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InternatIonal MarketIng and export ManageMent Gerald Albaum Edwin Duerr

Seventh Edition

www.pearson-books.com Front cover image: © Getty Images

InternatIonal M arketIng

and export M anageM

ent

Albaum Duerr

Seventh EditionInternatIonal MarketIng and export ManageMent

Gerald Albaum Edwin Duerr

Seventh Edition

International Marketing and Export Management offers an accessible and authoritative perspective on international marketing with a strong export management orientation, comprehensively describing the evolving competitive landscape as created by technological advances and international trade patterns. The seventh edition retains its clear and informed coverage of the opportunities for companies of all sizes and in all industries in the export of goods, services, intellectual property and business models.

Written in a no-nonsense style, the book has been updated to offer the most current discussion of the literature in the area, as well as new and engaging cases and examples in every chapter.

Key features include:

• Updated to take account of the global economic crisis

• New case studies including BP’s problems in the Gulf of Mexico and Toyota’s worldwide recalls, along with more practical examples and vignettes throughout the text

• Increased coverage of the service sector

• New material on the increased importance of the BRIC countries (Brazil, Russia, India and China) and their rapid export-led growth

• Greater emphasis on corporate social responsibility and ethics

About the authors

Gerald Albaum is Research Professor at the Robert O. Anderson Schools of Management, University of New Mexico, and Professor Emeritus of Marketing at the University of Oregon, USA. He is also Senior Research Fellow at the IC2 Institute, University of Texas, Austin, USA. He has been a visiting professor and scholar at universities in Canada, Denmark, New Zealand, Australia, Turkey, France, Finland and Hong Kong.

Edwin Duerr is Professor Emeritus of International Business at San Francisco State University, USA. He has been a visiting professor at universities in Japan, Brazil, Germany, Denmark, Sweden and the Netherlands, and has extensive consulting business around the globe. He is also Senior Editor of The Journal of International Business and Economy.

The book is ideal for undergraduate and postgraduate students taking modules in International Marketing and Export Marketing/International Trade. It will also be used as a supplementary text on International Business courses.

CVR_ALBA3880_07_SE_CVR.indd 1 20/04/2011 15:09

International Marketing

and Export Management

We work with leading authors to develop the strongest educational materials in marketing, bringing cutting-edge thinking and best learning practice to a global market.

Under a range of well-known imprints, including Financial Times Prentice Hall, we craft high quality print and electronic publications which help readers to understand and apply their content, whether studying or at work.

To find out more about the complete range of our publishing, please visit us on the World Wide Web at: www.pearsoned.co.uk

Gerald Albaum University of New Mexico, USA

Edwin Duerr San Francisco State University, USA

International Marketing and Export Management Seventh Edition

Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England

and Associated Companies throughout the world

Visit us on the World Wide Web at: www.pearsoned.co.uk

First published 1989 Second edition published 1994 Third edition published 1998 Fourth edition published 2002 Fifth edition published 2005 Sixth edition published 2008 Seventh edition published 2011

The rights of Gerald Albaum, Edwin Duerr and Jesper Strandskov to be identified as authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS.

All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners.

ISBN: 978-0-273-74388-0

British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data Albaum, Gerald S.

International marketing and export management / Gerald Albaum, Edwin Duerr. — 7th ed.

p. cm. Includes bibliographical references and index. ISBN 978-0-273-74388-0 (pbk.)

1. Export marketing—Management. I. Duerr, Edwin. II. Title. HF1416.I617 2011 658.8'4—dc22

2011001761

10 9 8 7 6 5 4 3 2 1 16 15 14 13 12 11

Typeset in Book Antiqua 10/12.5 by 73 Printed and bound in Great Britain by Ashford Colour Press Ltd, Gosport, Hampshire

The publisher’s policy is to use paper manufactured from sustainable forests.

Dedication To my wife, Carol, whose support and encouragement have sustained me in my continuing research and through seven editions of International Marketing and Export Management.

Gerald Albaum

To Mitsuko Saito Duerr, my wife and companion in life in teaching, consulting, writing and international adventures.

