Slide1: http://www.pbs.org/wgbh/commandingheights/lo/story/ch_menu_03.html


Introduction to Globalization andGlobal MarketingPat EskewUniversity of ArkansasOctober 5, 2004: Introduction to Globalization and Global Marketing Pat Eskew University of Arkansas October 5, 2004


Slide3: An interactive exchange to discuss the following: What is globalization/anti-globalization? How does this relate to global marketing? Why is China such a big deal to global marketers? Case Study: Dell in China 2002 Objectives and Agenda


Slide4: Globalization/Anti-Globalization


Slide5: Globalization Integration of the world's culture, economy, and infrastructure driven by the lowering of political barriers to transnational trade and investment, and by the rapid proliferation of communication and information technologies. The term is often used in reference to the substantial impact of free-market forces on local, regional and national economies. Globalization/Anti-Globalization “The Commanging Heights”, accessed on http://www.pbs.org/wgbh/commandingheights, September 29, 2004


Slide6: The success of globalization can be seen in many ways: 29 million net new jobs were created in the US from 1980 to 1998 as manufacturing jobs were replaced by “knowledge” jobs Under the same time frame, Europe (with roughly twice US population) only add 4 million net new jobs, in part because of policies restricting globalization advances Global exporting countries are 20% more productive than their non-exporting counterparts and pay wages and benefits at least 15% higher The USA is by far the biggest trading nation with 20% of all goods and 16% of all services by value in world trade Since 1990, the value of global trade has increased 54%. Since 1970 that number is 2200% “Economic Isolation is not an Option”, Mike Eskew, accessed on www.pressroom.ups.com, September 29, 2004 Globalization/Anti-Globalization


Slide7: Despite its benefits and evidence of success, globalization is a source of concern to many people. A Google search for “pro-globalization” reveals 5500 hits, “anti-globalization” reveals 114,000. Sources of concern: Job losses from home country Labor rights and protections against child labor Environmental protection Cultural diversity Food and personal safety Immigration flows Anti-capitalism in general Globalization/Anti-Globalization “Globalization”, accessed on Wikipedia.com, September 29, 2004 In 2003, the New York Times dubbed the anti-globalization movement the “world’s second largest superpower” after 10 million people demonstrated against the war in Iraq


Slide8: Global Marketing Considerations


Slide9: Given the importance and sensitivities of global markets, how can you as a Global Marketer best capture the opportunity? Global Marketing Management shares the same primary process elements of all Marketing Strategy What is Marketing: What - Define the Value Proposition of the good or service offered Who – Define the Target Population(s) who have the strongest affinity to that Value Proposition How – What Product, Price, Positioning and Promotion (4 Ps) strategy will most effectively capture this market opportunity? Global Marketing The main distinction for Global Marketing is the process of assessing the individual country or regional market for local and global sensitivities


Slide10: Market assessment - Key things to look for: Understand corporate objectives for market entry such as: Corporate earnings potential Learn vs. earn Competitive advantage by being first Identify product-market drivers and enabling conditions such as: Distribution infrastructure Advertising and media availability Purchasing power of consumers (including credit facilities) Forecast demand as possible purchases in next 3-5 years, as well as long-run potential First mover advantage exists when customers/partners are tied in. Watch for first-mover disadvantage Global Marketing Source: David Arnold, International Marketing Management Course, Harvard Business School, Fall 2002


The first, and possibly most important, element of Global Marketing is the market entry decision: The first, and possibly most important, element of Global Marketing is the market entry decision What are key drivers of marketing model? Are enabling conditions in place for this marketing model? What is the cost of entry? What is the cost of waiting? Is risk/control trade-off appropriate? Global Marketing Source: David Arnold, International Marketing Management Course, Harvard Business School, Fall 2002 What questions can you ask to get the data you need to answer these questions effectively?


Slide12: Market assessment decision framework COUNTRY Economics Politics Regulation MARKET Size Growth Competition COMPANY Drivers of global expansion Regional experience Risk tolerance MARKETING MODEL Key points to determine success: Value creation Value capture ENTRY AND TIMING Global Marketing Source: David Arnold, International Marketing Management Course, Harvard Business School, Fall 2002


Slide13: China Market Considerations


Slide14: China By 2008, China will rival Germany for the world’s third largest economy, behind US and Japan Lieberthal, Kenneth, “The Great Transition”, Harvard Business Review, October 2003 Figures in $ trillions


Slide15: China China’s consumer consumption as a % of world consumption is exploding, driving marketers around the world to focus particular attention there Cherry, Brenda, “What China Eats (And Drinks And …)”, Fortune, October 4, 2004


