Of Business And Foreign Marketing
5.2 Market Entry Strategies
Chapter 6 (Page no .34-35)
6.1 Success OfDifferent Local Brands At Global Level
Chapter 7 (Page no .36-38)
7.1 Effect Of Globalization On Indian Industry
7.2 Effect Of Globalization On Rural Marketing
CONCLUSION
BIBLOGRAPHY

8. INTRODUCTION
Overview
Globalization has caused dramatic changes to business practices around the world. Companies
such as IBM, Intel, Microsoft, and Philips have started to outsource specialists from various
parts of the world, causing job shifts and changes in companies’ structures. Alliances among
automakers (e.g., GM-Ford- DaimlerChrysler, Ford-Mazda, and GM-Honda), petroleum
manufacturers (e.g., BP-Mobil, NUPI-Chevron Texaco), and airlines(e.g., star alliances) are
other examples of changes driven by this phenomenon. Therefore, this dissertation investigates
the effects of globalization on business firms with a particular interest on how it affects firms
from both emerging economies (i.e., China, India,Thailand), and developed economies,
In this study, “globalization” refers to the process of increasing social and cultural inter-
connectedness, political interdependence, and economic, financial and market integrations that
are driven by advances in communication and transportation technologies, and trade
liberalization
The dissertation is comprised of three related studies. The first study is empirical research
designed to examine the effects of globalization on the performance of exporting firms in
Thailand and in the U.S. The second study examines the relationships between the effects of
globalization and the degree of co-marketing alliance and international marketing performance
of firms. The last study makes an empirical investigation of the effects of globalization on the
degree of co-marketing alliance and international marketing performance of firms from two
distinct economic contexts—developed and emerging economies, which are represented by
American and Thai firms, respectively. Thailand and the U.S. are appropriate research settings
since these two countries differ greatly in their degree of globalization level of economic
development, and national competitiveness. While the U.S. is highly globalized, Thailand is
considerably less globalized
In this introduction, the phenomenon of globalization, including the effects of globalization on
businesses, is first described. The purpose of the study, the major research questions, and the
scope of the study are then presented. Finally, the organization of the dissertation is provided
in the last section

9. CHAPTER-1
GLOBLISATION
Globalization - describes an ongoing process by which regional economies, societies, and
cultures have become integrated through a globe-spanning network of communication and
trade. The term is sometimes used to refer specifically to economic globalization: the
integration of national economies into the international economy through trade, foreign direct
investment, capital flows, migration, and the spread of technology. However, globalization is
usually recognized as being driven by a combination of economic, technological, sociocultural,
political, and biological factors. The term can also refer to the transnational circulation of ideas,
languages, or popular culture through acculturation.

10. People around the globe are more connected to each other than ever before. Information and
money flow more quickly than ever. Goods and services produced in one part of the world are
increasingly available in all parts of the world. International travel is more frequent.
International communication is commonplace. This phenomenon has been titled
"globalization."
"The Era of Globalization" is fast becoming the preferred term for describing the current times.
Just as the Depression, the Cold War Era, the Space Age, and the Roaring 20's are used to
describe particular periods of history; globalization describes the political, economic, and
cultural atmosphere of today.
While some people think of globalization as primarily a synonym for global business and trade,
it is much more than that. The same forces that allow businesses to operate as if national borders
did not exist also allow social activists, labor organizers, journalists, academics, and many
others to work on a global stage.
In terms of economics, businesses participate in globalization to increase the international flow
on capital, including foreign investments. This would lead to the economic stability of the
nation and means providing more development such as infrastructures and establishments.
Furthermore, it could create international agreements among different nations, and may lead to
more job opportunities in the nation. This also affects the political aspect, as more projects will
be produced, nationally and locally, and will practically help the nation or country in their
stability and leadership. More opportunities may also mean the boosting of confidence of each
individual to become more productive and effective. Culturally, there will be an increase in the
exchange of information, and multiculturalism will be achieved; having no inferior or superior
races. This will lead to a boom in travel and tourism, which would totally help locals to promote
their products and profit from their small businesses.
No one doubts that the world’s economy is truly global. Whether it’s a Fortune 100 company
that sells on six continents or a local concern whose bottom line is affected by the cost of raw
materials that originate across the ocean, every business is tied to the global economy. And
ambitious companies look to become more global by the day.
And why not? Nestlé has reported massive double-digit growth in its China business. Procter
& Gamble has acknowledged that emerging markets will account for 25 percent more business
in a few short years. India will be a top-five consumer-packaged-goods market by 2010. The
average salary in that country is growing by more than 10 percent a year. Global means growth
potential. And the potential is staggering. By 2030, the world population will have gained
nearly 50 percent over 2002, and developing nations will represent 90 percent of the world’s
population, up five percentage points
Effect Of Globalization On Different Aspects
Globalization is an interesting phenomenon since it is obvious that the world has been going
through this process of change towards increasing economic, financial, social, cultural,
political, market, and environmental interdependence among nations. Virtually, everyone is
affected by this process. Given these changes, globalization brings about a borderless world.

11. Globalization drives people to change their ways of living, prompts firms to change their ways
of conducting business, and, spurs nations to establish new national policies. Events transpiring
in different parts of the world now have dramatic consequences to other parts of the world at a
faster pace than anyone could imagine in the past. For example, the Asian financial crisis in
1997 has severely affected businesses around the world and the outbreak of SARS (Severe
Acute Respiratory Syndrome) in 2003 has shown how globalization permits the rapid spread
of the disease, which affects many airlines, the hospitality industry, and other businesses
around the globe.
On the positive side, globalization enables firms to outsource and find customers around the
world, e.g., the auto and electronics industries. The globalization of production and operations
benefits firms through the realization of economies of scales and scope. Hence, no one can
deny that globalization has changed the way we conduct business.
Although globalization is a worldwide phenomenon, the extent to which each country is
globalized is not identical. To measure the degree of globalization of each nation, a
globalization index was recently developed by a cooperation between Foreign Policy
Magazine, AT Kearney and EDS Company.
The index indicates that some small developing countries in emerging economies such as
Singapore and Malaysia were among the top twenty most globalized nations from 2001 to 2004
with Singapore being ranked as the most globalized nation. Thus, it is clear that globalization
is an important phenomenon, one that cannot be simply ignored, because every nation—
regardless of size or level of development—is globalized and affected by globalization. With
the prevalence of this worldwide phenomenon, it is not surprising that businesses are inevitably
affected.
Throughout this dissertation, the effects of globalization are classified into two broad
Categories:
1) Global market opportunities and
2) global market threats.
These two major effects are chosen to be investigated here because they are frequently cited in
the past literature as the most apparent and immediate effects of globalization. Global market
opportunities refer to the increases in market potential, trade and investment potential and
resource accessibility. Global market threats refer to the increases in the number and level of
competition, and the level of uncertainty.
The changing dynamic of consumer behavior
Consumer researchers are increasingly exploring and comparing behavior and cognitions in
diverse national environments. New samples of the consumer behavior are formed by the fact
that it drastic changes within the political borders and in the spatial configuration of the sales
markets for consumer goods, which are connected with strong sociological-cultural forces.
Barriers between markets moved away through regional integration, and created larger unified
market entities. Consumers are increasingly exposed to a myriad of diverse influences from
beyond their national borders, because the advances in communications technology are