Edwin Duerr

Preface xvii

About the authors xxii

List of abbreviations xxiii

Publisher’s acknowledgements xxviii

1 International marketing and exporting 1

2 Bases of international marketing 102

3 The international environment: culture; economic forces; and competition 174

4 The international environment: government, political and legal forces 217

5 Market selection: definition and strategies 262

6 Information for international market(ing) decisions 322

7 Market entry strategies 391

8 Export entry modes 442

9 Nonexport entry modes 512

10 Product decisions 580

11 Pricing decisions 670

12 Financing and methods of payment 730

13 Promotion and marketing communication 774

14 Supply chain management/logistics and handling export orders 854

15 Organization of international marketing activities 921

Glossary 959

Index 974

Brief contents

vii

Preface xvii

About the authors xxii

List of abbreviations xxiii

Publisher’s acknowledgements xxviii

1 International marketing and exporting 1

Introduction 2

Reasons why rapid growth in international business will resume 7

Increasing competitive demands on business world wide 14

Problems and needs 17

Being effective: the nature and practice of international marketing 21

Export marketing planning and strategy 33

The Internet, the World Wide Web, and e-business 42

The impact of technology 48

Entrepreneurial approaches to international marketing 51

The growth of non-traditional exports 54

Purpose and approach of the book 60

Appendix The worldwide recession of 2007–2010 61

Questions for discussion 63

References 64

Further reading 908

Case study 14.1 Jaguar Electronics, Inc. 908

Case study 14.2 Primex Marketing, Inc. 912

Case study 14.3 EFI Logistics 918

15 Organization of international marketing activities 921

Introduction 922

Main considerations of being organized internationally 923

Organizational structures 929

Summary 940

Questions for discussion 940

References 941

Case study 15.1 Hewlett-Packard (HP) 941

Case study 15.2 Unilever (A) 945

Case study 15.3 Unilever (B) 956

Glossary 959

Index 974

Supporting resources

Visit www.pearsoned.co.uk/albaum to find valuable online resources.

For instructors: ● Complete, downloadable Instructor’s Manual. ● PowerPoint slides that can be downloaded and used for presentations. ● Links to articles and resources on the web.

Also: The Companion Website provides the following features: ● Search tool to help locate specific items of content. ● E-mail results and profile tools to send results of quizzes to instructors. ● Online help and support to assist with website usage and troubleshooting.

For more information please contact your local Pearson Education sales representative or visit www.pearsoned.co.uk/albaum

Meeting the changing challenges in international marketing

Three changes in international business have made international marketing and export management of even greater importance – and a new edition of this book necessary. The first is the economic recession beginning in 2007–08, and its aftermath. The second is the exceptionally strong growth and economic power of China and India. The third is the continuing development of the factors that had led to economic growth and the importance of international business in previous decades.

1. The recession that began in 2007–08 had dramatic effects, reducing GDP and demand in most nations, and causing the first drop in the volume and value of international trade in 50 years. Paradoxically, as we shall see, it made inter- national business and export marketing of even greater importance to both countries and businesses. We will discuss the many problems businesses faced, the strategies taken to meet the challenges, and the effects these changes can be expected to have on long-term operations. However, in order to place the effects of the recession in perspective, we will first briefly discuss five aspects of the situation: (1) the recession and expected renewed growth; (2) increasing international interdependence; (3) exports as an engine of growth; (4) importance of innovation and entrepreneurship; and (5) the rea- sons why rapid growth in international business and trade will resume.

2. China’s economic development has made it one of the world’s largest exporters and importers, and the second largest economy in the world. It is exporting manufactured goods with increasing levels of technology, and importing more luxury goods. This has resulted in continually changing world trade patterns and greater threats to and opportunities for companies throughout the world. India has become the world’s leader in the provision of services of knowledge-industry workers, and also an important IT provider.

3. The other major advances that have occurred during past decades will con- tinue to drive increasing globalization, and the ever-greater importance of international marketing and export management. These include:

Preface

xvii

xviii Preface

● The information revolution with the technological advances and lowered costs in communications, the development of the Internet and e-commerce, and the development of increasingly sophisticated and diverse software to support a wide variety of business functions. New companies and industries have emerged while a number of existing companies have undertaker major changes or failed. Blogs and other new communications networks, some of which were initially developed as social network sites, have enabled easier gathering of information by individuals as well as providing new opportuni- ties for businesses. They have provided means for companies to more effec- tively interact with key stakeholders: obtaining information on consumer preferences, demands and suggestions as well as advertising to the cus- tomers; obtaining suggestions from and providing information to company personnel as well as other stakeholders and the public.

