International Marketing in a Global context
By Carl-Axel Engdahl, KTH, Royal Institute of Technology, Stockholm Sweden
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1. Global Marketing 9
1.1 Introduction 9
1.2 From passive to active marketing. 11
1.3 from exports to global presence 16
1.3.1 Active or passive internationalization 19
1.4 For companies motives for international activity 20
1.4.1 Economic motives 21
1.4.2 Non-economic motives 21
1.4.3 Other reasons 22
1.5 Some models strategy for international expansion 23
1.5.1 Product-market matrix 23
1.5.2 BCG Matrix 24
1.5.3 Selecting the market - attack is the best defense 26
1.5.4 guerrilla tactics - but do not seem to grow 26
1.6 Choice of strategy at the international establishment 26
1.7 Special Considerations for international marketing. 27
1.8 border barriers between domestic and export market 29
1.8.1 Examples of reasons for support and corrective actions 29
1.9 The Swedish border barriers on exports 31
1.9.1 licensing authorities 32
1:10 Answers to questions at the beginning of Chapter 1 of 33
Internship Fall 35
2 The global market 35
2.1 The nation as a subsystem of the global market 36
2.2 Countries with different levels of economic development 37
2.3 The various nations share of world output and world trade 38
2.4 groupings of nations 42
2.4.1 Market Block 43
2.4.2 Military Pacts 45
2.4.3 Cultural sites 46
2.4.4 Islands of prosperity 47
2.5 International customers 48
2.5.1 Public global customers 49
2.5.2 Global companies 51
2.5.3 Individuals global customers 52
2.6 National clients 53
2.6.1 National, public customers 53
2.6.2 National business 54
2.7 Answers to the questions at the beginning of Chapter 2 55
3 Election of the market 56
3.1 What strategy is used to select the market? 57
3.2 Election of the market for exports 58
3.3 Additional costs of international marketing 61
3.4 Compensation for extra costs 62
3.5 Election of customers 62
3.7 Answers to the questions at the beginning of Chapter 3 64
4th International market research 65
4.1 gather knowledge about the market 66
4.2 Sources of market information 66
4.2.1 Statistics 67
4.2.2 Books and magazines 70
4.3 Methods for the treatment of secondary information 70
4.3.1 Trend Analysis 70
4.3.2 Derived demand 71
4.3.3 Analogies with developments in other countries 71
4.4 Custom market research 72
5 Marketing design 73
5th l Marketing Mix Adaptation to the market 73
5.2 Competition of funds adjustment 77
5.3 Adaptation of the product mix 77
5.3.1 Safety 78
5.3.2 Economic Criteria 79
5.3.3 cultural differences 79
5.3.4.Service and spare parts as a competitive tool 80
5.4 Commercial communications - to get in touch 81
5.4.1 International advertising 81
5.4.2 Publicity 83
5.4.3 Promotion 84
5.4.4 Personal selling 85
5.4.5 Exhibitions 86
5.5 Pricing 87
5.6 Answers to the questions at the beginning of Chapter 5 89
Internship Fall 90
6 Pricing for the International Sales 90
6.1 The price of competition 91
6.2 Pricing of goods 92
6.2.1 Duties 94
6.2.2 Taxes 95
6.2.3 Antidumping Rules 96
6.2.4 Discount 96
6.2.5 Price Control 97
6.3 Price strategies in different market situations 98
6.3.1 Introduction of a new market 99
6.3.2 Segmentation of the market 100
6.3.3 countertrading 100
6.3.4 Product-related considerations into pricing, 103
6.3.5 Price Decisions based on calculations 106
6.4 Answers to the questions at the beginning of Chapter 6 109
7th Customer Credits 110
7.1 Credit as a competitive tool 111
7.2 Differences between price and customer credit as a competitive tool 112
7.3 Risks of export credits 112
7.4 Opportunities for credit protection 113
7.5 Credit depends on different markets 115
7.6 Alternative funding opportunities 117
7.7 Response to the initial questions in Chapter 7. 117
8 Product development and monitoring of innovation 118
8.1 Description of the exchange on the international markets 119
8.2 Products with new features 120
8.3 Monitoring of new ideas 121
8.4 Sources of product ideas 122
8.4 1 User, as a source of new product ideas 122
8.4.2. Competitor watch 123
8.4.3 Research and development 125
8.4.4 Manufacturers 126
8.5 Standard requirements in different countries, 127
8.6 The customer's preferences for different characteristics 130
8.7 Continuous product - a guard? 131
8.8 pace of innovation 132
8.9 Answers to the questions posed at the beginning of the chapter: 133
9 Legal protection for the products and knowledge 134
9.1 product that anyone can copy is not worth 135
9.2 Protection of the company's unique expertise 136
9.3 Patents 137
9.3.1 Rights of prior use reduces the value of patent 137
9.3.2 A compulsory license may be granted if the patent is not used 138
9.3.3 patent protection varies 138
9.3.4 The cost of a patent can be sized 138
9.3.5 The patent provides protection to 139
9.4 Trademark Protection 139
9.4.1 Choice of brand 140
9.4.2 Constructing marks 140
9.4.3 Domain name extension of the brand 141
9.5 designs 142
9.6 Privacy 142
9.7 Answers to the questions posed at the beginning of this chapter. 143
10 International commercial 144
10.1 commercial communications scope and purpose 144
10.2 Different audiences for commercial 146
10.3 Coordination of resources and local adaptation 147
10.4 Adjustment of different parts of the commercial communication 148
10.4.1 Text and layout 148
10.4.2 Trademarks 149
10.4.3 Selection of Media 149
10.4.4 advertising message 150
10.5 Internet as a channel for commercial 150
10.6 The effectiveness of the international commercial communications 151
10.7 Concluding comments 152
10.8 Answers to Questions in Chapter 10 152
11 To organize global marketing 153
1.11 Different types of distribution channels 153
11.2 Long-and short-term effects 156
11.3 Cooperation between the home organization and distribution channel 157
11.4 Direct or indirect promotion 158
11.5 Swedish large company's choice of distribution channel 159
11.6 Business Ethics at the global operations 162
11.7 Multinational companies 165
11.8 An attempt to answer the questions at the beginning of chapter 11 168
12 Licensing Sales 169
12.1 License sales spot in market planning 170
12.2 Different types of licenses 170
12.3 Grounds for licensing 172
12.4 Reasons for not giving license 174
12.5 Selling intellectual property and to conclude licensing 175
12.5.1 Setting the target 176
12.5.2 Searching and selecting licensees 176
12.6 To prepare for negotiations 177
12.6.1 Agreement for confidentiality 177
12.6.2 Negotiating fees and options contracts 178
12.6.3 Licensee's skills and interests of the Community 178
12.7 License object value 179
12.7.1 Coordination of various rights 179
12.7.2 Additional supplies 180
12.7.3 Methods to increase the licensor's skill 180
12.7.4 of license fees 181
12.8 Responsibility for the product 182
12.9 Transfer of knowledge and technology 183
12:10 An attempt to answer the initial questions for Chapter 12 184
Appropriate training cases 185
13 agents and other forms of representation 185
13.1 The representative will facilitate contact with the buyer 185
13.2 What is an agent? 186
13.3 Election of Representatives 189
13.3.1 Renegotiation and reform of the Representation 190
13.3.2 Applying for a representative 190
13.4 Agreement with Representative 193
13.5 Stimulation and support 196
13.6 Settlement of Representative, 196
13.7 Handelshus 197
13.8 A draft response to questions at the beginning of the chapter on agents. 198
Appropriate training cases 199
14 own sales 199
14.1 Personal sales, the most effective distribution channel? 199
14.2 FSC's functions 200
14.3 Establishment of subsidiaries 201
14.3.1 Establishment through formation 202
14.3.2 Types of companies 203
14.3.3 The registration of companies 203
14.3.4 Acquisition of businesses 204
14.4 Time for establishment 205
14.5 Acquisition of 206 companies
14.5. L Planning for the acquisition 206
14.5.2 Financing of acquisitions 207
14.6 Assumption of the purchased company 207
14.7 Answer the questions in the beginning of chapter 14 208
15 manufacturing subsidiaries. 209
l5. l Production in other countries 210
15.2 National forced ups 211
15.3 Beginning of the additional assembly and service 213
15.4 The local production as part of the purchase of market shares 214
15.5 Effects of local manufacturing marketing 215
15.6 Answers to questions at the beginning of chapter 215
16 Exports Alliances and joint ventures 216
16.1 Collaboration makes business impossible possible 217
16.2 What is the export cartel? 218
16.2.1 Export Cooperative scale 219
16.2.2 Export Alliances - an alternative 219
16.2.3 Cost Benefit 220
16.2.4 Difficulties in coordinating the export cartel 220
16.2.5 Advantages of the export cartel 221
16.2.6 Disadvantages of the export cartel 222
16.2.7 Export Cooperative dynamics 222
16.3 Collaboration with foreign companies 223
16.4 Joint ventures 223
16.5 Joint ventures in market economies 224
16.6 Response alternatives to the questions at the beginning of chapter 225
17 Human International Marketing 225
17.1 Recruitment of international business 226
17.1.1 Pressures for overseas service 227
17.1.2 Company 227
17.1.3 International Head 227
17.2 The need for personnel for overseas service 228
17.3 Provision of personnel for overseas service 229
17.3. L family status, work and schools 229
17.3.2 Remuneration and 229
17.3.3 Renegotiations during the ongoing contract 231
17.4 Pressures during overseas service 231
17.5 To return from overseas service 233
17.6 Personnel Policy in the Global 235 company
17.7 Answer the questions in the beginning of Chapter 17. 235
Appendix 1 Checklists 236
Checklist for decision on foreign establishment 236
Checklist, licensing 238
Checklist, Sale by Agent 240
Checklist, Equity sales 241
Checklist, Custom manufacturing companies 242
Checklist, Export Alliances 245
Annex 2 Tables of Swedish exports to some countries in 1983.2003 and 2004 251
Annex 3 Swedish exports in 2003 by commodity groups 252
Annex 4 The largest exporting countries in 2004, and India 253
List of Figures 254
List of Tables 256
Useful Internet addresses 258
1. Global Marketing
After studying Chapter 1, the following questions be answered:
1. Why should our company to export this product?
2. How, in broad terms, this product will be adapted to different markets?
3. Which markets should we choose for this product for export?
4. Planned no changes in the global or regional market for our product?
5. Which markets should we give priority to this product?
6. If we offered to sell in a market, we will accept or wait?
The following issues are also dealt with in the chapter:
What is characteristic of global marketing?
Why is not export sufficient sales operation?
How can the internationalization and globalization of companies is explained?
When should a company establish itself abroad?
The basic idea of the importance of international commodity exchanges is that if every country, every company and
every individual performing the production they had relatively good conditions and no transaction costs occurred
when changing the finished goods, so wealth would be maximized. However, it requires a financial system for
distribution of wealth so that everyone will participate and for the system to function. International marketing is
certainly an even rudimentary method but still the best to increase trade exchange and to exploit the comparative
advantages of production and thereby increase the overall prosperity of the world. Internationalization has now shifted
to the initiation of a process of globalization as if it may continue going to change much, not only with regard to sales
but also the whole society everywhere.
The reason for that whatsoever can talk about international marketing is that the Earth is divided into a number of
nations. Were the earth a country we would be talking about marketing on different continents and different
submarkets. The division of land in various nations is thus the reason why we can talk about international marketing, a
marketing effort that includes more than one country. Technological developments, both in transport and
communication as the production also affects the size and the continuous appearance of what could be a suitable
market for a product.
The main reason for the existence of international trade is usually in the older economic theory is presumed to be the
availability of various production factors vary from market to market. A reallocation of production factors is therefore
necessary to manufacture different products and satisfy human needs. Of factors of production on this particular raw
materials, whose uneven distribution previously observed in foreign trade theory. The presence of various mineral
deposits can be very variable. For some metals extraction is concentrated in a à two countries. The costs of extraction
can vary greatly. A mineral that is everywhere in large quantities can in some places may be obtained at such low cost
that only one or a few deposits are processed.
Although other factors of production as capital and labor show large fluctuations in the availability and quality, which
cost between countries. Labor quality - a difficult concept to pin down - has come to attract increasing interest. This
aspect of the labor force for all levels of business and society, and covers both the absolute knowledge of an
enterprise, science, technology, etc. as the ability to use them in business, group and society. With the ability referred
to as motivation, ethics, social, technical and personal skills, legal opinion, religion, values and organization. The
ability to initiatives or rather the power to take initiatives vary widely in different communities.
The technical competence, i.e. workers' ability to use existing resources, varies greatly in different countries. The labor
force is covered even when managers and potential managers. Capital allocation also varies between different regions
and countries. Thus provided not only the availability of cash, but especially the structure and infra-structure. For the
modern production requires many different components of high-knowledge (specialized) quality and often in
combination with the machinery and equipment of high quality and specialization. Some actions of these factors of
production may only require a few hours a year, but they are absolutely necessary to modern production facilities to
operate. This provides great benefits for cities and regions with a high degree of concentration, where the specialized
production factor can be used extensively and without long, cumbersome and costly transport / travel.
The existence of so-called "white elephants in developing countries is largely an effect of lack of maintenance and
upkeep. The corresponding problem for this factor is also available in developed countries, where enterprises in rural
areas burdened with higher costs than competitors in the big cities. The factors of production, finished goods and
services transferred across borders between countries and regions is not new. This has happened as long as people
have switched products with each other. This relocation is the basis for international trade. International trade has
grown in importance at the same pace as production processes and consumers put higher demands on the availability
of inputs and finished products. Once this process has accelerated, the first forced, partly supported by the means of
communication development for both the transport of goods and personnel information.
1.2 From passive to active marketing
The exchange of goods between countries has previously mainly been to make it what it had exported the surplus and
imported goods and services that we missed. Nowadays there is a clear trend in market economies to evaluate various
options for the purchase and sale regardless of which country the supplier / customer. It is actively seeking to locate
their clients and assess their needs and the opportunities it has to satisfy them profitably. In principle there is no
difference between domestic and international marketing in market economies. When marketing to the planned
economies, the few that remain, however, is a customer contact more difficult and often there is in these economies, a
major challenge for national policy considerations.
International marketing is therefore the independence of countries and frontiers are actively seeking to identify needs -
latent or documented - which can be met with respect to different stakeholders' demands for fair compensation for
their participation in production and marketing of goods and services.
The difference between domestic and international marketing consists primarily of efforts to identify, analyze and
meet customer needs in a mutually satisfactory way, but is complicated by national differences, distance and border
barriers. The international marketing are also in practice far more complex and requires a larger number of variables
into account than the national marketing.
Corporate horizons broadened. The geographical area in which you are looking for different customer groups and try
to solve their problems, thus widening the domestic market to a large number of countries, perhaps nearly 160
countries in extreme cases of a total of over 200 countries around the world in 2005. The number of independent
countries has grown through the colonies become independent states and by various minority people liberate
themselves and form their own states. In all these countries have different events and changes into account. Some of
the new countries have only a few ten thousand inhabitants.
Each market is different from the other in any respect. At the international marketing made it so before the
requirement to collect, systematize and analyze a much larger amount of information than the national marketing. We
also face the problem to overcome distance and to cross various boundaries with more or less developed barriers in the
form of administrative systems, customs duties, taxes, technology requirements, copyright restrictions, etc. The fact
that in international marketing are forced to study a variety of markets and to identify various cross-border barriers
and other barriers between the markets can, of course, on an initial analysis of the difference between domestic and
international marketing seem like a major fundamental difference. It should not be overlooked that even within a
country may be several sub-markets between which there sometimes are several important differences and border
barriers. Within a country may be differences in language, culture and various social differences and the boundaries
between markets in terms of different distribution systems and different standards and requirements for the product to
be used for different purposes. This element is often not as detailed at national and at international marketing. When
the market base allows would therefore sometimes also at the national promotion to win a lot to consider this situation
by eg differentiate their products and market measures for the various segments of needs. This is what companies with
multiple brands and different distribution channels for the same to be realized, and often successfully applied.
1.2.1 The global market - a large number of sub markets.
Differences exist in the various markets, either they are perceived as large or small. For a successful introduction of a
new product in a market requires that the market is that customers need the product and the product is properly
designed and marketed with the right arguments. This is difficult. An overwhelming number of product launches
conducted in the domestic market often fails because one or a few important factors overlooked, or not gone to change
as rapidly as the marketing managers had expected. At the launch of a new product on the domestic market may be
purely technical deficiencies as the cause of the failure of the product is not fully developed at the introduction. At the
launch on the international market is usually already an established domestic market for the product and the product is
technically completed. Market Adjustment and marketing will be critical for the device to be launched effectively in
the foreign market. Failures at the introduction of a product in foreign markets is not unusual, even if the product is
successful in the domestic market. The international launch of a product that failed in the domestic market is more
chance even though it can sometimes be right and succeed. The effect of market policies often vary throughout the
product lifecycle. Gosta Mickwitz have tried to show this in a graph of competitive funds relative effectiveness at
various stages of product life cycle.
At the introduction of a product in a new market can Mickwitz model of competition in the efficacy of the different
market situations as an effective analytical tool, see Figure 1.1.
Figure 1.1 Revised picture of Mickwitz model of the different competitive funds relative efficiency at different stages
in the product lifecycle.