12. shrinking distances and forgetting links between markets worldwide. Traditional definitions of
the unit of analysis used in cross cultural research need to be critically re-examined in view of
the changing consumer landscape.
There are different changing dynamics of consumer behaviour in the world. In the following a
few are introduced. The first changing dynamic are the massive waves of migration which are
taking place, as consumers from emerging market economies are moving to industrialized
economies. The second one is that consumers are becoming more mobile and travelling more
both for pleasure and business. One of the results of this changing dynamic is that the
consumers are becoming exposed to the products, lifestyles and behaviour patterns of
consumers in other countries. There are some reasons, for example that barriers come down
(European Union) and consumers and goods move freely across national boundaries. Firms
gradually alter traditional patterns of behavior, by introducing new products, services and ideas
into the global market place. As a result countries or cultures can no longer be viewed in
isolation as a set of separate entities, characterized by their own distinctive value-systems, traits
and customs.
In the 60s and 70s the first studies (cross-cultural consumer research) emerged, which examine
the consumer behaviour in the different countries. Studies were primarily descriptive and
lacked any strong conceptual framework to interpret findings and make inferences about
observed similarities' or differences' in behaviour in different countries. One wanted to examine
whether similar consumption samples and behavior in similar demographic and sociological-
cultural groups in the different national cultures exist. A number of studies have focused on
examining the universality of consumer models in different countries and cultural contexts.
This is one of the key themes in cross-cultural psychology. Another stream of research focuses
on comparing similarities and differences in various aspects of consumer attitudes and
behaviors such as values, cognitions and decision making etc., in different cultural contexts or
countries.
The key theme of this is the study of cultural values or rather to compare values cross culturally.
Differences in time orientation and use of time across countries or cultures have been another
favorite topic of investigation. A number of studies have focused on identifying global market
segments based on demographic characteristics, such as, global teenagers, women worldwide,
elite consumers, and have compared their attitudes and behavior patterns in different countries.
The changing dynamics of consumption behavior and the increasing complexity of cultural
influences on behaviour, together with the limited ability of traditional research designs to
capture this complexity suggest the need to reexamine the design of cross cultural consumer
research
It is necessary to define the unit of analysis. There are different aspects to be attended here.
The first priority is to define the relevant unit of analysis, or cultural group to be studied.
Important point in this context is a high degree of homogeneity in attitudes and behaviour
among members of the group. There are two different key criteria to define the unit. First there
is the language, which may be a dialect or main language, and secondly the degree of social
interaction and communication. Modern means of communication enable members located at
geographically dispersed sites to communicate, interact, and establish a strong closely knit
community of shared interest and identity. Besides this it structures the research design in

13. cross-cultural studies. Once the unit of analysis has been determined along with its cultural
context, the next step is to structure the research design and identity, the nature of the cultural
phenomena or influences to be studied.
The first and most common type of study involves a static comparison of culti-units located at
different geographic sites and within different macro or micro-cultures. Another type of study
involves examination of the impact of exposure to direct and indirect influences from other
cultures on behaviour patterns of a given group. A third type of study examines how attitudes,
interest and behaviour patterns change with movement from one macro-culture to another. In
such studies, the local point is to examine the ethnic core of the culture, and in some instances,
its variation across sites. Different aspects of the ethnic core and its relation to behaviour as
consumers can be examined, including, for example, its core values and beliefs, the artifacts
and symbols of the culture, and their impact on consumption, and desired product benefits, or
ritualistic behavior.
While multi-site studies focus on the ethnic core of the culti- unit, and its influence on attitudes,
preferences and consumption behavior, the second type of study focuses explicitly on
examining the impact of external cultural influences on the culti- unit or individual members.
These are influences which come from other macro-cultures or originate from a cultural context
other than the one in which their culti-unit is embedded. There are direct and indirect
influences. Direct influences will arise when an individual travels to or lives for a period of
time in another cultural context or macro-culture. Indirect influences, on the other hand, arise
from passive exposure to media, information, visual images, or other stimuli generated by
organizations from other ma cro-cultures. A third type of study deals with transition from one
macro-culture to another. This occurs when an individual moves from one macro-cultural
context to another, as through immigration to another country.
Consumer Behaviour in Global markets
The A-B-C-D paradigm and its application to Eastern Europe and the third world
The focus is to provide a comprehensive view of consumer behaviour in global markets,
especially in relation to the countries of Eastern Europe and the third world.
Consumer behaviour is likely to be somewhat different in developing countries since it is
largely influenced by social, political and economic conditions. It provides a framework that
can be used to study consumer behaviour in global markets, this framework is applied to
examine and understand consumer behaviour in countries of the third World and Eastern
Europe. Besides this it offers generalizations and recommendations to those wishing to market
their products/services in the Third World and Eastern Europe.
Theories/models have played an important role by detailing how various factors influence
consumer behaviour. In this article it presents the A-B-C-D paradigm. The four stages are
termed access, buying behaviour, consumption characteristics, and disposal. A thorough
understanding of each stage is essential for the global marketer since the overall effectiveness
of the marketing function is contingent on all four stages being facilitated within any culture.
First there are short definitions of each stage:

14. (1) Access
The first step in global marketing is to provide access to the product/service for consumers
within a culture. Access pertains both to physical access as well as to economic access.
(2) Buying Behaviour
This stage encompasses all factors impacting on decision making and choice within a culture.
Examples of these factors include perceptions, attitudes, and consumer responses such as brand
loyalty.
(3) Consumption characteristics
The specific products/services that are purchased and consumed may be different in each
culture. The cultural orientation (traditional versus modern) and social class distribution,
among other factors, will determine consumption patterns within a culture.
(4) Disposal
Most countries, including the developing countries, are becoming more environmentally
conscious and moving away from throw-away products. Hence marketers need to design
systems to facilitate the safe disposal, recycling, resale or manufacturing of products. They
must also meet their social responsibilities in other countries, especially in relation to public
safety and environmental pollution.
A different rationale for the A-B-C-D paradigm:
 First, since the four stages are universally applicable, the paradigm offers a general
framework to understand consumer behaviour within any global market.
 Second, in order to understand the broadest possible range of consumer behaviour within
any culture, the paradigm encompasses all aspects of purchase and consumption within a
simple framework.
 Third, the four stages of the paradigm are arranged in a hierarchical fashion from the
consumers' viewpoint. And fourth the A-B-C-D paradigm is consistent with the concept of
business process reengineering, which encourages business to improve corporate
performance by using a cross- functional perspective.

15. CHAPTER-2
NEED OF GLOBALIZATION OF BUSINESS
Globalization has melted national borders, free trade has enhanced economic integration and
the information and communications revolution has made geography and time irrelevant. The
role and functions of entrepreneurship in the new global economy have taken on added
significance and face compounded challenges. We live in a challenging environment of rapidly
changing economic events, where the private sector has become the most important engine of
economic growth and the public sector has shrunk in importance and influence. Entrepreneurs
are defining the new rules of engagement on the economic landscape as they come to grips
with contemporary challenges and new opportunities. In this new environment, entrepreneurs
need to articulate a pragmatic vision, exercise effective leadership and develop a competent
business strategy. They should create the synergies that will allow them to integrate the
interactive ingredients of the new economy in order to enhance their competitive advantage.
Their business strategy should embrace flexibility, a quick response time and a proactive
approach to economic opportunities. This paper will also enumerate the entrepreneurial
abilities, skills, competencies and perspectives that are essential pre-requisites for success in
the new global economy of the twenty-first century. In short, the economic heartbeat of the
new economy is the global entrepreneur with an international mindset.
The economic gains of the Industrial Revolution were associated primarily with economies of
scale. Economies of scale accrue when the cost of producing a unit of output decreases as the
output rate increases prior to diminishing returns setting in. This is a result of the incremental
decrease in per unit cost, as the per unit fixed cost is distributed over a larger number of total
production output. Economies of scale arise from specialization and the division of labor that
can be attained more effectively by each business' internal structure of the production process
co-ordination, rather than in market co-ordination. The mass production of consumer durable
goods using the assembly line method of production is a good example of gains from
economies of scale during the Industrial Revolution. More specifically, car manufacturers have
been the beneficiaries of economies of scale through the use of cost saving machinery and
highly specialized labor, along with targeting increases in production output levels.
The role and functions of entrepreneurship in the new global economy of the 21st Century have
taken on added significance and face compounded challenges. Today we live in a challenging
environment of rapidly changing economic events, where the private sector has become the
most important engine of economic growth, and the public sector has shrank in importance and
influence. In this context, the entrepreneur has a primary role to play in promoting national
well-being through the enterprise of the private sector. Entrepreneurs are defining new rules of
engagement on the economic landscape as they come to grips with contemporary challenges
and new opportunities.

