Global Business

Positioning Ventures Ahead

Michael R. Czinkota, Ilkka A. Ronkainen

• Publisher: Routledge
• Year: 2010
• ISBN:
  9781135965877
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Business allgemein

Global Business: Positioning Ventures Ahead alerts every business to the new windows of opportunity open to those willing to explore global markets. Authors Czinkota and Ronkainen bring readers quickly up to speed on the essentials of international marketing, explaining all the strategic alternatives for going global—from exporting and licensing to distributorships and joint ventures. They illustrate how to present, promote, and price products and services to appeal to multiple world markets and how to strike back when world competitors move into one's territory.

Each chapter concludes with " Food for Thought " questions that challenge the reader to think more deeply about entry into the global market, as well as further readings and online resources that provide useful references for continuing investigation.

Global Business: Positioning Ventures Ahead equips readers with the skills to ride out the risks and reap the rewards of world-class engagement.

Chapter 1
The Global Imperative

International marketing is a necessity, not an option.

A nation that does not participate in the global marketplace will see its economic capability and overall standard of living decline. A company that overlooks the potential of global marketing might not even survive – let alone thrive. Successful international marketing benefits both nations and employers, promising an improved quality of life, a better society, more efficient business transactions, and a more peaceful world as trading partners “make love, not war.”

THE GLOBAL ECONOMY DEPENDS ON TRADE

The reality is that the world depends on continuity in trade. Trade flows and currency values shape the global economic outlook, competition, and consumer choices. In the U.S., for example, trade-related activities comprise more than 25 percent of the country’s GDP – which is more than the housing and banking sectors combined. Trade also accounted for the entire U.S. economic growth in 2008.

Patterns identified during the global recession of late 2008 highlight the remarkable impact of any ripple in trade worldwide. According to U.S. Commerce Department data, combined U.S. exports and imports dropped 18 percent from July to November 2008, with a decline in imports accounting for two-thirds of the drop. With the U.S. importing less, nations that export to America suffered as a result. For example, during this period, Japan experienced its biggest drop in exports ever, while China and Germany experienced their biggest drops in a decade. This, in turn, means that other countries that are exporting less will also import less from the U.S. and other nations. As a result, the World Bank predicted that global trade would decline 2.1 percent during 2009, just two-tenths of a percent more than the last big decline in 1975.

Of course, when demand is down among the world’s global trading partners, little or no trade growth is likely to occur until a recovery begins. This lull in trade creates an opportunity for companies that are new to global trading to study, learn, and become knowledgeable. This is the time to prepare for the inevitable point when global buyers regain confidence – and they will regain confidence. Research shows that it typically takes new exporters about two years to get their international legs before they begin to realize good sales results. The best time to get that experience is when there’s less pressure to learn it quickly to keep up with a booming industry or with the competition.

University MBA program applications reflect this – increasing numbers of students, knowing that job prospects are not as robust as in the past, are staying in school to accumulate knowledge and capabilities that will prepare them for the economic turnaround to come.

Companies can do the same. Now is the time to use slack resources to explore new market opportunities, new cultures, and new customers. Company leaders and managers can take international business courses at local universities, attend regional trade seminars and industry conference workshops on global business, and read books and newsletters. They can network with managers of local companies already marketing their products and services in other countries. U.S. businesses can contact the local office of the U.S. Commercial Service to learn more about how this arm of the International Trade Administration can assist. Then, when economic conditions get better, companies can pounce on the markets they have researched and prepared for.

This applies to all nations. Many countries have export promotion capabilities and the expertise needed to help more of their firms market overseas. There has never been a better time to take advantage of the knowledgeable support that they offer.

U.S. Leadership is Essential

As we write this, governments worldwide are working to counteract the 2009 economic crisis by developing stimulus plans. The efforts of any one nation will have an impact globally because national economies are intertwined, but economic activity is highly concentrated among a few players – the U.S., European Union, Japan, China, and Canada – who account for more than 75 percent of the world’s economy. That clout makes it critical for U.S. companies to become more involved in international marketing, whether it is export–import trade, licensing, joint ventures, wholly owned subsidiaries, turnkey operations, or management contracts.

