International Marketing Persuasive Essay Example

previously monopolistic international and wireless markets that now compete on pricing with traditional wireline services. Projections from the World Trade Organization indicate that implementing this agreement in 1998 is expected to decrease international phone call prices by 80 percent by 2001 - resulting in consumer savings of $1 trillion due to increased competition and cost reduction. Looking ahead, international calls will become just as affordable as local calls.To effectively meet the global telecommunications needs of multinational companies, national telecommunications companies are forming marketing alliances and joint ventures. One notable example is the merger between AT&T and British Telecoms in July 1998, resulting in a jointly owned company generating $10 billion in revenues. This merger aimed to facilitate seamless communication between global locations for multinational corporations. It was projected that the market for international communication services for large and medium-sized businesses would grow from $36 billion in 1998 to $180 billion in 2007.

Another significant partnership in the telecommunications industry includes MIMIC-Workroom and Telephonic. These major carriers operate respectively in the United States and Latin America. Sprint Corporation, which is the third largest long-distance carrier in the US, has partial ownership from Deutsche Telecoms and France Telecoms. They are positioning themselves to compete with Workroom/Telephonic and AT&T/BIT ventures for multinational customers within the global telecommunications sector.

This trend of forming partnerships reflects a fundamental shift occurring in the world economy known as globalization. National economies are merging into an interdependent global economic system.The telecommunications industry has been playing a leading role in the recent acceleration of a trend that is expected to continue into the early years of the new millennium. In the past, state-owned monopolies controlled national

telecommunications markets with barriers to international trade and investment. However, global competition among telecommunications providers has rapidly changed this landscape for residential and business customers. This competition has resulted in lower prices for services, leading to significant savings for customers worldwide.

The emergence of a global economy presents opportunities for businesses to increase revenues, decrease costs, and boost profits. One way companies achieve this is by utilizing cost-effective global telecommunications services to establish international markets for their products. A prime example of this trend is Bridgewater Pottery, a small British company based in Stafford that effectively utilizes the internet since its establishment in 1997.

By conducting business online with consumers across countries, Bridgewater Pottery overcomes challenges associated with limited retail outlets and exclusive distribution channels that were less feasible or cost-effective before the digital era. Many companies around the world are taking advantage of the new global communications infrastructure to access international markets.The text describes a trend in which a former farmer from Norway used global connectivity to bring his innovative ergonomic computer mouse, designed to combat carpal tunnel syndrome, to a worldwide audience. He established his own company and utilized the internet as a distribution channel for his product. However, while the global economy offers opportunities, it also presents challenges and threats. Managers must make decisions on expanding into foreign markets by considering exporting from their home base or establishing local production facilities within specific markets. They also need to customize products, marketing strategies, human resources management, and overall business strategies to accommodate cultural differences, language barriers, varying business practices, and government regulations. Furthermore, they must address potential competition from efficient foreign competitors entering their domestic

market. The case study at the beginning of the text illustrates how telecommunications providers are adapting to the global reality.Once monopolies in their respective national markets, companies like AT&T and British Telecoms now directly compete with other service providers. To attract multinational corporations seeking a single global telecommunications provider, these companies have formed joint ventures and marketing alliances. They are experimenting with various strategies to effectively compete in the emerging global marketplace. This text explores how firms across different industries engage in strategic experimentation as they adapt to the realities of global markets and competition. The book aims to explain the impact of globalization on businesses and management. In its introductory chapter, it examines the definition of globalization, its drivers, changes in internationally operating firms' profiles, criticisms of globalization, and challenges faced by international business managers. Globalization refers to the integration and interdependence of the world economy, consisting of two main components: the globalization of markets and production. The globalization of markets involves merging separate national markets into a single global marketplace driven by converging consumer preferences across countries. The popularity of products like Citron credit cards, Coca-Cola, Levi's Jeans, Sony Walkways, Nintendo game players, and McDonald's hamburgers exemplifies the trend towards globalization. These companies contribute to the global market by providing standardized products worldwide.Even small businesses can benefit from globalization. For instance, a small British enterprise aims to establish a global market for fish 'n' chips. However, it is important to recognize that there are still significant differences between national markets in terms of consumer preferences, distribution channels, and cultural values. Therefore, customized marketing strategies based on each country's conditions are essential. Automobile companies

provide an example as they promote different car models considering factors such as local fuel costs, income levels, traffic congestion, and cultural values.