16. New ideas, new directions, and new initiatives are the signature mark of the 21st Century. In
this new environment, entrepreneurs need to articulate a pragmatic vision, exercise effective
leadership, and develop a competent business strategy. They should have personal qualities to
integrate the interactive ingredients of the new economy, viz. globalization, trade liberalization,
and the information technology and communications revolution, in order to enhance their
competitive advantage.
Their business strategy should embrace flexibility, a quick response time and a proactive
approach to economic opportunities The pervasive economic integration that has taken place
in the new global economy has compounded the interdependence of nations, and enhanced the
linkages of production and marketing. At the very heart of this transformation is the birth of
the global entrepreneur. In other words, the ability to adopt a global mindset in the exercise of
entrepreneurial initiatives. Indeed, in addition to a new global vision, new competencies and
new skills are necessary tools for the modern entrepreneur. Among those new skills are the
ability to cope with the tidal wave of frequent and repeated change, more cost-effective
production methods, improving the quality of products, having a faster response time to
changing market conditions, selling at lower prices, and being more aggressively competitive.
In order to strategize globally, the contemporary entrepreneur must extend his/her mindset to
incorporate multidimensional relationships and complex social, cultural, economic and
political realities.
One of the most important entrepreneurial requirements is the ability to have a global
perspective. Globalization has for all practical purposes melted national borders and made
geographical location irrelevant. Entrepreneurs with a global vision have the advantage of
reaching out to embrace economic opportunities world-wide. Conducting business in a local,
regional or national milieu is significantly different from doing business internationally. For
example, it requires up scaling from a national image in the market place to a global image.
This involves endorsing the same standards of quality throughout the world on a consistent
basis, but at the same time incorporating the flexibility to tailor packaging or the image of the
product to suit the customs and traditions of the local market.
Second, the new global entrepreneur must have the ability to meet the challenges and take
advantage of the opportunities associated with human diversity. This requires the adoption of
a progressive multicultural approach in terms of one's workforce as well as one's product
clients. The contemporary entrepreneur must develop a knowledge and appreciation of the
cultural, social, and economic differences that influence how people perceive and interact in
their environment and its relationship to community development. It requires being constantly
sensitized to the different cultural values, attitudes and approaches to problem solving and
decision-making. A proficiency in managing diversity domestically and internationally is
essential for harnessing the multicultural profile of the workforce and ensuring optimum levels
of productivity. The cultural diversity of the workforce is an economic asset that must be
deployed to strategic business advantage. It translates into an ability to communicate in the
languages of many different countries, and familiarity with local customs, traditions, business,
and financial habits. Marketing strategies must understand the role of languages and cultures
as they attempt to introduce new products in foreign markets. The failure to take local
preferences, packaging, branding, local conditions, and economic infrastructure into account
can result in poor strategic decisions.

17. An imperative for effectively managing cultural diversity is cultural sensitivity. The modern
entrepreneur requires a comfort level that is conducive to utilizing the multicultural,
multiracial, multilingulstic, and multifaith character of the workforce. This is a profound
economic advantage in such areas as international trade, identifying export markets, overseas
business contacts, opening doors of economic opportunity, establishing a presence in overseas
markets, facilitating foreign direct investment, integrating advanced technology, and assessing
the business risk of operating in a foreign market. A global perspective involves a holistic view
of workforce inclusiveness whereby all employees are treated fairly and equitably, and are
provided with equal opportunities and equal rewards. It requires the effective integration of
diverse cultures in the business network in a productive and trusting environment. In short, this
is about creating people synergy, where the outcome is greater than the inputs, because of the
strategic co-ordination of a diverse and pluralistic workforce.
The third axiom of successful entrepreneurship in the new economy depends on pushing the
frontiers of innovation in a persistent and deliberate manner. Integrating innovation has become
a constant objective for economic efficiency and the development of a successful business
strategy. The maxim "if it ain't broke don't fix it" should be replaced with "if it ain't broke
improve it". The modern entrepreneur must embrace the role of a catalyst for innovative change
on a continuous time frame. In this respect, entrepreneurs must seek opportunities for achieving
economies of scale and economies of scope. Global enterprises can ascertain these economies
by extending their reach to global markets. In doing so, they extend the potential of their
domestic market and enhance the scope of their innovation initiatives through research and
development, the development of new products, improving quality, and reducing the cost of
existing products. It should be noted that developing global niche market requires a long-term
customer oriented focus. In order to compete in the contemporary global market, products and
services must be sensitive and responsive to local market needs and customer preferences.
Furthermore, in the fast paced world of business, even the long term is getting shorter. Given
the diversity of market requirements and needs, the dispersion of manufacturing and out
sourcing, the importance of research and development leadership, and the recognition of
technological advances for product and process innovations; learning and the transfer of
knowledge are key to global success. Business organizations that are successful must be able
to co-ordinate, transfer, and use knowledge gained rapidly and effectively.
New corporations with an international focus must embrace an organizational vision that has a
global reach. There must be an administrative model that facilitates the corporate vision and
has the plans to implement it effectively and consistently throughout the entire organization. It
is in this regard that product quality takes on added significance. The culture of the modern
enterprise must be to adhere to high quality standards that are company-wide and permeate
throughout the entire enterprise, not just parts of it.
The economic profile of the new global economy has been driven by technology, fuelled by
innovation and entrepreneurial initiative, and is based on new ideas, new perspectives and new
business strategies. It has opened the door to new investment opportunities and acted as a
catalyst for employment creation. At the same time the new economy has altered the economic
landscape and realigned the linkages between different sectors of the economy. In short,
technological innovation and entrepreneurial initiative is alive and well in the new global
economy of the 21st Century.

18. The new economy has markedly transformed the structural parameters of the economic
landscape and contracted the prism for time and space. The role of information technology in
the new economy has been pivotal. It is particularly potent in the changing structure of
international production. International economic transactions that formerly were conducted
between independent entities are now being internalized within a single firm or multinational
corporation. The new technological infrastructure has empowered services to be delinked from
production, and traded or performed remotely. In this contemporary venue, the market for a
growing number of internationally integrated but geographically dispersed business enterprises
is global, rather than national or regional. The internationalization of production is necessitated
by the economics of profitability. In other words, the high cost of information technology and
the highly skilled labour used in the production process, require a marketing niche that caters
to a global market rather than a smaller national market. The economic heartbeat of the new
economy is the global entrepreneur.
The opportunities and threats evoked by globalization have caused firms to adapt their
organizational structures and strategies accordingly. Firms that respond to these trends have
been found to improve their performance. Although many scholars have often discussed these
two effects of globalization, a review of related literature reveals that empirical work on such
effects and business firms is still scarce. Therefore, this dissertation specifically aims at
analyzing the effects of global market opportunities and threats on 1) a firms’ overall
performance, and 2) a firms’ cooperation in marketing alliances and international marketing
performance.

19. CHAPTER-3
DECIDING THE MARKET FOR GLOBAL
BUSINESS
What is the EPRG Framework?
EPRG stand for Ethnocentric, Polycentric, Regiocentric, and Geocentric. It is a framework
created by Howard V Perlmuter and Wind and Douglas in 1969.
It is designed to be used in an internationalization process of businesses and mainly addresses
how companies view international management orientations. According to the EPRG
Framework (or the EPRG Model), there are four management approaches that an
organization can take to get more involved in international business substantially.
The EPRG Framework suggests that companies must decide which approach is most suitable
for achieving successful results in countries abroad. For this reason, the EPRG Framework
can be a useful tool to utilize if a company does not know yet how to manage business
activities between companies in the local country and a host country. The EPRG Framework
is additionally useful for making strategic decisions.
 Ethnocentric
In this approach of the EPRG Framework, the company in a local country that wants to do
business overseas does not put in much effort to do research abroad about the host country’s
market. Instead, most of the market research is executed in the headquarters in the local
country.
With this approach, the company seeks for markets abroad that share the same characteristics
as the local market so that the marketing strategy does not have to be adapted. More
specifically, the ethnocentric approach uses the same marketing strategies that are created by
local personnel and further utilized multiple countries.It is many times possible that
companies that utilize this approach believe that local products should not be adapted to the
local need of countries abroad because the products are already of high quality. Another
reason could be that a specific product is sold in large volume in the local market, and for this
reason, it is believed it will do the same in other markets abroad.
The ethnocentric approach of the EPRG Framework has benefits but also downsides. At first,
the company saves a lot of operational costs that can be invested elsewhere. But the downside
is that the company does not build up new knowledge about the market abroad, which could
substantially increase sales volume if products and strategies would be adopted to the needs
of the host country.