It's important to be aware that the model is an analytical tool and not a prescriptive set of rules. Reality is not always
the model assumptions, even if they have been tested in certain situations. When using the model, it is important to
define what the model is a product and what is a product variant on the new market. Is the product new to the market
or is it just a new product in our company, it is we who believe that it is completely new? The model can provide a
basis for the four combinations of market situations within the limits defined above. However, it is important to
remember that the model has been developed for a new product introduced in the market and not for new varieties or
brands. The vast majority of companies start selling in a new country makes it through the introduction of their
successful products, which then usually is a variant of a product already established in the new market. Completely
new products new revolutionary inventions that pen, the transistor, AGA lighthouse etc are not as common. Since the
product has already been established during a period in the new market has passed some of the product life cycle and
the market has been affected. Marketing, operations may have changed the nature of a number of times and the
various competitive funds relative power have changed. It may have different lengths of time elapsed since the
original product was introduced on the market. The market may have had more or less latent needs of the product,
which may have influenced the introduction process and at which stage the product group now finds itself. In the
election of new export markets and of measures for introduction of the product, you can use the following criteria:
(1) Markets that are similar to domestic market
(2) Markets that are ahead of the domestic market
(3) Markets are for domestic market
An introduction in markets where product resides on the same step or something for the home market is likely to be
more successful than other alternatives. It is easier to pay attention to the requirements laid down in the marketing of a
situation which we are accustomed.
Figure 1.2 The picture shows where the life cycle of a product is at a number of different markets.
Is the new market, far behind the domestic market of the development may need to be made with the introduction
methods, and a velocity equivalent to several years ago, with consequently low sales and slow development.
Marketing focus on key groups of customers who are able and willing to pay for the product's unique features. Only
part of product variants may be introduced at such a high quality oriented introduction. That while attempting to
launch low-priced variants can damage the entire introduction. Customers in a high-quality segments can provide the
product status and they can also, through its recommendations contribute to product marketing in the new
environment. By purchasing power customers in this segment of the market has been beneficial and economic
advantages of using the product despite its possible shortcomings so outweighs the benefits. At a broad introduction to
the market, the customers are processed not as willing to overlook the deficiencies for which the benefits the product
offers are not as important or perhaps almost been abandoned.
Polaroid camera that delivers a photograph in a few seconds immediately after exposure was launched only in the
domestic U.S. market in the late 1940s. In the mid-1960s was considered an international expansion of the product as
a way to increase growth and to compete with traditional cameras. The introduction in France was carried out with all
the force that the big company Polaroid was able to mobilize. Its main product in the United States and which in the
past two years, had responded to rapid growth. SWING camera was selected as the product to which the French
market would be captured. Swing the camera was a cheap camera that cost about 100 French francs. It was easy to use
and offered to customers in different pastel colors. In the United States had SWING primarily sold as a second or third
camera for the family. Much of the market was presented market. The camera was in the U.S. a popular gift for
children and grandchildren, not least the sale transaction to Christmas showed. Despite a strong sale effort by 26
sellers who would process the photo retailers and department store sales were modest and the cost of advertising and
marketing efforts could not be covered.
The causes of failure can be explained by several factors, including lack of television advertising that is superior to
other media at the demonstration of the function, the lower purchasing power in France, a lower ownership rate of
cameras than in the United States. Cameras were purchased in France, mainly in the summer to take vacation photos.
But the very crucial weakness in the French launch of the Polaroid was the product choice and expectations of rapid
growth. When the Polaroid camera was introduced in the U.S., there was a quality product that turned into an audience
that consisted of surveyors, professional photographers and policemen, all of which had a need to directly obtain an
image at the time for investigation. When this target group used the product in mellan10 and 15 years were a great
knowledge of the product is also among the public. The introduction of low-priced variants was a great success.
Advertising and market processing had long-term effects despite the introduction was concentrated in the most urgent
target audiences. The product and brand knowledge gradually over a period AV15 years has been built up in the
United States in France could not be offset by a vigorous advertising and sales effort. To some extent seemed even the
traditional photographic trade to the detriment of Polaorids. Photo Traders were often one-person and got a large share
of its revenue from printing and enlarging, what they were afraid of losing the sale of cameras with direct printing.
Exports to markets located in the domestic market is perhaps more difficult, especially if the market had time to
evolve into maturity. It requires was either an equally wide and varied range of competitors, an equally well-
established service and warranty etc, and accessories, or to concentrate to a defined customer segments where a
limited range is sufficient. One condition is often a lower manufacturing cost to the customer despite the export and
introduction costs can be offered favorable prices. Exceptions are niche products where the design and snob value,
may justify a higher price. An excellent example is the European cars in the U.S..
1.3 From exports to global presence
During the past century, the volume of international trade, particularly raw materials and intermediate goods. The
production requirements for raw materials and intermediate goods were relatively low. Until the Second World War
was the communication of the international exchange of goods mainly through agents and trading houses. The
Swedish foreign trade was dominated for a long time före1600 century the Hanseatic League and in 1700 - och1800
centuries came English agents and trading houses play a major role. It was not the least English agents who responded
to the great Swedish exports of wood products in the late 1800s and early 1900s, several of them came to live in
Gothenburg. Unprocessed goods still account for a large share of world trade. Mineral oil is the largest commodity
group, coffee and cereals follows. Industrial products, however, show very strong growth and has done so throughout
the 1900s with some exceptions, notably in connection with the sharp price increases for oil and many other
commodities in the 1970s.
In connection with that industrial has come to represent an increasing share of world trade has also increased the
requirements on knowledge of how these products should be used and managed. This has led to demands for a
different organization of marketing than for raw materials. For those companies that want to commit industrial
products has become necessary to provide qualified technical know-how and service.
That proximity to customers is important is demonstrated not least the fact that already in 1638 established a
Dutchman who was active in the Swedish province of Bergslagen, established a wire factory in Surrey, England, in
order to sell their brass products. To establish operations abroad in order to facilitate the sale is nothing new.
Agents and trading houses have not always been able to provide this form of sales and marketing support. Training of
Representative's staff, so that it can pass on know-how, in most cases proved less successful. In particular, the
collection of information on markets served inadequately by agents' involvement. Increasingly, companies are trying
today to promote their products through its own sales offices and sales abroad. A strong contributing factor has
obviously also been a competition when the market shifted from being a seller to be the buyer's market. The
internationally established sales offices and subsidiaries play a major role in the intensively monitor the market and to
the parents pass on information as a basis for further product development. Marketing begins and ends with the
customer in a continuous cycle of information between customers and vendors. With the increased competition for
industrial goods has increased buyers 'requirements on sellers' ability to market goods and services at competitive
prices. Often, however, is not price but total economy, the decisive factor for the buyer. Vendor's ability to provide
security of supply, service and training in the use of the product is often crucial to success in the international market.
To effectively meet these demands, several companies established production facilities in the vicinity of major
customers. Popular people talk of "going over TARIFF WALL." In some cases, the cost savings achieved by
producing locally and not have to import that were important for the establishment of local production. In other cases
it may be supply security, which was important, as well as proximity to the customer, in order to effectively coordinate
product development and production.
In recent years, various tariff negotiations led to many tariff barriers eliminated. There has been including in the WTO
and former GATT and UNCTAD framework for the entire world economy but also in regional customs unions and
free trade areas. Work on changing the rules for world trade has been in what are called rounds, the first resulted in the
formation of GATT 1947, then followed a large number of rounds given names Dillon round, Kennedy Round, and
later Tokyo, Uruguay, and the current Doha Round. But the expected impact of a rapid increase in world trade were
met only partially, so long as the negotiations were only applied tariff rates. Non-tariff barriers and administrative
procedures, documentation, safety, product liability and quotas have emerged as very important border barriers, which
impede the international exchange of goods, and has therefore been included in negotiations as well as issues on
customs valuation, antidumping rules, trade in services and a series of specific questions covering only a number of
WTO member countries. Extends beyond the WTO General Agreement is now also a number of other agreements on
TRIMs trade-related investment, the GATS on trade in services and TRIPS for the commercial aspects of intellectual
Administrative border barriers in the form of customs documentation and other documentation have been on average
for Swedish exports estimated at between 5 and 7 percent of goods value, of course, with variations for different
product groups and dependent on the quantity per shipment. Safety regulations, necessitated by concern for staff,
consumers and property for virtually any type of goods, and can sometimes be contradictory in different countries and
are usually designed with different maximum limits for hazardous substance and the minimum content of other
subjects. Procedures for testing and approval are different and the work must sometimes be performed by other named
authorities to be valid. The non-tariff trade obstacles’ share of the goods value of export products is very difficult to
generally estimate from zero at the commodity exports to around one third of the value of supplies of certain drugs.
The techno-economic developments have contributed to the forces both within and between companies a higher
degree of specialization in all product areas. The same rate is increased demands for raw materials and intermediate
goods. The company is a constant effort to improve their production, both as regards the production of inputs.
