WHY GO GLOBAL

1

WHY GO GLOBAL?
2
REASONS FOR GLOBAL MARKETING/BUSINESS

• Need for sales-growth.
• Need to reduce costs by sourcing raw materials,
  inputs, or final products.
• Need to gain competitive edge--economies of scale
  or strategic posturing.

3
SEEKING MARKETS

• The largest single domestic market--the U.S.--is
  only 25 of the total world market. 75 is
  outside.
• Coca Cola derives over 70 sales and 80 profits
  from overseas markets.

4

• Second largest market is Japan at 15 of the
  total world market.
• Among the European markets, Germany is the
  largest at only 6 of the total world market.
• Other countries have even smaller markets.

5
SEEKING INPUTS

• Minerals
• Farm Produce
• Forest Products
• Labor

6
STRATEGIC POSTURING

• CAT versus KOMATSU

7
WHAT ARE THE DRIVERS OF GLOBALIZATION

• TECHNOLOGICAL FACTORS
• TRAVEL TRANSPORT
• TELE-COMMUNICATIONS
• MEDIA
• SOCIO-POLITICAL FACTORS
• REDUCTION OF TRADE BARRIERS
• MARKET LIBERALIZATION
• INTERDEPENDENCE

8
A JET GOES SO FAR--IT BRINGS PEOPLE
TOGETHER.--BOEING.

• JET TRAVEL IS ONE OF THE MOST EXCITING
  DEVELOPMENTS OF OUR TIMES.
• THE FIRST U.S. PASSENGER JET WAS BUILT BY BOEING
  IN 1958. B-707 COULD CARRY 181 PASSENGERS AT A
  SPEED OF 550 M/HR.
• THE JUMBO (B-747) SHOWN HERE DEBUTED IN 1969.

9
AIRCRAFTS

• TYPE SEATS SPEED RANGE nm
• B-747-400 416 565nm/hr 7330 (14 Hr)
• B-777-300 365 565 7250 (14 Hr)
• B-777-200 301 565 8820 (18 Hr)
• B-737-800 162 530 2942
• A-340-200 239 578 8000
• A-330-200 253 578 6400
• DC-10-40 250 600 5000

10
WORLD TRAVEL FIGURES

• IN 2000, NUMBER OF PASSENGERS ON SCHEDULED
  DOMESTIC AIRLINES WAS 1.1 B AND INTERNATIONAL
  AIRLINES WAS 0.5 B.
• IN 1988, THE CORRESPONDING FIGURES WERE 0.8 B AND
  0.3 B.
• GROWTH IS EXPECTED TO REMAIN AT ABOUT 5 PER
  YEAR.
• Source ICAO (May 2001)

11
TRAVEL FIGURES FOR U.S.

• NUMBER OF INTERNATIONAL TRAVERLERS HAS INCREASED
  FROM 5.5M IN 1960 TO 55.5M IN 2000.
• AVERAGE DISTANCE TRAVELED HAS INCREASED FROM
  1,510 MILES IN 1960 TO 3,322 MILES IN 2000.
• NUMBER OF DOMESTIC TRAVELERS INCREASED FROM 52.4
  M IN 1960 TO 610 M IN 2000, REPRESENTING OVER
  HALF OF DOMESTIC WORLD TRAVEL.
• Source air-transport.org

12
MEGA AIRCRAFTS

• A3XX-100 IS DESIGNED TO CARRY 481-656 PASSENGERS
  AND FLY 8000 NM.
• BOEING IS CONTEMPLATING A 800-1000 PASSENGER PLANE

13
TRANSPORTATION

• CONTAINERIZATION HAS BEEN THE BIGGEST SINGLE
  TECHNOLOGICAL INNOVATION IN SHIPPING.
• OTHERS INCLUDE
• SIZE
• SPEED
• HANDLING

14
CONTAINER SHIPS

• A 40 CONTAINER CAN CARRY 4403 VCRs OR 10,000
  PAIRS OF SHOES.
• NEWER SHIPS CAN CARRY 3,300 40 CONTAINERS. USUAL
  IS 500-1000.
• A 100 CAR DOUBLE-DECK FREIGHT TRAIN CAN CARRY 200
  40 CONTAINERS.

15
SPEED

• SINGAPORE-NEW YORK JOURNEY TAKES 21 DAYS WHILE
  SINGAPORE TO LOS ANGELES TAKES 23 DAYS.
• AVERAGE TIME TAKEN TO HANDLE AND CLEAR A SHIPMENT
  IS LESS THAN 1 DAY IN SINGAPORE, 3 DAYS IN THE
  U.S. AND 15 DAYS IN JAPAN.