● The further development of logistics and supply chain management, draw- ing upon new concepts and methods, advances in information technology in its most broad sense, and major advances in physical equipment and facilities. This has resulted in goods moving around the world with increas- ing efficiency and lower costs.

● The increased importance of innovation as ideas, and advances in technolo- gies, strategies, and business models, spread more rapidly. The advantages of being ahead, and the dangers of failing to adjust to new conditions, have increased greatly.

● The recognition that increasing incomes, and the increasingly diverse pop- ulations in some countries, have provided new and often more segmented markets. Niche markets have emerged that provide additional opportuni- ties for small companies and the need for larger companies to respond to the increasing diversity in demand.

● The expected resumption of lowering of governmental and other barriers to trade and investment as economies around the world recover. Some in- creases in such barriers have resulted from the current economic problems, but increased multilateral trade agreements are still being developed.

● The increased competition and increased opportunities for companies of all sizes, resulting from the greater mobility of goods, services, information, and ideas due to all of the changes noted above.

Although many of these changes have created new problems that firms must address, they have opened new opportunities for businesses ranging from one-person operations to corporate giants. E-commerce has had a partic- ularly strong impact in furthering the globalization of business, especially for smaller and medium-sized businesses. With a viable product or service, the smallest business can now find potential customers and means of distribution across the globe. The increased ease of entry has also resulted in new entrants creating increased competition in all marketplaces.

Preface xix

New to the seventh edition

The changes in the international marketing landscape discussed above are re- flected in both new material and in expanded coverage of topics previously emphasized. Several new cases have been added, and almost all of the previ- ous cases updated.

An important change is the addition of several interesting and insightful new cases. They cover success, challenges and problems of companies ranging in size from a profitable one-person exporter to well-known internationals operating worldwide. One particularly interesting case involves the unexpected shutdown in 2010 of a unique Japanese-US joint venture that had been operating very suc- cessfully for 26 years. Other new cases include BP, Royal Phillips Electronics, Toyota, India’s Tata Motors, Gloria Jean’s Coffees, Boeing Company, Kraft Foods, and the one-person company that is now successfully exporting its product to 21 countries. Cases carried over from the sixth edition have been updated to reflect changes in the economic, competitive, social, legal, and political environments.

Aims and objectives

The basic aims and objectives of this seventh edition remain the same as those of the previous editions:

1. to provide a text in international marketing which will be as applicable and valuable for small and medium-sized enterprises as it is for large interna- tional corporations;

2. to provide an emphasis on exporting which is appropriate, given its posi- tion as the major international activity of most small and medium-size busi- nesses and its extensive use by all global companies; and

3. to provide coverage of the non-export modes of market penetration used by both expanding smaller companies and corporate giants as a part of their overall international marketing strategy and channel management.

These emphases are a reflection of both the international marketing environ- ment and the authors’ view of exporting. In terms of the numbers of compa- nies doing some type of international business, small and medium-sized companies are most prevalent. Most of these companies never diversify and grow to the size where being a multinational (or global) company is desirable or even feasible. The major activity of most small and medium-size companies is exporting. It is in this area that the transition from domestic to international marketing usually occurs, and in which knowledge of international dimen- sions of marketing is of critical importance. For the increasing number of enter- prises that do expand into other methods of market entry, exporting typically remains a major activity. Even the largest multinational firms with global oper- ations are involved in extensive exporting.

This book is focused primarily on the marketing decisions and management processes involved in developing export operations. The key procedural aspects and activities required in exporting, which the manager must know, are covered. Necessarily, a certain amount of descriptive material must be included. While

xx Preface

this is not a ‘how to’ treatment of technical details, it does provide the basic knowledge and references to facilitating organizations that can guide the poten- tial exporter in determining what he or she needs to do to begin exporting. As in previous editions, the emphasis remains on exporting as a marketing activity.

From a marketing perspective, the ideas underlying international market se- lection, information development, product development, and strategy, pricing, and promotion are often the same whether the mode of entry is export or non- export. Thus export marketing and international marketing as a whole con- verge from both an educational and an operational/practice perspective.