Although this work is carried out in dynamic business internationally. The international purchasing process is as
important as the international marketing and is an important part of efforts to improve corporate competitiveness.
Companies that limit their range to a good market-driven segments in conjunction with internationalization, through
thus larger volume of production to obtain cost advantages that firms that stop in a national market can not absorb.
Cost benefits for not only manufacturing but also product development, marketing and after sales. Production of raw
materials and finished products, thus showing an increasing tendency towards internationalization and specialization.
One can in this context to talk about a snowball effect. When a company has begun to specialize in one product area
and in particular large-scale marketing of its products, it has acquired a unique expertise. While giving the broadened
interface automatically lead to further improvement and deepening of its unique expertise. A company that specializes
in one product may thus gradually increasing their knowledge. It can thus achieve such an advantage over competitors
that are superior to those companies that do not focus on the analogy. Small companies with several hundred million
in sales can account for between 70 and 80 percent of the global market in its product area.
Very soon the competitors to be inclined to specialize and to internationalize their operations, if they want to compete
with the company that initiated the above developments in this product. More and more companies will in future be
forced to focus their activities in new areas or to concentrate and internationalize in order to satisfy customer needs in
the most effective ways to survive the competition. In Swedish industry Electrolux is an often quoted example of this
specialization and internationalization strategy.
Figure 1.3 A snowball that is rolling in, suck up more and more snow. Similarly, competition means that once a
company has decided to set up a new market forced a growing number of competitors to follow suit and enter new
markets. The combined effect is the globalization of a growing number of product areas and industries.
Clear oligopolistic tendencies can be observed in many production areas where a few firms account for a large part of
the world market, sometimes large and sometimes even among small businesses. Some small businesses may have an
even greater share of the global market leader in its niche, depending on the patent or from the beginning a rapid
expansion that did not provide competitors an opportunity to enter the market. Sometimes, the total market to be so
small that there is only room for one or two small businesses.
In order to be successful must specialization often run so far that the company has a leading position within a product
before further expansion can occur through diversification. Diversification of a too small business only leads to
fragmentation of resources. This diversification of risk can not be compensated by the profit opportunities that
specialization can bring.
1.3.1 Active or passive internationalization?
Internationalization Efforts need not only be active, ie that the company actively and consciously take steps to increase
its international sales overall, or within a group of products. Internationalization can equally well be passive.
Client Company may invite or require that their suppliers comply with them to new markets, when they otherwise
have to change suppliers even for current operations. Even new customers in countries to which the selling is done can
come and ask to buy but also make demands on local representation and service. Buyers of client companies is
actively seeking new and better suppliers of both raw materials and production equipment. Find the suppliers with
better equipment to offer than the current suppliers are taking the initiative. There are studies suggesting that a large
proportion of sales to industry takes place at the initiative of the buyer looking for alternatives to satisfy their needs.
This behavior of the customers often force suppliers to enter new markets. Companies that passively established itself
in a number of markets may later be necessary to reconsider its approach to international activities. They may find that
they have coveted products that can provide them with increased profitability by expanding into new markets.
As the first step in learning international business expansion will be taken on several new markets less demanding
than the first store.
Examples of outward foreign establishment is adjacent to a wide range of industries such as mining and engineering
industries. To companies in this sector, it happens that a specialist company agrees to supply completely finished
factories. In order to offer an entire factory, it may be necessary to occasionally buy machines that are manufactured
by companies that are not interested in exporting. The company undertakes to deliver their full factory look, of course,
as an advantage if all of the contracted manufacturers to offer local service in the countries where it supplies complete
plants. The manufacturer can not provide service on a competitive basis in the relevant countries will in general in a
worse position with regard to sales to companies that sell finished plants.
1.4 For companies motives for international activities
Companies' incentive to engage in international activities is an svårutforskat area. Some attempts to clarify the
rationale for different forms of international activity has been made, but no clear conclusions have not been reported.
Three groups of motifs can be distinguished:
3rd other motives
1.4.1 Economic motives
Among the economic reasons is a large number of distinguished:
1. Expansion Efforts based on a surplus of personnel, capital, raw materials and know-how or the inherent business
2nd Profit opportunities, price competition and exploitation of know-how and research and development (R & D).
3rd Vertical re-assurance by the supply of raw materials.
4th Horizontal re-assurance through market diversification.
5th Profitability through economies - long runs.
6th Adaptation to the institutional arrangements through to get inside a new TARIFF WALL resp avoid being cut off
from a market.
7th Actively participate in the competition for wealth development.
8th Monitoring of innovation by establishing close research centers and leading customers, so that personal contacts
can be created.
For Swedish companies have been motivated 3, "raw materials", so far has been relatively uncommon. Some
examples are, however, the mining industry in eg Tunisia and Liberia, forest plantations in Portugal and forestry in
Canada. Oil exploitation has over 1970 - and 1980's attracted a number of Swedish companies. Oil exploitation and
mining operations in foreign countries are examples of extractive activities, which are often associated with high risks
of nationalization. These risks can often offset by high returns in the short time an extraction of "security" can last.
Best is to have agreements and also by the design or investment to create a binding situation for the country in which
the investment is to be made in order to avoid losses at a future nationalization or to undertake other restrictive actions
for the future.
The increased habit of outsourcing to low income country’s is an example of exploitation of local production
Outsourcing may cover most activities in a company, most common are, Backoffice, service functions and production.
Motives 1, 2 och 4 are the most common for Swedish companies during the 1960- och 1970-ties also motive 6, when
EG later EU was established.
1.4.2 Non-economic motives
Among the non-economic motives can be distinguished as follows:
1. The spread of prosperity.
2. Work towards goal, based on undefined background factors: CEO likes to travel, the sales manager to get rid of a
troublesome vendors, etc.
The non-economic reasons for it is often harder to define than the economic. The non-economic motives may
encompass a lot of economic factors of individuals among its owners, directors, senior management and staff. The
non-economic reasons, however, play a not insignificant role in their internationalization, and without the personal
commitment to get people to be willing to sacrifice a personal freedom, foreign operation requires at an early stage.
Common is that companies of a chance to seek out a new market, for example, after an inquiry directly from a client
or friend of someone in management or someone from the management team found a contact for a vacation or trip that
is worth following up .
Among the reasons for the spread of prosperity, there are two main groups: first, that we so strongly believe that their
product actually provides a utility, such as cleaner environment, it must be spread over the world, and that it would
help create jobs. An example could be the Page project with sister company in Tanzania and Kenya, where several
small Swedish companies involved. Such a commitment would hardly be justified on purely commercial grounds,
although some projects are profitable.
1.4.3 Other reasons
1. Your organization's inherent vigor, Parkinson's Law.
2nd trial and error.
3rd power needs of individuals or groups within the organization.
Your organization's inherent vitality is crucial to the further internationalization. Staff with the expectation that longer
or shorter period of time to work abroad is a requirement for continued expansion. Having worked abroad, have often
been regarded as an important experience and qualification for continued career within the company.
Studies show, however, as soon as the opposite of those who succeed in their career in large Swedish companies. That
for some years have the opportunity to save money is an important motive for many to take a few years of overseas
service, and it can be a good slant on family situation and other private circumstances allow.
Some companies but they have been such a profitable that they can be developed by examining all possible ideas for
international business and more or less as proposals emerge.
Power needs of individuals or groups can take many forms. Getting rid of people competing for promotion within the
head office by sending them abroad is a possibility. Their own department or product group's internal strength of the
company can be strengthened through growth, which perhaps can only be done internationally, as other departments
and groups within the company defends its share of the domestic market.
1.5 Some models strategy for international expansion
A planned, structured and motivated international expansion requires a good tool to explain and demonstrate the
different situations and relationships between them. The following models can be adequate basis for analysis and goal-
1. Product-/marketing matrix
2. BCG Matrix
a. The learning curve
b. Market share model, the dominance theory
3rd Select Market, attack is the best defense
4th Guerrilla Tactics, grow, but not labeled
1.5.1 Product-/market matrx
A company that wants to grow can make it through to expand in any of the four cases shown in Figure 1.4:
Product Old New
Old Consolidation/ Expansion into new markets
New Product Innovation Diversification
Figure 1.4 Model of the options for expansion as a company, for its growth.
The companies that want to expand can do that by increasing the range or expand the market. Product-/market matrix
shows three expansion routes, besides the option to try to sell more of existing products in existing markets and
consolidate its operations. The first thing a company should do is obviously to sell more of existing markets if they are
not fully funded. Then the best profitability. The advice given by all companies wishing to export must have is to first
fully exploit the current market in order to increase their profitability and volume. Any expansion, whether in product
development, market expansion or diversification, costs more and gives less profits than to fully exploit existing
markets, provided that they are profitable.