16
TRIVIA TIME

• WHICH PORT HANDLES THE LARGEST VOLUME OF CARGO?
  (99 326 M MT)
• WHICH PORT HANDLES THE SECOND LARGEST VOLUME OF
  CARGO? (99 304 M MT)
• SOUTH LOUISIANA IS 3 AT 194 M MT
• Source infoplease.com/ipa

17
TRIVIA TIME

• WHICH PORT HANDLES THE LARGEST CONTAINER TRAFFIC?
• (99 8.10 M 40 CONTAINERS)
• WHICH PORT HANDLES THE SECOND LARGEST CONTAINER
  TRAFFIC?
• (99 7.97 M 40 CONTAINERS)
• LA IS 6 AT 2.2 M 40 CONTAINERS
• Source infoplease.com/ipa

18
WORLD AIR CARGO

• IN 1999, THE WORLD AIR CARGO WAS ABOUT 28.2 m mt
  (67.5 b ton-mile), OF WHICH 17.2 m mt (57.9 b
  ton-mile) COMPRISED OF INTERNATIONAL FREIGHT.
• A JUMBO SHOWN HERE CAN CARRY UP TO 124 mt OF
  CARGO OR ABOUT 5 40 CONTAINERS.
• Source icao.int/icao/en/nr/pio200106..htm

19
AIR TRANSPORT IN THE U.S.

• U.S. INTERNATIONAL AIRCARGO INCREASED FROM 1.30 b
  ton-miles IN 1970 TO 13.2 b ton-miles IN 2000.
• U.S. DOMESTIC AIRCARGO INCREASED FROM 2.2 b
  ton-miles IN 1970 TO 7.9 b ton-miles IN 2000.
• WHILE ONLY 5 OF U.S. TRADE BY WEIGHT IS HANDLED
  BY AIR, IT CONSTITUTES 25 OF TRADED VALUE.
• Source air-transport.org

20
TRUCKING

• CONTAINERIZATION HAS REVOLUTIONALIZED TRUCKING
  TOO.
• U.S. IMPORTS FROM MEXICO 20.7 M MT (2000) BY
  TRUCK VALUED AT 88.7 B
• U.S. IMPORTS FROM CANADA 65.7 M MT (2000) BY
  TRUCK VALUED AT 127.8 B
• Source bts.gov/ntda/tbscd/reports/nat_m2000.html
  2000.html
• Source bts.gov/transborder/reports/weight/new_mlb
  20001.html clb2001.html

21
RAIL

• U.S. IMPORTS FROM MEXICO 6.6 M MT (2000) BY RAIL
  VALUED AT 21.1 B
• U.S. IMPORTS FROM CANADA 60 M MT (2000) BY RAIL
  VALUED AT 49.7 B.

22
CAPACITY

• EVEN IN 1960, TRANSATLANTIC CABLE COULD CARRY
  ONLY 138 CONVERSATIONS SIMULTANEOUSLY.
• NOW A FIBER OPTIC CABLE CAN CARRY UP TO 1.5M
  CONVERSATIONS.
• WHAT DO YOU THINK HAPPENED TO COST??

23
MEDIA

• THE REACH OF TELEVISION AND PRINT MEDIA HAS
  BECOME GLOBAL.
• ADVERTISING COMPANIES HAVE BECOME GLOBAL.
• IT IS EASY TO REACH PEOPLE IN DIFFERENT COUNTRIES
  MORE COST EFFECTIVELY.

24
SOCIO-POLITICAL FACTORS

• REDUCTION OF TRADE BARRIERS
• MARKET LIBERALIZATION
• INTERDEPENDENCE

25
TRADE LIBERALIZATION

• EXPORT VOLUME HAS INCREASED OVER 17 TIMES SINCE
  1950 (FROM 420B IN 1950 TO 7300B IN 1999)
• INVESTMENT HAS INCREASED OVER 25 TIMES SINCE 1950
  (FROM 14B IN 1950 TO 350B NOW).
• TARIFFS AND RESTRICTIONS HAVE FALLEN WORLDWIDE.
  GATT/ WTO
• Source worldbank.org/data/databytopic/databytopic
  .htmlINTERNATIONAL20ECONOMICS

26
Emerging Market Access IndexOpenness to Trade

• Singapore
• Chile
• Hong Kong
• Estonia
• Peru
• Slovenia
• South Africa

Lithuania Venezuela Taiwan Kuwait Latvia Romania I
srael
Mexico Zimbabwe Hungary Argentina Colombia Turkey
Czech Rep.
Egypt Philippines Poland South Korea Bulgaria Thai
land Slovakia
27
BENEFITS OF FREE TRADE

• SPECIALIZATION LEADS TO EXPLOITATION OF
  COMPARATIVE ADVANTAGE.
• CONSUMERS HAVE GREATER CHOICE.
• AN OPEN DOMESTIC MARKET IS A SOURCE OF
  COMEPTITIVE STRENGTH.
• COUNTRIES WITH OPEN TRADE HAVE DEVELOPED MUCH
  FASTER.

28
INTERDEPENDENCE

• TRADE AND INVESTMENT LIBERALIZATION HAS LED TO
  DEEPER FORMS OF ECONOMIC INTERDEPENDENCE AMONG
  NATIONS.