A clear understanding of the basic concepts of international business/global business management, in the light of the business scenario in this 21st century globalized business environment. Why global business is studied as a different field, yet encompassing itself into the body of marketing management.
Understanding of the complex and a dynamic definitions related to international marketing/ trade etc.
Understanding the concept of globalization & why it is important and its definition.
Why globalization is referred in the context of international business.
A brief historical background from modern times to assess the role of globalization being not new in this 21st century global business scenario.
Overall competitive scenario, when markets and business worldwide are facing a paradigm shift from monopoly to oligopoly.
Corporate examples from India and other world markets towards understanding of the global business/ international marketing management.
Important mergers and acquisitions by Indian companies abroad.
Exposure of the students to the global business activities.
Focus on managing international business, operational as well as strategic.
Understanding the macro international business environment, strategies to enter foreign market.
Understanding of the global business policy and regulatory measures in the light of emerging markets.
Understanding the concept of international trade, balance of trade and balance of payments. Definitions and importance on the terms.
Global Marketing Management by Warren. J. Keegan
Other Important References:
Global Marketing Management-Kotabe Makadi
International Marketing Management- Varshney and Bhattacharya.
The Worldly Philosophers- Robert. H. Heilbrowner
History of Economic Thought- Eric Roll
Economic Theory- Eric Roll
Syllabus - MODULE-1
Need, Scope, Tasks, Domestic vs. International Marketing, International Trade Theories, Importance of International Marketing, The EPRG Concept of Management Orientation.
International Marketing Environment– Economic Environment- World Economy, stages of market and economic development, income and purchasing power parity, Economic risk analysis, Balance of Payments concept, Trade patterns, international trade alliances– GATT and WTO, World Bank, IMF– Regional Economic Groups– EU, NAFTA, SAFTA, G8, OPEC etc. Social and Cultural Environment- Culture, analytical approaches to cultural factors, cultural impact on industrial and consumer products. Political, Legal and regulatory environment– political risk, international law, licensing and trade services, dispute settlement and litigation, Embargoes and Sanctions
International Entry and Expansion Strategies– Decision criteria for entry, International market entry strategies– Exporting, sourcing, licencing, joint-ventures, ownership and control, ownership investment, Merger’s and Acquisitions, Investment in developing countries, Market expansion strategies, Stages of development models– Domestic, International, multinational, global, transnational.
Analyzing, segmenting, targeting and positioning, international marketing opportunities – regional market characteristics, marketing in less developed economies. Perspective on international consumer behavior, international market segmentation, targeting and positioning.

Developing product for international market – Products, local, national, international and global. The international product and life-cycle, product positioning, product design consideration, Geographic expansion, global branding, and different positioning, of the same brand I different countries, new product development and testing in national market. Dumping, Role of services in global economy.
Module- 6
Promotion and pricing strategy for International market – Channel development and innovation, role of international advertising and branding, PR, Trade fairs, personal selling, sales promotion, Exhibitions, Sponsorship promotions, internet marketing. Global pricing– objectives and methods, pricing policies. Export payment methods– L/C, Advance, DA/DP, FIBC, Counter trade, transfer price.
Module- 7
India’s international policy and impact on economy--- Government measures and export incentives, EXIM policy, ECGC services, Role of Indian banks and financial institutions, FDI, FEMA, Foreign exchange market and rate, services export from India.
Module - 8
Emerging Trends– Integrating the concepts with other functions of management.
Definition of Globalization
Globalization means integrating the economy of the country with the world economy. Under this process- goods, services, capital, labor and resources move freely from one nation to another, further implying one single market in a global village.
Further, the thrust of globalization has been to increase the domestic and external competition through extensive application of market mechanism and facilitating forging of dynamic relationships with the foreign investors and suppliers of technology.
Role of globalization and its effect in the business environment.
International business is the activity of engaging in business operations across national boundaries/borders.
International business is the field of study that concerns itself with the development, strategy and management of multinational enterprises in the global context of complex and dynamic business environments.
Actually the complete gamut of the whole context and interest in international business lies in multinational enterprises, culture and communications-as also the special skills that are required to operate in global business environment.

A corporation that has production operations in more than one country, (e.g.:- Toyota having manufacturing facility in India as also other parts of the world.) for various reasons such as- securing supplies of raw materials, utilizing cheap labor sources, servicing local markets and bypassing protectionist barriers.
Important critical comment on multinationals and its gravity in the light of marketing products in the ‘Third World’ market.
Investment in the domestic economy by foreign individuals or companies is called foreign investment in generic terms.
Foreign investment takes the form of:-
Direct investment in productive enterprises
Investment in financial instrument such as portfolio of shares.
Important critical comment on foreign investment in the light of ‘societal marketing concept’ under the principles of marketing management concepts.
Foreign investment is increasingly important in the economy of the modern business world-explanation as to how?

The acquisition abroad of physical assets such as plant and equipment, with operating control residing in the parent co-operation.

Part of a nation’s internal market representing the mechanism for issuing and trading securities of entities domiciled within that nations.
Brief Historical Background of International Business/Trade relations-
-- International business and trade has been there from times immemorial,
-- Man is a social animal– wants different kinds of goods/ commodities- required for the standard of living.
-- The country is not self-sufficient in developing all the products/ commodities etc.
-- Hence dependent on other country-
-- Thus international business and trade exists- International trade is between nations, business is between companies.
Fundamental Questions that companies tackle:
-- What market presence should be achieved in own country/ continent.
-- Globally presence – yes/ no
-- Knowledge of Competitors.
-- What strategies to be adopted?
-- What resources to deploy?
Factors that reinforces to take interest in International Marketing in Modern Times
-- Income growth of the consumers
-- Lower trade barriers
-- Desire for new products, around the world
-- Search for new markets/new avenues/new segments

-- Demand for new styled goods/ services– innovative goods.
-- Integration of telecommunication facilities/communication
-- Faster means of travel, transport, technology.
-- Move towards reduction of international marketing barriers.
Definition of Global Industry:
A global industry is an industry, where the strategic positions of competitors in major geographic or national markets are fundamentally affected by their overall global positions.
Definition of Global Firm:
A global firm is one that is operating in more than one country- captures research and development, production, logistical, marketing and financial advantages in its costs and reputation that are not available to purely domestic competitors.
-- They rely on technological innovation.
-- Enhance their capabilities through technology.