There is a tendency today toward domestic protectionism and while it is not surprising, it is also not wise. Using the U.S. as an example, those with global marketing experience know that a “buy American” attitude will cost the U.S. and the world billions of dollars and reduce the number of jobs. The U.S. needs the companies from other nations with facilities in the U.S. to continue to pump money and jobs into the economy. These companies should be welcome to do so, particularly when they create products Americans want at an affordable price.

Conversely, when an American company ventures abroad, it wants its contribution to another country’s economy to be welcomed, not feared. The reception it receives in those countries will be driven by the openness the U.S. offers outside companies. Every time a U.S. firm loses business abroad because of retaliation for American restrictions, the economy suffers. Keeping the U.S. open to trade will avoid a new global battle of trade restrictions that will undo decades of effort by corporations and governments to eliminate the trade barriers that keep businesses from thriving.

Recent economic recovery plans in the U.S. and abroad have provided both an opportunity to send a signal to markets about what they can expect in terms of U.S. trade, and a chance to reassert U.S. leadership on the global stage. Discussions of U.S. economic improvements must go beyond domestic issues and include a focus on global recovery. Countries must be willing and able to buy each other’s goods – in increasing quantities – if economies are to blossom. Financing is key to their success, so recovery plans that include governmental efforts to help companies finance overseas ventures, including providing buyers with credit, will boost the domestic economy as well.

Global Opportunities Yield Success

The potential is exciting. A new world order and curious and open-minded consumers offer a vast array of new marketing opportunities. At the same time, international specialization and cross-sourcing have made production much more efficient than ever before. New technologies and resources, especially connections made possible through the Internet, have changed the way we do business, allowing us to both supply and receive products from across the world. Even the smallest companies that had never thought in terms of global marketing have been able to actively expand to international markets because of buyers who have discovered their products or services online and purchased them. These buyers, while similar to domestic customers, might never have been targeted by the companies for global outreach.

The number of markets in a position to buy our products and services is increasing, as well. As more traditionally poor regions enjoy access to improved communications technology – television sets, satellite networks, and Internet access, for example – more people become aware of products available elsewhere, creating demand for them in unexpected places. Microfinancing designed to help poor households meet basic needs or assist entrepreneurs starting or expanding a business will have a profound impact. The funding will improve not only the quality of life for borrowers in emerging markets, but will also help build a workforce for manufacturers establishing operations in these regions. Citizens with new employment opportunities offered by international investors will also be better able to afford those enticing products seen in television and movies or the Internet.

World traders have forged networks of global linkages that bind us all – countries, institutions, and individuals – much more closely than ever before. A drought in Brazil and its effect on coffee production and prices is felt around the world. Hurricanes Katrina and Rita on the U.S. Gulf Coast disrupted oil production so severely that there was a spike in gasoline prices worldwide, raising transportation costs for countless industries and businesses. These linkages have also become more intense on the individual level. Communication has built new international bridges, whether it is through music or international programs transmitted by CNN, BBC, Al Arabiya, and other networks. We share similar interests and activities with others worldwide – many of us wear jeans, listen to the same music on iPods, and eat kebabs or curry or sushi. Transportation linkages let individuals from different countries see and meet each other with unprecedented ease. Common cultural pressures result in similar social phenomena and behavior, such as the rise of dual income families searching for ways to save time with shopping and housework.

Trading blocs – the European Union in Europe, NAFTA in North America, Mercosur in Latin America, and ASEAN in Asia – encourage trade relations between member countries while having an impact on the trade and investment flows of nonmember nations. They remind companies that they are competing not only domestically but also globally – whether they have an overt presence overseas or not.

LEVERAGE OPPORTUNITIES, MINIMIZE CHALLENGES

Today’s international marketer is subject to a new set of macro-environmental factors; to different constraints than they are accustomed to; and to quite frequent conflicts resulting from different laws, cultures, and societies. The basic principles of marketing still apply, but their application, compl...