The most globalized markets are not found in consumer product markets where national variations in taste and preferences persist. Instead, these globalized markets include commodities like aluminum, oil, and wheat as well as industrial products such as microprocessors,Drams (computer memory chips),and commercial jet aircraft."Financial assets like US Treasury Bills and futures on stock indexes or currencies also fall into this category. In the global markets, it is common for companies to compete against each other in multiple countries. For example,Coca-Cola competes globally with Pepsi,Ford competes with Toyota,and Boeing competes with Airbus.Caterpillar competes with Comates,and Nintendo competes with SagaWhen a company enters a country without established rivals, these competitors typically follow suit to prevent their competitor from gaining an advantage. These companies bring successful assets such as products, operating strategies, marketing strategies, and brand names from their home markets to new countries. This results in some level of market homogeneity across nations. Multinational enterprises play a crucial role in converging national markets into one global marketplace as competitors observe and imitate each other's worldwide success. Consequently, differentiating between national markets within industries becomes less important as firms shift focus towards the global market.

The globalization of production involves sourcing goods and services globally to take advantage of disparities in factors of production. This allows companies to reduce costs, improve product quality, and gain a competitive edge. Boeing's 777 airplane exemplifies this approach by utilizing a network of suppliers from around the world. The aircraft consists of 132,500 major components supplied by 545 worldwide suppliers. Notably,

Japanese suppliers produce parts for the fuselage, doors, and wings while a Singaporean supplier manufactures doors for the nose landing gear and three Italian suppliers create wing flaps.Boeing believes that by outsourcing to specialized foreign suppliers, it can surpass Airbus in total aircraft orders. This strategy is not only utilized by large companies like Boeing but also by smaller firms such as Swan Optical. Despite being a relatively small company with revenues between $20 to $30 million, Swan Optical strategically disperses its manufacturing and design processes globally. It operates low-cost factories in Hong Kong and China through partnerships, while also holding minority stakes in design houses located in Japan, France, and Italy. This approach allows Swan to leverage favorable skill bases and cost structures across various locations, particularly China. Similar to Boeing's strategy, this dispersion of activities gives Swan a competitive edge in the market. According to Robert Reich, former secretary of labor in the Clinton administration, this dispersal leads to the creation of "global products" that transcend national origins.Despite trade barriers, restrictions on foreign direct investment, transportation costs, and economic and political risks, caution should still be exercised in the excessive globalization of production. These obstacles will be further explored in upcoming chapters. However, modern firms continue to have a significant role in adapting efficiently to changes in their operating environment. The main drivers of globalization can be attributed to the reduction of barriers for free flow of goods, services, and capital since World War II and advancements in communication technology, information processing, and transportation. In the past, many countries imposed significant barriers on international trade and foreign direct investment through high tariffs on

imported manufactured goods. These barriers resulted in retaliatory trade policies and a decrease in global demand during the Great Depression. Nevertheless, after World War II, advanced industrial nations committed to removing trade barriers through the General Agreement on Tariffs and Trade (GATE).This agreement has been through several rounds of negotiations, with the most recent being the Uruguay Round in 1993. The Uruguay Round not only reduced trade barriers but also expanded GATE to cover services and intellectual property protection. It also established the World Trade Organization (WTO) as an overseeing body for international trade.

Table 1.1 displays how average tariff rates for manufactured goods have significantly decreased since 1950 due to implementation of the Uruguay agreement, with an expected rate of 3.9 percent by 2000.

Additionally, countries have gradually removed restrictions on foreign direct investment (FDA). According to a United Nations report, from 1991 to 1996, over 100 countries enacted 599 changes in FDA legislation. About 95 percent of these changes aimed at liberalizing regulations to facilitate foreign companies' entry into the market.

Efforts to promote FDA can also be seen through a significant increase in bilateral investment treaties that protect and ease investments between two countries. By January 1, 1997, there were already 1,330 such treaties involving participation from a total of162 countries – marking a threefold rise within just five years.

Table 1.1 presents data on average tariff rates for manufactured products as a percentage of value across different countries and years.Based on the full implementation of the Uruguay agreement, it is estimated that these rates will reach 3.9 percent by 2000 (The Economist: A Survey of the Multinationals, June 24, 1995, pgs.3-4). With the growth of

global trade and output, markets and production have become more globalized due to reduced barriers to international trade. This allows companies to expand their market beyond one country by designing products in one country while manufacturing component parts elsewhere and assembling the final product in another location before exporting globally. This trend is supported by decreased trade and investment barriers. According to data from the World Trade Organization, world trade volume has consistently exceeded world output over time, with a sixteen-fold expansion in trade compared to a six-fold growth in output. In recent years, there has been an upsurge in global trade growth, indicating that more companies are adopting strategies similar to Boeing's approach with their 777 aircraft. This strategy involves spreading production processes across multiple locations worldwide to reduce costs and improve product quality. As trade continues to expand, nation-states' economies have become increasingly interconnected, leading to a greater reliance on each other for vital goods and services (Source: "Who Wants to Be a Giant?" The Economist: A Survey of the Multinationals).Foreign direct investment (FDI) is playing an increasingly significant role in the global economy. The total annual flow of FDI from all countries grew tenfold from 1984 to 1997, reaching $430 billion. This growth rate was twice as fast as that of world trade. Major investors include companies from the US, Japan, and Western Europe who have made investments in Europe, Asia (specifically China), and the United States. Japanese automobile companies have swiftly invested in auto assembly operations located in Asia, Europe, and the US.

