Chapter Twelve – What is the international market and why
is it important?
As a consumer you regularly buy products manufactured in other countries. The U.S. usually has a negative balance of trade, meaning that as a country we import more products than we export (for example, see the following website and review our annual trade deficits for the last ten years):
(http://www.kiplingerforecasts.com/kbftables/usecon/trade/trade_balance_annual.html).
What is the impact of this trade deficit? Experts disagree as to whether this deficit creates real problems for the U.S. economy or not. Critics argue that buying so many imported goods hurts the market for U.S. jobs, while others believe that this open competition forces U.S. businesses to learn how to compete effectively in global markets. A full discussion of this issue is beyond the material in this course. However, you should have a clear understanding and appreciation for the arguments expressed surrounding this issue. If you do your own search on the keywords “U.S. balance of trade” and “trade deficits” you will find many different viewpoints on this topic.
Our point is that, as a consumer you buy products manufactured in other countries almost daily. You are, no doubt, familiar with the fact that Nestles is a foreign company and that they recently merged with a U.S. company, Purina. (see http://www.nestle.com/all_about/index.html for an article outlining the merger) and that many products you buy are manufactured in China (see http://www.census.gov/foreign-trade/balance/c5700.html for recent government data on the U.S. trade balance with China).
However, you may not be familiar with Fiskars, based in Finland (http://www.fiskars.com/) or that your Doc Marten’s were probably under a brnad name owned by a company based in U.K. (http://www.drmartens.com/flash/).
International marketing is the rule today, rather than the exception. Since NAFTA (North American Free Trade Agreement) was instituted, the U.S., Mexico, and Canada are moving towards an open market without trade barriers (search with keyword “NAFTA” to find further information), and the European Union (http://userpage.chemie.fu-berlin.de/adressen/eu.html) has tried to reach this goal for several years.
Thus any student of marketing should have some understanding of global trade agreements, particularly, NAFTA, the European Union, and the General Agreement on Taxes and Tariffs, also known as “GATT” (http://gatt.org/). As global competition for the production and marketing of goods and services intensifies, these trade agreements will become more controversial.
If an organization determines that it has the interest and capability to market its products internationally, the organization must then choose among several options. Traditionally, the following four options have been identified:
Check out the internet site http://www.alibaba.com/ to find more information on trading companies and how they do business.
Because of the historical abuses of imperialism (or situations wherein industrialized countries exploited smaller, less developed countries), many countries require that a foreign organization have at least fifty-percent of its ownership held by citizens of its own country. For an example of how one multinational company manages its international marketing efforts see the website of Xerox Corporation at http://biz.yahoo.com/p/x/xrx.html. You will note the Xerox, like many large organizations uses several different approaches to market its products in different regions of the world. Also, check out the Coca-Cola website to see how that company manages its international activities (http://www.cocacola.com/).
Explore different the websites of different companies to observe how those companies are managing their efforts at international marketing. For example, review (http://www.jpoststore.com/product417.html, note that “Jarden” means Jordan as in the Jordan River in the middle east*), http://www.spa-saariselka.com/EngIndex.html, and http://www.arabia.com/ remember to click on ‘English’ on these websites.
How would you approach marketing to these different areas of the world? The first step in any kind of marketing endeavor is to understand what satisfies the customer, and the first step in understanding is listening, an attribute that we in the U.S. do not often exhibit. In some cultures in the world, there is nothing wrong or uncomfortable with silence. However, being silent is not an attribute of most subcultures in the U.S. thus business people from the U.S. often talk rather than listen to people from other countries. This seems simple, but as an exercise, try to be in a group of people and not say a word for at least thirty seconds. Sound easy? Try it.
Understanding other cultures requires an effort at empathy. That is, one must try to understand what it is like to ‘stand in another’s shoes.’ While this is intellectually easy to understand, it is challenging to actually do. For example, how does an Amazonian Indian see his or her world?
Chapter Twelve Exercises