IM for International Marketing 2nd Asia Pacific Edition Michael R. Czinkota

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IM for International Marketing 2nd Asia Pacific Edition Michael R. Czinkota

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Chapter 1
Introduction to international marketing
Chapter outline
What is international marketing?
Environmental and social sustainability
The importance of world trade
o Global linkages
o Domestic policy repercussions
Opportunities and challenges in international marketing
The goals of this book
Chapter objectives
The main objectives of this chapter are to: orient students to the role of international marketing in the past, present and future; provide students with a definition and better understanding of the concept and practice of international marketing in a globalised world; explain the influence of domestic policies on an international scale; highlight the importance of environmental and social responsibility in the international environment; introduce the students to the international business environment; present some of the opportunities and major challenges in International marketing; provide an understanding of the technological drivers of Globalisation; present the main goals of the book; and introduce an Australasian perspective to the discussed topics.
Suggestions for teaching
We find it useful to highlight the extent to which nations and their economies have become intertwined. For students, this will clearly establish that international marketing is a necessary activity which improves the lives of individuals and the welfare of nations. Yet, the forces of globalisation push some important social and political issues
Copyright 2011 Cengage Learning Australia Pty Limited
Introduction to international marketing 2
that tend to generate a good discussion with the class. Students should get engaged in discussing topics such as child labour and the environmental costs of globalisation. To illustrate the interdependence in todays economy, the consequences of the global financial crisis is a topic that tends to get the students attention. Additionally, it is important to communicate the international environments dramatic impact on firms. As well as allow students to draw their own conclusions about the value of concentrating on the international market.
Encourage students to access Search Me! Marketing online database to find more information that can assist them in answering the questions for discussion.
Suggested links to online video material
What Thomas Friedman means when he says the world is flat Video URL: http://www.youtube.com/watch?v=oM2BguxRSyY&feature=channel
Concept: Thomas Friedman explains the global platform he believes has flattened the world.
Clip Description: Thomas Friedman, author of the book The World is Flat, talks about the importance of visualising opportunities and taking some actions. In other words, if something can be done it will be done by you or to you.
Key outcome/points to consider: This video is a good tool to discuss how globalisation and technology have fastened the pace of changes and how individuals and organisations cannot ignore the existence of new opportunities and challenges, which are on an international scale.
PowerPoint slide reference: 4-10
Car industry China stepping up to the plate?
Video URL: http://www.youtube.com/watch?v=PT5FhP3CWsA&feature=related Concept: News regarding the Chinese car market
Clip Description: The Chinese car market is on fire. China is now the largest car market in the world, position which was previously taken by the US. Additionally, China is an important market for American car makers due to its fast growing economy.
Key outcome/points to consider: Students will be exposed to several issues in this video. First, the Chinese steady growth in a period of Global recession. Secondly,
Copyright 2011 Cengage Learning Australia Pty Limited
Czinkota et al., 2e Instructors manual 3
the shift in importance from the United States to China in the car market, the same that is happening in several other industries. Finally, there are some environmental concerns that come with the growth of the Chinese car market and there will be a great increase in fuel demand.
PowerPoint slide reference: 6
EU protectionism row escalates
Video URL: http://www.reuters.com/news/video?videoId=98460
Concept: The video highlights the threat of protectionism among some members of the European Union breaking some bloc rules.
Clip Description: With the Global financial crisis there has been an increase in the protectionism of some members of the European Union and United States once the American stimulus package has a buy American provision that stipulates that all public projects should buy only steel and iron domestically.
Key outcome/points to consider: This video can be an interesting tool to discuss how domestic policies have an effect on trade and the risks of protection. It will both give students an introduction to stimulus packages and point the threat of protectionism within the European Union.
PowerPoint slide reference: 20
Wal-Marts green revolution
Video URL: http://www.youtube.com/watch?v=eUCznRsf1-Y
Concept: ABC News regarding Wal-Mart new sustainable green standards.
Clip Description: This video shows the retail giant Wal-Mart new sustainable policy, which is as reported a game changer. It is expected that all the products have an environmental rating, which states the costs that each product had to the environment. Thus, every supplier will have to take into consideration the sustainability of their products and what can be done for improve their sustainability.
Key outcome/points to consider: The students will be able to understand how environmental sustainability has been receiving an increasing amount of attention and how organisations have to react to this pressure. It can also be discussed the importance and consequences of the largest retailer in the world to force all of its suppliers to provide more sustainable products and decrease environmental costs.
Copyright 2011 Cengage Learning Australia Pty Limited
Introduction to international marketing 4 PowerPoint slide reference: 24
The Maasai go mobile an African journey with Jonathan Dimbleby Video URL:

Concept: BBC programme shows how the Maasai tribe has benefitted from the use of mobiles
Clip Description: Documentary shows how even a remote tribe in Kenya has benefitted form the use of technology.