Slide16: China This rapid rise in Chinese consumers is driving Procter and Gamble, and their rivals to focus global marketing attention on China Penhirin, Jacques, “Understanding the Chinese Consumer”, The McKinsey Quarterly, 2004 Special Edition Figures in $ millions


Slide17: China Despite it’s rising consumer class, China still has the 102nd largest per capita GDP “List of Most Populous Nations”, TheFreeDictionary.com, accessed on September 29, 2004


Slide18: Case Study: Dell in China 2002


Tying it all together: How Should Dell Consider the Following?: Tying it all together: How Should Dell Consider the Following? What are key drivers of marketing model? Are enabling conditions in place for this marketing model? What is the cost of entry? What is the cost of waiting? Is risk/control trade-off appropriate? Source: David Arnold, International Marketing Management Course, Harvard Business School, Fall 2002 What questions can you ask to get the data you need to answer these questions effectively? Case study: Dell in China 2002


Slide20: Eskew, Pat, “Can Dell Replicate Its Direct Model in China?”, December 2002 As Dell considers the China PC market of 2002, the following enabling conditions are of most importance (and concern) Case study: Dell in China 2002


Slide21: Eskew, Pat, “Can Dell Replicate Its Direct Model in China?”, December 2002 Despite all the challenges, the overall market potential seems to render the question “should Dell enter the market” irrelevant Case study: Dell in China 2002 China PC Market Growth Trends Dell Position with China PC Market by Customer Segment


Slide22: Appendix


Slide23: Signs of Globalization Increase in international trade at a faster rate than the World Economy Increase in international flow of capital including foreign direct investment Greater trans-border data flow, using technology including Internet, satellites and telephones Greater international cultural exchange through export via Hollywood or Bollywood Erosion of national sovereignty and borders through international agreements leading to organizations like the WTO and OPEC Greater international travel and tourism Greater immigration, including illegal immigration Increase in the share of the world economy controlled by multinational corporations Increase in the number of standards applied globally, e.g. copyright laws “Globalization”, accessed on Wikipedia.com, September 29, 2004 Globalization/Anti-Globalization


Slide24: Globalization/Anti-Globalization It’s a BIG world after all and Asia is home to 17 of the world’s 30 biggest cities and is second to Africa as the fastest growing region in the world “List of the World’s Most Populous Cities”, September 29, 2004, available from The Free Dictionary.com,


Market entry (Positioning) modes: Market entry (Positioning) modes CONTROL RISK Exporting Trading companies Piggybacking Cooperation Licensing Joint ventures Direct exporting Distributor Franchising National subsidiary Global Marketing Source: David Arnold, International Marketing Management Course, Harvard Business School, Fall 2002


Slide26: Market assessment - standard criteria Market size and growth trends Industry structure and level of competition Customer response and marketing mix fit Availability of local management / partners Availability of (regionally) experienced HQ executives Global Marketing Source: David Arnold, International Marketing Management Course, Harvard Business School, Fall 2002


First Mover Advantage? What value is accrued by moving first into a market: First Mover Advantage? What value is accrued by moving first into a market Build brand loyalty Lock up best suppliers, partners Earn host government goodwill and investment incentive Gain from low marketing costs Benefit from pent up demand Benefit from threshold effect Participate in development of national infrastructure Global Marketing Source: David Arnold, International Marketing Management Course, Harvard Business School, Fall 2002


Reasons to delay entry: Reasons to delay entry Enabling conditions absent Lack experience in region or type of market Low customer switching costs (later entrants can free-ride) Lack resources (financial, managerial) Desire high level of control Cannot enter at low cost Volatile or hostile government Global Marketing Source: David Arnold, International Marketing Management Course, Harvard Business School, Fall 2002


Slide29: China North American companies have the least favorable view on the economic risk associated with China’s political leadership How confident are you that China’s leadership can continue to liberalize and manage economic growth effectively? “What Global Executives ”, The McKinsey Quarterly, 2004 Special Edition


China is positioning itself for the future as well as the present, leading all countries in number of science & engineering students: China is positioning itself for the future as well as the present, leading all countries in number of science & engineering students Source: UNESCO 2000 Total Student Population: 88.2 million Students in Science & Engineering: 23.6 million China: 3 million students in Science & Engineering (6 million total) United States: 2.7 million students in Science & Engineering (15 million total) China


Slide31: Eskew, Pat, “Can Dell Replicate Its Direct Model in China?”, December 2002 Despite all the challenges, cont’d… Case study: Dell in China 2002 China PC Consumer Usage by Province