MKT 448 INTERNATIONAL MARKETING

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MKT 448INTERNATIONAL MARKETING
DR. SANJEEV AGARWAL Associate Professor,
Marketing Iowa State University 368C Carver
Hall 515-294-9822 sagarwal_at_iastate.edu www.bus.ias
tate.edu/sagarwal/mkt448
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WHY GO GLOBAL?
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REASONS FOR GLOBAL MARKETING/BUSINESS

• Need for sales-growth.
• Reduce costs by sourcing raw materials, inputs,
  or final products.
• Need to gain competitive edge--economies of scale
  or strategic posturing.

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SEEKING MARKETS

• The largest single domestic market--the U.S.--is
  only 25 of the total world market. 75 is
  outside.
• Coca Cola derives over 70 sales and 80 profits
  from overseas markets.

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• Second largest market is Japan at 15 of the
  total world market.
• Among the European markets, Germany is the
  largest at only 6 of the total world market.
• Other countries have even smaller markets.

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SEEKING INPUTS

• Minerals
• Farm Produce
• Forest Products
• Labor
• Others

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STRATEGIC POSTURING

• CAT versus KOMATSU

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WHAT ARE THE DRIVERS OF TRADE

• TECHNOLOGICAL FACTORS
• TRAVEL TRANSPORT
• TELE-COMMUNICATIONS
• MEDIA
• SOCIO-POLITICAL FACTORS
• REDUCTION OF TRADE BARRIERS
• MARKET LIBERALIZATION
• INTERDEPENDENCE

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A JET GOES SO FAR--IT BRINGS PEOPLE
TOGETHER.--BOEING.

• JET TRAVEL IS ONE OF THE MOST EXCITING
  DEVELOPMENTS OF OUR TIMES.
• THE FIRST U.S. PASSENGER JET WAS BUILT BY BOEING
  IN 1958. B-707 COULD CARRY 181 PASSENGERS AT A
  SPEED OF 550 M/HR.
• THE JUMBO (B-747) SHOWN HERE DEBUTED IN 1969.

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AIRCRAFTS

• TYPE SEATS SPEED DISTANCE
• B-747-400 416 565nm/hr 7330 nm
• B-777-300 386 565 5960
• B-737-800 162 530 2942
• A-340-200 239 578 8000
• A-330-200 253 578 6400
• MD-11 285 600 6635
• DC-10-40 250 600 5000

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WORLD TRAVEL FIGURES

• IN 1999, NUMBER OF PASSENGERS ON SCHEDULED
  DOMESTIC AIRLINES WAS 1.0 B AND INTERNATIONAL
  AIRLINES WAS 0.5 B.
• IN 1988, THE CORRESPONDING FIGURES WERE 0.8 B AND
  0.3 B.
• GROWTH IS EXPECTED TO REMAIN AT ABOUT 5 PER YEAR.

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TRAVEL FIGURES FOR U.S.

• NUMBER OF INTERNATIONAL TRAVERLERS HAS INCREASED
  FROM 5.5M IN 1960 TO 53.1M IN 1999.
• AVERAGE DISTANCE TRAVELED HAS INCREASED FROM
  1,510 MILES IN 1960 TO 3,237 MILES IN 1999.
• NUMBER OF DOMESTIC TRAVELERS INCREASED FROM 52.4
  M IN 1960 TO 582.3 M IN 1999, REPRESENTING OVER
  HALF OF DOMESTIC WORLD TRAVEL.

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MEGA AIRCRAFTS

• A3XX-100 IS DESIGNED TO CARRY 481-656 PASSENGERS
  AND FLY 8000 NM.
• BOEING IS CONTEMPLATING A 800-1000 PASSENGER PLANE

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TRANSPORTATION

• CONTAINERIZATION HAS BEEN THE BIGGEST SINGLE
  TECHNOLOGICAL INNOVATION IN SHIPPING.
• OTHERS INCLUDE
• SIZE
• SPEED
• HANDLING

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CONTAINER SHIPS

• A 40 CONTAINER CAN CARRY 4403 VCRs OR 10,000
  PAIRS OF SHOES.
• NEWER SHIPS CAN CARRY 3,300 40 CONTAINERS. USUAL
  IS 500-1000.
• A 100 CAR DOUBLE-DECK FREIGHT TRAIN CAN CARRY 200
  40 CONTAINERS.

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SPEED

• SINGAPORE-NEW YORK JOURNEY TAKES 21 DAYS WHILE
  SINGAPORE TO LOS ANGELES TAKES 23 DAYS.
• AVERAGE TIME TAKEN TO HANDLE AND CLEAR A SHIPMENT
  IS LESS THAN 1 DAY IN SINGAPORE, 3 DAYS IN THE
  U.S. AND 15 DAYS IN JAPAN.

