International Marketing &

Operations Management

International Marketing & Globalzation Imperative

By
Sandy De Mel
Adapted by Tariku Atomsa (PhD)
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International Marketing &

Operations
Essential Points to be Discussed
in Advance

Course Content

S ession reading reading additional materials &

journals ( Refer next slide & P. 12)

Note: It will be advantageous if you do the short

cases after each lecture refer the text book

International Marketing & Operations

Course Texts
Key text
Kotabe M & Helsen K (2008) Global Marketing
Management, 4th edition, John Wiley & Sons, Inc.
Recommended text
Bradley F (2 005) International Marketing
Strategy , Prentice Hall
Mangan J, Lalwani C & Butcher T (2008), Global
Logistics and Supply Chain Management John
Wiley or any appropriate book
Note: The lecture slides for the course are based
mainly around the
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International Marketing &

Operations

Description of Assessment & marking

Assessment is based on individual assignment

(100%)

Detailed description of assessment (Refer course

guide pp. 14-16)

Assignment submission date (August 29, 2011)

Marking criteria (Refer course guide pp. 16 -17 )

Feedback methods (Refer course guide pp. 17-18 )

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International Marketing &

Operations
Introduction to the Course

(Why study IM & OM? )

Reasons:

The impossibility of avoiding competitive pressure

operating domestically or internationally. Important
factors could be:

Communication technologies revolutionized information

exchange & eliminated national boundaries

The changes that took place in Eastern Europe, trade liberalization,

growth of new emerging markets, European integration, etc.

Marketing & Operations (Functions) must

designed & managed to achieve sustainable competitive

advantage
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International Marketing &

Operations

Introduction to the Course

(Why study IM&OM?)

integrated with other tasks that reflect the firms commitment to

creating customer satisfaction leads to improved product profit
margins, firms profitability & overall corporate growth

Understanding the integration b/n marketing,

operations & strategic planning

Thus, planning, resourcing & execution of operational

& marketing processes must reflect the firms strategy

Operations supply chain management , purchasing & logistics

Marketing customer service, r/ship marketing & direct marketing

Eventually, to develop intellectual, analytical &

practical competencies

International Marketing &

Operations
Important Concepts ( Brainstorm)
What do we mean by marketing?
Explain how domestic marketing differs from
international marketing?
Are there differences b/n international marketing &
global marketing?
International Marketing & Operations
Management course is said to be strategic in
nature. What that means?
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International Marketing &

Operations
Lesson Overview

1. Why Global Marketing is Imperative?

2. Globalization of Markets: Convergence &
Divergence
3. Evolution of Global Marketing
4. Appendix: Theories of International Trade & the
Multinational Enterprise
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Introduction

Products have been traded across borders throughout

recorded civilization, extending back beyond the Silk Road
that once connected East with West from Xian (China) to
Rome ( Italy).

Total world trade volume in goods and services grew from

$7.6 trillion in 2000 nearly $ 11 trillion in 2004.

According to the World Trade Organization (WTO), the

worlds five exporting countries were Germany ($912 billion),
the United States ($819 billion), China ($593 billion), Japan
($566 billion), and France ($449 billion), collectively
accounting for 36 percent of global trade in 2004 .
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Introduction

The Triad Regions (North America, Western Europe, and

Japan) of the world collectively produce over 78 percent of
world GDP in 2004.

Big Emerging Markets (BEMs): In the next ten to twenty

years, BEMs such as the Chinese Economic Area (CEA:
including China, Hong Kong Region, and Taiwan), India,
South Korea, Mexico, Brazil, Argentina, South Africa, Poland,
Turkey, and the Association of Southeast Asian Nations
(ASEAN: including Indonesia, Brunei, Malaysia, Thailand, the
Philippines, and Vietnam) will provide many opportunities in
global business.
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1. Why International & Global

Marketing is Imperative

Saturation of domestic markets: Domesticmarket saturation in the industrialized

parts of the world and marketing
opportunities overseas are evident in
international marketing.
Global competition: Competition around the
world and proliferation of the Internet have
been on the rise and are now intensifying.
Need for global cooperation: Global
competition brings global cooperation.
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1.. Why Global Marketing is

Imperative

Internet revolution: The Internet and electronic

commerce (e-commerce) are bringing major
structural changes to the way companies operate
worldwide.

