Chapter 5 ♦ Developing a Global Vision 5-1
CHAPTER 5 Developing a Global Vision
CHAPTER FEATURES
Chapter Features
Key Points
✓ Marketing & You
Students are given a survey to measure their cultural openness.
✓ Ethics in Marketing
In early 2010, Google and the Chinese government had a public
✓ Application Exercise
A geography exercise helps students refresh their memories on a
topic they probably haven’t studied for a while but that is very
important for global marketers.
USING THIS MANUAL
Chapter five includes six learning outcomes that help students become more familiar with the development of a global
vision. The chapter outline provides detailed analysis of these learning outcomes, listing PowerPoint slides and review
Modifications to existing products and marketing strategies may
Multinationals must think creatively to breach such markets.
5-2 Chapter 5 ♦ Developing a Global Vision
LEARNING OUTCOMES
1 Discuss the importance of global marketing
Businesspeople who adopt a global vision are better able to identify global marketing opportunities, understand the
2 Discuss the impact of multinational firms on the world economy
Multinational corporations are international traders that regularly operate across national borders. Because of their vast
3 Describe the external environment facing global marketers
Global marketers face the same environmental factors as they do domestically: culture, economic and technological
4 Identify the various ways of entering the global marketplace
5 List the basic elements involved in developing a global marketing mix
A firm’s major consideration is how much it will adjust the four Ps—product, promotion, place (distribution), and
6 Discover how the Internet is affecting global marketing
Simply opening a Web site can open the door for international sales. International carriers, like UPS, can solve logistics
CHAPTER OUTLINE
PowerPoint 5-4:
Rewards of Global
Marketing
1 Discuss the importance of global marketing
I. Rewards of Global Marketing
The word global has assumed a new meaning, referring to a boundless
mobility and competition in social, business, and intellectual arenas.
Chapter 5 ♦ Developing a Global Vision 5-3
Review Question 1.1
Global vision means recognizing and reacting to international marketing
opportunities, using effective global marketing strategies, and being aware of
threats from foreign competitors in all markets.
PowerPoint 5-6:
Importance of Global
Marketing to the U.S.
A. Importance of Global Marketing to the United States
1. The United States exports about a fifth of its industrial production.
2. Exports create jobs for more than 10 million Americans.
PowerPoint 5-7: The
Fear of Trade and
Globalization
Review Question 1.2
PowerPoint 5-8: Benefits
of Globalization
B. The Fear of Trade and Globalization.
The WTO, World Bank, and IMF have drawn considerable protests.
Some of the negatives of global trade are as follows:
1. Millions of Americans have lost jobs due to imports, production
shifts abroad, or outsourcing of tech jobs.
C. Benefits of Globalization
Some of the benefits of global trade are as follows:
1. Expands economic freedom.
2. Spurs competition.
2 Discuss the impact of multinational firms on the world
economy
5-4 Chapter 5 ♦ Developing a Global Vision
II. Multinational Firms
Review Question 2.2
PowerPoint 5–11:
Stages of Global Business
PowerPoint 5–12:
The multinational corporation (MNC) is a company that is heavily engaged
Multinationals often develop their global business in stages:
• Companies operate in one country and sell in another
A. Currency Fluctuations
Multinationals can be helped or hurt by currency fluctuations. The exchange
B. Global Marketing Standardization
1. Global marketing can be defined as individuals and organizations
2. Global marketing standardization, representing Ted Levitt’s use
3. Some markets and products, such as McDonald’s and Coca-Cola, do
seem to fit global market standardization concepts, but critics argue
that their successes are actually based on variation.
PowerPoint 5–15:
External Environment
Facing Global Marketers
3 Describe the external environment facing global marketers
III. External Environment Facing Global Marketers
PowerPoint 5–16:
Culture
A. Culture
Central to any society is its culture, the common set of values shared by
its citizens that determine what is socially acceptable. Culture underlies
family, education, religion, and the social class system.
1. Culture affects thinking and perception.
Chapter 5 ♦ Developing a Global Vision 5-5
PowerPoint 5–17:
Economic and
Technological
PowerPoint 5–18:
Political Structure and
Actions
PowerPoint 5-19:
Legal Considerations
B. Economic Factors
In general, complex and sophisticated industries and higher family
C. The Global Economy
Global markers must be fully aware of the intertwined nature of the
D. Doing Business in China and India
China and India interest many multinationals because of their huge
E. Political Structure and Actions
Government policies in other countries run the gamut, from no private
ownership and minimal individual freedom to little central government
and maximum personal freedom.