Need/Factors for International Marketing:

Business Factors
Competitive Factors

-- Profitability
-- Achieving Economies of Scale
-- Growth Factors
-- Marketing due to life-cycle
-- Uniqueness of Product / Services
-- Access to imported inputs
-- Spreading R and D cost
In Continuance:
Competitive Factors/ Other Factors:
-- The company’s domestic market might be attacked by global firm’s offering better products or at lower prices.
-- Counterattack by the domestic firm in the competitors home market.
-- Company discovering, some markets presenting higher profit opportunities than the domestic market.
-- Company wanting larger customer base in order to achieve economies of scale.
In Continuance:
-- Company wanting to reduce dependence on anyone market.
-- Reducing risk

Major decisions in International Marketing:
The Major decisions are encircled as a step by step calibrated process:
Deciding whether to go abroad?
Deciding which market to enter?
Deciding how to enter?
Deciding on the marketing program?
Deciding on the marketing organization?
Major Concerns while Entering Foreign Market:
1. Unstable Government, if any.
2. Foreign Exchange problems.
3. Foreign government entry requirements/ entry barriers.
4. Trade / Tariff barriers.
5. Corruption in the respective country government, if any.
6. Technological pirating.
(Explanation: A company locating its plant abroad worries about foreign managers learning how to make its product and breaking away to compete openly or clandestinely- for example in the diverse area such as machinery, electronics, chemicals, pharmaceuticals etc.)
7. High cost of product manufacturing and communication adaptation.

Environmental Differences when marketing overseas:
2. Tastes and Fashions
3. Religion
4. Physical Environment (temperature/ humidity etc)
5. Power sources
6. Security arrangements
7. Family structure and size

In Continuance:
8. Times at which business is done
9. What is polite and impolite
10. Social priorities
11. Literacy levels
12. Communication infrastructure
13. Distribution facilities
14. Methods of transaction
In Continuance:
15. Political differences
16. Legal differences
17. Regulatory differences
18. Different technical standards (may be operating in the country)
19. Different taxation policy
20. Economic complications/situations – at a particular time

What to study finally – when company’s going abroad:
Study each foreign market carefully
Study about the economic laws of targeted countries
Know about the politics of that country
Know about the culture
Adapt that country’s products and communication to foreign tastes
Domestic VS International Marketing

-- Definition of Domestic Marketing
-- Definition of International Marketing
NB: Basic tenets of marketing concepts is applied whether it is domestic or international marketing. It revolves around the controllable and uncontrollable factors that governs the pragmatic marketing scenario.
In Continuance:
Uncontrollable Factors:

Macro Environment- Uncontrollable Factors are:

-- Economic
-- Political
-- Logistics (controllable to a certain extent only, especially in the domestic market )
-- Competition
-- Legal Affairs
-- Socio-cultural
-- Geography

In Continuance:
Micro Environment-the Controllable Factors:
-- Product
-- Price (subject to certain limitations, taking competitors offer prices into consideration)
-- Place
-- Promotion
Management’s Orientation
Management’s orientation towards international marketing- EPRG Concept:

E---- Ethnocentric
P---- Polycentric
R---- Regiocentric
G--- Geocentric

Importance of Global Marketing and the EPRG Concept:
The importance of global marketing can be gauged from the fact that:

-- Maximum growth potential opportunities to be tapped.
-- Companies should go global/ motivation required to go global.

Management’s orientation- the EPRG concept revolves around the grand fact that any company’s response to global market opportunities depend greatly on the management’s assumptions and beliefs, as to how it views the new market opportunity, how it plans to enter the foreign market, how it views the culture, preferences of consumers in a foreign market etc…..
In Continuance:
The Ethnocentric Orientation:
-- It is a belief which considers- one’s own country/ culture, products as superior
-- It views similarities in all markets/ foreign country market.
-- Product’s/ services/ management practices/ methods that is being offered/ followed in one’s own country/ successful in one’s own country will be acceptable in other world markets, anywhere.
-- Adaptation of the product is not required.
-- Shades of egoism encircled herewith
In Continuation:
Criticism of Ethnocentrism
-- Ethnocentric oriented companies ignore foreign market and therefore loose great opportunities.
-- the product of the ethnocentric oriented company might be of a very high quality, and might be accepted in other world markets- (this is accepted in the first instance, subject to certain limitation), but will the marketing methods/ practices that is being followed in the home country does not need any adaptation in any form? For example if a- Benz Car or a Lincoln or a Ferrari or a BMW is to be marketed in a ‘Third World’ country. A critical examination is required.

In Continuation:
The Polycentric Orientation:
-- Opposite of Ethnocentrism .
-- It views each country as unique.
-- Each subsidiary is to develop its own unique business.
-- Each subsidiary to develop its own marketing strategies to succeed in its own right.

In Continuation:
The Regiocentric Orientation:
-- Management views regions as unique.
-- Management seeks to develop an integrated regional strategy, to market product/services- in the particular identified region.
-- Regions are considered to be one- i.e. consumers having one taste, choices, preferences, one regional identity etc.
-- NAFTA, EU, SAARC etc are examples.
In Continuation:
The Geocentric Orientation:
-- The Company views the entire world as a potential market.
-- Company strives to develop integrated world market strategies.
-- It views similarities and differences in markets and countries.
-- It seeks to create a global strategy- responsive to local needs and wants.