Key outcome/points to consider: There are two main outcomes that can be expected from this video. First, students will have an example of how isolation is practically impossible in todays economy. Secondly, it will open their eyes to how there are several opportunities for an international business in unexpected locations and the importance of being aware of international markets.
Additionally, it can be mentioned in class that the Masaai tribe has already been using money transfers through mobile phones, thus it can be asked to the class: what other services are likely to benefit the Maasai tribe through the use of the mobile technology? What does this mean to international businesses?
PowerPoint slide reference: 30 Critical Issues
1 Weve said that international marketing is not the same as international trade, but the problem is that most statistics focus on trade, export and imports, rather than the complex pattern of global development, production, and distribution of products. Take one global company (e.g. Sony, Coca-cola, Volkswagen) and map out its R&D, production and sales. What happens here? How much does the company spend and earn, in each place?
In this question students should conduct a research about one particular global organisation that they will choose. Some of the information that is asked in this question might be hard for the students to find, such as financial information.
This question can be answered by applying the product lifecycle theory.
Copyright 2011 Cengage Learning Australia Pty Limited
Czinkota et al., 2e Instructors manual 5
Additionally, Appendix B (page 40), Geographical perspectives on international marketing, provide a good framework to answer this question.
The location of the R&D location and the reason why R&D activities are concentrated in this particular country.
Production: the patterns in production focus on the advantages of concentrating the production in this country and if there any recent changes that might affect the production patterns (e.g. http://news.smh.com.au/technology/foxconn-to-move-china-apple- production-as-costs-rise-20100629-ziee.html )
How much does the company spend and earn in these locations is probably the most complicated part of the question to be answered due to the lack of information available. However, research articles can be a good source of information.
2 International marketing is all around us, even if we are not aware of it. Back in 2007 an American woman, Sara Bangiorni, brought out a book entitled A year without Made in China: Ones family true life adventure in the Global economy describing how her family tried to live a year without buying anything made in China. Lets do a mini version of that. Keep a diary for perhaps a week or so (you might want to continue it through your international marketing course) noting what you buy and consume that is internationally marketed. Try to identify the country of production but also, as appropriate, the country of the brand.
The aim of this question is to allow students to realise how much they are affected by international marketing in their daily lives and sometimes dont even realise. It will make the students reflect about the patterns of production and consumption. Consequently, it will highlight the importance of international marketing and the consequences of globalisation.
Students can be encouraged to read part of the book A year without Made in China: Ones family true life adventure in the Global economy, which is available on Google books (http://books.google.com.au/books?hl=en&lr=&id=taikveCUbmgC&oi=fnd &pg=PR9&dq=A+year+without+%E2%80%98Made+in+China%E2%80% 99+:+One%E2%80%99s+family+true+life+adventure+in+the+Global+ec onomy%E2%80%9D&ots=vUUaU5dtL5&sig=- zAOhgSdOgC8084uAZ12NgMNH9E#v=onepage&q&f=false) in order to enrich their analysis.
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Introduction to international marketing 6
3 Environmental and social sustainability is a crucial element of contemporary international marketing. T ake two comparable companies (e.g. General Motors and Toyota, Procter & Gamble and Unilever) and contrast and compare their environmental policies. Dont overlook implementation; are they actually improving their environmental record or is it just greenwash. Use a variety of sources company websites, media, academic articles, consumer/activist groups.
Students should do a critical analysis based on the information that they will find on the following sources of information
Company website:
Environmental sustainability programs currently in place.
Emphasis given to environmental sustainability.
Search for the latest sustainability report available and compare the
results of the programs in place. For instance, Procter & Gamble and Unilever sustainability report can be found on their websites:
http://www.pg.com/en_US/downloads/sustainability/reports/PG_2
010_Sustainability_Report.pdf
http://www.unilever.com.au/Images/sd_UnileverSDReport170310
_amended_tcm72-212972.pdf. Media/academic articles:
Information regarding the effectiveness of the companies environmental policies.
A more critical and less biased analysis on the programs in place. articles such as the ones below can provide valuable information
Unilever sets ambitious green goals
(http://www.bangkokpost.com/business/economics/210197/unilev
er-sets-ambitious-green-goals)
Seventh Generation Highlights Its Chemical Free Detergent
(http://www.nytimes.com/2010/12/30/business/media/30adco.html ?src=twrhp).