1. As rights of private property increase, government-owned
industries and centralized planning tend to decrease.
F. Legal Considerations
Legal structures, often closely intertwined with the political
5-6 Chapter 5 ♦ Developing a Global Vision
environment, are designed to either encourage or limit trade.
Review Question 3.2
PowerPoint 5–21:
Political and Legal
Considerations
Review Question 3.4
1. A tariff is a tax levied on the goods entering a country.
4. Exchange control is a law compelling a company earning foreign
exchange from exports to sell the foreign currency to a control
agency, usually a central bank.
5. Market grouping, or common trade alliance, occurs when several
countries agree to work together to form a common trade area which
G. Uruguay Round, the Failed Doha Round, and Bilateral Agreements
1. The Uruguay Round is an agreement that dramatically lowered
trade barriers worldwide, making several major changes in world
trading practices:
2. The latest round of WTO talks began in Doha, Qatar in 2001. The
3. The trend toward globalization has resulted in the creation of
additional agreements and organizations.
H. North American Free Trade Agreement (NAFTA)
The North American Free Trade Agreement (NAFTA) is the world’s
I. Central American Free Trade Agreement (CAFTA)
Chapter 5 ♦ Developing a Global Vision 5-7
The newest free trade agreement is the Central American Free Trade
Review Question 3.3
J. European Union
1. The EU is one of the world’s most important free trade zones and
now encompasses most of Europe.
2. The European Union currently has 27 member states, Austria,
candidates.
5. To join the EU candidates must meet the Copenhagen criteria.
These require a stable democracy, a functioning market economy,
and the acceptance of all obligations of membership
6. The EU is the largest economy in the world with a gross domestic
product of about $18 trillion. Some economists call the EU the
K. The World Bank, the International Monetary Fund, and the G-20
1. The World Bank offers low-interest loans to developing nations.
PowerPoint 5-22:
Demographic Makeup
Review Question 3.1
L. Demographic Makeup
1. Population is an important factor to marketers.
a. The three most densely populated nations in the world are
2. Age is another key demographic consideration.
5-8 Chapter 5 ♦ Developing a Global Vision
PowerPoint 5–23:
Shortages in Natural
Resources
M. Natural Resources
The abundance of natural resources in a country can create huge amounts
of wealth.
1. Many oil-rich nations have experienced an influx of wealth.
Ethics in Marketing
China Puts the Brakes on Google
In early 2010, Google and the Chinese government had a public dispute over
4 Identify the various ways of entering the global marketplace
IV. Global Marketing by the Individual Firm
PowerPoint 5–26:
Global Marketing
Questions
PowerPoint 5–27:
Why “Go Global”?
A company should consider moving to the global arena only after its
management has a solid grasp of the global environment. Some relevant
questions are:
• What are our options in selling abroad?
Why “Go Global”?
• Additional profits
• Leverage a unique product or technological advantage
Risk Levels for Global
Entry
Review Question 4.1
A. Exporting
Exporting is selling domestically produced products in another country.
It is usually the least complicated and least risky alternative.
1. A company can sell directly to foreign importers or buyers, or it
may decide to sell to independent exporting intermediaries located
in its domestic market.
Chapter 5 ♦ Developing a Global Vision 5-9
PowerPoint 5–30:
Export Intermediaries
3. Another type of intermediary is the export agent or broker who
plays the traditional broker’s role by bringing the buyer and seller
together without taking title to or possession of the goods.
B. Licensing and Franchising
Licensing is a legal process whereby a licensor agrees to let another firm
use its manufacturing process, trademarks, patents, trade secrets, or other
proprietary knowledge.
1. The licensee agrees to pay a fee or royalty.
C. Contract Manufacturing
Some firms become involved in global marketing by subcontracting the
manufacturing to a firm in the foreign country.
1. Contract manufacturing is simply private-label manufacturing by
3. The potential for brand theft is increased through this option. Brand
5-10 Chapter 5 ♦ Developing a Global Vision
Review Question 4.3
Review Question 4.4
D. Joint Venture
1. In a joint venture, the domestic firm buys part of a foreign
E. Direct Investment
Direct foreign investment, the active ownership of a foreign company
or of oversees manufacturing or marketing facilities, offers the greatest
potential rewards and the greatest risks.
1. Direct foreign investment by U.S. firms is currently about $3.9
trillion.
Review Question 5.1
5 List the basic elements involved in developing a global
marketing mix
V. The Global Marketing Mix
PowerPoint 5–33:
Product and Promotion
Class Activity: “Reverse”
International Marketing
The first step in creating a marketing mix is developing a thorough
A. Product and Promotion
With the proper information, a good marketing mix can be developed.
