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MKT 448 INTERNATIONAL MARKETING

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

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MKT 448 INTERNATIONAL MARKETING

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  1. MKT 448INTERNATIONAL MARKETING DR. SANJEEV AGARWAL Associate Professor, Marketing Iowa State University 368C Carver Hall 515-294-9822 sagarwal@iastate.edu www.bus.iastate.edu/sagarwal/mkt448

  2. WHY GO GLOBAL?

  3. 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.

  4. 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.

  5. 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.

  6. SEEKING INPUTS • Minerals • Farm Produce • Forest Products • Labor • Others

  7. STRATEGIC POSTURING CAT versus KOMATSU

  8. WHAT ARE THE DRIVERS OF TRADE • TECHNOLOGICAL FACTORS • TRAVEL & TRANSPORT • TELE-COMMUNICATIONS • MEDIA • SOCIO-POLITICAL FACTORS • REDUCTION OF TRADE BARRIERS • MARKET LIBERALIZATION • INTERDEPENDENCE

  9. “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.

  10. 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

  11. 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.

  12. 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.

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

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

  15. 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.

  16. 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.

  17. 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.

  18. 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.

  19. 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

  20. 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.

  21. 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??

  22. THE FUTURE IS PROMISING WIRELESS/SATELLITE COMPUTERS/INTERNET DIGITIZATION

  23. 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.

  24. SOCIO-POLITICAL FACTORS • REDUCTION OF TRADE BARRIERS • MARKET LIBERALIZATION • INTERDEPENDENCE

  25. 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

  26. 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.

  27. 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

  28. Economic Freedom & Growth

  29. Economic & Political Freedom

  30. Economic Freedom • Trade Policy • Taxation • Government Ownership • Monetary Policy • Restrictions on Foreign Investment

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

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

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