Consumer activist groups:
There are several campaigns against certain companies, such as a campaign that can be found in the protection of forests in South East Asia which were in risk due to the deforestation that took place in that
Copyright 2011 Cengage Learning Australia Pty Limited

Czinkota et al., 2e Instructors manual 7 area for the supply of Palm oil that is used in Dove soaps
(http://www.youtube.com/watch?v=odI7pQFyjso). Questions for discussion
1 Will the expansion of world trade in the future be similar to that in the past?
From 1999 to 2008, the world experienced a unique growth in the trade levels, as world exports nearly trebled during this period. On the other hand, the Global Financial Crisis severely decreased the volume of exports in 2009, when the world exports dropped by 12.2% if compared to 2008, which was the sharpest decline in 70 years. Yet, the world economy is recovering at a faster than expected pace, increasing by 13.5% in 2010. The world trade tends to increase as the economy recovers from the recession. This growth will be particularly higher in developing nations in Asia and Latin America.
Australian and New Zealand trade with Asian countries is likely to continue to grow at a higher pace than trade with the European Union (EU) because the annual growth rates in Asia are currently much greater than in Europe. Australia is a country rich in resources, and with the Asian economic boom, there has been a high demand for those resources. Also, the geographic proximity of Asia to Australia and New Zealand has made the logistical aspects of trade easier.
Since the 1970s, many Australian businesses have realised that the only way to expand and remain competitive is to enter the international marketplace. It is vital that the total number of firms participating in world trade increase. Australia outstripped the US, Japan and most EU nations in export growth between 1990 and 2004. During this same period, China and India experienced unprecedented growth in exports, with the Chinese service exports growing by 980 %.
Governments may have an interest in promoting exports, but private- sector financial transactions have increasingly impacted the direction of exchange rates. Also, existing international agreements limit policy makers ability to impose import restrictions. However, policy makers role in the expansion of world trade could be positive, depending on how their domestic policies influence international trade. Their promotion of a good trade environment rather than a hostile one is one of the most powerful methods of aiding Australian exporters.
Copyright 2011 Cengage Learning Australia Pty Limited
Introduction to international marketing 8 Expansion in general will continue because of available growth
opportunities and continually advancing communications technology. Web references:
http://www.wto.org/english/news_e/news_e.htm
2 Does increased world trade mean increased risk?
World trade leads to several economic benefits, however, increased world trade leads to higher risks because the international environment is politically and economically unstable, and differs from what companies encounter at home. Political disagreements and exchange rate fluctuations can make contracts uncertain. Increased world trade is risky for non-exporting domestic companies as well as for exporting companies because foreign competitors often threaten the domestic marketplace, as has occurred in the textile and auto industries. Manufacturing has essentially become extinct in Australia due to cost- based competition from Asian countries. This has led to companies downsizing and exiting the market completely, but it has also provided opportunities for new business to thrive on product development and branding while subcontracting manufacturing to other countries. Finally, the Global Financial Crisis, which started in the United States and soon became evident in countries all around the world illustrates how the increased world trade increases the risk. For instance, on an economic level, the decline of the American demand had a negative impact on all its commercial partners. World trade makes nations interdependent and any kind of crisis that affects a nations commercial partners will impact its internal economy.
Risks may be minimised by trade agreements drafted between countries or by organisations, such as the WTO. Additionally, the potential added revenues and diversification benefits from the international market offset the risks involved. Therefore, risk must always be viewed in the context of returns on investment.
3 Is it beneficial for nations to become dependent on one another?
Copyright 2011 Cengage Learning Australia Pty Limited
Czinkota et al., 2e Instructors manual 9
Dependency between nations resulting from trade agreements is beneficial in that it leads to greater cooperation. In this way, dependency can lead to more peaceful economic and political relations.
However, dependency increases risk because political and economic changes in one country can affect its trading partners economic and national security. Economic policies currently have far-reaching effects; the Asian meltdown in the 1990s, the Argentine financial crisis in 2001, the Global Financial Crisis, in a larger scale, and other events have impacted Australian and other global businesses. Risk of dependency is that nations requiring hard currency to buy necessary imports may become indebted to other countries. Their dependency will escalate if they continually borrow from abroad to maintain their economic systems. (The Argentine financial crisis is an example of such a situation.) This degree of dependence is not beneficial, and countries in this position must diversify their industrial bases in order to produce more of their own goods and reduce their dependency.
4 Can you think of examples of international marketing contributing to world peace?
International marketing brings interdependence among countries. As a consequence, nations have to maintain friendly and cordial relations among themselves, which brings some guarantees for world peace. For example, the formation of the 10-member ASEAN group, consisting of South-East Asian nations, with the cooperation of China, Japan, South Korea, India, Australia and New Zealand. The annual ASEAN summit is a very important event that helps Australia improve its relations with Asian countries and allows it to develop trade agreements and good will, which facilitates the export market. However, such political and economic associations can encounter their fair share of difficulties. Relationships with ASEAN have been hampered by criticism from Asian nations aimed at Japan for refusing to accept its imperialistic past as well as by Australias criticism of Malaysia over what it perceives to be Malaysias attempts to undermine its foreign policy.