20.  Polycentric
In the polycentric approach of the EPRG Framework is the opposite of the ethnocentric
approach. A company that utilizes this approach carefully consider different markets abroad
to identify host countries that could potentially offer the most benefits. It means that if a
company has a local headquarter and a separate office overseas in a host country that
manages the operations in that or more countries, the marketing strategies are locally created
and implemented based on the local needs.Businesses that utilize the polycentric approach of
the EPRG Framework strongly believe that every market has its differences. For this reason,
these types of companies implement different marketing strategies for each market.In the
polycentric approach, it is therefore easier to make strategic decisions based on
current cultural differences and political differences. Companies that use this approach can
also more easily adapt to changes in the market because of their decentralized decision-
making authorities.
The downside is that the local headquarter has less control over its operations abroad. As long
as the business operations in the host country demonstrate to be successful, this might not be
a problem. But if the business operations overseas show to be not too profitable and result in
losses, it is more difficult for the local company to minimize those losses.However,
companies that use this approach learn by doing. For this reason, a learning effect occurs, and
new knowledge is an intellectual asset of the company.If a company is the first to enter a
market or offer an unfamiliar product, the local company has first-mover advantages. It could
have the best location in a host country to operate the business, and this could additionally
substantially increase profit margins.
 Regiocentric
In a regiocentric approach of the EPRG Framework, businesses create and implement
internationalization strategies for specific regions. Companies that utilize this type of
approach use this for the area in which the local business is operated.
It can also be that an organization utilizes two kinds of approaches. An organization can use a
regiocentric approach for the business in the region in which it operates. And the same
organization can use a polycentric or ethnocentric approach to do business in countries
outside the region.Businesses that use a regiocentric approach of the EPRG Framework many
times believe that the markets in the region share the same characteristics of the market in the
home country. It is still challenging to determine countries in one region that share the same
characteristics. Consider, for example; some companies use this approach for NAFTA
countries, which include the United States, Canada, and Mexico.
All countries are in the same region but still have some different characteristics. The same
implies for the Benelux, which include Belgium, Netherlands, and Luxembourg. The
countries are in the same region, but Belgium has different market characteristic than the
Netherlands and Luxembourg.The reason why companies use this approach to group
countries into for example NAFTA and Benelux. is depending on the type of industry and
product or service. Every organization has its way of internationalization.

21.  Geocentric
A geocentric approach of the EPRG Framework means that a business strongly believes that
it is possible to utilize one type of strategy for all countries, regardless of the cultural
differences.However, companies that use this approach attempt to create products or offer
services in a way that best suit national and international customers. This means that instead
of believing that their product or service is excellent and that it will sell in other markets, like
in the ethnocentric approach, these organization proactively adapt their products and services
that best meet the global needs.Companies sometimes prefer this type of strategy of the
EPRG Framework because it does not involve many adoptions, which minimizes operational
costs. These companies use one strategy to sell a product or service, and could for this reason,
achieve economies of scale.
Organizations that have a geocentric approach are many times considered as key international
businesses because these companies utilize a combination of the polycentric and ethnocentric
approaches.It means that organizations with a geocentric approach of the EPRG Framework
can identify similar cultural characteristic, and they can convert the different cultural
characteristics into mutual characteristics
Deciding where you should offer translated localized information and how much of it are
basic international marketing functions.
Globalization is not an all-or-nothing proposition. This is not a binary decision. Some markets
make natural sense to support because you have a significant customer base. Others will be less
obvious and might involve localizing your internal operations or a behind-the scenes supply
chain before tackling the consumer-facing Web site.
• Language plus country make a market. Most globalists start out by reviewing the countries
or the languages that are important to their business. Here I outline the more evolved notion of
country-language pairs, also called locales. For example, supporting the German language for
Germany is such a pair that I would characterize as a discrete market or locale, just as Spanish
for U.S. Latinos or French for Canadian francophone’s is unique markets. I call languages like
Chinese, English, and Spanish that are spoken by people in different countries mega languages.
Some companies go global by first creating an international site for all English or Chinese
speakers regardless of where they live.
• Seven guideposts for global marketing. Just as we have the traditional four Ps of marketing
(product, price, place, and promotion) to guide us, we can look to similar guideposts for moving
into international markets. Here we discuss the three Ps: product portability, Internet
penetration, and the polities that you must consider for each market.
These discussions will always revolve around return on investment Business without Borders
(ROI) factored against the benefits.
• Tiered support lessens the burden. Too many globalization aspirants want to enter every
country at once and offer phenomenal levels of service in each one. Here I lay out the notion
of a multitier approach to entering only the markets that matter.

22. CHAPTER-4
GLOBALIZATION AND MARKETING CO-
OPERATION
GENERAL BRAND STRATEGIES
Brand strategy is aimed at influencing people.s perception of a brand in such a way that they
are persuaded to act in a certain manner, e.g. buy and use the products and services offered by
the brand, purchase these at higher price points, donate to a cause.
A global brand needs to provide relevant meaning and experience to people across multiple
societies. To do so, the brand strategy needs to be devised that takes account of the brand’s
own capabilities and competencies, the strategies of competing brands, and the outlook of
consumers (including business decision makers) which has been largely formed by experiences
in their respective societies. There are four broad brand strategy areas that can be employed.
 Brand Domain. Brand domain specialists are experts in one or more of the brand domain
aspects (products/services, media, distribution, solutions). A brand domain specialist tries
to pre-empt or even dictate particular domain developments. This requires an intimate
knowledge, not only of the technologies shaping the brand domain, but also of pertinent
consumer behavior and needs. The lifeblood of a brand domain specialist is innovation
and creative use of its resources. A brand domain specialist is like a cheetah in the
Serengeti preying on impala and gazelle.
The cheetah is a specialist hunter with superior speed to chase, and the claws and teeth to kill
these animals. The cheetah is also very familiar with the habits of its prey.
 (2) Brand Reputation. Brand reputation specialists use or develop specific traits of their
brands to support their authenticity, credibility or reliability over and above competitors. A
brand reputation specialist needs to have some kind of history, legacy or mythology. It also
needs to be able to narrate these in a convincing manner, and be able to live up to the
resulting reputation. A brand reputation specialist has to have a very good understanding
of which stories will convince consumers that the brand is in some way superior. A brand
reputation specialist is like a horse.
 (3) Brand Affinity. Brand affinity specialists bond with consumers based on one or more
of a range of affinity aspects. A brand affinity specialist needs to outperform competition
in terms of building relationships with consumers. This means that a brand affinity
specialist needs to have a distinct appeal to consumers, be able to communicate with them
affectively, and provide an experience that reinforces the bonding process. A brand affinity
specialist is like a pet dog.

23.  (4) Brand Recognition. Brand recognition specialists distinguish themselves from
competition by raising their profiles among consumers. The brand recognition specialist
either convinces consumers that it is somehow different from competition, as is the case
for niche brands, or rises above the melee by becoming more well known among consumers
than competition. The latter is particularly important in categories where brands have few
distinguishing features in the minds of consumers.
Impact On Brand Strategies
The factors discussed above each have their own specific impact on the four general brand
strategies and their strategy sub-types. Due to the limitations of its format, this paper focuses
on factors that influence the four general strategies only. We also limit the discussion to one
global branding issue that has attracted a lot of attention among practitioners in recent years,
namely brand harmonization or standardization. This is not say that the factors discussed above
do not also have a profound effect on other global branding issues such as global brand
extensions, rationalizing a global brand portfolio, global brand architecture and co-branding
global brand