Of the options for growth is the expansion rate in new markets the least risky and easiest to assess. Diversification is
the most difficult to assess and evaluate, even if it attracts many to try. Product Innovation is always associated with
many unknown and difficult to control factors but may be an option when it can be done in close collaboration with
customers who may account for the development work.
Despite all the problems that a broader market means it is usually more advantageous to increase the sale of an
existing catalog on the international market than to develop new products in a limited market. The differences between
the markets is usually not greater than the costs of adapting a product to multiple markets will be lower than the cost
of developing additional products for the original market.
1.5.2 BCG Matrix
Boston Consulting Group (BCG) developed a model to explain the link between growth and market share. The model
has been widely distributed and is based on two well-known and basic assumptions in the production and marketing.
These assumptions are that the cost of production per unit decreases with repeated production costs and also decreases
at increasing sales and the company's activities are superior to the sale will be greater than its competitors.
It has also found that for each doubling of production decreases the cost of learning by 20 to 30 percent per unit. Of
learning curve shows that the reduction of the initial cost of knowledge, experience and rationalization becomes
significant when the production volume is doubled, eg, 1 to 2, 2 to 4 and 4 to 8 units produced. The cost drops from
100 to 51.2 from the first to the eighth unit of production is planned and implemented effectively. The learning curve
is clearly attributable even at double the significantly higher production volumes, but it may be difficult to define what
is a new product in relation to a new model.
Marknadstillväxt i procent
Greater than 10 percent annual Stars Questionmarks
Less than 10 percent annual Cash cows Dogs, products with low
growth growth and low profitability
Relative market share relative Competitor's market share is Market share is less than the
to largest 10 percent larger than leading leading competitor
Figure 1.5 BCG Matrix shows four situations in which products can be positioned along a combination of growth and
relative share of the market. At higher percentage than 1, l times the nearest competitor, the company has a
competitive advantage in the market.
In versions of an old product is already at the first production part of the previously accumulated knowledge to be
utilized and the repetitive effect is not as great.
The cost of marketing can be significantly reduced, and above all to be lower than its competitors on a larger quantity
of goods of that kind is sold by the market than what competitors are doing. Variations can exist between different
markets but they are usually small. In marketing the economies of scale in virtually all areas: advertising, publicity,
market analysis, exposure and sales. The fixed cost can thus be distributed over a larger number of units sold and you
get a better effect through a greater effort in various media and hence an increased attention.
According to the BCG matrix enables its products to be in four different situations: stars, question marks, profitable
"cash cows" Cash cows, and barely profitable "dogs" dogs. A company needs to (usually) profitable products to be
developed. BCG model was developed without regard to international marketing. The company can achieve similar
comparative advantage in manufacturing over competitors without being a player in the market if sales are made
internationally. For companies in market segments where the mass marketing and advertising are of relatively minor
importance, can be at major international business advantages of a well-developed production technology to be of
greater importance than the advantages of a major marketing effort.
The traditional interpretation of BCG Matrix for national advertising is that a company must dominate its market, ie to
be better than its competitors in the relative market share, and have a product that does not increase sales by more than
10 percent a year to maintain a long-term profitability self-financing.
Part of the profits must be reinvested in growth products, star products for long-term growth is assured. In Sweden,
Electrolux is best known for having worked for this model in its market expansion into different product areas and
different markets. A large number of companies have since followed the same strategy more or less pronounced;
example, ASSA-ABLOY, the locks, Monarch of bicycles and Securitas to watch.
1.5.3 Selecting the market, attack is the best defense
One strategy that has often proved successful is to choose the market in which you want to compete. By the
international expansion work faster than the competition and gain more profitable markets and choose where and
when it wants to compete can reach advantage. Chances are, of course, that it has but in some markets. This can be
exploited by competitors, but how can one know that if you do not already active internationally and at the markets
that may be relevant? In markets where there is a small market share might not be noticeable, but they can still make a
valuable contribution volume. This can increase the competitive ability and may later be possible through a major
operation soon take a larger share of a smaller market.
1.5.4 guerrilla tactics, to grow but not visible
Freedom to combine a variety of countries and market segments, provides excellent opportunities to select markets
where growth can take place relatively undisturbed from potential competitors. Major competitors might not react on a
distinctly niche application behavior. For some products the company chooses, instead, a ten-or twenty markets, with
market shares of between two to four percent market share. This may provide an equally high total turnover in a
market share of between 20 to 30 percent in three of the four markets. By this way systematically build productive
resources and economic strength, it may eventually be possible to acquire or actively compete to significant market
shares even in large and central market. It thus differs from the guerrilla-dominance strategy in the relevant product
while guerrilla strategy may still apply for other product areas.
1.6 Choice of strategy at the international establishment
Regardless of the motive that drives companies into an international expansion and establishment in different markets,
the following main strategies can be distinguished, see Figure 1.6.
Reason for international establishment little consideration for competitors close attention to competitors
Are invited to market Passive Defensive
Seeking Market Active Offensive
Figure 1.6 Four different strategies for international expansion.
The figure shows how the strategy for the establishment of foreign markets may be affected by competition and
customer situation. It is not uncommon for companies that passively begun an internationalization move to become
more active. Companies are not born international or multinational but develops into it if they have the ability to adapt
to and exploit the opportunities in the international market offers.
The process of internationalization of Swedish firms has been studied by Jan Johnson and Vahlne, Jan-Erik. This study
shows clearly how careful and slow progress has been during the late 1800s and early 1900s. A tendency to both
bolder and more rapid progress can be discerned for the company in recent decades has begun its activities abroad. In
a study of high-tech firms conducted by Uno Alfredéen on behalf of the Ministry of Foreign Affairs (1985) shows that
those starting their internationalization during product development period and that the first finished products can be
marketed in remote high-tech markets like the U.S. and Japan before the sale takes place in Sweden.
What is the difference between a high-tech companies and a development company based on traditional technology is
apparent, however, not the ministry's study.
1.7 Special considerations in international marketing
It was noted at the outset that there is no principled distinction between national and international marketing. Each
national market as a company is considering the process is a new market for which all the decisions about how
marketing is done must be reconsidered in the same way as the introduction of a new product on the domestic market.
Needs, market channels, argumentation, media, catalog, and all other market factors must be analyzed as carefully and
systematically as well as possibilities before deciding what strategy to be applied.
At an international scale it is not enough that each market must comply with the "traditional textbook''in marketing.
The following specific areas of concern must also be considered:
1. A greater distance.
2. SEconomic, legal and technical barriers to trade.
3. Geographical, economic, political, cultural and social differences, which often can be substantial.
4th Knowledge of and documentation of the problems associated with the transfer of goods and the environment,
which is often scanty and random.
5th Communication and language difficulties.
A larger distance can provide higher transport costs due to freight charges but also because of the need to unpack and
stow cargo more carefully to avoid injury. For goods that are capable of causing injury, eg, flammable, corrosive,
toxic, explosive or radioactive goods, also require a special documentation for them to get transported and often
different records for different modes of transport: train, car, boat and plane.
Trade barriers are constituted by duties, and also the documentation requirements of and regulations concerning its
Differences between countries in geography, topography, climate, etc., as well as economics, politics, culture and
social structure are often highly significant. In the following chapters, a large number of examples to be given to the
importance of these differences into account.
The lack of systemized knowledge of what differences are important in themselves constitute a difficulty in
international affairs. Experience and knowledge gives only a partial indication of the difficulties there.
Communication and language difficulties are a significant problem in international affairs. They can partly be
individual, but they are primarily cultural.
Figure 1.7 At each border are a number of known and unknown obstacles of transferring goods and services.
Different ways of doing business in different parts of the world and within different product areas may, before the
people who do business learned to master them, constitute obstacles which grows to a level that deals impossible.
Language differences are only some of the obstacles and is the part that can be easily remedied, for example, using an
interpreter. The other communication barriers can hardly be an interpreter, helping to overcome.
How those problems will be resolved, if they need to be resolved, or if our businesses are not material may not
generally be answered here.
Lärpengar, most companies have to pay the thorough investigation and analysis than is done, it can be much cheaper
to use "legal" advisors than to not use them. Many mistakes can be avoided, while still get to experience the joy and
trouble of collecting their own knowledge and experience.
1.8 border barriers between domestic and export market
For a number of goods requiring a permit for the export resp imports in the foreign country. The rules vary from
country to country. Other restrictions, customs duties and charges, and documentation requirements with different
attributes and form. All this prevents the free transfer of goods and services between countries. Market Drivers must
take account of these obstacles and take the necessary measures in various cases. The Swedish export regulations
discussed in Section 1.9.
Several reasons can be cited for tariff protection, among other things, that it can reduce consumption of foreign
products in favor of domestic products. Employment in the domestic industry can be stimulated (short term) and new
companies can be encouraged through improved profitability. Duties and taxes must always be finally paid by the
country's own inhabitants and loaded their own exports. They should be used only as temporary support and corrective
measures. Defense policy reasons may justify the support for domestic industries perpetuated in a significant cost.