Definition of Global Localization:
The concept of global localization refers to the explicit fact that – a successful global marketer should have the ability to think ‘globally’ and act ‘locally’.
Drivers for Global Integration (in the light of Globalization)
-- Technology
-- Culture
-- Market Needs
-- Cost
-- Free Markets
-- Economic Integration
-- Management’s vision
-- Strategic Intent
-- Global Strategy and Action
International Trade

“Of all sorts of luggage man is the most difficult to be transported”. – Adam Smith
In Continuation:
International trade defined:
Simply explained international trade refers to trade between countries/nations/state’s. It is always compared with inter-regional trade- meaning trade between different regions within the same country.
NB: Here little attention is given to the company level marketing methods and strategies

International trade contd..
In continuation:
The Fundamental basis of International Trade:
It lies on the fact that different countries of the world are endowed by nature with different elements of productive powers. Factor endowments are unevenly distributed among the countries of the world. For example- West Bengal in India for the production of Jute, Arab countries for oil resources etc.
In continuation:
Is International Trade Inevitable?

International trade is inevitable when there are marked differences in the countries regarding materials, natural resources, natural vegetation, climate, soil etc.

In Continuation:
Other Factors affecting International Trade:
Stage of economic development
Accumulation of capital by a nation
Foreign investments by a nation
Technological progress
Finance regulations
Political affiliations- etc.

International Trade Theories
The Theories are:
Theory of ‘Mercantilism
Theory of Absolute advantage (of Adam Smith)
Theory of Comparative advantage/ comparative cost (of David Ricardo)
Modern theory of international trade or Factor Endowment theory
Theory of International Product life-cycle
Theory of Competitive Advantage

Theory of Mercantilism:

-- An economic doctrine that flourished in the 17th and 18th centuries.
-- It sought to maximize national wealth- in the form of nation’s bullion reserves - especially in gold.
-- To this end tariff’s were applied to imports in the hope of creating a ‘balance of trade’ surplus, and adding to bullion reserves.
-- Exports were viewed favorably so long as they brought in gold for the country.

GIST: Nations should accumulate financial wealth in the form of gold by encouraging exports and discouraging imports.

B. Theory of Absolute Advantage:
-- Forwarded by the great classical economist, Adam Smith.
-- Repudiated the mercantile notions of international trade.
-- Advocated the theory of Free Trade.
-- Advocated that the real wealth of a nation is measured by the level of improvement in the quality of living of a nation’s people.

Gist of the Absolute advantage theory:

If one country has an absolute advantage over another in one line of production and the other country has an absolute advantage over the first country in another line of production, then both countries would gain by trading.
NB: A country’s advantage can be:-
Natural Advantage
Acquired Advantage
C. Theory of Comparative Advantage
-- Forwarded by David Ricardo./
-- Extension of the theory of Absolute advantage
-- Also known as the theory of comparative cost.
-- The theory forwards that- a country tends to specialize in the production of those commodities in which it possesses a comparative advantage by virtue of its climate, natural resources, skill of its people, capital equipment etc.
Gist of the comparative advantage theory

Any two countries can very well gain by trading even if one of the countries is having an absolute advantage in both the goods over another, provided the extent of absolute advantage is different in the two commodities in question.
D. Modern theory of International Trade
-- Also called Factor Endowment Theory or factor proportions theory.
-- Forwarded by Heckscher and Bertil Ohlin.
-- The immediate cause of International trade is the difference in commodity prices, which in turn is due to the differences in factor prices.
-- Thus goods are purchased from outside because it is cheaper to buy them outside.
Gist of the Modern theory of International trade:
A nation will export that commodity whose production requires intensive use of the nation’s abundant and cheap factors, and import the commodity whose production requires intensive use of the nation’s scarce and expensive factors.
E. Theory of International Product Life Cycle
-- Revolves around the concept of international marketing of product/services
-- Two paradigms on which the theory is based:--
Shifting of market in the light of the size of the market
Reaching the economies of scale by location of production facilities.
F. Theory of Competitive Advantage:
-- Forwarded by ‘Michael Porter’
-- Concentrates on a firm’s home country environment as the main source of competencies and innovations.
-- Forwarded the famous ‘Diamond Model’

The Diamond Model
Attributes of the Diamond model revolves around:
Factor / Input conditions
Demand Conditions
Firm’s supporting industries
Firm’s Strategy, structure and rivalry
Chance i.e. occurrences that are beyond the control of firm
Government- its policies regarding trade etc.
Module --2
The World Economy – An Overview
Brief Historical background of the World Economy
a. World Economic scenario has undergone a drastic change, if we look it critically from the economic paradigm’s point of view.
b. The development of economies of the different regions/ countries of the world, has a strategic effect from the angle of international business scenario.
c. Finally we reach the year– 1945 (End of the second World War)
Year – 1945 and after (till late 1991)
--Signaled the end of ‘The Second World War’.
-- The World divided into bi-polar world.
-- Start of the Cold War, meaning silent war
-- Cold war was but a silent war among the two economic systems – Capitalism and Socialism, led by USA and erstwhile USSR.
-- Fall of Socialism by 1991
-- Mixed Economic System
Changes found in the World Economy
-- Emergence of global markets
-- New opportunities for the marketer’s
-- Global Competitors in the market place
-- Heavy Competitive environment
-- New players in the product line
-- Integration of the world economy
-- Globalization effects in the macro environment of business.
-- Increased volume of capital movements

The World Economy– The Macro Dimensions of the Environment
-- Economic Environment
-- Social Environment
-- Cultural Environment
-- Political Environment
-- Legal Environment
-- Technological Environment
NB:Most important of all, is the Economic Environment from a global marketer’s point of view. The Economic environment has the shades of opportunity. And opportunity is business. Business is for profit, and profit is successful marketing.

-- Relationship between productivity and employment
-- The greatest economic change is the end of the Cold War

NB: The success of the capitalist market system has caused the overthrow of communism as an economic and political system, and the role of ‘Mixed Economic’ system has a role to play in the current business scenario/ trade relations.
The Economic Systems
The economic systems criteria has been divided into three forces:
The Capitalist market allocation economic system.
Socialist pattern of command allocation economic system
Mixed economic system.

