Global Marketing

Module objectives
Generate a deeper understanding of the concepts of the global marketing process and the global environment within which companies operate Extend the understanding to deal with global marketing situations Develop the skills to analyze and evaluate non-domestic markets to compete effectively in world markets

Globalization is a reality
A bouquet of flowers.grown in more than one country Head and Shoulders shampoo sold in the Indian market manufactured in Thailand Made in China Indian flags to meet the high demand for flags during the Anna Hazare movement

Globalisation.it is everywhere!
Lancome launches Visionnaire magical serum; a skincare product that is suitable for use by people of all ethnicities. Available in Mumbai at the Lancome store at High Street Phoenix TOI, 5/10/11 Movies- Slumdog Millionaire, Harry Potter.a single product launched globally Computer Software, Hardware , Mobile phones one product for the global market Mood Indigo (cultural festival of IIT-Bombay goes global TOI, 6/10/11

 There is a difference between a domestic product that is marketed overseas with some customisation and a product that is designed and launched with a single global market in mind.

What is globalization?
National economies- relatively self contained economies, isolated from each other by barriers to trade, investment; by distance time zones and language Globalization- the shift to a more interdependent and more integrated world economy

Globalization-twin dimensions
Globalization of production-the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost, quality and availability of the factors of production Globalization of markets-the merging of historically distinct and separate national markets into a single integrated global market place.

Drivers of globalization
Falling barriers to the free flow of goods , services and capital that has occurred since the end of WW II Technology- Communications, transport, information processing

The decades of the 1920s and 30s

During the 1920s and 1930s, the worlds nation states erected formidable barriers to international trade and foreign investment, in the form of high tariff barriers on imports of manufactured goods. The ostensible objective was to protect domestic industry from competition These mutual , retaliatory beggar thy neighbor policies ultimately led to the Great Depression of 1930

 Learning from this experience, the western economies committed themselves to removing barriers to trade and investment

The role of technology

Lowering of trade barriers made globalization of markets a theoretical possibility Technological change made it a reality i) Microprocessors and telecommunications ii)The internet and the www iii)Transportation technology

Global institutions
The management of global trade requires the presence of global institutions GATT and its successor, WTO The IMF and the World Bank The United Nations

Globalisation
Do we have a choice not to globalise? Can a firm decide to have two levels of qualityfor the domestic and global market? So long as consumers have a choice of getting their product from anywhere, firms have no option but to globalise their thinking. Two levels

Theodore Levitt (19252006)

Professor of Economics, Harvard Business School Editor of Harvard Business Review Credited with having popularized the term globalisation

The globalization of markets- Theodore Levitt HBR (1983) A powerful force is driving the world toward a converging
commonalityand that force is technology The multinational and the global corporation are not the same thing. The multinational corporation operates in a number of countries, and adjusts its products and practices in each - at high relative costs. The global corporation operates with resolute constancy at low relative cost - as if the entire world (or major regions of it) were a single entity; it sells the same things in the same way everywhere The difference between the and the fox and the hedgehog is that the fox knows a lot about a great many things; but the hedgehog knows everything about one great thing.

 Two vectors shape the world - technology and globalization. The first helps determine human preferences; the second, economic realities. Regardless of how much preferences evolve and diverge, they also gradually converge and form markets where economies of scale lead to reduction of costs and prices.

There is a strong economic rationale that favors globalization

The world is flat- Thomas Friedman

The beginning of the twenty first century will be remembered ,not for military conflicts or political events , but for a whole new age of globalization- a flattening of the world Globalization 1.0: 1492 (Columbus voyage)- 1800 Was about countries and their muscle Countries and their governments often inspired by imperialism, religion or both led the way in global integration

 Globalization 2.0: 1800-2000 (interrupted by the two world wars and the Great Depression) The dynamic force driving global integration was multinational companies The industrial revolution; steamships; railroads;telephones

 Globalization 3.0: 2000 onwards Shrinking the world from size small to size tiny and leveling the playing field at the same time Newfound power for individuals to collaborate and compete globally

The 10 forces that flattened the world

Nov, 1989- The fall of the Berlin Wall Aug, 1995- When Netscape went public Workflow software Open sourcing- self organizing, collaborative communities Outsourcing-the Y2K problem Offshoring- the rise of China Supply chain and Logistics Insourcing- a whole new platform of collaboration for creating value horizontally Web search- Google, Yahoo The mobile revolution

Globalization- the down side

Effect of globalization on jobs and income- no one is exempt Globalization , labour policies, environment protection Globalization and national sovereignty issues Globalization and poverty

Joseph Stiglitz
Professor of Economics, Columbia University Nobel prize in Economics (2001)

an exception to the general proglobalization view of most professional economists

Joseph Stiglitz
Making globalization work (2006) argues that argues that through tariffs, subsidies, an over-complex patent system and pollution, the world is being both economically and politically destabilised. Stiglitz argues that strong, transparent institutions are needed to address these problems Globalization and its discontents (2002) argues that bitterly that the IMF has done great damage through the economic policies it has prescribed that countries must follow in order to qualify for IMF loans. The organization and its officials, he argues, have ignored the implications of incomplete information, inadequate markets, and unworkable institutionsall of which are especially characteristic of newly developing countries.