As in previous editions, we approach the material from the perspective of the process by which a company – from any country – can creatively adapt to the international environments within which it can operate. To enhance the discussion of each topic, case studies are provided at the ends of each chapter. We have added a number of new cases to provide coverage of emerging areas of opportunity and concern, such as e-commerce, changing strategies for mar- ket entry and development, and social responsibility. Some of the cases from the previous edition have been retained, and updated where appropriate. Most of the cases have been written expressly for this book. The experiences of the companies covered in the cases illustrate issues covered in the text and provide a vehicle for (a) integrating material from throughout the book and (b) illus- trating key elements and concerns in making decisions.

This edition of International Marketing and Export Management has been rewritten and updated to cover the events and changes that have occurred since the fifth edition was published. Both increasing opportunities and challenges are addressed. While the exporting focus remains, more extensive material on other forms of entry and methods for evaluating market entry strategy is provided so that decisions can be made regarding economical and effective entry mode selec- tion. As in previous editions, we continue to link the various topics to strategy.

Target audience

The seventh edition of International Marketing and Export Management is designed for anyone desiring to increase his or her knowledge of international and export marketing. It provides comprehensive coverage of the marketing mix, including all types of entry modes and channels. It also provides informa- tion on all aspects of the changing international marketing environment, making it particularly well suited for:

● undergraduate and graduate students taking courses in export manage- ment or international marketing;

● those enrolled in management education courses and other tertiary non- university programs that cover export management and/or international marketing;

● export/international marketing practitioners interested in fresh insights in the rapidly changing field of international marketing; and

● individuals interested in beginning export or import ventures.

Preface xxi

Authors’ acknowledgements

The authors wish to thank the many people who have encouraged, or assisted in, the preparation of this book. We are particularly gratefully to two people: Jesper Strandskov, who made outstanding contributions as co-author of the first five editions, and Juliet Dowd for making material available to us from the book Introduction to Export Management, written by Laurence Dowd and published by Eljay Press. We owe a great debt to the many scholars and busi- ness people whose articles, books, and other materials we have cited or quoted. Also, personal contacts with specialists in many of the subject areas have enhanced our knowledge.

We wish to acknowledge the help we received from the following:

J. Andrzej Lubowski J. H. Dethero Dico de Jon, ABN AMRO James Fitzgerald, President, EFI Logistics Daniel Scanlan, Bank of America Steven Schafer, Fenestra Technologies Corporation

In particular, we want to thank Gordon Miracle from Michigan State Univer- sity for making material available to us from work he did in the past with one of the authors of this book. We are also grateful to those who reviewed the fifth edition and previous editions of the book in part or in whole. We value their suggestions even though we were not able to incorporate all of them. There- fore, any deficiencies remaining are ours. Reviewers include:

Michele Akoorie, University of Waikato Jeremy Baker, London University Guildhall University Geraldine Cohen, Brunel University Ofer Dekel, University of Derby David Demick, University of Ulster Nick Foster, Sheffield Hallam University Collin Gilligan, Sheffield City Polytechnic Raul de Gouva, University of New Mexico, Anderson School of Management E. P. Hibbert, Durham University Business School Valerie Isaac, University of Derby Jürgen Reichel, University of Stockholm

Finally, the Publishing Team at Pearson Education, including Rachel Gear, Emma Violet and Tim Parker deserve our appreciation for their encourage- ment, support and most of all, patience while we prepared the manuscript.

Gerald Albaum Edwin Duerr

Spring 2011

About the authors

xxii

Gerald Albaum is Research Professor at the Robert O. Anderson School of Management at the University of New Mexico. In addition, he is Professor Emeritus of Marketing at the University of Oregon and a Senior Research Fel- low at the IC2 Institute, University of Texas at Austin. He received his PhD in 1962 from the University of Wisconsin-Madison and his MBA (1958) and BA (1954) from the University of Washington.

He is the author, or co-author, of 8 books, 9 monographs, and more than 90 ar- ticles in refereed journals, 40 papers in refereed conference proceedings, 20 papers in other publications, and 14 book and software reviews published in the Journal of Marketing Research. His writings deal with issues in research methods, inter- national marketing activities, cross-cultural/national research, and retailing (especially direct selling). Many of his studies are cross-cultural/national in nature.

Dr. Albaum has presented seminars for such Danish companies as Danfoss, GfK Research, Novo Nordisk, and LEGO. He has also made presentations be- fore industry groups such as the Northern Jutland Export Council in Denmark and the Hong Kong Institute of Marketing. He has given seminars for the Hong Kong Housing Authority and for Air China in the People’s Republic of China.