Brief Explanations of the economic systems:

The Capitalist Economic system:
--The capitalist economic system, believed in the fundamental fact of free market allocation system, where the role of the state in a market economy is to promote competition and ensure consumer protection.
-- It is the capitalist who will decide – What to produce? How to produce? and For whom to produce?
NB:-- Basically the whole concept of ‘Capitalism’ is designed around the concept of ‘Laissez Faire’- meaning ‘Leave us alone’

Capitalism continued:
--Under capitalism, all farms, factories and other means of production are the property of private individuals and firms. They are free to use them, with a view to making profit or not to use them, if it so suits them.
-- Desire for profit is the main motive behind the capitalist economy system.
-- In a capitalist economy everyone is free to take up any line of production he likes and is free to enter into any contract with other fellow citizens for his profit.
Socialism Defined:
Based on the command allocation system or the so called Central Plan allocation system, socialism is an alternative to capitalism. In a nutshell, it implies social ownership of means of production. Here the major instruments of production is under the state control, so that the economy is run for social benefit rather than private profit.
Under Socialism as an economic system it is the State that decides:
-- Which products are required
-- Which products are not required
-- How to make these required products
Mixed Economic System:
It is neither pure capitalism nor pure socialism, but a mixture of the previous two economic systems.
-- The characteristics of both capitalism and socialism is found in this economic system.
-- It is operated both by private enterprise as well as public enterprise.
-- The private enterprise is not permitted to function freely and uncontrolled through price mechanism’s– the government intervens to regulate and control private enterprise in several ways.
How Mixed Economy?
-- Control and regulation of the government over the private enterprise through its monetary and fiscal policies.
-- The government institutes:
Price Control
Licensing System
Import control
Exchange control
Control over capital issues.
Stages of Economic Development/ Market development:
In brief, the importance of the stages of economic and subsequent market development, rests on the fact that it provides a useful basis for global market segmentation and target marketing. It is a first hand knowledge for a global marketer towards meeting the desired goals.
FOUR STAGES of Economic/Market Development:
-- Stage 1. Low Income Countries
-- Stage 2. Lower Middle Income Countries
or Lesser Developed Countries.
-- Stage 3. Upper – Middle Income
Countries or the Industrializing
-- Stage 4. High Income Countries.

Characteristics of LOW- INCOME countries :
Political instability
Heavy reliance on foreign aids
High birth rates
Limited industrialization
High population growth
Low literacy levels
Very limited markets for products
NB: Importance of chief characteristics from purchasing power point of view, as also the probable growth in the market place.

The BEM Concept :
BEM refers to “big emerging markets”- an international marketing concept forwarded by Jeffrey E. Carten, in his famous treatise- ‘The Big Ten’. BEM’s are those markets that are growing at a faster rate than the world average market growth, from the current stage where it is at present. And here the marketers sees a wonderful opportunity for growth in their profitability and related issues. The BEM’S are well positioned to move towards the next stage of development – economic as well as market.
Income and purchasing power parity

-- The chief role of the income from consumerism/ consumer buying behavior.
-- Explanation of the concept
Balance of Payments :
-- Balance of Payment or BOP, is a comprehensive record of economic transactions of the residents of a country with the rest of the world during a given period of time.
-- The system generally adopted for recording transactions is the ‘Double Entry Book- Keeping System’
Importance of BOP:
Every nation carrying out economic transactions with foreign countries prepare its BOP accounts periodically :
-- To know/taking stock of its assets and liabilities.
-- To know its receipts from and payment obligations to the rest of the world.
Main Purpose of BOP:
The main purpose of BOP is to present an account of all receipts and payments on account of goods exported, services rendered, and capital received by residents of a country – and goods imported, services received and capitals transferred by the residents of the country.

Division of BOP :-- Into two categories:



CURRENT ACCOUNT : (what is recorded)
Expenses on travel
Investment income
NB: All these are related to current transactions
CAPITAL ACCOUNT: (What is recorded)

Borrowing and lending of capital
Repayment of capital
Sale and purchase of securities and other assets to and from foreigners – individuals and governments
NB: Export of commodities to foreign countries adds to the foreign receipts, while imports adds to the payments, that a resident have to make to the foreigners.
IF, EXPORT > IMPORT it is favorable balance of trade

IF, IMPORT> EXPORT it is unfavorable balance of trade.
Balance of Trade : The difference between the value of commodity exports and imports is known as the Balance of Trade.
Merchandise trade. i.e. trade in commodities- a visible trade
Services trade, i.e. intangible items for example human resources skills etc, is an invisible trade.
FTA,(Free Trade Association) meaning to remove all internal barriers to trade among the member nations
Customs Union, meaning establishing a common external barriers.
Common Market, meaning eliminating the barriers to the flow of factors of production such as labor and capital within the market.
Economic Union, meaning fulfilling the all the chief characteristics of an economic union.

Chief Characteristics of an
Unified central bank.
Common policies on agriculture.
Social services and welfare.
Transport services requirement.
Regional development.
Taxation policy.
Single currency
Construction and building infrastructure.
Political unity requirements.
Importance of Stages of Economic Development :
-- For a global marketer or a multinational company, when interested to enter a new foreign market, the stage in which that targeted region/country is matters most- in designing a marketing plan and strategy.
-- The stage of economic development of a particular country is directly related to the stage of market development in that country.
-- The reference is towards the Income and the purchasing power parity, context – revolving round the international marketing opportunities.