1.8.1 Examples of reasons for support and corrective measures
1. New domestic industry needs to be stimulated.
2nd Employment needs to be protected.
3rd Foreign currency needs to be saved.
4th Standard of living and real wages can be improved.
5th Natural resources must be saved.
6th Competition from low wage countries.
7th Full employment, or reduced unemployment.
8th Security of supply for possible contamination by a foreign power.
9th bargaining power vis-à-vis other states.
10th Expansion of some domestic industries.
Meanwhile, following the EC's creation has been under United Nations Framework (GATT and later WTO)
negotiations were conducted to reduce tariffs and thereby facilitate trade.
The problem with these negotiations has been that the tariff structure seen different in different countries, so it was not
enough to agree on a certain percentage of tariff reduction, but that group of products for group of products has been
The non-tariff barriers (ie, those barriers do not represent rates) have tended to increase as soon as possible. Examples
of non-tariff barriers are standard provisions, mandatory testing by designated organizations and agencies, quality and
labeling. A new set of such rules has also been introduced as a result of the increasing interest of protecting life,
property and environment. The producers' responsibility towards consumers have tightened, which has increased the
importance of following standards and recommendations. Through the economic transformation that has resulted from
the sharp increases in oil have protectionist tendencies re-asserted itself. Several countries have suffered foreign
exchange and labor problems. Temporary restrictions are in place and exchange rates have changed. In Sweden,
among others shoe import limited and textiles imports continued to be limited. EC countries' response to the slower
phase out duties on Swedish cellulose products would have cost Sweden more than was saved by limiting shoe import.
(This was at the EFTA negotiations with the EC on the EEA Agreement)
In a second round of UNCTAD was the non-tariff barriers to trade up. But it's not as easy to negotiate away safety.
Work started to including within the UN standards program to coordinate standards for a range of products. Provisions
relating to chemical products and manufacturing processes in which chemical substances are again the subject of
negotiations in the year 2005 ongoing Doha Round.
Companies are trying in various ways to reduce the cost of crossing the border between different countries. This can
be done in several ways:
The product can be separated into its components and cross the border, mounting can be done in the importing country
and some parts can be manufactured locally.
The product can be initially constructed to meet the requirements of several countries.
Figure 1.8 Cross-border barriers vary from country to country. Product, the various factors of production and the
know-how is also covered by various cross-border basis.
Customs clearance of goods can be done at less cost if the final product is divided into components. Figure 1.8 shows
how the barriers may vary for different production factors in the transmission between domestic and export market.
The barriers are different for different countries and different goods and factors of production. One approach that is
described may lead to the number of manufacturing units abroad increases, either now takes the form of subsidiaries,
joint ventures or subcontracting. The most common was that local production is in the form of its own subsidiaries,
not least the case for Swedish companies. The need to find ways past the customs barrier and hence the cost of
reaching markets have proved to be large, as documented in numerous foreign subsidiaries.
1.9 The Swedish border barriers on exports
The Swedish border barriers are now few and of little importance for most exporters. But especially after 11
September 2001 and the increased fear of terrorism, the demand for export control has increased. The growing
awareness of certain substances is detrimental impact on the environment has led to new export ban has been imposed
and that vigilance is required before the new ban could be introduced for environmental reasons. A concrete example
is the ban on exports of mercury as applied to Swedish exports since 1997, which the EU wants to introduce from
2011. Was formally bans export of Swedish products right up until the 1980s. Law from the Second World War was
still while the exception was granted for most goods. Now is the law abolished. Freedom to export the case with a few
exceptions, where an export license must be obtained before export can take place.
Commodity Areas with licensing requirements are:
1. Some industrial goods containing electronic high technology, and what has the U.S. as country of origin or
manufactured under license by the commitment to comply with U.S. restrictions on re-exports.
2nd equipment or materials for nuclear extraction
3rd Military equipment and technology for weapons production.
4th Unprocessed gold, drugs, certain older cultural goods.
5th Aerial images and some photographic images and maps.
In contrast, the license requirement for termination following categories:
1. Junk and vessel; reason is to secure the Swedish steel industry's raw material supply.
2nd Agricultural Products - This is also deleted some refunds why there is reason to be knowledgeable in the rules.
3rd Some types of seeds - to protect the Swedish agricultural competitiveness and prevent the export of "technology".
Permission are often well organized and involves no major delays or difficulties for the serious exporters who sell to
customers in Sweden's main export countries. But the license application can always be rejected, so all offers must be
subject to a license obtained. Commodity groups electronics and armaments in recent years several cases of export
publicly discussed, as well as the validity of the authorization given or to permit circumvention. It is sometimes the
licensing authority, and sometimes even export it difficult to obtain accurate information about the client's intentions
Caution should always be exercised in the export of goods licenspliktiga so that it does not suffer negative publicity,
fines and damages or cancellation of licenses. Although the individual employee for companies that export their
commodity groups should be careful when personal responsibility is sometimes charged. Some goods can normally be
unlicensed export, but their particular use makes them the authorities can, at least retroactively, will be classified as
needs license - something that may be impossible to realize. What makes a serious exporter of such a request for
quotation? It is an area of the individual's position, which is both difficult and important.
There are examples where private aircraft, which have no similarity to what we in Sweden are normally associated
with war planes, come to be classified as military equipment for export to a belligerent country. Discussion of the
assessment has been of major high-speed motor boats and trucks used by a belligerent state to carry missiles.
For used machinery, there is reason to be vigilant. They can include command and control equipment which are still
under U.S. prohibitions concerning re-exports of electronic components.
The examples are many. It's always tempting to take a profitable order even though it could ultimately cost society a
1.9.1 licensing authorities
Armaments Agency has since 2000 been replaced by a new agency that had a greater responsibility, Inspectorate of
Strategic Products (ISP), which controls Sweden's export of arms and dual-use items, ie products that can be used both
in civilian and defense purposes. ISP is also the national authority of the UN Chemical Weapons Convention. ISP says
its mission as follows on their website, www.isp.se:
Inspectorate of Strategic Products take care prudential and other controls under the Act (1992:1300) and the Law
(2000:1064) on control of dual-use items and technical assistance. Regulation (2000:1070).
The inspection shall also be the national authority, as Sweden's commitments under the United Nations Convention on
the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction
with the functions required by the Act (1994:118) concerning inspections in accordance with the United Nations
Convention on the Prohibition of Chemical Weapons and the Regulation (1997:121) concerning inspections in
accordance with the United Nations Convention on the Prohibition of Chemical Weapons.
The inspection shall also pass such information on export controls of military equipment and dual use items that
Sweden is obliged to provide that a member of the European Union. The same applies to information on export
controls within the framework of cooperation in
the International Group for control of biological and chemical products (Australia Group),
the International Group for control of nuclear substances and materials, etc. related to nuclear activity (Nuclear
the International Group for control of missiles and missile technology (Missile Technology Control Regime),
the International Group for control of munitions and other strategically sensitive products (Wassenaar Arrangement).
The inspection shall annually before March end to leave the government a report on Swedish exports of military
equipment and other strategic products during the previous calendar year.
Interestingly, an increasing responsibility on the exporter, in case of doubt, any application of ISP. This applies to
products that are exported and can, if the request comes from a country that is suspected to have intended to use the
products for weapons development or weapons production, lead to a license requirement. A debate has started in
spring 2005 because of the skills and services can be used for weapons development. Information alleges that visiting
scientists took the information home with them to countries that use this knowledge in the development of weapons,
both conventional and biological and chemical. Representatives from many Swedish universities have been totally
ignorant of the ISP's existence and the freedom of research would no longer be as free as before. The desire to control
may entail many difficult decisions. Where should limits be drawn for students who have not been screened allowed to
study at some university? The training course may contain information that could be used improperly. The same
knowledge can be crucial to tackle environmental pollution or epidemics. There is reason to closely follow the debate
and the application of the laws that exist.
1:10 Answers to questions at the beginning of Chapter 1
At the beginning of the chapter introduces a number of questions, here is a proposal to answer these questions:
1. Why should our company to export this product?
This product is already profitable which probably shows that we have an efficient production or that we are alone
product, for example, through patent protection. Here is an opportunity to expand and improve returns on invested
capital and create secure jobs for our employees. Maybe we can also contribute to raising living standards for the new
customers in new markets. Our customers request it.
2nd How, in broad terms, this product will be adapted to different markets?
Through to find out what specific requirements and needs that exist in the new markets and make the necessary
changes, or by providing the product with appropriate accessories.
3rd Which markets should we choose for this product for export?
Start with countries such as the relatively low demands for changes in product and market communication, usually
neighboring countries or markets where the current global customers represent the customer group. (Exceptions exist,
such as New Zealand and Australia as culturally strong similarities with Sweden, despite the great distance and
4th Planned no changes in the global or regional market for our product?
