PRESENTAD BY : MOHD ZUBAIR

1513370054

Globalization

is the increasing interdependence,

integration & interaction among people and
corporation in various locations around the world.

Interdependence is a dynamics of being mutually

responsible to and sharing common ET of
principles with others.

Globalization refers to rapid increase in

the share of economic activity taking
place across national borders.
It goes beyond the international trade
includes the way in which goods/
services are produced /created, delivered
&sold & movement of capital.

Definitions
A typical - but restrictive - definition can be taken
from the International Monetary Fund which
stresses the growing economic interdependence of
countries worldwide through increasing volume and
variety of cross-border transactions in goods and
services, free international capital flows, and more
rapid and widespread diffusion of technology.

Threat or opportunity...
Globalization can be a force for good. It has the
potential to generate wealth and improve living
standards. But it isn't doing that well at the moment.
The benefits from increased trade, investment, and
technological innovation are not fairly distributed.
The experience of the international trade union
movement suggests that the reality for the majority
of the world's population is that things are getting
worse.
Globalization as we know it is increasing the gap
between rich and poor. This is because the policies
that drive the globalization process are largely
focused on the needs of business.

KEY PLAYERS
They are multinational firms which carry out
business across the national borders.

the world trade organization (wto)

through which international trad e
agreements are negotiated& enforcd

the world bank & international monetary

fund (imf) are means to assist govt .in
achieving development aims through the
provision of loans, technical assistance.

STAGES IN GLOBALISATION Domestic company links with dealer &

distributor.
Company does the activities on its own.
Company begins to carryout its own
manufacturing , marketing & sales in the
foreign markets.
Company starts fullfledged operations
including business systems and R&D. At
this stage the managers are expected to
perform the tasks which they were doing
in domestic markets to replicate them in
foreign markets.

Business Freedom-No unnecessary Government

restrictions like restriction, restrictions on sourcing
of funds and other factors from abroad. Hence the
liberalization is the 1st step towards facilitating
globalization.

Facilitators-Infrastructure facilitation available at

home country an help entrepreneurs go globally.

Government support Government support

available in the form of policy & procedure reform
encourage globalization

 Resources-

Resources is an important factor

which decides the ability of affirm to
globalize. They include finance ,technology,
brand image, companys image, managerial
expertise etc.
Competitors- This is an important factor
which companys success in global market
bank on. The factors like low costs& price,
product quality, product differentiation,
technological superiority. After sales service,
market strengths etc are few to name.

Firm operate internationally for a number of reasons:

They may be seeking to secure better sources of raw

materials & energy.
They may want to obtain access to low cost factors of
production such as labour.
They may be attracted to certain countries because of
subsidies those countries provide.
They may be seeking new markets for their products.
Domestic markets may no longer be able to absorb
production at minimum efficient scale.

They may be motivated by life style

factors.Domestic markets become
saturated .As they mature , firms look
abroad for new opportunities.
They may be seeking opportunities for
economies of scope & for learning.

So why go Global?

Competition within your national market is

becoming too intense so you decide to push sales in
overseas markets.
Your products within your national markets are
reaching the end of the lifecycle so you wish to push
it into national markets.
Sales and profit are generally declining in national
markets.
You wish to become a global player.

A company will start to compete internationally by

entering just one or maybe a select few foreign
markets. Competing on a truly global scale comes
later , after a company has established operations on
several continents & is racing against rivals for
global market leadership.

There is a meaningful difference between the

competitive scope of a company that operates in a
few foreign countries & company that markets its
products in 50-100 countries & expanding its
operations into additional country markets annually.

Former is termed as International Competitor while

the later qualifies as a Global Competitor.

Entering global markets:

There are a number of steps that need to be taken

before you decide to enter international markets.

Analyze the international marketing environment. A

PEST/STEP analysis needs to be conducted on the
market you enter, to assess whether it is worthwhile
or not.

Political factors Consider:

The political stability of the nation. Is it a

democracy, communist, or dictatorial
regime?

Monetary regulations. Will the seller be

paid in a currency that they value or will
payments only be accepted in the host
nation currency?

Economical Factors Consider:

Consumer wealth and expenditure within the

country.
National interests and inflation rate.
Are quotas imposed on your product.
Are there import tariffs imposed.
Does the government offer subsidies to national
players that make it difficult for you to compete?

Social Factors Consider:

Language. Will language be a barrier to

communication for you? Does your host nation
speak your national language? What is the meaning
of your brand name in your host countrys
language?
Customs: what customs do you have to be aware of
within the country? This is important. You need to
make sure you do not offend while communicating
your message.
Social factors: What are the role of women and
family within society?
Religion: How does religion affect behaviour?
Values: what are the values and attitudes of
individuals within the market?

Technological Factors Consider:

The technological infrastructure of the market.

Do all homes have access to energy (electricity)
Is there an Internet infrastructure. Does this
infrastructure support broadband or dial up?
Will your systems easily integrate with your host
countrys?

After assessing the environment in your selected country, how

do you decide which are the best countries to enter? Following
factors to be considered before entering-

Speed How quickly do you wish to enter your selectedmarket?

Costs-

Flexibility How easy is it to enter/leave your chosen market?