International Trade Alliances :
-- GATT and WTO
-- IBRD (The World Bank) and IMF
-- EU (The European Union)
-- G8
-- G10 and GAB i.e. General Agreement to Borrow
The Autonomous and Accommodating items in Balance of Payment :
--The autonomous items include all visible or invisible items such as exports, imports, remittances, reparations etc which enter the balance of payments regardless of its position or with motives quite other than to put balance of payments into positive balance. …..Continued…. next slide.
They are in both current and capital accounts.
NB:-- Accommodating items are meant to offset balance of payments deficit or surplus. They include movement of monetary gold from the central bank or sale of foreign currency or increase in foreign liabilities to meet import bill or taking foreign loan to finance deficit etc. Continued…………..
-- Accommodating movements may be made by private or public authorities and may be automatic, unplanned or unforeseen. However, they take place only when other items in the Balance of Payments are such as to leave a gap to be filled.
SDR and Its Importance
SDR Defined :--
--Special Drawing Right’s or SDR’s were created as a new and additional form of international reserves/liquidity in 1970, under the International Monetary Fund.
-- Countries receive SDR’s as per their share in reserve assets, and have an automatic right to draw them from the IMF- over and above other drawing facilities.
-- A deficit country uses SDR’s for settling deficit by exchanging SDR’s for whatever currency it requires.
-- Other countries accept SDR’s as gold or convertible currencies. Its value is based on the values of a ‘Standard Basket’ of five major currencies.
SDR Continued..
Basket Value of SDR—
A group of five currencies namely – US Dollar, Deutsche Mark, Japanese Yen, French Franc and Pound Sterling- included proportionally on the basis of Country’s size of exports of goods and services during the previous five years. It is used by IMF to determine the vale of SDR’s.
GATT- General Agreement on Tariff’s and Trade
-- A trade treaty that operated from 1948 until 1995, when it was replaced by World Trade Organization (WTO).
-- GATT was technically an agreement, rather than an organization, among various countries called contracting parties.
-- Secretariat at Geneva.------- Continued…
Objectives of GATT:
Establishing Standards for the non-discriminatory commercial policies of the contracting parties.
Settling trade disputes and encouraging mutual consultation between nations.
Discouraging non-tariff barriers and sponsoring tariff reductions.
Meeting the above through a series of multilateral negotiations and rounds.
-- Set up in 1995, following the conclusion of the long-running URUGUAY round of trade negotiations and talk.
-- A body of organizing framework for the smooth application of free trade rules among the interested member nations.
Primary functions of WTO:--
Administering WTO agreements.
Act as a forum for trade negotiations.
Handling trade disputes between member nations.
Monitoring the national trade policies of its members.
Providing technical assistance and training for developing member countries.
To act in coordination with other international organizations.
Of Particular Importance-- WTO
--- As far as the dispute settlement process of WTO is concerned , countries may complain to the WTO about the behavior of another member, and a disputes panel will then adjudicate. A country that does not abide by the findings of the panel can be subject to countermeasures.
It should never be forgotten that companies/firms/corporations/business enterprises are not allowed to make complaints to the WTO. They must persuade a government to do so, for it falls under the world trade laws of WTO, to be accepted by one and all, and the international economic protocol so desires, to be respected in toto. NB: WTO is also charged with advancing the agenda of free-trade with new trade rounds.
IBRD-International Bank for reconstruction and Development
-- A specialized agency of the United Nations, known as the World Bank, with headquarters in Washington DC, its function is to finance development in member countries by making loans to governments or under government guarantee.
-- Set up in 1944 under Bretton Woods agreement to facilitate reconstruction after world war II.
-- All members of World Bank should belong to the IMF.
IMF- The International Monetary Fund
-- Established in 1945, to promote international monetary harmony, monitor exchange rates and monetary policies and to provide credit for countries experiencing problems in terms of deficits in their ‘balance of payments’.
-- The members of IMF have a quota, known as the SDR or the special drawing rights.
-- IMF is funded through quotas paid by members.
GAB and G-10
Refers to ‘General Agreement to Borrow’ . Members of GAB are:
The Netherlands
The United Kingdom and the US

-- South Asian Association for Regional Cooperation. The first South Asian summit held in Dhaka, Bangladesh in December 1985, culminated in the formation of the South Asian Association for Regional Co-operation.
-- Members of SAARC are: India, Bangladesh, Pakistan,Sri Lanka, Bhutan, Nepal and Maldives.
-- The charter of SAARC provides for annual meetings of the Heads of State and of Governments, and a six monthly meeting of a Council, of Ministers, which is the organizations highest policy making body.
-- A permanent secretariat of the state has been set up at Kathmandu in Nepal.
-- The chairmanship of the organization remains with the country which had hosted the last summit and is transferred to the new host at the time of the next summit.
EEC or the European Economic Community :
--Created under separate treaties signed on March 25, 1957– it became effective from January 1, 1958.
-- EEC is currently a bloc of 15 west European industrial nations, which through a network of agreements are seeking to pool their economies, while retaining their separate national identities. …. Continued….

-- The ultimate goal is a complete customs union, with free flow of goods, service and labor- among all members.
-- Members of EEC currently are-
Belgium, France, Germany, Italy, Luxembourg, Netherlands, Denmark, Ireland, United Kingdom, Greece, Portugal
-- Headquarters of EEC is located in Brussels, Belgium.
ASEAN Association of South East Asian Nations : The ASEAN was formed on August 8, 1967 by Indonesia, Thailand, the Philippines, Malaysia and Singapore- to promote active collaboration and mutual assistance in matters of common interest in the economic, social, cultural, technical, scientific and development fields.
-- Currently under ASEAN, there are 10 members.
OPEC Organization of Petroleum Exporting Countries :
--OPEC was formed on November14, 1960, to control production and pricing of crude oil. It has been successful in determining world oil prices and in advancing member’s interest in trade and development dealings with industrialized oil consuming nations. …. Continued..
-- Membership of OPEC is open to any country having a substantial net exports of crude petroleum, which has fundamentally similar interests to those of member countries.
-- Members are– Algeria, Indonesia, Iran, Kuwait, Libya, Nigeria, Iraq, Qatar, Saudi Arabia, United Arab Emirates (UAE), Venezuela.
-- Headquarters located at Vienna, Austria.
OAPEC- Organization of Arab Petroleum Exporting Countries
-- The OAPEC was established in 1968, to safeguard the interests of its members and encourage co-operation in economic activity within the petroleum industry. Its members are --- Algeria, Bahrain, Egypt, Iraq, Kuwait, Libya, Qatar, Saudi Arabia, Syria and the UAE.
-- Headquarters at Kuwait.
Group of Eight/G-8
G-8- Group of Eight originally consisted of the seven wealthiest nations of the world- The USA, UK, Japan, Germany, France, Italy and Canada. However with the admission of Russia at G-7 summit at (DENVER – June 21, 1997) the group was renamed as G-8 in May, 1998.
-- The heads of governments of G-8 countries meet annually at different venues to discuss economic matters and world problems.
NAFTA- North American Free Trade Agreement :
-- A trade agreement between US, Canada and Mexico. The objectives of NAFTA is to promote economic growth and expand trade and investment among member nations.
-- To meet economic challenges in the decades to come.
-- Gradual elimination of trade barriers.
-- Protection of the Intellectual Property Rights.
Social and Cultural Environment:
--Culture has a major influence, in international marketing/ global business environment.
-- In global marketing scenario the concept of consumer buying behavior has a definite role to play.
-- Society and culture affects the consumers decision making process
-- Trend conscious consumers, dictates global marketing of products and services.
Examples of affects of culture in global marketing: (The American Culture)
-- Eating breakfast or sand-witch while moving in a train.
-- Drinking coffee in public places etc.
NB: Marketing industrial or consumer goods in targeted foreign markets is looked from the angle of the stage of economic development - the targeted county is in.
Reference is here to Stage 1 to Stage 4, where the targeted market falls.