Join in the trade negotiations taking place within the WTO, the EU and within various standardization organizations
such as ISO and EMAS.
5th Which markets should we give priority to this product?
De som ger bäst avkastning på marknadsinvesteringen och de som är viktiga för produktutvecklingen.
6th If we offered to sell in a market, we will accept or wait?
Examine conditions: what is required of us, how much we bind ourselves to an agent / dealer who ultimately
do not meet our demands? What happens if we reject the offer, will a competitor to get the same offer, local
production will start later can become a serious competitor?
1. How common is it that you use the products or services which are manufactured abroad
a. by foreign companies or
b. by Swedish companies?
Pick out a number of products and services that you regularly use, and try to find out where they are made.
2nd How common is it that the Swedish-made goods sold in other countries? You can get an idea by
studying the language used in the operating instructions and manuals as well as the reports of the contents of
the products. What languages are used?
Compulsory cases is intended to stimulate problem solving in study situations to train the ability to analyze
various business situations that illustrate internationalization.
Scandsam AB, a practical case which addresses the issue of how a startup company to work in their
marketing. The owners would like to sell for export.
AB Centrifugator, a practical case based on a compilation of a variety of situations in the internationalization
taken from several Swedish companies.
2 The global market
After reading Chapter 2 you should be able to answer the following questions:
1. What is a relevant market for a company with ambitions to sell their products in multiple countries?
2nd Countries that have geographical areas still have a role in global marketing?
3rd Where can I find information on various sub-markets in the global marketing?
4th What customers can come to act as buyers of more than one market?
5th Have the different trading blocs like the EU, LAFTA, ASEAN and MERCOSUR have an importance in the global
marketing and if so what?
6th How often must prioritizing of the choice of markets for special coverage of the competitors be?
Additional issues raised in Chapter 2.
What characterizes an international market?
Why is it useful to group countries into different market segments?
How can the groupings are the nations in various forms of interaction affect marketing strategy?
What is a global customer?
How does global customers, the company's marketing promotion?
National customers are always nationalist?
2.1 The nation as a subsystem of the global market
The global market, which can be said to consist of all buyers and sellers in every country, no strict definition of the
global market does not exist. The market is divided into different segments depending on the product and business
needs. For each theoretical international product market there, according to the various difficulties of organizing the
market, a larger or smaller number of local markets, sometimes national.
Because of the practical problems of information exchange, transport and total character formation of local markets. A
global market where all buyers and sellers in the world involved directly is rare. An international markets where a
number of countries participating companies are, however, relatively common. The foreign exchange market is
perhaps one of the best examples of an international market where trading takes place around the clock via phone and
computers. Formal market is certainly a number of local currency markets in Frankfurt, London, New York and
Tokyo, but these are intimately linked and their clients to run simultaneously on several of these markets.
For many other products are similarly international markets by way of example. a commodity exchanges such as in
Chicago and London. These international markets are important for national markets, but many buyers and sellers are
unable to directly participate in trading on international markets because they are too small or do not have the skills or
the capital required for the trade at the exchanges .
Local markets with relatively independent price discovery is, especially for agricultural products, this may be striking.
On the international stock exchanges are negotiated, as a rule of uniform and clearly defined technical qualities, such
as in the case of metals. Cereal and coffee is often complemented with samples to show offered the required quality.
In the case of goods for which it is impossible to provide uniform quality specifications may trade happen directly
between buyers and sellers and on terms to be agreed in each case, which prevents a uniform pricing.
The regulations contained in the national markets that border for exports and / or imports means that there can be large
discrepancies between the qualities and prices of the various national markets. These conditions can be quite different
than the conditions in which business takes place in international trade for the particular goods. One reason, in
addition to national regulations and trade restrictions, are difficult to explain and justify the differences in quality and
to obtain fast shipping and transport permits.
The cereals market is really first of a number of major national markets and a market for international trade, which is
significantly smaller than the largest national market. The prices on the international market affected by the excess
quantities are disposed of in this market, and sometimes considerably lower prices than in the country where cereals
are produced. The quantities allocated internationally is still so great that many smaller countries to meet all needs can
be purchased on the market without the price reaches the cost of production at their own "rational" production. It is
mainly a number of developing countries which are mainly engaged in agriculture, which applies a free imports of
grain while countries with a large industrial application of levies on its imports to protect its agriculture. (It should be
opposite to achieve a change of employment and living standards in developing countries.)
The international exchange of goods stimulated by the company is studying opportunities to buy cheaply and sell
dearly to any processing in order to circumvent trade restrictions and the organization and thereby develops an
The differences that exist between nations in terms of quality, standards, quantities and prices are good protection for
the incumbents either the national or international with a suitable local business. The same company can be a
movement in the area actively work to harmonize trade and standards, while in another can actively work to ensure
that national special provisions shall prevail. There is more concern for consumers who should be subject to
harmonize standards and other local differences, but because consumers in general are also employees so their job
must be considered.
2.2 Countries with different economic development levels
World countries are usually divided into different groups according to level of economic development. Before 1974
they talked generally about the industrialized and developing countries, but the big rise in oil, among other things
meant that it was found that a more nuanced picture was needed. OPEC countries became a particular group as well as
developing countries come a long way towards industrialization, the so-called NICs. It also tends to divide developing
countries into those that are respectively for those that have valuable commodities. This division of the world's
countries are simplified. In some area of major countries, the regional differences to be significant with significant
technical, social and economic discrepancies.
Several developing countries with access to oil and other commodities have coveted by the exploitation of these
deposits have increased opportunities to finance their development, without aid or assistance from other countries.
These countries have more choice when shopping, then in principle they are no longer as dependent on credit from
their suppliers. The ambition to achieve more rapid development has made some debt financing needed for almost all
the oil countries. Some developing countries with access to oil and minerals and with an ambitious state management
has demonstrated a strong economic expansion, which attracted foreign firms. Some of the more conspicuous
examples are Abu Dhabi, Indonesia and Brunei.
Because of his stance or general doubts about the stability of the country, many developing countries with good
financial resources, however, attracted a very chilly interest from foreign companies. With some surprise, noted
several export companies to markets that had previously not worked suddenly become important and dollars in the
years 1973 -74. Purchasing power was, however, to disappear just as quickly, which, among other countries such as
Zambia copper are examples.
For developing countries, trends in assets are their raw materials essential to their financial situation. Large swings in
commodity prices can be expected in the future. In companies with products in demand by countries in this group, it is
therefore important to be well prepared for such changes that may lead to increased revenues, while imports tend to
grow very rapidly. The long time intervals between periods of rising prices of commodities because when production
capacity is done as a rule, an excessive expansion. It can then take many years, perhaps up to several decades, before a
new shortage occurs due to insufficient capacity. The rapid economic development in China and even India have led to
increased demand for a range of commodities in the first years of the 2000s, as iron ore, steel and oil products to name
a few examples where the production capacity does not match demand, with sharp price rises on world markets as a
2.3 The various nations share of world output and world trade
Completely dominant in the world are the U.S., both in production and share of world trade. The U.S. accounts for not
less than 31 percent in 2003 compared with 40 percent in 1984 of world GDP and 15.4 percent in 2003 and 16 percent
in 1984 of world exports.
As table 2.1 shows that the U.S. position will not be as dominant if compared with the euro area in 2003 accounted for
15.33 percent of world exports and that the EC had 36.7 percent of world exports in 1984. (It must be noted that the
EC's high figure for 1984, helps the relationship to the internal trade between the countries of the EC included. Could
its internal trade are eliminated decreases the EC's share of world trade sharply).
The trivial Japan in the total world exports is significant and it can only be explained by the fact that Japan has a far
less foreign trade than Canada in relation to GDP: Japan's share of world exports was 10 percent for 2003 and 16
percent in 1984. For Sweden, the corresponding proportions were 47 per cent in 2003 and 37 percent in 1984.
Although the U.S. has foreign trade a small role - exports represent only 8 percent of GDP both in 1984 as in 2003
while imports account for 12 percent of GDP in 2003.
(source for data in 2003, The Economist Pocket World in Figures)
Miljarder US$ 1974Procent 1984Procent 2003Procent
Hela världen 532 398 100,0 1 211 213 100 9 298 000 100,0
OECD 378 325 71,1 863 043 71,3
USA 58 732 11 193 642 16 1 011 500 10,9
EG 161 840 30,4 44 4358 36,7
EU 1 466 800
Danmark 7 327 1,4 13 965 1,2 99 400 1,1
Frankrike 33 621 6,3 78 090 6,4 485 600 5,2
Italien 23 939 4,5 48 437 4 364 800 3,9
Nederländerna 28 026 5,7 54 342 4,5 357 100 3,8
Storbritannien 31 917 6 79 574 6,6 448 000 4,8
Tyskland 47 280 8,9 107 629 8,9 863 900 9,3
EFTA 48 142 9 87 934 7,3
Finland 4 304 0,8 7 627 0,6 60 700 0,7
Norge 6 673 1,3 11 592 1 89 100 1,0
Sverige 12 654 2,4 21 696 1,8 131 500 1,4
Japan 20 343 3,8 42 650 3,5 542 400 5,8
Kina 484 300 5,2
Australien 92 200 1,0
Table 2.1 Some countries' exports and share of world exports in 1974, 1984 and 2003. For 2003, includes both goods
exports as exports of commercial services. EFTA decreased when Sweden, Finland and others joined the EU in 1995.