24. CHAPTER-5
THE GLOBALIZATION OF BUSINESS AND
FOREIGN MARKETING
Since at least 10 years you hear a lot about Globalization, about the shrinking physical and
mental distances between countries. Thomas Friedman calls is the “Flattening of our world”,
other describe it as the “Globe as our village” phenomena. Is the same happening in our beloved
marketing field?
There are probably four different marketing constituents that need to be considered if one
analyzes the extent of the globalization of marketing: The Consumer, Brands, the community
of marketers, and the academic field of marketing. Let’s review each one separately:
The Consumer – There is no doubt that today’s consumers are much more globally oriented
than ever before. The internet makes physical boundaries seem obsolete, the exchange of ideas
and communication appear more borderless. But, but most consumers, especially in the US,
still spend most of their discretionary income on US brands, on products and goods that are
sold (definitely not manufactured) in the United States. There is only a very limited global
sourcing and purchasing behavior of consumers. This is very different from businesses which
are getting used to buy goods and services from anywhere. Still, the US consumer is used to
shop non US brands, and thinks more and more beyond physical country boundaries but there
are only a few (very rich) truly global consumers.
Brands – The number of truly global brands (e.g. Apple, Nokia, Hugo Boss) have increased
over the last decade. One just needs to look at Toyota and their increasing leadership in the
automotive industry on a global level. One can imagine that the world of brands morph into
two extremes, of very global and very local brands. Brands will have to decide if they want to
focus primarily on their local or their local identity.
Marketers – It’s still pretty rare to find really global marketers in the CMO’s position of
Fortune 2,000 Firms. It’s much more common for CEO’s to have the global work experience
with stints on multiple continents. CMOs still seem to follow the old rule of originating from
a brand’s motherland. While this is partly understandable (you first need to understand the
consumer’s mindset of the brand’s mother or fatherland), CMO’s need to become much more
global players. Unfortunately there does not seem to be a growing community of global
marketers, not even within the big marketing services firms, that actively promote the global
CMO.
Academics – The biggest lack of globalization resides within the academic community. Most
US marketing academics are too busy enough in reinforcing their own US superiority while
non US academics don’t like to rely heavily on the US marketing leadership. Just recently I
asked US academics about their favorite non US marketing personality or stimulating book. I
did the same with some of their European counterparts and inquired about their favorite US
marketing academic or book. In both cases I only received blank stares and uncomfortable
silence

25. This brief assessment of the globalization degree along the key marketing constituents shows
that leading brands behave and think much more global than the practicing or the academic
oriented marketer. We Marketers have to be careful that we don’t fall further back but instead
keep up with the speed of globalization. Currently it’s more driven by brands and opinion
leading consumers instead of a community of global marketers. Let’s change it.
FORCES OF GLOBALIZATION
Why Go Global?
The playing field is wide open for small business. Here’s why both men and
women should consider going global:
 Increase sales.
 Generate economies of scale in production.
 Raise profitability.
 Insulate seasonal domestic sales by finding new foreign markets.
 Create jobs, productivity growth and wealth.
 Encourage the exchange of views, ideas and information.
Small business in particular can take a mentoring role in educating other men and women in
going global. They can establish educational programs, conferences and other activities to
advance their colleagues, and in doing so, promote professional growth and leadership among
all small business owners.
What Does It Take To Go Global?
Any small business owner must be adaptable, strategic and willing to take calculated risks. But
becoming a successful global small business requires the following commitments:
 Be comfortable with change.
 Welcome new experiences; and learn as much as possible about the culture in which you
are interested in doing business.
 Be willing to take risks, even though it may create short term challenges.
 Push yourself to continuously innovate.
DIFFERENT MARKET ENTRY STRATEGIES
1. Exporting
Exporting, the most traditional mode of entering the foreign market is quite a common one
even now. International trade has been growing much faster than the world output resulting in
greater world economic integration.
Exporting is the appropriate strategy when one of more of the following conditions prevails.

26.  The volume of foreign business is not large enough to justify production in the foreign
market.
 Cost of production in the foreign market is high.
 The foreign market is characterized by production bottlenecks like infrastructural
problems, problems with materials supplies etc.
 There are political or other risks of investment in the foreign country.
 Exporting is more attractive than other modes particularly when underutilized capacity
exists. Even when there is no excess capacity, expansion of the existing facility may
sometimes be easier and less costly than setting up production facilities abroad. Further,
many governments, as in India, provide incentives for establishing facilities for export
production. The alternatives to making in foreign countries by the international marketer
for marketing the goods in the foreign countries are licensing and contract manufacturing.
Although these have certain advantages, there are also certain risks. Hence, if a company
does not want to go in for licensing or contract manufacturing, the only avenue open is
exporting.
2. Licensing and Franchising
Licensing and Franchising, which involve minimal commitment of resources and effort on the
part of the International marketer, are easy ways of entering the foreign markets. Under
International licensing, a firm in one country (the licensor) permits a firm in another country
(the licensee) to use its intellectual property (such as patents, trademarks, copyrights,
technology, and technical know-how, marketing skill or some other specific skill). The
monetary benefit to the licensor is the royalty or fees which licensee pays. In many countries,
such fees or royalties are regulated by the government; it does not exceed five per cent of the
sales in many developing countries.
A licensing agreement may also be one of cross licensing, wherein there is a mutual exchange
of knowledge and/or patents. In cross licensing, a cash payment mayor may not be involved.
Franchising is “a form of licensing in which a parent company (the franchiser) grants another
independent entity (the franchisee) the right to do business in a prescribed manner. This right
can take the form of selling the Franchiser’s products, ‘using its name, production and
marketing techniques, or general business approach.” One of the common forms of franchising
involves the franchisor supplying an important ingredient (part, material etc.,) for the finished
product, like the Coca-Cola supplying the syrup to the bottlers.
2. Contract Manufacturing
Under contract manufacturing, a company doing international marketing contracts with firms
in foreign countries to manufacture or assemble the products while retaining the responsibility
of marketing the product. This is a common practice in international, business.
Contract manufacturing has the following advantages.
1. The company does not have to commit resource for setting up production facilities.
2. It frees the company from the risks of investing in foreign countries.

27. 3. If idle production capacity is readily available in the foreign country, it enables the marketer
to get started immediately.
4. In many cases, the cost of the product obtained by contract manufacturing is lower than if it
were manufactured by their international firm.
4. Management Contracting
Under the management contract, the firm providing the management know-how may not have
any equity stake in the enterprise being managed. In short, in a management contract the
supplier brings together a package of skills that will provide an integrated service to the client
without incurring the risk and benefit of ownership Thus, as Kotler observes, management
contracting is a low-risk method of getting into a foreign market and it starts yielding income
right from the beginning.
The arrangement is especially attractive if the contracting firm is given an option to purchase,
some shares in the managed company within a stated period. Management contract could,
sometimes, bring in additional benefits for the managing company. It may obtain the business
of exporting or selling otherwise of the products of the managed company or supplying the
inputs required by the managed company.
Management contract enables a firm to commercialize existing know-how that has been built
up with significant investments and frequently the impact of fluctuations in business volumes
can be reduced by making use of experienced personnel who otherwise would have to be laid
off.
5. Turnkey Contracts
Turnkey contracts are common in international business in the supply, erection and
commissioning of plants, as in the case of oil refineries, steel mills, cement and fertilizer plants
etc; construction projects and franchising agreements.
“A turnkey operation is an agreement by the seller to supply a buyer with a facility fully
equipped and ready to be operated by the buyer’s personnel, who will be trained by the seller.
The term is sometimes used in fast - food franchising when a franchiser agrees to select a store
site, build the store, equip it, train the franchisee and- employees and sometimes arrange for
the financing.”
6. Wholly Owned Manufacturing Facilities
Companies with long term and substantial interest in the foreign market normally establish
fully owned manufacturing facilities there. As Drucker points out, “it is simply not possible to
maintain substantial market standing in an important area unless one has a physical presence
as a producer.” A number of factors like trade barriers, differences in the production and other
costs, government policies etc., encourage the establishment of production facilities in the
foreign markets Establishment of manufacturing facilities abroad has several advantages.
It provides the firm with complete control over production and quality. It does not have the
risk of developing potential competitors as in the case of licensing and contract manufacturing.
Wholly owned manufacturing facility has several disadvantages too. In some cases, the cost of
production is high in the foreign market. There may also be problems such as restrictions
regarding the types of technology, non-availability of skilled labour, production bottlenecks