International Entry and Expansion

Decision Criteria for entry :

-- Major decisions in International Marketing
-- Decision criteria for international business

Major Decisions in International Marketing
Deciding whether to go abroad or not?
Deciding which market to enter?
Deciding how to enter the market?
Deciding on the marketing program.
Deciding on the marketing organization.
Decision Criteria for International Business
This rests on the following specific questions:
-- Importance of the international macro environment. The importance and scope.
-- Advantages and Disadvantages that have to gained/lost, opportunities to be tapped.

The Decision criteria’s are as follows :
Political Risk
Market Access
Factor Cost and Conditions
Shipping Consideration
Country Infrastructure
Foreign Exchange
Creating a Product Market Profile (The Nine W’s)
Market Selection Criteria

The NINE W’s of creating a Product Market Profile :
Who buys our Product?
Who does not buy our product?
What need or function does our product serve?
What problem does our product solve?
What are customer’s currently buying to satisfy the need/problem?
What price are they paying?
When is our product purchased?
Where is our product purchased?
Why is our product purchased?
Strategies for Entering foreign market:

-- It refers to the different routes that is undertaken to enter a foreign market
-- The Modes of Entry
-- Stages of Foreign Market entry
Different routes to enter a foreign market are the following:
EXPORTING – A. Indirect Exporting
-- B. Direct Exporting
-- A. Licensing
-- B. Contract
-- C. Local Assembly/Investment

Indirect Exporting is one when a third party arranges the documentation, shipping and selling of an organization’s goods abroad.
-- Refers to the lowest level of commitment to international marketing
(The third party refers to independent middlemen – of four types )
Indirect Export through four routes:
Domestic-based export merchant– here the middlemen buys the manufacturers products and sells them abroad on its own account.
Domestic-based export agent– here the agent seeks and negotiates foreign purchases for a commission. Agents can be in the form of individuals or a group of people involved or trading companies
3. Co-operative Organization– exporting on behalf of several producers and is partly under administrative controls.
4. Export Management Company– manages export for its client for a fee.
Advantages of Indirect Export :
Involves less investment
No spending on export department
No foreign/overseas sales force required
No foreign contacts required
Less risk
First hand knowledge of the foreign market, through the middlemen
Fewer mistake by the seller.


Direct Export:

As foreign sales grow, an organization often begins to make a limited commitment, frequently documenting itself/ deciding to handle their own exports.

Methods of Direct Export :
Domestic based export department.
Setting up an overseas sales branch office/depot/subsidiary.
Appointing and utilizing the service of export sales representatives.
Foreign brand distributors or agent

Foreign Production:
A. Licensing represents a simple way for a manufacturer to become involved in international marketing. Here the licensor licenses a foreign company to use a manufacturing process, trademark, patent, trade secret, or other item of value for a fee or royalty.The licensor gains entry into the foreign market at little risk; the licensee gains production expertise or a well-known product or name without having to start from scratch.
B. Management Contract -- A company can enter a particular foreign market through the management contract route. Here a company can sell a management contract to a party to manage a foreign business such as hotel, hospital etc for a fee. It is a low-risk method of getting into a foreign market, since it yields income from the beginning.
C. Contract Manufacturing : An entry method, where the firm engages local manufacturers to produce the product.
Contract manufacturing’s disadvantage is that there is less control over the manufacturing process. Finally it offers the company a chance to start faster, with less risk, and with the opportunity to form a partnership or buy out the local manufacturer later.
D. Joint Ventures: Joint ventures are a part of foreign investment. It represents an extensive form of participation and commitment towards international marketing. Here foreign investors may join with local investors to create a joint venture in which they share ownership and control. Forming a joint venture might be necessary or desirable for economic or political reasons. The foreign firm might lack the financial, physical, or managerial resources to undertake the venture alone or the particular foreign government might require joint ownership as a condition for entry.
E. Direct Investment --(Ownership and Control /Manufacturing Facilities)
The foreign investment is another route through ownership or through a manufacturing facilities presence.The foreign company can buy part or full interest in a local company or build its own facilities. As a company gains experience in export, and if the foreign market appears large enough, foreign production facilities offer distinct advantages- by securing cost economies, gaining a better image in the host country, developing deeper relationship with the government, customers, local suppliers etc.
Foreign investments are undertaken in the light of long term strategic goals and ambitions of the company.
Investment in Developing Countries:

--Rapidly growing economies, Expanding purchasing power and Expanding markets etc of the developing countries, provides opportunities for the foreign companies to enter a new market. It is linked with the basic tenets of the need of international marketing and the opportunities that any developing country offers.
-- Foreign investments in the developing country can be through joint ventures, through equity stakes in another company, mergers and acquisitions etc.
Market Expansion Strategies

Targeting few segments in few countries.
Country concentration and segment diversification.
Country Diversification and market segmentation concentration.
Country and segment diversification.
Stages of Development Models
It refers to the stages in the evolution of the global corporation from a domestic player to international player to multinational player to a global player to transnational player.
Module- 5

