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International Marketing

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International Marketing ­ MKT630
VU
Lesson # 7
INTERNATIONAL TRADE & INVESTMENT THEORIES
Modern Firm Based Theories
Explore the firm's role in promoting exports and imports. These theories incorporate additional factors
i.e., quality, technology, brand names, customer loyalty, product life-cycles etc. into explaining success
or countries in selling products and services in international markets as firms and not countries are the
agents for international trade
International Product Life - Cycle Theory:
This theory attempts to explain the impact of a product's life-cycle stage on flow of its trade (where a
product would be manufactured and where it would be in demand)
According to this theory shifts in manufacturing and trade flow of a product goes through four phases
which are in the following;
1. New product stage
A product will be initially produced & sold mostly in the country in which it is developed
(nearby observed need & market). For most advanced and technology products these will
initially be conceptualized in developed countries and sold in these markets
2. Growth stage
At the next stage, the market for the successful product would start to rapidly grow. In this
stage the product would be produced in the innovating and other industrial countries ­ and
sold in many industrial countries
3. Mature stage
Reaching the maturity stage market for a product would become competitive and buyer
would become experienced. As the result margins on the product would decline and
competitive pressured would require the manufacturers to seek lower production costs. At
this stage production of the products shifts from industrialized countries to countries where
costs are lower ­ the innovating country may stop producing & start importing
4. Decline stage
At this stage demand for the product declines, especially in advanced countries, as other
more effective technologies and products are introduced. At this stage production and
market of the product is mainly in less developed countries
· Exceptions
There are however, exceptions to the impact of the life-cycle on a product's manufacturing
locations and trade. Products with very short product-lifecycles, luxury products where cost
are less important, products requiring specialized skills, strategic products of a country,
differentiated products (i.e., differentiated on country of origin, such as hand made Italian
leather fashion products ) will experience less, if any, impact of a life-cycle stage.
Global Strategic Rivalry Theory:
This theory was forwarded in 1980 by Paul Krugman. He studied firms that were successful in
competing in international markets and concluded that;
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Firms struggle to dominate world markets by
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International Marketing ­ MKT630
VU
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Owning intellectual property rights
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Investing in research & development
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Achieving economies of scale & scope
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Exploiting the experience curve
Such firms that were innovative and could establish competitive advantages by owning intellectual
property rights to useful technologies, that pursued research and development aggressively, that strived
to achieve economies of scale and scope and that were learning organization and could become more
efficient with time were able to succeed in international competition.
Porter's Theory of National Competitive Advantage:
Professor Michael Porter combined the country specific and firm specific factors to explain how firms
and industries of certain countries are able to achieve success in international markets. This theory was
forwarded in 1990.
· According to Porter's Theory of National Competitive Advantage success in international trade
comes from the interaction of four country - and firm - specific elements;
­ Factor conditions : abundance and quality of land, raw materials, labor, capital, educational level
of workforce, country's infrastructure etc. The factors that are need essentially for producing
certain products and services.
­ Demand conditions : large sophisticated domestic market stimulated development and
distribution of innovative products which may also be exported ­ most new innovative products
are first developed by firms for domestic markets and then sold in other countries. If domestic
markets are not sophisticated and large, domestic firms may not have the opportunity to
conceptualize and produce innovative products and to develop skills and resources needed for
successful international marketing.
­ Related and supporting industries: today most products require many complex technologies for
successful manufacturing and it is difficult for any one firm to master all the aspects of all the
needed technologies and skills. Firms therefore, need to collaborate with other firms as buyers
and suppliers to develop final products. Industries of any country that are successful in
international markets are the ones where related and supporting firms are co-located in proximity
to allow effective and efficient transactions and collaborations.
­ Firm strategy, structure & rivalry : presence of a competitive domestic market forces local firms
to focus efforts in skills training, strategizing and r&d that eventually shapes companies to reduce
costs & become competitive internationally.