28. due to infrastructural problems etc. If the market size is small, a separate production unit for
the market may be uneconomical. Foreign investment also entails political risks.
7. Assembly Operations
As Miracle and Albaum point out, a manufacturer who wants many of the advantages that are
associated with overseas manufacturing facilities and yet does not want to go that fat may find
it desirable to establish overseas assembly facilities in selected markets. In a sense, the
establishment. of an assembly operation represents a cross between exporting and overseas
manufacturing.
Having assembly facilities in foreign markets is very ideal when there are economies of scale
in he manufacture of parts and components and when assembly operations are labour intensive,
and labour is cheap in the foreign country. It may be noted that a number of U.S. manufacturers
ship the parts and components to the developing countries, get the product assembled there and
bring it back home. The U.S. tariff law also encourages this. Thus, even products meant to be
marketed domestically are assembled abroad.
8. Joint Ventures
Joint venture is a very common strategy of entering the foreign market. In the widest sense,
any form of association which implies collaboration for more than a transitory period is a joint
venture (pure trading operations are not included in this concept). Such a broad definition
encompasses many diverse types of joint overseas operations, viz,
1. Sharing of ownership and management in an enterprise.
2. Licensing/franchising agreements.
3. Contract manufacturing.
4. Management contracts.
Three of the above have already been discussed in the preceding sections. The following
paragraphs are confined to the first category referred to above, i.e. joint ownership ventures.
What is often meant by the term joint venture is joint ownership venture.
The essential feature of a joint ownership venture is that the ownership and management are
shared between a foreign firm and a local firm. In some cases there are more than two parties
involved.
A joint ownership venture may be brought about by a foreign investor buying an interest in a
local company, a local firm acquiring an interest in an existing foreign firm or by both the
foreign and local entrepreneurs jointly forming a new enterprise.
9. Third Country Location
Third country location is sometimes used as an entry strategy. When there are no commercial
transactions between two nations because of political reasons or when direct transactions
between two nations are difficult due to political reasons or the like, a firm in one of these
nations which wants to enter the other market will have to operate from a third country base.
For example, Taiwanese entrepreneurs found it easy to enter People’s Republic of China
through bases in Hong Kong. Third country location may also be helpful to take advantage of
toe friendly trade relations between the third country and the foreign market concerned. Thus,
for example, Rank Xerox found it convenient to enter the erstwhile USSR through its Indian
joint venture Modi Xerox. There are several cases of countries not having direct commercial

29. transactions. For example, it was true of Israel and Arab Countries. In the past, government of
India did not permit trade with South Africa and Mauritius.
10. Mergers and Acquisitions
Mergers and acquisitions (M & A) have been a very important market entry strategy as well as
expansion strategy. A number of Indian companies have also used this entry strategy. Mergers
and acquisitions have certain specific advantages: It provides instant access to markets and
distribution network. As one of the most difficult areas in international marketing is the
distribution, this is often a very important consideration for M & A. Another important
objective of M and A is to obtain access to new technology or a patent right. M and A also has
the advantage of reducing the competition. Mergers and acquisitions may also give rise to some
problems which arise mostly because of the deficiencies of the evaluation of the case for
acquisition. Sometimes the cost of acquisition may be unrealistically high. Further, when a
enterprise is taken over, air its problems are also acquired with it. The success of the enterprise
will naturally depend on the success in solving the problems.
11. Strategic Alliance
Strategic alliance has been becoming more and more popular ininternational business. Also
known by such names as entente and coalition, this strategy seeks to enhance the long term
competitive advantage of the firm by forming alliance with its competitors, existing or potential
in critical areas, ‘instead of competing with each other. “The goals are to leverage critical
capabilities, increase the flow of innovation and increase flexibility in responding to market
and technological changes.”
Strategic alliance is also sometimes used as a market entry strategy. For example, a firm may
enter a foreign market by forming an alliance with a firm in the foreign market for marketing
or distributing the former’s products. A U.S. pharmaceutical firm may use the sales promotion
and distribution infrastructure of a Japanese pharmaceutical firm to sell its products in Japan.
In return, the Japanese firm can use the same strategy for the sale of its products in the U.S.
market. Strategic alliance, more than an entry strategy, is a competitive strategy.
There are different types of alliances according to purpose or structure. Based on the
description of the generic forms of coalitions by Michael Porter ‘and Mark Fuller, Magsaysay
classifies alliances according to purpose as follows.
i. Technology development alliances like research consortia, simultaneous engineering
agreements, licensing or joint development agreements.
ii. Marketing, sales and service alliances in which a company makes use of the marketing
infrastructure etc., of another company, in the foreign market, for its products. This may
help easy penetration of the foreign market and preemption of potential competitors.
iii. Multiple activity alliance which involves the combining of two or more types of
alliances. While marketing alliances are often single country alliances, as international
firms take on different allies in each country, technology development and operations
alliances are usually multi-country since these kinds of activities can be employed over
several countries.

30. iv. Multiple activity alliance involves the combining of two or more types of alliances.
While marketing alliances are often single country alliances, as international firms take
on different allies in each country, technology development and operations alliances
are usually multi-country since these kinds of activities can be employed over several
countries.
12. Countertrade
Although the major reason for the substantial growth of counter trade is its use as a strategy to
increase exports, particularly by the developing countries, countertrade has been successfully
used by a number of companies as an entry strategy.
For example, Pepsi Co, gained entry to the USSR by employing this strategy. Countertrade is
a form of international trade in which certain export and import transactions are directly linked
with each other and in which import of goods are paid for by export of goods, instead of money
payments. In the modern economies, most transactions involve monetary payments and
receipts, either immediate or deferred. As against this, “countertrade refers to a variety of
unconventional international trade practices which link exchange of goods - directly or
indirectly - in an attempt to dispense with currency transactions.”
Types Of Countertrade
There are many types of countertrading. It can be classified into six broad categories: barter,
buyback, clearing agreement, counterpurchase, offset and switch trading.
Barter: Bartering is the oldest and most common countertrade arrangement. It is a form of
countertrade involving the direct exchange of goods and/or services for other goods and/or
services, without the use of money and without the involvement of a third party. Barter is an
important means of trade with countries using unconvertible currencies. For example, a bag
of nuts might be exchanged for coffee beans or meat. By removing money as a medium of
exchange barter makes it possible for cash-tight countries to buy and sell. Although price
must be considered in any counter trade, price is only implicit at best in the case of barter
Buyback (CompensationTrade): A buyback is a countertrade occurs when a firm builds a
manufacturing facility in a country-or supplies technology, equipment, training, or other
services to the country and agrees to take a certain percentage of the plant's output as partial
payment for the contract. Example: Party A builds a salt-processing plant in Country B,
providing capital to this developing nation. In return, Country B pays Party A with salt from
the plant.
Unlike counterpurchase, which involves two unrelated products, the two contracts in a
compensation trade are highly related. Under a separate agreement to the sale of plant or
equipment, a supplier agrees to buy part of the plant's output for a number of years. For
example, a Japanese company sold sewing machines to China and received payment in the
form of 300,000 pairs of pajamas. Russia welcomes buyback.

31. Counterpurchase (Parallel Barter): A counterpurchase refers to the sale of goods and
services to a company in a foreign country by a company that promises to make a future
purchase in a specified period of a specific product from the same company in that country.
For example; Party A sells salt to Party B. Party A promises to make a future purchase of
sugar from Party B. The goods being sold by each party are typically unrelated but may be of
equivalent value.
Offset: Agreement that a company will offset a hard - currency purchase of an unspecified
product from that nation in the future. Can be explained as an agreement by one nation to buy
a product from another, subject to the purchase of some or all of the components and raw
materials from the buyer of the finished product, or the assembly of such product in the buyer
nation. Example: Party A and Country B enter a contract where Party A agrees to buy sugar
from Country B to manufacture candy. Country B then buys that candy.
This practice is common in aerospace, defense and certain infrastructure industries.
Offsetting is also more common for larger, more expensive items. An offset arrangement may
also be referred to as industrial participation or industrial cooperation.
SwitchTrading: Defined as a practice in which one company sells to another its obligation
to make a purchase in a given country. Switch trading involves a triangular rather than
bilateral trade agreement. Example: Party A and Party B are countertrading salt for sugar.
Party A may switch its obligation to pay Party B to a third party, known as the switch trader.
The switch trader gets the sugar from Party B at a discount and sells it for money. The money
is used as Party A's payment to Party B.
When goods, all or part, from the buying country are not easily usable or salable; it may be
necessary to bring in a third party to dispose of the
merchandise. The third party pays hard currency for the unwanted
merchandise at a considerable discount. A hypothetical example could involve Italy having a
credit of $4 million for Austria's hams, which Italy cannot use, A third-party company may
decide to sell Italy some desired merchandise worth $3 million for a claim on the Austrian
hams. The price differential or margin is accepted as being necessary to cover the costs of
doing business this way. The company can then sell the acquired hams to Switzerland for
Swiss francs, which are freely convertible to dollars.
Globalization Effects, Co-Marketing Alliance And Performance
Due to the emergence of global market opportunities and global market threats, firms have
been forced to respond quickly to these effects. Unlike other environmental changes, the effects
of globalization are far more pervasive—affecting every individual, business, industry, and
country
The environment surrounding business today is characterized as a “hypercompetitive”
environment—a faster and more aggressive competitive environment. Major forms of business
restructuring in response to the dramatic changes brought by globalization include, for
example, investments in new technologies, downsizing and reengineering, the formation of
strategic alliances and networks, and a shift from international and multinational to global and
transnational strategies. Among these various forms of business restructuring designed to
manage globalization effects, alliance formation is considered the most remarkable business

