Global Business PDF

Global Firms -a global business sees the world as one giant market and provides the same, undifferentiated product worldwide -global businesses can sell the exact same good worldwide using the same global price, product, place and promotion (standardised marketing mix) or it can adjust how it se...

Global Firms -a global business sees the world as one giant market and provides the same, undifferentiated product worldwide -global businesses can sell the exact same good worldwide using the same global price, product, place and promotion (standardised marketing mix) or it can adjust how it sells in different areas (adapted marketing mix) -eg Coca-Cola, Google, Facebook, Nike, Adidas, Amazon, Volkswagen and Ford Global Firm Characteristics -treats the world as one market -locates in low wage countries -purchases raw materials from the cheapest country -borrows finance in the cheapest financial markets -has a standardised product Reasons Global Firms Exist -market saturation = saturation of own market, to increase sales and profits firms must expand internationally -economies of scale = more produced means lower cost per unit -growth in technology = makes mass production possible etc -communication improvements = easier for firms to operate throughout the world -transport = improvements in transport makes global distribution easier -mergers = businesses are getting larger due to mergers and alliances -free trade = this has eliminated protection for firms -deregulation = removal of trade barriers and the WTO makes trading easier -consumer demand = consumers are demanding a wider choice of goods and services from different countries -institutional investors = financial institutions are prepared to invest in large firms which have the potential to establish themselves on the world stage 25 Global Marketing -the idea that a global business tries to treat the world as one marketplace and that a product is marketed the same everywhere in the world -eg Nike, Starbucks and McDonald's are examples of businesses that try to use broadly the same marketing mix in every country they sell to around the world -Unit 5 Notes page 7 Global Marketing Mix -made up of the 4Ps of marketing (product, price, place, promotion) on a global context -it can be a standardised global marketing mix or adapted global marketing mix Standardised Marketing Mix -a standardised marketing mix is the sale of a product by a business with an undifferentiated approach to its marketing mix -the price, product, promotion and place are the same no matter where in the world the product is bought -Unit 5 Notes page 12 Adapted Marketing Mix -an adapted marketing mix is the adaptation by a business of its marketing mix to suit local market needs -this is more common than a standardised marketing mix -the elements of the marketing mix often changed to meet local market needs are price (different income levels), product (different tastes) and promotion (different cultures) -it is common for a business to adapt the marketing mix to reflect man local differences Reasons for Adapted Marketing Mix -regional differences differences -local language differences -cultural differences -geographical differences -economic differences 26 Global Product -the product might need to be adjusted to reflect technical, legal and language requirements -different countries might have different rules on recyclable packaging or safety standards so products might need to be adapted (cars need to be adapted for left-hand or right- hand drive based on region or country) -eg McDonald's varies items on its menu according to local tastes, in Tokyo, Japan, McDonald's sells a fried shrimp burger -Unit 5 Notes page 13 Global Price -global firms might try to sell at the same price in all markets -selling at the same price in all markets is useful to stop people buying from a cheaper market than their own -however, the cost of living and level of disposable income can affect people's ability to pay the same price around the world -there might also be different taxes and charges, such as custom duties or different VAT rates that they need to pay on top of the selling price in some countries -some global firms may charge different prices for the same goods, as it sells in different currencies and some items may have different tax rates in certain countries -eg Guinness is sold at a higher price in Ireland than in Malaysia due to different alcohol regulations and price restrictions -Unit 5 Notes page 19 Global Place -a global firm might have to use different channels of distribution to get the product to the consumer in a different country or market effectively -direct export = using e-commerce or the internet to sell straight to the consumer -opening a branch = expanding with a new store in a new location -franchising = allowing a franchisee to open a business in a different country -agent = using an independent firm or person to sell the products in a certain region in return for commission on the sales 27 -alliance = using a joint venture with a local firm to reach a local market -eg Five Guys fast-food entered into the Irish market under a franchise model of which is ran by an Irish company -Unit 5 Notes page 28 Global Promotion -differences in legislation, language and culture need to be recognised in the choice of promotion such as advertising and publicity campaigns -the language of television advertisements might have to be amended in certain countries due to language variations -an acceptable message in one country may be considered offensive in another. -eg KFC famous slogan ‘finger-licking good’ translates to ‘eat your fingers off’ in Chinese which did not aid its opening in Beijing in 1980 -Unit 5 Notes page 23 Globalisation -this refers to developments that are changing markets from operating in individual countries to one integrated world economy and marketplace in which to sell goods and services