Developing product for International

Product Defined :
-- A product is often considered in a marketing sense that can be offered to a market for attention, acquisition, use or consumption – that may satisfy a want or need. Continued……

Continued …
-- A product is something tangible that can be described in terms of physical attributes, such as shape of the product, dimensions of the given product, important components in making of the product, form color and so on.
-- A product is also intangible, which cannot be touched and felt, only experienced of its benefits, for example- engineering services, restaurant services, hotel services etc.
Marketing of Products
Products that are marketed include:
-- Physical Goods such as automobiles, books etc.
-- Services such as engineering services, marketing services.
-- Persons such as Amitabh Bacchan, Aishwarya Rai, Sachin Tendulkar etc.
-- Places such as Delhi, Agra, Jodhpur etc.
-- Organizations such as AIIMS, Escort Heart Research Institute, NGO’s etc.
The best way to define a product is to describe it as a bundle of UTILITIES or SATISFACTION

-- Status Symbol- in the case with highly niche product category
-- Benefits– whether it is any generic product or any niche product
Continued …

Core Benefits– The fundamental benefit or service that the consumer is actually buying.
Generic Product– The basic version of the product. For example a ‘car’, a solution for easy transportation. A car can be of many designs and models, and from different manufacturers and of different brand names.
Continued …
3.Expected Product– what the buyers expect from a product offer, in terms of a set of attributes and conditions.
4. Augmented Products– Expectation of additional services and benefits by the consumer, that distinguishes a company’s offer from the competitors product.
5. Potential Product– meaning all the changes and transformations that the product may undergo in future. It is nothing but a possible evolution of the product. It is distinguishing the market offer.
Continued …
-- Focus is the Product offer.
-- Product is the most crucial element of the marketing program.
-- A company’s product defines its business.
-- Pricing, quality, promotion, communication and distribution policies has importance in product offering.
-- Firm’s competitors and customers are determined by the products it offers.
--Research and Development

Important: Whenever, we as a consumer buy any product, to satisfy our need or want, we are actually looking for a solution. We thus end up buying a solution and return with a brand. Brand is always associated with any product offering – tangible and intangible. This is a generic fundamental fact enshrined with any particular product being marketed or sold in any part of the world.
Brand Defined:
A particular product, or a line of products, offered for sale by a single producer or manufacturer and made easily distinguishable from other similar products by a unique identifying name and or a symbol or term.

Brand Image :
The perception of a product formed in the mind of the consumer which is the result of the symbols and meanings associated with a particular brand. Advertising is often employed to create brand image: e.g. automobile advertising on television commonly sells a lifestyle rather than a mode of transportation.
Brand Marketing :

A strategy in which each of a firm’s product’s is marketed independently, generally under the direction of a brand manager.
Brand Name :

That part of a brand consisting of the actual letters or words; i.e. that part which can actually be vocalized, which comprises the name of the product or service as distinct from other identifying signs, symbols, and designs incorporated into the overall design.
Brand Position :

A products niche in the marketplace. The term ‘position’ refers to the products relationship to competing brands and is generally measured in terms of how the consumer perceives the various attributes attached with the brand.
Brand Positioning / Positioning :
Efforts aimed at establishing a product or service in a particular niche or segment of the market place.
Brand positioning is also referred to as market positioning- where the strategy usually includes those promotional strategies which differentiate the product from competitors and which vividly establish the products image in the minds of the potential customers. Also known as Positioning, product positioning or target positioning.
Continued …
Products – Local, National, International
and Global

The concept of products, when taken from an international marketing perspective rests on the fact that any product, whether it is a national product of one country for use in the same country– can it be marketed into another foreign market? Can it be modified into as per the requirements of the now target country or for…. Continued….

Continued …
any other world market? These enigmatic questions revolves around the EPRG concept of global marketing management, as also the stage of economic development / market development the particular targeted country is in, at the particular period of time.
-- Should the company focus on the production of products for each particular market ?

-- Products available in the portion of the national market
--Sometimes hailed under the category of regional products
-- These products may be new products that the company is introducing.
-- Local products are products exclusively distributed in a particular region.

Continued …
National products
-- Product that is offered in a single national market
-- Product specially developed for a particular country.
-- Products that are not sold outside the home country.
Continued …
International Products :
-- Offered in multinational and regional markets.
-- A multiregional product can become an international product.
[The Gist is that initially a product can be a great player in a regional market, and having the quality to become an international player, it can come out of the regional market, and can also be a player and thus marketed into other targeted world markets- through the route of acquisition or joint venture or any other specific route.]
Continued …
Global Products and Global Brands
-- The global products are offered in global markets and in every part of the world – and in every economic development stage country.
-- Some products are specially designed to target all the world market.
-- Some products specially made for a particular national market, can also be marketed in other country market.
The concept of Global Products revolves around the concept of Global Brands.
Please Note:
A product is not a brand. Any Global brand like the generic concept of brand has a general perception and image.

Examples of Global Brand:

A Global brand has :

Only Difference between a global product and global brand is that --- it does not carry the same name and image from country to country.
-- A great global product can be sold in the home country by a different name and the similar product can be sold in other world market by a different name.
Should a global product be turned into a global brand?
For this:
-- Name should be standardized
-- Image should be standardized

Please Note: The definition of standardized product follows in the slides concerning ‘IPLC’ segment, later
Continued …

International Product Life cycle

IPLC Theory

The international product life cycle theory (IPLC) describes the ‘diffusion process of an innovation’ across national boundaries.

The Whole game of IPLC, has the following characteristics:
--The International product life cycle begins when a developed country, having a new product to satisfy consumer needs, wants to exploit its technological breakthrough by selling abroad.

-- Other advanced nations soon start up their own production facilities, and before long less developed countries do the same.
Continued from last slide…
-- Efficiency/comparative advantage, thus shifts from developed countries to developing nations.