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Table of Contents:
  1. OVERVIEW OF INTERNATIONAL MARKETING:Domestic marketing, Multinational marketing, Globalization of markets
  2. INETRNATIONAL MARKETING PROCESS:Situation Analysis, Implementation and Control, Relationship
  3. INETRNATIONAL MARKETING PROCESS:The Product Concept, The Societal Marketing Concept
  4. INETRNATIONAL MARKETING PROCESS
  5. ENGAGING IN INETRNATIONAL MARKETS:Expansion of technology, Merchandize export and import
  6. INTERNATIONAL TRADE & INVESTMENT THEORIES:Theory of Comparative Advantage, Country Similarity Theory
  7. INTERNATIONAL TRADE & INVESTMENT THEORIES:Global Strategic Rivalry Theory,
  8. INTERNATIONAL MARKETING INFORMATION REQUIREMENTS:Foreign exchange info
  9. INTERNATIONAL MARKETING INFORMATION REQUIREMENTS:The Product
  10. FOREIGN NATIONAL ENVIRONMENTS:Political systems in the world, Political risks in international markets
  11. FOREIGN NATIONAL ENVIRONMENTS:Types of legal systems,
  12. FOREIGN NATIONAL ENVIRONMENTS:Conciliation, Mediation, Global relevance
  13. ROLE OF GOVERNMENTS IN INTERNATIONAL MARKETS:Industry-level needs, Promotion of exports by governments
  14. INTERNATIONAL CULTURAL AND SOCIAL ENVIRONMENTS:The concept of culture, Attitudes & beliefs,
  15. INTERNATIONAL CULTURAL AND SOCIAL ENVIRONMENTS:Culture is a human medium
  16. DETERMINING EXPORT POTENTIAL IN INTERNATIONAL MARKETS:Political Environment
  17. DETERMINING EXPORT POTENTIAL IN INTERNATIONAL MARKETS:Product Potential
  18. INTERNATIONAL MARKETING RESEARCH PROCESS:market structure, Implementing the research plan
  19. INTERNATIONAL MARKETING RESEARCH PROCESS:Identify alternative information sources
  20. INTERNATIONAL MARKETING RESEARCH PROCESS:Issues with primary global research:
  21. INTERNATIONAL MARKETING RESEARCH PROCESS:Problems with data, Comparative Analysis
  22. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Export intermediaries, Export and import management
  23. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Licensing contract, Licensing risks
  24. MODES OF ENTRY INTO INTERNATIONAL MARKETS:The franchiser’s balance,
  25. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Forms of countertrade, Specialized entry modes
  26. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Demand factors, Political factors
  27. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Drivers behind successful joint ventures
  28. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Distribution agreements, Critical mass & optimism traps
  29. INTERNATIONAL STRATEGIC ALLIANCES:Impetus for international alliances, Management of strategic alliances
  30. INTERNATIONAL CONSUMER MARKETS:Model of Consumer BehaviorThe Buyer Decision Process
  31. INTERNATIONAL BUSINESS MARKETS:Nature of buying unit, Major influences on international business buyers
  32. INTERNATIONAL TARGET MARKETING:Market segmentation, Market positioning
  33. INTERNATIONAL MARKET SEGMENTATION:Geographic, Behavioral, Situational factors
  34. INTERNATIONAL MARKET SEGMENTATION:Basis for country segmentation, Stages of economics development
  35. INTERNATIONAL MARKET SEGMENTATION:Cultural Variables,
  36. INTERNATIONAL MARKET SEGMENTATION:Market coverage strategy, Socio-economic variables
  37. INTERNATIONAL MARKETING MIX - PRODUCT POLICY:Individual product decisions, Branding
  38. INTERNATIONAL MARKETING MIX – PRODUCT POLICY:
  39. INTERNATIONAL MARKETING MIX - PRODUCT POLICY:Modular Approach
  40. INTERNATIONAL MARKETING MIX – PRODUCT POLICY:Issues in labeling, Pricing, Distribution
  41. INTRODUCING NEW PRODUCTS IN INTERNATIONAL MARKETS:The new product development process
  42. PRICING IN INTERNATIONAL MARKETS:Factors influencing international pricing,
  43. ITERNATIONAL MARKETING CHANNELS:Channel membership, Vertical marketing, Control over distribution
  44. PROMOTING IN INTERNATIONAL MARKETS:Advertising, Direct marketing, Public Relationing
  45. REVISION