Risk Factor What is the political risk of entering the market?

What are the competitive risk? How competitive is the market?

What

is

the

cost

of

entering

that

market?

Payback period When do you wish to obtain a

return from entering the market? Are there pressures
to break even and return a profit within a certain
period?

Long- term objectives- What does the organization

wish to achieve in the long term by operating in the
foreign market? Will they establish a presence in
that market and then move onto others?

Trading overseas
There are a number ways an organization can start
to sell their products in international markets.
1. Direct export.
The organization produces their product in their
home market and then sells them to customers
overseas.
2. Indirect export
The organizations sell their product to a third party
who then sells it on within the foreign market.

3. Licensing

Another less risky market entry method is

licensing. Here the Licensor will grant an
organization in the foreign market a license to
produce the product, use the brand name etc in
return that they will receive a royalty payment.
4. Franchising

Franchising is another form of licensing. Here

the organization puts together a package of the
successful ingredients that made them a
success in their home market and then franchise
this package to oversea investors. The Franchise
holder may help out by providing training and
marketing the services or product. McDonalds is
a popular example of a Franchising option for
expanding in international markets.

5.Contracting
Another of form on market entry in an overseas
market which involves the exchange of ideas is
contracting. The manufacturer of the product will
contract out the production of the product to another
organization to produce the product on their behalf.
Clearly contracting out saves the organization
exporting to the foreign market.
6.Manufacturing abroad
The ultimate decision to sell abroad is the decision
to establish a manufacturing plant in the host
country. The government of the host country may
give the organization some form of tax advantage
because they wish to attract inward investment to
help create employment for their economy.

7.Joint Venture
To share the risk of market entry into a foreign
market, two organizations may come together to
form a company to operate in the host country. The
two companies may share knowledge and expertise
to assist them in the development of company; of
course profits will have to be shared out also

The International Marketing Mix

When launching a product into foreign markets do
you standardize or adapt your marketing mix to the
foreign market? A company can adopt to use a
standardized marketing mix around the world or an
adapted marketing mix in each country.

Basic marketing concepts tell us that we

will sell more of a product if we aim to
meet the needs of our target market. In
international markets, we have to take
into consideration consumers cultural
background, buying habits, levels of
personal disposable income etc in order
to deliver a tailored marketing mix
program to suit their needs.

In todays global world, where consumers

travel more, watch satellite television,
communicate and shop internationally
over the internet, the world now is
becoming a lot smaller. Because of this
there is no need to adapt products to
local markets.
Brands such as Coca-Cola, MTV, Nike,
Levis are all successful global brands
where they have a standardized
approach to their marketing mix, all
these products are targeted at similar
groups globally.

In many circumstances a company will have to

adapt their product and marketing mix strategy to
meet local needs and wants that cannot be changed.
McDonald is a global player however, their burgers
are adapted to local needs. In India where a cow is a
sacred animal their burgers are served with chicken
or fish.
Coca-cola is some parts of the world taste sweeter
then in others. Yes we can argue that standardization
is better for the organization because it reduces cost,
however many organizations will have to think
global, but act local if they are to successfully
establish them selves in foreign markets.

International strategy

MultiCountry

Global

Multicountry competition strategy varies somewhat

across nations, since
Buyers in different countries are attracted to
different product attributes.
Sellers vary from country to country.
Industry conditions & competitive forces in each
national market differ in important aspects.

Multi Country strategy

Product customized for each market.
Decentralized controlLocal decision making.
Effective when large difference exists between the
countries.
Advantageous product differentiation, local
responsiveness, minimal political risk.
With multicountry competition , rival firms battle for
national leadership & winning in one country does
not necessarily signals the ability to fare well in
other countries.

Global strategy involves consistent strategy for

each country which includes,Integrating & coordinating the company's strategic
moves worldwide.
Selling in many if not all nations where there is
significant buyer demand.

Global strategy
Product is same in countries.
Centralized control
Effective when the difference between the countries
is small.
Advantage cost, coordinated activities, fast in
product development.

 As

with international product decisions and

organization can either adapt or standardize
their promotional strategy and message.
Advertising messages in countries may well
have to be adapted because of language
barriers or the current message used in the
national market may be offensive to overseas
residents.

The

use of certain colours may also need to be

thought about. In India red is the colour worn
by the bride in weddings, white is the colour
for mourning in Japan.
How much control does the government have
over advertising on TV and radio? Is print
media
more popular then TV? Many
organization go for a strategy of adapting
advertising messages to local markets to best
meet consumer demand.

Pricing on an international scale is difficult. As well as

taking into account traditional price considerations
Fixed and variable costs,
Competition,
Company objectives ,
Proposed positioning strategies,
Target group and willingness to pay,

The organization needs to consider the costs of transport, any

tariffs or import duties that may be levied on their product's
when they are sold on the international scale. Also what
currency do you expect to be paid in? Will it be home or
international currency? Exchange rate fluctuation will also
impact profitability and influence pricing decisions.

Other factors to consider include local incomes, what are

income. What is the general economic situation of the
country and how will this influence pricing?

The internet is now making pricing more transparent for

consumers. Goods can be purchased online from any
overseas organizations at local currency prices.

THANK YOU