B. One Product, One Message
This strategy, essentially the global standardization strategy, means
Review Question 5.2
product.
D. Product Adaptation
Marketers can slightly alter a basic product to meet local conditions.
E. Promotion Adaptation
PowerPoint 5–34:
Place (Distribution)
F. Place (Distribution)
1. Solving promotional and product problems does not guarantee
global marketing success. The product still has to get adequate
distribution.
2. Innovative distribution systems and creative strategies can create a
PowerPoint 5–35:
Pricing
PowerPoint 5–36:
PowerPoint 5–37:
Dumping
PowerPoint 5–38:
Countertrade
G. Pricing
1. Once marketing managers have determined a global product and
H. Dumping
Some companies overproduce certain items and end up dumping them in the
I. Countertrade
Countertrade, a form of trade in which all or part of the payment for goods
or services is in the form of other goods or services, is also very popular in
5-12 Chapter 5 ♦ Developing a Global Vision
international trade. It is estimated that almost 30 percent of global trade is
countertrade.
Customer Experience
Marketing to the Poor Around the Globe
Review Questions 6.1, 6.2
6 Discover how the Internet is affecting global marketing
VI. The Impact of the Internet
Opening an e-commerce site on the Internet immediately puts a company
in the international marketplace.
The global Internet economy is still restrained by rules, regulations, and
TERMS
buyer for export
exporting
joint venture
capital intensive
European Union (EU)
licensing
Central America Free Trade
global marketing
multidomestic strategy
contract manufacturing
countertrade
global vision
North American Free Trade
direct foreign investment
gross domestic product
Uruguay Round
dumping
Group of Twenty (G-20)
World Bank
exchange rate
International Monetary Fund (IMF)
World Trade Organization (WTO)
export agent
General Agreement on Tariffs and
Mercosur
Suggested Homework:
Chapter 5 ♦ Developing a Global Vision 5-13
investigations into marketing.
REVIEW AND APPLICATIONS
1.1 What is meant by “having a global vision”? Why is it important?
1.2 Isolationists have suggested that America would be much better off economically and politically if we just
“built a wall” around the country and didn’t deal with outsiders. Do you agree? Why or why not?
Answers will obviously vary, but an interesting answer might include a historical perspective of what
1.3 Discuss job outsourcing. Is it beneficial to U.S. firms?
Student answers will vary. Job outsourcing is sending U.S. jobs abroad and has been a highly controversial
2.1 Rubbermaid, the U.S. manufacturer of kitchen products and other household items, is considering moving to
global marketing standardization. What are the pros and cons of this strategy?
Although students’ answers will vary, they should address some of these points. Promoting standardized products
2.2 Do you believe that multinationals are beneficial or harmful to developing nations? Why? What could foreign
governments do to make them more beneficial?
Students’ opinions will vary, though most students in a business class such as marketing tend to support global
trade. Regardless of their opinion, students should list the pros and cons of multinational involvement in
5-14 Chapter 5 ♦ Developing a Global Vision
3.1 Many marketers now believe that teenagers in the developed countries are becoming “global consumers.”
That is, they all want and buy the same goods and services. Do you think this is true? If so, what has caused
the phenomenon?
Many of your students may argue this is true, largely because of the prevalence of American movies and television
3.2 Renault and Peugeot dominate the French market but have no presence in the U.S. market. Why do you
think that this is true?
Students may argue that those car manufacturers have never modified their vehicles to appeal to the U.S. consumer.
3.3 Suppose your state senator has asked you to contribute a brief article to her constituents’ newsletter that
answers the question “Will there ever be a ‘United States of Europe’?” Write a draft of your article, and
include reasons why or why not.
Students who make a case for the “United States of Europe” may argue that the Europeans will come to agreement
3.4 Divide into six teams. Each team will be responsible for one of the following industries: entertainment;
pharmaceuticals; computers and software; financial, legal, or accounting services; agriculture; and textiles
and apparel. Interview one or more executives in each of these industries to determine how the Uruguay
Round and NAFTA have affected and will affect their organizations. If a local firm cannot be contacted in
your industry, use the library and the Internet to prepare your report.
3.5 What are the major barriers to international trade? Explain how government policies may be used to either
restrict or stimulate global marketing.
Many firms do not have the financial resources for direct investment or are not willing to take the risk involved in
4.1 Candartel, an upscale manufacturer of lamps and lampshades in America, has decided to “go global.” Top
management is having trouble deciding how to develop the market. What are some entry options for the
firm?