EC is not the same countries as the EU.
Belopp i MSEK kronor
Land 2003 Procent 2004 Procent
Total 814 966 888 251
USA 94 766 11,6 96 348 10,8
EU 469 840 57,7 514624 57,9
Varav 0 0
Tyskland 81 553 10 90 465 10,2
Storbritan 62 934 7,7 69 059 7,8
Frankrike 3 980 4,9 42 656 4,8
Italien 29 057 3,6 32 974 3,7
Nederländ 40 087 4,9 42 706 4,8
Belgien 36 756 4,5 40 386 4,5
Spanien 25 780 3,2 26 145 2,9
Österrike 9 444 1,2 9 692 1,1
Portugal 4 398 0,5 5 103 0,6
Grekland 4 513 0,6 5 255 0,6
Norden 166 680 20,5 185 358 22,7
Varav 0 0
Norge 69 226 8,5 76 996 8,7
Danmark 50 556 6,2 56 888 6,4
Finland 44 996 5,5 48 973 5,5
Island 1 902 0,2 2 501 0,3
Ryssland 11 359 1,4 13 600 1,5
Estland 5 565 0,7 4 948 0,6
Lettland 2 816 0,3 2 859 0,3
Litauen 2 836 0,3 2 654 0,3
Swiss 9 162 1,1 9 945 1,1
Table 2.2 Some countries'
exports and share of world
exports in 2003 and 2004.
In 1984, "said the ten
largest exporting countries
for 73.2% of total world
exports. Source: Trade
When comparing Table 2.1
and 2.2 shows that among
Sweden's ten largest export
markets are no neighbors
that are important for
Sweden, while in the
world more important
trading countries are of
importance for Sweden.
Kina 18 026 2,2 18 648 2,1
India 7 111 0,9 8 291 0,9
Japan 15 895 2 15 531 1,7
Taiwan 4 555 0,6 4 466 0,5
Vietnam 814 0,1 975 0,1
Australia 9 444 1,2 9 692 1,1
New 1 079 0,1 1 297 0,1
Brazil 4 369 0,5 5 173 0,6
Argentina 582 0,1 1 419 0,2
Chile 1 368 0,2 1 561 0,2
Iran 5 137 0,6 6 981 0,8
Israel 2 179 0,3 2 390 0,3
Tanzania 293 0 194 0
South 3 577 0,4 4 427 0,5
Ten largest 67,4 67,3
Figures in million £ Exports and international sales in 2003
Siffror i MSEK kr Export Utlands-
AB Volvo ... 168
Electrolux 6 122
Ericsson 73 112
Skanska ... 98
Ikea 8 97
Volvo ... 87
SCA 6 78
Vattenfall ... 72
Coop Norden ... 57
Securitas ... 54
Sandvik 0,9 47
Scania 4 47
Atlas Copco 1,7 44
H&M ... 44
Telia Sonera ... 41
SKF ... 39
Astra Zeneca 38 38
Gambro 6 26
Nordstjernan ... 26
ICA ... 25
Assa-Abloy ... 23
Saab Automobile 19 22
ABB 19 19
Trelleborg 0,7 16
Preem Petroleum 15 15
Table 2.3 Sweden's biggest export industries, export and foreign sales. For groups with shared nationality, but the
foreign office as ABB and AstraZeneca has chosen to only count the Swedish part. Exports and foreign sales coincides
therewith. Many groups provide no information on exports from Canada. Source: Mauro Gozzo, chefeskonom Trade
2.4 groupings of nations
For various reasons, the nations since the distant past have come together to take advantage of common interests. Such
groups of nations may depend on economic, political, military, religious or other common interests. In some cases,
groups remain more or less regionally stressed. These economic units is of great importance to the marketer.
In recent decades, an increasing number of attempts have been made to exploit the economic benefits of cooperation
between nations, and a number of regional groupings of nations has come about. Examples of common types of
groupings of nations is the market blocks and military pacts.
Try to global economic cooperation has also been made, but the results have not been as extensive nature of the
regional groupings of nations.
2.4.1 Market Block
The advantages of large, economically dollars markets have become increasingly visible. By that join together to
market bloc nations can take advantage of economies of scale and specialization in different industries and thus
stimulate the economic expansion in the countries concerned. A long list of attempts to create such trade areas have
been made. Many have failed, but few have succeeded.
Figure 2.1 A customs union is characterized by the members TARIFF WALL common approach to the world. In an
FTA, however each country designing its TARIFF WALL towards third countries.
Two main types of market-blocks can be distinguished:
1. Customs Unions
The EU is an example of the customs union.
The internal tariffs and trade barriers are reduced, while building up a common external TARIFF WALL. Each country
maintains or adjusts its TARIFF WALL outside the Community. Internally, the country is not something tariff
protection or no duties. Other barriers can be removed, see Figure 2.1.
A current statement of the active market, the blocks are shown in table 2.3.
Other market groups in different parts of the world:
COMECON or Ceam is the Eastern European Economic Cooperation Organization, which ended with the Eastern
bloc and the dissolution.
NAFTA is the free trade area "in the North American continent and includes the U.S., Canada and Mexico.
In Central and South America are a number of trade areas:
MERCOSUR is a collaboration between the four countries, Argentina, Brazil, Paraguay and Uruguay.
LAFTA is perhaps the most significant and largest, but also a subgroup, called the Andean Group, are of great interest.
Of the various commercial areas in the world, it is basically the only two European developed as a truly effective and
functioning markets, although EFTA now includes only four countries. In other market areas are tariff dismantling
much slower, although it is leaps and bounds.
For the individual company, it may be important to know the status of their products within their trading area as well
as anticipated changes. Companies operating within a trade area can suddenly observe a significant change in the
competitive situation, where their goods will be duty free within the trade area.
Trading Members Associate Members Remarks
Europe Several African states
EFT Association Agreement between EFTA and the EU
Table 2.4 Some of Sweden's most important trade areas.
Marketing blocks are attractive markets for companies wishing to establish themselves internationally. New
opportunities for sales generated as the markets opened, with which it has previously been difficult to sell. During
such a period of restructuring, there are good opportunities for well-consolidated and competitive businesses to gain a
good position in the new market. Provided, however, often to companies willing to invest in local production, at least
for some parts of the catalog to be sold on the market. These investments may sometimes need to be in various forms
of cooperation with companies in the market, such as minority partners, joint ventures, subcontracting, or licensed
production, for political and commercial barriers should not prevent progress.
Even countries that are not part of any trading bloc may be through free trade agreements create a substantial duty-free
market for their exports. Chile has separate FTAs with among other things, the EFTA, EU, MERCOSUR, and
countries like the U.S., Canada, Mexico and several Latin American countries have created a duty free market,
amounting to 1.25 billion people, the bulk of its exports. Chile also negotiating with China, India, New Zealand and
Singapore on a similar free trade agreements. In 1975, exported 200 Chilean company 200 product groups to 50
countries, compared to the year 2003 when the corresponding figures were 6435 companies exported 3854 different
product lines to 165 countries.
2.4.2 Military Pacts
A wide range of products and raw materials are of greater or lesser military importance, depending on the situation in
the world. Countries and among all countries in a military alliance has therefore drawn up lists of goods they wish to
control, to be sure of being able to gain access to and sometimes in order to prevent other military organizations are in
possession of such goods or skills. The international trade has been in the 1980s mainly been advanced technologies in
electronics and computer technology which was the subject of attention. During the 1950s there was a range of
commodities and metals, which attracted great interest.
Military account exists for either a single nation or military alliances, which have agreed on certain rules for
international trade in goods. Import or export may be impaired or halted entirely dependent on which country is the
prospective counterparty in a transaction. U.S. takes a very restrictive approach and do not allow exports from the
U.S. by a series of products without the recipient undertakes not to resell the goods to any country without first
obtaining permission from the United States or by proxy. Countries within the NATO alliance is often a proxy and can
itself carry out inspection and issue permits for re-export of the input product is not classified as strategically
important. The corresponding control system may exist in other countries, but usually only when the cover exports
from the country itself. The United States uses the rules represent a compromise between the U.S. exports its own
interests and military considerations. The country would also like more than to keep the products and knowledge for
itself stimulate economic growth and technology development in the countries they have friendly relations with.