-- Finally, advanced nations, no longer cost effective, import products from their former customers.
The understanding
The entire result of the great game of the stages encircled with its particular characteristics- is governed by the fact that in the end the initiating country and the advanced nations become a victim of its own creation.
NB: The IPLC is examined from the marketing perspective, and marketing implications for both innovators and initiators are taken from the paradoxical angle of marketing only.
Stages of IPLC
The stages of international product life cycle begins from Stage 0 to Stage 4.
STAGE 0 --- Local Innovation
STAGE 1 --- Overseas Innovation
STAGE 2 --- Maturity
STAGE 3 --- Worldwide Imitation
STAGE 4 --- Reversal
The generic diagram concerning the IPLC may be referred.

NB: The curves in the IPLC shows curves for the same innovation: one for the initiating country, one for other advanced nations, and one for the Less developed countries.
-- For each curve, net export results when the curve is above the horizontal line, and when the curve is under the horizontal line, net import results from that country.
Why USA as a initiating country?
As far as the curves related to the international product life cycle is concerned, it has been universally accepted that a developed nation having all the technical knowhow, expertise etc that is required to develop a product--- after identifying the need and demands of a particular product a company in a particular country, initiates that product in its home market initially. This is the beginning of the diffusion of the innovation process concerning the international product life-cycle. Continued……………
Why USA…….?
Since many of the products found in the world’s markets were originally created in the USA, before being introduced and refined in other countries and in most instances, regardless of whether a product is intended for later export or not, an innovation is initially designed with an eye to capture the US market, the largest consumer nation in the world.


Stages of International Product Life
Cycle (IPLC) and their Characteristics

Stage 0 – Local Innovation

-- Represents a life cycle stage when any initiating country takes the first leap in manufacturing the product for the first time in the world, thereby beginning the story of the familiar life-cycle stage, in operation within its original market.
-- Innovations are most likely to occur in a highly developed countries because consumers in such countries are affluent and have relatively unlimited wants.

Stage 0 …………….
-- At this stage firms in advanced nations have both the technical know-how as well as abundant capital to develop new products.
Stage 1 : Overseas Innovation
As soon as the new product is developed and initiated by the initiating country following syndromes will happen:
-- Original market will get well cultivated.
-- there will be demand for the all new offering.
-- Local demands of the product will be adequately supplied.
-- Many prospective consumers/user of the product will come to learn about the utilities and satisfaction to be derived from the product.
It is at this stage only that, the innovating firm will look to overseas market in order to expand its sales and profit.
-- Stage 1 is also called as the ‘Pioneering Stage’ or ‘International introduction’ stage.

In the Stage 1, the technological gap is first noticed in other Advanced nations due to their similar needs and high income levels.
(Concept of the Stages of Economic
Development runs here)
Competition in Stage 1
--Competition at this stage usually comes from US firms, since firms in other countries may not have much knowledge about the innovation.
-- Production costs tend to decrease at this stage for the competitive firms, because by this time the innovating firm will normally have improved the production process.
-- Aggressive overseas sales also help decline the production costs.
-- The scenario gives the intangible feeling of the ‘Economies of Scale’.
-- the price of the product at this stage is high, since because of the technological breakthrough, costs need to be recovered, in addition to the recovering of the price incurred in marketing efforts.


The final word for Stage 1 is that– there will be more exports from the USA, and increase in imports by other developed nations.
Stage 2 – Maturity
-- Growing demand in advanced nations, will lead firms to conceptualize the product, and learn to make it in their home country.
-- Local production will start in advanced nations
Stage 2 …… continued..
-- Competition grows more at this stage.
-- More players in the market place.
-- Innovating firm’s sales see the light of the start of suffering, at the cost of advanced nations products, but still the export level remains stable.
-- The LDC’s now enter the imitation field.
-- Introduction of the product in LDC’s helps offset any reduction in export sales to advanced nations.
Stage 3 – World Wide imitation
-- This stage is generally considered as the beginning of heavy competition among the advanced nations firms.
-- This is the stage where copy cats work, in the form of re-engineering, me-too products, made in different forms and styles, having the same USP’s, differentiation is tried at every angle of the product make……
-- Tough times for the initiating nation.
-- Loss of market share for the initiating firm- to products from other advanced nations and LDC’s.
-- No more new demand anywhere for the initiating country to cultivate.
-- Effect on the economies of scale for the initiating nation.
-- Now the production cost for the initiating nation rises, on account of the new players using the comparative advantage philosophy.
-- Firms in other advanced nations use their lower prices, coupled with product differentiation techniques in place.
-- Worldwide imitation is faster at this stage.
-- The initiating country’s export declines very fastly and rapidly reaching nil.

The Final word for Stage 3--- At this stage US production or the initiating nation production still remaining, is basically cornered from the world market- and is left for the local consumption only. Once an initiating country, now only a small player in its national market – facing competition from products from other advanced nations. A great paradox of the business macro environmental scenario.
A great paradox of the business macro environmental scenario. The greatest Example for stage 3:

Among the 30 different companies selling cars in the U.S.A., with several more on the rise, of these only two players – General Motors and Ford are US firms. The rest are from Western Europe, Japan, South Korea, and others/


Stage 4– Reversal
-- In this stage two functional characteristics makes appearance
Product Standardization
Comparative Disadvantage
-- The innovating country’s comparative advantage becomes country’s disadvantage.
-- The product is no longer capital –intensive or technology
IMC also announced that Nelson, who has 27 years of experience in the home furnishings industry, has joined its High Point staff as a leasing manager. She most recently worked in sales and customer service for upholstery supplier Verellen in High Point and before that was a design and sales consultant for Furnitureland South in Jamestown, N.C.

International Market Centers owns the World Market Center in Las Vegas and several High Point showroom buildings, including the International Home Furnishings Center, Market Square and related properties, and Showplace.

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IMC also announced that Nelson, who has 27 years of experience in the home furnishings industry, has joined its High Point staff as a leasing manager. She most recently worked in sales and customer service for upholstery supplier Verellen in High Point and before that was a design and sales consultant for Furnitureland South in Jamestown, N.C.

International Market Centers owns the World Market Center in Las Vegas and several High Point showroom buildings, including the International Home Furnishings Center, Market Square and related properties, and Showplace.

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