32. trend of the past decades. Therefore, it is of interest to both academics and practitioners to
explore how alliances help firms achieve superior international marketing performance in the
globalization era.
Since globalization makes alliances an integral part of a firm’s strategy to better satisfy
customers and to achieve sustainable competitive advantage, the proliferation of alliances in
recent years is not surprising. It has become difficult for firms to stay competitive in this era
without allying with other firms. Moreover, to achieve superior marketing performance in the
present business environment, firms need to manage relationships with partners, customers,
and different parties in the value chain. As a result, there has been an increasing trend towards
more cooperation among firms, both vertically and horizontally. Such inter-firm cooperation
is especially important for firms to compete in the global marketplace. In order for firms to
succeed in international markets, they need cooperate with other firms and or governmental
agencie. Thus, the purpose of this paper is to explore whether globalization affects the degree
of international marketing cooperation of firms participating in co-marketing alliances, a type
of strategic alliance in which partners cooperate in one or more marketing activities.
Specifically, we propose to investigate the influence of globalization effects on the degree of
firms’ cooperation in co-marketing alliances, and the relationship between such cooperation
and the firms’ international marketing performance.

33. CHAPTER-6
SUCCESS OF DIFFERENTLOCAL BRANDSAT
GLOBAL LEVEL
Much of the debate about global branding has centered on the question of whether global
brands should attempt to speak with one voice around the world, or whether they should adapt
to local cultures. A popular strategy for many brands has been to globalize logos, brand names
and trademarks, while introducing product variations at the local level. But a few global brands
have gone the extra mile and achieved what must be the best of all possible worlds—acceptance
as local brands nearly everywhere they do business. Most of the brands that have achieved
multilocal status have been around for awhile, although the tie-in is not completely obvious.
 McDonald's
One modern American brand that has achieved widespread local acceptance overseas is
McDonald's. The American fast food chain has become such a routine part of the landscape in
parts of Asia, for example, that kids may not even be aware of the company's foreign origins.
In the book "Golden Arches East," Emiko Ohnuki-Tierney relates a story of Japanese Boy
Scouts who were surprised, when traveling abroad, to encounter a McDonald's in Chicago
(edited by James L. Watson, Stanford, 1997).
McDonald's began expanding internationally in 1967, twelve years after it began franchising
in the US. By 1996, the restaurant chain was operating restaurants in more than 25 foreign
countries. In contrast to Singer and Philips, however, McDonald's became multi-local in the
absence of trade barriers and at a time when global communications were practically
instantaneous; nor have McDonald's overseas restaurants operated independently of the home
office.
Although the restaurant chain has made numerous efforts to localize its menu (it offers, for
example, salads in the US, lamb burgers in India, vegetarian burgers in the Netherlands,
teriyaki burgers in Japan, salmon sandwiches in Norway, frankfurters in Germany, and poached
egg burgers in Uruguay), it did not gain local acceptance worldwide by marketing local
specialties.
As Harvard's James L. Watson argues in Golden Arches East: McDonald's in East Asia, the
secret to the restaurant's global popularity has almost certainly been its French fries, which he
writes are "consumed with great gusto by Muslims, Jews, Christians, Buddhists, Hindus,
vegetarians, communists, Tories, marathoners, and armchair athletes." McDonald's fries have
resonated with local tastes in dozens of countries—a fact that is not surprising when one
considers that potatoes, consumed by over a billion people around the world, are one of the
most recognized foods on earth. According to the University of Western Ontario's Dawar,

34. McCain Foods of Canada is the largest international supplier of French fries to McDonald's.
Meanwhile McCain, which markets frozen potato specialties in 100 countries, has itself
achieved multi-local acceptance in many of the countries where it does business.The company
localizes its product by calling it chips in the UK for instance and developing local advertising
for markets and managers by region. In Australia, people think of McCain as an Australian
company. In England, people think of McCain as an English company. In Canada, people think
of McCain as a Canadian company... McCain is a very local brand in each of the markets in
which it operates
Problems faced by Global brands
Companies find it difficult to succeed in new markets that are culturally unfamiliar.
 They often underestimate differences in the patterns of daily life in the new markets.
 This makes it difficult to develop products and services that fit peoples’ lives,
 It is difficult to extend their brand, and manage culturally diverse teams.
 Strategy adopted by Coca-Cola
Coca-cola : Global is Out, Local is In
• Initial set backs in 80s the benefits of global integration are sought and the need to adapt
products to local markets is largely ignored.
• Coke is instituting a strategy of ‘think local, act local’ by putting increased decision making
in the hands of local managers.
• Make model citizen by reaching out to the local communities and getting involved in civic
and charitable activities.
Better understanding and appealing to local differences.
 Disney: Learning to Say Oui Not Yes
Before :
• workers were required to speak English, even if most people in attendance were French.
• liquor was not sold in the park, they have a drink with lunch or dinner.
• many of the exhibits and rides did not have a local theme, they were the same as those in
After :
• began creating European-specific attractions
• Started to serve alcoholic beverages
How Companies Try to Understand Consumers
Two general types of research that companies use to understand new markets
1. product-focused research: asks consumers through surveys, focus groups, interviews,
home visits and usability tests, about existing or prototypical products and services.
2. culture-focused research: uses measures like census-taking and demographic data, to look
at general patterns of daily life like value systems, social structures, and relationships
among friends and relatives.
3.

35. CHAPTER-7
EFFECTOF GLOBALIZATION ON INDIAN
INDUSTRY
Effects of Globalization on Indian Industry started when the government opened the country's
markets to foreign investments in the early 1990s. Globalization of the Indian Industry took
place in its various sectors such as steel, pharmaceutical, petroleum, chemical,
textile,cement,retail,andBPO.
Globalization means the dismantling of trade barriers between nations and the integration of
the nations economies through financial flow, trade in goods and services, and corporate
investments between nations. Globalization has increased across the world in recent years due
to the fast progress that has been made in the field of technology especially in communications
and transport. The government of India made changes in its economic policy in 1991 by which
it allowed direct foreign investments in the country. As a result of this, globalization of the
Indian Industry took place on a major scale.
The various beneficial effects of globalization in Indian Industry are that it brought in huge
amounts of foreign investments into the industry especially in the BPO, pharmaceutical,
petroleum, and manufacturing industries. As huge amounts of foreign direct investments were
coming to the Indian Industry, they boosted the Indian economy quite significantly. The
benefits of the effects of globalization in the Indian Industry are that many foreign companies
set up industries in India, especially in the pharmaceutical, BPO, petroleum, manufacturing,
and chemical sectors and this helped to provide employment to many people in the country.
This helped reduce the level of unemployment and poverty in the country. Also the benefit of
the Effects of Globalization on Indian Industry are that the foreign companies brought in highly
advanced technology with them and this helped to make the Indian Industry more
technologically advanced.
The various negative Effects of Globalization on Indian Industry are that it increased
competition in the Indian market between the foreign companies and domestic companies.
With the foreign goods being better than the Indian goods, the consumer preferred to buy the
foreign goods. This reduced the amount of profit of the Indian Industry companies. This
happened mainly in the pharmaceutical, manufacturing, chemical, and steel industries. The
negative Effects of Globalization on Indian Industry are that with the coming of technology the
number of labor required decreased and this resulted in many people being removed from their
jobs. This happened mainly in the pharmaceutical, chemical, manufacturing, and cement
industries.
The effects of globalization on Indian Industry have proved to be positive as well as negative.
The government of India must try to make such economic policies with regard to Indian
Industry's Globalization that are beneficial and not harmful