The restructuring of Central Europe has resulted in a push for increased joint ventures and direct foreign investments. This radical change has meant that Australia and other western nations must strive for greater harmonisation and cooperation in the international arena of politics and economics.
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Introduction to international marketing 10 5 Describe some opportunities and challenges in international
marketing created by new advances in information technology.
Answers to this question will vary.
One important effect of international marketing will be greater opportunities for technology companies to supply the world with cutting- edge products. Despite concerns about the increased breadth of goods being made in lower-wage countries, the newest technologies and products will be conceived in, produced in and shipped from Australia and other technologically-advanced countries. This has led Australian industry to focus more on research and development and high-end manufacturing. In addition, there has been boom on international business conducted over the internet. Companies dont need to be physically present in a country in order to do business with commercial partners located in other nations.
Due to improved infrastructure in many developing countries, international marketing will also likely result in an overall growth in trade. For example, new telecommunications capabilities, including wireless technologies and Internet access, will create more chances for companies around the world to identify and take advantage of international business opportunities.
Opportunities:
Quicker and cheaper access to data from around the world.
Easier, more reliable communications.
New methods of advertising and promoting products internationally.
More opportunities to find partners to manufacture and develop your products.
Challenges:
Maintaining an adequately trained workforce.
Improvising in markets where particular technologies have yet to
become standard.
Greater degree of competition.
Potential for copyright and patent infringements in countries with a lack of legal governance.
Copyright 2011 Cengage Learning Australia Pty Limited

Czinkota et al., 2e Instructors manual 11 Protection of Intellectual property rights.
6 What effect has the relative decline of the UK and the rise in importance of Asia had on Australia and/or New Zealand?
Since Britain joined the European Economic Community in 1973, Australian and New Zealand exports have been heavily affected. Yet, both countries were able to develop new products and new markets overseas. Australia mainly focused on Asia while New Zealand began to trade more with Australia. In 2009-2010, 64.6% of the Australian exports were destined to Asian countries, while Australia received 23% of the New Zealand exports.
The US domestic market is large enough to allow companies to grow within the economy. However, the Australian market is much smaller and requires foreign trade in order to expand. The percentage of the GDP attributable to exports is approx 19.6 % in Australia. This is a mid-range result compared to the GDP export rates of the US (9.8 %) and Japan (11.1 %) at one end of the spectrum and New Zealand (33.2 %) and England (25.8 %) at the other. To encourage businesses to export, there have been several government and non-government initiatives. For example, Austrades New Exporter Development Program (NEDP) targets small and medium enterprises (SMEs). Most SMEs find exporting difficult and tend to stick with familiar countries, such as New Zealand or the US. NEDP attempts to overcome these issues by providing cultural and economic training for Australian companies new to exporting.
Web references:
http://www.austrade.gov.au/How-to- export/default.aspxhttp://www.state.gov/r/pa/ei/bgn/35852.htm
http://www.dfat.gov.au/publications/statspubs/mtd/australia_trade_10 07.pdf
7 What effect has the Global Financial Crisis had on international marketing?
The Global Financial Crisis generated a turbulent economic and financial environment. As a consequence, international marketing was affected by several facets of the crisis.
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Introduction to international marketing 12
First of all, there was a severe decline in the global consumption which had a very negative impact in global trade. It is estimated that the volume exports volume in 2009 dropped by 12.2%.
In addition, there was a sharp fall in the commodity prices which generated severe loss for some exporting businesses and nations. However, this has been beneficial to importers.
Yet, the high risk levels generated a great instability which decreased the foreign direct investments. This can be associated to the increased difficulty in obtaining appropriate credit.
Also, protectionist measures seemed to be on the rise to stimulate the domestic economies. For instance, The European Union increased the import duties of steel pipes from China to European Union countries. The US government now requires companies to buy US steel and manufacturing products in government funded projects (page 5).
As most organisations felt a decline in their revenue, the investment in marketing also faced a fall. In addition, investment needs to be higher for a demand to be on the same level as before the crisis.
For Australian business, the global financial crisis brought some challenges and opportunities. While some companies have suffered from the decline in overseas orders, others have benefited due to the fall in the value of the Australian dollar which helped to make Australian products more cost competitive. In addition, Australia has been benefiting from the fast recovery pace that has been taking place in some Asian countries.
Web references:
http://www.austrade.gov.au/Global-financial-crisis/default.aspx

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