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INTERNATIONAL MARKETING

LECTURE 9

I NTERNATIONAL M ARKETING LECTURE 9 CHAPTER 8 GLOBAL MARKETING STRATEGY

The shift towards Globalization: No national products, no national technologies, no national corporations, no national industries, no national economies. Reich, an American economist, and noble prize winner, stated that the term national economy cease to exist, and the American economy is very much linked and related to international economy. Ohmae, Japanese consultant wrote many important books. A borderless world, the inter-linked economies, in which he used the term companies without countries. Is Sony a Japanese firm? No, they moved to many places, developed multiple identities, and they are building products to the whole world. Ohmae said: am I Japanese? No, although originally he was born in Japan, but learnt in USA, worked may times in European Union, USA. So, he considers himself a citizen of the world. Levitt introduced the term: global village with one single converging demand. There is large number of people everywhere willing to use the same product, regardless of their income level and regardless of their cultural background. This is driven and enhanced by mass communication. Freidman, a journalist in NY Times, wrote a book Lexus and the olive tree. Lexus symbolizes trends toward globalization, at least for USA and EU. Although, actually, Lexus is not a global product for the whole world. Oil tree symbolizes attachment to roots and resistance to globalization.

USA and Globalization: Many think of globalization as an equal of Americanization. Global 1000 brands (published by Business Week Magazine, based on brand value1 or brand equity): most of these brands are American. www.BusinessWeek.com most valuable brands.
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Ranking criteria: sales revenue, brand recognition (share of mind and share of heart), Most of these criteria are customer based.

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ADEL FAWZY YOUSSEF

INTERNATIONAL MARKETING

LECTURE 9

What exactly is Globalization? A truly global company looks at the whole world as one market. The company manufactures, raises capital, and buys supplies wherever it can do the job best. A stage of development in a firms strategy, structure, and culture whereby it allocates resources with global objectives in mind to access the desired market with the highest (or the desired) quality product and lowest cost. To have: global vision and global mind set.

Forces driving companies to globalization

1. Customers: Customers around the world are willing to buy the same standardized product, regardless their income level. Naisbitt, a sociologist and his group issue decade-based periodicals to describe global trends and global customers, stated in 1990: The 21st century customer will be drinking cappuccino, eating sushi, dressing in united colors of Benetton, listening to US British rock, while driving his Hyundai over to McDonalds.

2. Markets: Triad markets: North America: USA and neighbors, European Union, South Asia: Japan and neighbors (mainly South Korea, Hong Kong, and Singapore). Each of these markets generates almost 1/3 of the world revenue, and has almost 1/3 of the world buying power.

3. Technology: Generally, technology is generated and originated in the triad markets.

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ADEL FAWZY YOUSSEF

INTERNATIONAL MARKETING

LECTURE 9

4. Competition: To take advantage of global presence. Access to technology, man power, ideas and practices.

Dimensions of a global strategy

1. Building global market participation,

2. Designing global products and services, Towards standardizing products, e.g. digital cameras are a real example of a world product; most people would buy it regardless of their income and culture. Look for commonalities and develop product that satisfies wide range of consumers (broad segment).

3. Creating global marketing, Standardize one or more component of the marketing mix, e.g. promotion (slogan, message, or celebrities).

4. Locating global activities, Where to locate activities is an important issue. Especially R&D and manufacturing facilities, their location need special attention, as re-location of these activities consume time and money.

5. Making global competitive moves. The firm should be willing and able to transfer people and money across national borders.

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ADEL FAWZY YOUSSEF

INTERNATIONAL MARKETING

LECTURE 9

Global integration and local adaptation of corporate functions

New product development Raising capital R&D Production Sourcing

Pricing Packaging Promotion Human Resources Management

Global Integration

Local Adaptation

BALANCE Think Global, Act Local

Notes: Glocalization: a new Japanese term that describes the process of global and local integration. Example: HSBC Bank, The World Local Bank. Aiming at world presence, and local adaptation. Never under-estimate the power and need of local knowledge.

Assignment 4: Globalization Definition, pros & cons, economic & social implications, globalization index. Due date: 18th of November, 2006.

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