Globalization has led to greater interconnectedness between markets and production, resulting in firms facing competition from foreign competitors even

within their domestic markets. American companies like Kodak, Procter & Gamble, and Merrill Lynch expanding their presence in Japan can be observed. Similarly, Japanese automobile firms have gained market share at the expense of General Motors and Ford in the United States. In Europe as well, Dutch company Philips has lost its dominance in the consumer electronics industry to Japan's C.V., Matthias,and Sony.

These examples demonstrate how competition has intensified across various manufacturing and service industries due to increased integration of economies into a single marketplace. However, it should not be assumed that trade barriers will continue to decline indefinitelyProtectionist demands against foreign competitors are still prevalent worldwide, including in the United States. The majority opinion on further reductions in trade barriers remains uncertain among industrialized nations. If there are no additional declines in trade barriers, it is possible that the globalization of both markets and production may have reached a temporary limit.

Technological advancements since World War II, particularly in communication, information processing, and transportation technologies, have played a crucial role in enabling globalization. The rapid emergence of the Internet and World Wide Web has further contributed to this tangible reality. Telecommunications and transport have been essential for connecting people globally.

Ornate Ruggeri, director general of the World Trade Organization, stated that telecommunications is responsible for creating a global audience. Similarly, transport has allowed people from different cities to share cultural experiences and has contributed to the formation of a global village. This can be observed through the popularity of MET (Metropolitan Opera), widespread use of Levies Jeans, and everyday use of Sony Walkmans during commutes.

The development of microprocessors has significantly advanced computing by enabling high-power, low-cost

processing for individuals and businesses.It has also played a crucial role in advancing telecommunications technology over the past three decades.Advancements in satellite, optical fiber, wireless technologies, and the Internet have been made possible by microprocessors. Encoding, transmitting, and decoding large amounts of information flowing through electronic highways is essential to their function. The continuous improvement of microprocessors drives this transformation; according to Moore's Law, their power doubles every 18 months while their cost halves. As microprocessors become more powerful and affordable, organizations worldwide gain easier access to global communications. This decrease in costs greatly reduces coordination and control expenses for these organizations.

The growth of the Internet and World Wide Web has been remarkable. In 1990, there were less than one million Internet users, but by mid-1998, there were around 147 million users (with 70 million in the United States). Projections suggest that by the year 2000, there could be over 330 million internet users. The number of host computers connected to the internet also significantly increased from 1.8 million in July 1993 to 36.8 million in July 1998.

The Internet and World Wide Web have the potential to become the information backbone of the global economy.Web-based transactions have grown significantly, reaching $7 billion in 1997 and potentially reaching $300 billion in the United States alone by2003.Companies like Dell Computer and Cisco Systems are generating millions of dollars in daily sales through their online platforms.
The Web is considered a tool that eliminates barriers related to location, scale, and time zones. It offers businesses, both small and large, an affordable opportunity to expand their global presence. For example, in 1996, Cardiac Science, a small start-up based in California

that manufactures defibrillators and heart monitors, lacked knowledge on how to establish an international presence. However, starting from 1998 onwards by selling its products online, the company managed to reach customers in 46 countries with foreign sales making up 85% of its $1.2 million revenues. The CEO of Cardiac Science stated that while some business came from traditional export channels, a growing percentage was generated through visits to their website (see Figure 1.2). The website attracts international business people easily and simplifies the process for buyers and sellers to find each other regardless of their location or size.

Since World War II, there have been significant advancements in communication technology along with notable developments in transportation technology. These economic innovations include commercial Jet aircraft and superchargers as well as centralization for simplified transshipment between modes of transport. Commercial Jet travel has effectively reduced travel time, shrinking the globe by more than 60% since the 1980s.Centralization has played a significant role in enabling globalized markets and increased international trade.Before centralization, the process of moving goods between different modes of transport was arduous, time-consuming, and costly. It necessitated several days and a substantial workforce to unload and reload goods onto trucks and trains. Nevertheless, thanks to widespread adoption in the 20th century, centralization greatly improved this procedure. Presently, only a small team of longshoremen can complete the entire process within a few days. Additionally, the expansion of the container fleet has played a role in fostering international trade growth. In general, resource concentration has significantly decreased transportation costs, thereby facilitating more cost-effective global shipment of goods.