36. Effect Of Globalization On Rural Marketing
Rural Agricultural Marketing - Impact of Globalization: Contract Marketing
The macro level changes due to the New Economic Policy have had a direct impact in the field
of agricultural marketing. So the impact of globalization has been highlighted here.
As a result of globalization substantial investments in new ventures are being made by national
as well as international corporations. A number of foreign companies are slated to enter the
Indian market through collaborations with the well known Indian companies like Eagle Agro-
farms, Maxworth Orchards, etc. It is clear that the wholesaler in the fresh products market as
well as the processor will prefer contract marketing tie-ups with the farmers for sourcing his
supply requirements.
The concept of contract farming is not new to India. Several years back, contract marketing
was successfully tried in respect of "Hima peas". 'MARKFED' of Punjab also operated a
scheme of contract marketing for green peas, Agrecotec proposes to setup country-wide retail
network of shops for fresh fruit vegetable marketing. ,Direct marketing to consumer is already
being done by the Mother Dairy through its outlets in Delhi.The successful integration of
production and marketing under Apni mandi' scheme in Punjab and the marketing
managements of 'FRESH' in Hyderabad are clear signs that contract marketing is going to be
increasingly resorted to in the years to come. “Pepsi Foods" also an another example of contract
farming of potatoes and tomatoes. Under this farming farmers will be producing specific
varieties or qualities tailored to meet the requirements of the processor or the fresh produce
market.
The potential benefits of the contract farming are:- producers can reduce the market risk, post
harvest losses can be reduced, technology can be transferred to the producers, contract serve as
a security for increased access to credit by both producers and processors, contract may create
a greater sense of common interest among the producers and induce greater involvement in
group activities etc.
Common problems may be volatility in market price, there is risk that the processors may
manipulate the quality standards, coordination problems may be there regarding delivery of
inputs or produce, processors may lack the competence or capacity to deliver the require
technical assistance, producers may become tied to a contract relationship by virtue of debt,
specialization, or the disappearance of other markets and may be unable to adjust their
production activities to changing conditions etc.
Many of these problems of contract farming will not arise where goodwill and credibility exist
between the farmers and the concerned company.

37. Major Areas of Concern in the Rural Marketing Sector
1. Government should assume a more dynamic role in the field of agricultural marketing that
of a strong buffer between global forces and local needs.
2. Emphasize value addition by giving a thrust to agro-processing industries at farm level so
that the benefit of value addition is transferred to the producer.
3. There is a need for professionalizing agricultural marketing as a subject of great practical
application.
4. Creation of an effective market intelligence network, right from the importer in the global
market to the producer in the remote corner of the rural India.
5. Institutional linkages should be emphasized upon to integrate the markets, for easy
movement of goods and also to facilitate the inter-state trade.
6. Regular surveys and analytical studies on agricultural marketing should be conducted, so
that appropriate policy adjustments and refinements whenever necessary.
7. Decentralization in the marketing system.
8. To introduce social marketing for bringing about a change in the behaviour and attitude
through social advertising and social communication. Some fertilizer companies and
commercial banks are taking up Village Adoption Programme under the social marketing.
9. A design frame work for information technology based Agricultural Marketing Network is
essential. Computer installations at State as well as district marketing boards enhances the
availability of trade information.
10. Economic incentives should be offered to the farmers to encourage them during low
economic conditions.

38. CONCLUSION
This dissertation is comprised of three papers relating to the effects of globalization on firms.
The first paper advances prior knowledge on globalization and business by empirically
investigating how this phenomenon affects firm performance. The second and third papers
explore the role of firms’ cooperation in alliances in enhancing their performance amid
globalization by specifically focusing on co-marketing alliances and international marketing
performance of firms. A particular emphasis is paid to this type of alliance since superior
marketing is crucial for firms to build a sustainable source of unique competitive advantage.
Such advantage eventually enables firms to achieve long-run success in a hypercompetitive
terrain under globalization. While the second paper proposes a conceptual framework relating
globalization effects to alliance cooperation and firm performance, the last paper empirically
tests the proposed relationships in two distinct economies (i.e., Thailand and the U.S.).
Given that globalization is a complex phenomenon, there is a scarcity of empirical research
investigating its effects on businesses. Hence, there are several significant contributions of this
dissertation. First, the effects of globalization on firms are classified into two key dimensions—
global market opportunities and global market threats— based on an extensive review of
scattered literature on the topic. Second, these major effects are operational zed and empirically
tested in two conceptual models to examine the relationships among these effects, cooperation
in alliances, and firm performance. Third, literature on international business, strategic
management, and marketing are integrated to address the effects of globalization on firms’
marketing conduct and outcomes. The first paper in this dissertation discusses how
globalization affects firms. It draws from environment-organization literature. Building on this
stream of research, macro environment such as globalization represents a context in which
organizational characteristics and outputs are strongly shaped.
For this reason, this paper attempts to demonstrate and address how globalization influences
firm performance. Although academic scholars have alluded to various impacts of
globalization, limited empirical studies have been conducted to investigate its effects on firms.
Therefore, the purpose of this paper is to classify and define such effects into two major
categories, i.e., global market opportunities and global market threats. Then, scales to measure
these effects were developed and empirically tested in two different economic contexts (i.e.,
Thailand and the U.S.) to answer two research questions:
1) Does globalization affect firm performance? And
2) Is the relationship between global market opportunities and performance stronger than the
relationship between global market threats and performance.
The results of this study provide considerable support for the notion that globalization can be
both beneficial and detrimental to business. Moreover, this study confirms that globalization is
a universal phenomenon in which firms, regardless of where they are located, are inevitably
affected. The second paper proposes a conceptual framework to investigate relationships
among globalization effects, degree of cooperation in co-marketing alliances, and international
marketing performance. This paper focuses on relationships between globalization effects and
alliances because past research often mentions that globalization drives more collaboration and

39. alliance participation, yet no empirical study establishes the link between these two. Co
marketing alliances and international marketing performance are particularly emphasized here
since gaining a competitive edge in today’s globalized business environment requires firms to
excel in marketing activities. As in Webster’s (1994) words, “in the global markets of the 1990s
and beyond, superior marketing will be a more sustainable source of unique competitive
advantage than superior technology”. Thus, this paper explores how firms with international
marketing activities can enhance their performance in the global marketplace through increased
cooperation in co-marketing alliances. Building on market power perspective and transaction
cost economics; this paper proposes that increased global market threats, including competitive
threats and market uncertainty, will encourage more cooperation in alliances while global
market opportunities will not.
While transaction costs economics considers alliances as a strategy enabling firms to expand
their strategic capabilities, market power perspective regards alliances as a means to reduce
competition and minimize uncertainty evoked by globalization. Hence, a higher degree of
cooperation in co-marketing alliances is then hypothesized to enhance firms’ international
marketing performance.
The findings of this study indicate that globalization drives more collaboration among firms,
allowing them to better cope with higher global competitive threats and market uncertainty.
Such cooperation eventually increases international marketing effectiveness of firms engaging
in co-marketing alliances.Whereas an increase in cooperation is influenced by higher global
market threats (i.e., both competitive threats and uncertainty), it is not affected by global market
opportunities. The absence of any effect of global market opportunities on alliance cooperation
can be attributed to the fact that ample opportunities in the markets may result in the lack of
collaboration among firms. Moreover, it is found that increased cooperation in co-marketing
alliances helps firms enhance international marketing effectiveness but not efficiency. Since
higher expenses may arise from such cooperative attempts, efficiency becomes difficult to
realize. In sum, these results validate globalization-alliance literature by showing that
globalization actually drives more cooperation among firms.
Managers should be prepared to cope with these diverse effects by capitalizing on global
market opportunities while carefully managing the inherent threats. Alliance participation and
cooperation presents a viable option for firms to navigate successfully in this new competitive
landscape. From both theoretical and practical perspectives, globalization is a complex
phenomenon. The three manuscripts included in this dissertation are among a few empirical
studies emphasizing the effects of globalization on firms. Given that globalization is
multifaceted and only a few key dimensions of its effects were explored here, many issues
remain to be addressed. It is hoped that this research will inspire more studies on the impact of
globalization on business and a search for theories to explain the phenomenon.

40. BIBLIOGRAPHY
Websites
www.hbr.org
www.sscasc.com
www. researchgate.net
www.jstor.org
Magazines
Fortune India Magazine
-Published on( 1 June 2021)
Forbes India Magazine
-Published on (11 March 2022)
Books and Novels
Power And Plenty By Ronald Findlay And Kevin H O’Rouke
-Year 2007
Globalizing Capital By Barry Eichengreen
- Year 1996