The term global epitomizes both the competitive

pressure and expanding market opportunities.

Whether a company operates domestically or

across national boundaries, it can no longer avoid
competitive pressures from around the world.
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Exhibit 1 -1

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2 . Markets: Convergence and

Divergence

Per capita income is an important determinant of

consumer buying behavior.

When a countrys per capita income is less than

$10000, much of the income is spent on food and other
necessities, and very little disposable income
remains.

As a countrys per capita income reaches $20000, the

disposable portion of income increases dramatically.

This increased disposable income level results in

increased convergent pressures on consumer buying
behavior.
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2 . Markets: Convergence and

Divergence

People with higher incomes tend to enjoy similar

educational levels, desires for material positions,
ways of spending leisure time, and aspirations for
the future.

Globalization does not suffocate local cultures, but

rather liberates them from the ideological conformity
of nationalism, with consumers becoming more
receptive to new things.

Consumers also have a wider, more divergent

choice set of goods and services to choose from.

In other words, the divergence of consumer needs is

taking place at the same time.
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2 . Markets: Convergence and

Divergence

International trade consists of exports and

imports.

International business includes international

trade and foreign production.

Extensive international penetration of companies

is called global reach.

International trade and foreign production

activities are managed on a global basis.

Growth of Multinational Corporations (MNCs)

and intra-firm trade is a major aspect of global
markets.
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2 . Markets: Convergence and

Divergence
Who manages international trade?

Intra-firm trade: Trade between MNCs and

their foreign affiliates Comprises 34
percent of world trade.

An additional 33 percent of world trade was

exports between MNCs and their affiliates.

I n other words, two-thirds of world trade is

managed one way or another by MNCs.
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3 . Evolution of International and

Global Marketing
What is marketing?

Marketing involves the planning and execution

of the conception, pricing, promotion, and
distribution of ideas, products, and services.

Marketing involves customer satisfaction and

their current and future needs.

Marketing is much more than selling and

involves the entire company.

Within marketing strategies, companies are

always under competitive pressure to move
forward both reactively and proactively.
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3 . Evolution of International &Global

Marketing

Five stages in the evolution of global marketing (Exhibit

12 ):

1. D omestic Marketing (domestic focus; home country

customers; ethnocentric orientation).
2. Export Marketing (indirect vs. direct exporting; country choice,
exports; ethnocentric orientation; home country customers).
3. International Marketing (markets in many countries;
polycentric orientation; use of multi-domestic marketing when
customer needs are different across national markets).
4. . Multinational Marketing (many markets; consolidation on
regional basis; regiocentric orientation; standardization within
regions).
5. Global Marketing (international, multinational & geocentric
orientation; companys willingness to adopt a global
perspective; global products with local variations).
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Exhibit 1 - 2

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3 . Evolution of Global Marketing

Global Marketing refers to marketing activities that

emphasize the following:
1.

Standardization efforts.

2.

Coordination across markets.

3.

Global integration.

Global marketing does not necessarily mean that

products can be developed anywhere on a global scale.

The economic geography, climate, and culture affect

how companies develop certain products.

The Internet adds a new dimension to global marketing.

E-commerce retailers gain substantial savings by selling

online.

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4. Appendix: Theories of International

Trade & the Multinational Enterprise

Comparative Advantage Theory (Exhibit 1-3)

Absolute Advantage
Comparative Advantage
Commodity Terms of Trade
Principles of International Trade
Factor Endowment Theory
International Product Cycle Theory (Exhibit 1- 4)
Economies of Scale
Economies of Scope
Technological Gap
Preference Similarity
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Exhibit 1 - 3

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4. Appendix: Theories of International

Trade & the Multinational Enterprise

Stages of International Product Cycle Theory:

Introduction Stage
A U.S. company innovates on a new product in its home
country.
Growth S tage
Product standards emerge and mass production becomes
feasible.
Maturity Stage
Many U.S. and foreign companies vie for market share
in the international markets.
Decline Stage
Companies in the developing countries also begin
producing the product and marketing it in the rest of
the world.

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Exhibit 1-4

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4. Appendix: Theories of International

Trade & the Multinational Enterprise

Internalization/Transaction Cost Theory

Appropriability Regime

Dominant Design

Manufacturing and Marketing Ability

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