1.4 Global Business +ppt

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Global Business:

Global Business

What is a Global Company?:

What is a Global Company? It is a business that operates all over the world and; Treats the world as one country. Locates in low wage countries. Purchases raw materials from cheapest country. Borrows from cheapest country. Moves managers around.

Examples:

Examples Coca-Cola Toyota McDonalds Nike………………

Reasons for the development of Global Co.’s:

Reasons for the development of Global Co.’s Increase Sales : Higher profits. (home market saturated) Mass Production :Enables Economies of Scale (more produced = lower cost per unit). Developments in ICT : Communication is faster & easier. Deregulation : World Trade Organisation making trade easier.

Global Marketing:

Global Marketing Selling the same product in the same way all over the world using the global marketing mix (4 P’s). Concentrates on similarities across world markets. Uses a Standardised Marketing Mix wherever possible.

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However the standardised marketing mix may have to be adjusted to meet local tastes, cultures & legislation. Eg. RHD cars in Ireland & UK……… LHD rest of world.

Global Product:

Global Product Try to use same brand name world wide However this may not always be possible. Eg. Jif to Cif, Marathon to Snicker. Barbie doll modified for Japan!!! McDonalds don’t sell beef in India!!

Global Price:

Global Price The price may vary around the world due to: Higher standard of living = higher price. Higher transport costs = higher price. Taxes & tariffs = higher price. More competition = lower price.

Global Promotion:

Global Promotion Special Events = economies of scale: Olympic Games World Cup Not always possible to use identical promotion due to legislation, language & culture: Proctor & Gamble had to withdraw bathroom tv add in Japan. In Germany “come to life with coke” = “come out of the grave with coke”!!!!!!

Global Place:

Global Place Channels of distribution is longer. Manufacturer-exporter-importer-agents and distributors ………. More time consuming and expensive.

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....................... Many global businesses rely on local agents and distributors to deliver. Coca–Cola allows local businesses to produce & sell its product under licence. Less expensive but involves loss of control over quality.

Why is Global Marketing important?:

Why is Global Marketing important? Economies of Scale: The more products that are made/advertised the cheaper per unit to make/promote. Home market may be saturated: There is no more potential to increase sales at home.

Continued….:

Continued…. Standard Marketing Mix may not always work. Cultural differences must be recognised. Adapted Marketing Mix takes these differences into consideration.

Role of ICT in International Trade:

Role of ICT in International Trade 1. Increase sales: e-commerce is using the internet to sell products all around the world either through websites or e-bay . 2. Advertising: Using MSN or Yahoo to advertise golbally.

3. Faster & cheaper communications:

3. Faster & cheaper communications E-mail is faster than “ snail mail”. Businesses can e-mail documents worldwide for a flat monthly fee . EDI: Electronic Data Interchange, sending standardised documents to other firms that you deal with regularly.

4. Decision-making:

4. Decision-making WWW is a vast library of information. Managers can access information it needs about trading partners. More informed decisions can be made

5. Reduced Costs:

5. Reduced Costs Video-conferencing allows virtual face-to-face meetings without travel. Live pictures & sound are sent via the internet or satellite. This reduces cost as no flights or accommodation is needed. e-banking reduces fees….

Factors that influence the location of a new factory.:

Factors that influence the location of a new factory. Infrastructure: Good roads, broadband Incentives: Grants and low tax Workforce: Skilled and unskilled Support services: Finance, government agencies, shops, housing, hospitals, schools Availability of raw materials: Proximity of markets: Close to where goods will be sold.

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