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Global Business Environment

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Fifteen years from now the world's third greatest ... Proctor & Gamble. 52.1. 65.1. 40.7. Coca-Cola. 67.0. 67.8. 48.6. Eastman Kodak. 48.8. 41.5. 32.4 ... – PowerPoint PPT presentation

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Title: Global Business Environment


1
Global Business Environment
2
U.S. Multinational in Europe - 1960s
Fifteen years from now the worlds third
greatest industrial power, just after the United
States and Russia, may not be Europe, but
American industry in Europe.
J.S. Servan Schreiber Le Defi American, 1967
3
The Nationality of the Worlds 100 Largest
Industrial Corporations (by country of origin)
SOURCES Adapted from The Worlds 500 Largest
Industrial Corporations, Fortune, Aug. 4, 1997
4
History of International Trade
  • The Roman Empire - Build on International Trade
  • What the Romans had
  • Pax Romana
  • Common coinage
  • Systematic law
  • Central Market Locations
  • Communication System

5
History of International Trade
  • The Fall of the Roman Empire
  • Loss of cooperation
  • European Feudalism Protectionism
  • Medieval International Trade
  • Turning away from International Trade
  • China The Empresss Palace (1896)
  • Smoot-Hawley Act (1930s) Consequences
  • Trade embargoes as foreign policy tools

6
International Trade and Recent History
  • Post World War II - A world divided
  • Eastern Bloc
  • Council for Mutual Economic Assistance
  • Western world
  • Pax Americana

7
International Trade and Recent History
  • Charter for International Trade Organization
    (1948) - 53 countries

8
International Trade and Recent History
  • Charter for International Trade Organization
    (1948) - 53 countries
  • á General Agreement on Tariffs and Trade (GATT) -
    reduce tariffs
  • á International Monetary Fund (IMF)
  • á World Bank

9
International Trade and Recent History
  • World Trade Organization (1994)

10
Reading Assignment
  • What is the role of each of the three world
    organizations?
  • When was each formed?
  • How has the role of each organization changed?
  • Which of these organizations was at the center of
    protests last year? Why?

11
Trends in Global Business
Internationalization of U.S. Markets International
ization of U.S. Business Growth of Regional Trade
Areas EU, NAFTA, AFTA, APEC Move toward free
market system by countries in Latin America,
Asia, Eastern Europe Large Emerging Markets such
as Argentina, China, South Korea, Poland,
India Evolving global middle income
households GATT and World Trade Organization The
TRIAD
12
Globalization of Business and Markets
  • Until recently, competition for U.S. markets was
    only among U.S. businesses with the same relative
    cost of money, labor and product
  • è U.S market now includes competitors from all
    over the world

13
Why internationalization?
  • Saturation of U.S. markets

14
Foreign Acquisitions of U.S. Companies
U.S. Company Foreign Owner Keebler (Cookies and
other foods) Britain J. Walter Thompson
(Advertising) Britain Spiegal (Catalog
retailing) Germany Mack Trucks
(Automotive) France Giant Food Stores
(Supermarkets) Netherlands Pillsbury, Burger
King, Pearle Vision Britain CBS Records (Music
and Entertainment) Japan Carnation (Coffee-Mate,
Friskies pet food) Switzerland Chesebrough-Ponds
(Vaseline) Netherlands
SOURCE Adapted from The 100 Largest Foreign
Investments in the U.S., Forbes, July 18, 1994,
pp. 266-270.
15
Why internationalization?
  • Saturation of U.S. markets
  • Higher ROI in foreign markets

16
Some Big U.S. Players in the Global Game
Foreign Revenues of Total
Foreign Profits of Total
Foreign Assets of Total
Company
51.4
Ei du Pont de Nemours
99.8
37.3
52.1
Proctor Gamble
65.1
40.7
67.0
Coca-Cola
67.8
48.6
48.8
Eastman Kodak
41.5
32.4
43.9
Motorola
84.8
34.6
49.1
Johnson Johnson
54.6
43.9
35.5
Sara Lee
41.3
45.0
64.5
Colgate-Palmolive
67.0
46.9
67.5
Gillette
61.4
65.7
49.0
Compaq Computer
63.6
40.5
46.9
McDonalds
45.1
46.9
32.0
Avon Products
59.9
48.3
1993 data. SOURCE Adapted from The 100 largest
Multinationals Getting the Welcome
Carpet,Forbes, July 18, 1994, pp. 276-279.
17
Why internationalization?
  • Saturation of U.S. markets
  • Higher ROI in foreign markets
  • Establish early position in world markets

18
Invented Here, Made Elsewhere
U.S. Invented Technology
9 0
Phonographs
1
9 0
Color TVs
1 0
1 9 7 0
4 0
Audiotape Recorders
0
N O W
1 0
Videotape Recorders
1
9 9
Machine Tools
3 5
Telephones
9 9
2 5
8 9
Semiconductors
6 4
9 8
Computers
7 4
0
20
40
60
80
100
19
Every American company is international, at
least to the extent that its business performance
is conditioned in part by events that occur
abroad
20
Definition of International Marketing
  • The performance of business activities that
    direct the flow of a companys goods and services
    to consumers or users in more than nation for
    profit.

21
Whats the difference between international
marketing and domestic marketing?
  • The environment in which marketing strategies
    have to be implemented

22
The International Marketing Task
7
Foreign environment (uncontrollable)
1
Economic forces
Political/legal forces
Domestic environment (uncontrollable)
2
7
Competitive structure
Political/ legal forces
Competitive Forces
(controllable)
Cultural forces
Environmental uncontrollables country market A
Price
Product
3
Channels of distribution
Promotion
Environmental uncontrollables country market B
6
Level of Technology
Geography and Infrastructure
Economic climate
Environmental uncontrollables country market C
4
5
Structure of distribution
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