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WORLD AIR CARGO

• IN 1999, THE WORLD AIR CARGO WAS ABOUT 220 B
  TON-MILES, OF WHICH ABOUT 156 B TON-MILES
  COMPRISED OF INTERNATIONAL FREIGHT.
• A JUMBO SHOWN HERE CAN CARRY UP TO 124 MT OF
  CARGO OR ABOUT 5 40 CONTAINERS.

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AIR TRANSPORT IN THE U.S.

• U.S. INTERNATIONAL AIRCARGO INCREASED FROM 1,299
  M TON- MILES IN 1970 TO 12,033 M TON MILES IN
  1999.
• WHILE ONLY 5 OF U.S. TRADE BY WEIGHT IS HANDLED
  BY AIR, IT CONSTITUTES 25 OF TRADED VALUE.

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TRUCKING

• CONTAINERIZATION HAS REVOLUTIONALIZED TRUCKING
  TOO.
• U.S. IMPORTS FROM MEXICO 19.7 M MT BY TRUCK
  VALUED AT 76.5 B
• U.S. IMPORTS FROM CANADA 71.4 M MT BY TRUCK
  VALUED AT 118.9 B

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RAIL

• U.S. IMPORTS FROM MEXICO 6.1 M MT BY RAIL VALUED
  AT 14.7 B
• U.S. IMPORTS FROM CANADA 55.7 M MT BY RAIL VALUED
  AT 46.3 B.

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TELECOM CAPACITY

• EVEN IN 1960, TRANSATLANTIC CABLE COULD CARRY
  ONLY 138 CONVERSATIONS SIMULTANEOUSLY.
• NOW A FIBER OPTIC CABLE CAN CARRY UP TO 1.5M
  CONVERSATIONS.
• WHAT DO YOU THINK HAPPENED TO COST??

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THE FUTURE IS PROMISING

• WIRELESS/SATELLITE
• COMPUTERS/INTERNET
• DIGITIZATION

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MEDIA

• THE REACH OF TELEVISION AND PRINT MEDIA HAS
  BECOME GLOBAL.
• ADVERTISING COMPANIES HAVE BECOME GLOBAL.
• IT IS EASY TO REACH PEOPLE IN DIFFERENT COUNTRIES
  MORE COST EFFECTIVELY.

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SOCIO-POLITICAL FACTORS

• REDUCTION OF TRADE BARRIERS
• MARKET LIBERALIZATION
• INTERDEPENDENCE

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TRADE LIBERALIZATION

• EXPORT VOLUME HAS INCREASED OVER 17 TIMES SINCE
  1950 (FROM 420B IN 1950 TO 7300B IN 1999)
• INVESTMENT HAS INCREASED FROM OVER 25 TIMES SINCE
  1950 (FROM 14B IN 1950 TO 350B NOW).
• TARIFFS AND RESTRICTIONS HAVE FALLEN WORLDWIDE.
  GATT/ WTO

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BENEFITS OF FREE TRADE

• SPECIALIZATION LEADS TO EXPLOITATION OF
  COMPARATIVE ADVANTAGE.
• PEOPLE LIKE GOVERNMENTS WHICH ALLOW FREEDOM OF
  CHOICE.
• AN OPEN DOMESTIC MARKET IS A SOURCE OF
  COMEPTITIVE STRENGTH.
• COUNTRIES WITH OPEN TRADE HAVE DEVELOPED MUCH
  FASTER.

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Economic Freedom

• _______________________________________
• Repressed Mostly Mostly Free
• ____________Unfree__ Free ___________
• Sudan Mexico Czech Hong Kong
• Syria Brazil Japan Singapore
• Myanmar Egypt Chile Bahrain
• Vietnam Russia Germany New Zealand
• Iran India S. Korea Switzerland
• Cuba China Thailand United States
• N. Korea Ukraine Turkey Ireland

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Economic Freedom Growth

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Economic Political Freedom

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Economic Freedom

• Trade Policy
• Taxation
• Government Ownership
• Monetary Policy
• Restrictions on Foreign Investment

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...

• Restrictions on Banking
• Wage and Price Controls
• Property Rights
• Regulations
• Black Market

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INTERDEPENDENCE

• TRADE AND INVESTMENT LIBERALIZATION HAS LED TO
  DEEPER FORMS OF ECONOMIC INTERDEPENDENCE AMONG
  NATIONS.