Edwin Duerr is Professor Emeritus of International Business at San Francisco State University, where he has served as Department Head of International Busi- ness, Director of Graduate Studies in the College of Business, and Chairman of the Board of Directors of the SFSU Research Foundation. He has been a Visiting Pro- fessor at universities in Denmark, Germany, Japan, the Netherlands, and Sweden.

Dr. Duerr obtained his BS in Engineering at the Illinois Institute of Technol- ogy. After working for several years in technical and management positions in multinational companies, and establishing (and later selling) a successful im- porting company, he received his PhD in Business Administration from the University of California, Berkeley.

Dr. Duerr has had extensive consulting experience in Brazil, Japan, Spain, and the United States. He has written widely on comparative management, produc- tivity improvement, and international marketing, and is a frequent speaker to business and educational groups in Europe, the United States, and Japan.

(Excludes company names; *these are not spelled out in the text)

AAC AsiaAfricaChina ABS* antilocking brake system AES automated Export Control System AFTA ASEAN Free Trade Area AGV automated guided vehicles ANZSCEP Australia, New Zealand, Singapore Closer Economic

Partnership ASEAN Association of Southeast Asian Nations Austrade Australian Trade Commission B2B business to business B2C business to consumer BA business area BEMs big emerging markets BERI business environment risk index B/Ls bills of lading BPI business periodicals index BRIC Brazil, Russia, India and China CACM Central American Common Market C&F cost and freight CalPERS California Public Employees’ Retirement System CalSTERS California State Teachers Retirement System CARICOM Caribbean Community and Common Market CATI computer-assisted telephone interviewing CATV* cable television CCC [USA] Commodity Credity Corporation CD compact disk CD-ROM* compact disk read-only memory CE chief executive CEO* chief executive officer

List of abbreviations

xxiii

xxiv List of abbreviations

CEPA Closer Economic Partnership Arrangement [between Hong Kong and China]

CER Closer Economic Relations [between Australia and New Zealand]

CFO chief financial officer CIF cost, insurance and freight CL container loads CMA German Agricultural Marketing Board COD cash on delivery COFACE Compagnie Française d’assurance pour le commerce

extérieur COMECON Council for Mutual Economic Assistance CPM cost per thousand (mille) CSM customer satisfaction management CTCs commodity trading companies D/A documents against delivery DAP delivered at terminal DAT delivered at place DDP* delivered duty paid DJVs domestic joint ventures D/P documents against payment DVD* digital video disc EC electronic assemblies ECGD [UK] Export Credits Guarantee Department EVIC [Hong Kong] Export Credit Insurance Corporation EDI systems electronic data interchange systems EEA European Economic Association EFIC [Australia] Export Finance and Insurance Corporation EFTA European Free Trade Area EJV equity joint venture EMC export management company EMDG [Australia] Export Market Development Grant scheme EMS environmental management system EMU European Monetary Union EPZs export processing zones ERP enterprise resource planning ETCs export trading companies EU European Union Eximbank [USA] Export–Import Bank EXW ex works FAS free alongside FCA free carrier FDA [USA] Food and Drugs Administration FDI foreign direct investment FMGs federated export marketing groups FOB free on board FPA free of particular average

List of abbreviations xxv

FAP-AC free of particular average American conditions FAP-EV free of particular average English conditions FSCs foreign sales corporations FTAA Free Trade Area of the Americas FTZ free trade zone GATT* General Agreement on Tariffs and Trade GCCP global consumer cultural positioning GDP gross domestic product GMO genetically modified GNI gross national income GNP gross national product GPS global positioning system GTCs general trading companies IATA International Air Transport Association IBRD International Bank for Reconstruction and Development ICAC [Hong Kong] Independent Commission Against

Corruption ICC International Chamber of Commerce ICFs insulating cement forms IJV international joint venture IMF International Monetary Fund INCOTERMS* trade terms of the International Chamber of Commerce INV international new ventures IPO initial public offering IP* Internet provider ISF importer security filing ISIC* International Standard Industrial Classification of All

Economic Goods ISO International Standards Organization ISPs Internet service providers IT information technology JAG [Australia] Joint Action Group JETRO Japan External Trade Organization JIT just in time L/C letter of credit LCL less than container load LNG liquefied natural gas LOV list of values MA mechanical assemblies MATV master antenna television MENA Middle East and North African region MFN most favored nation MII [China] Ministry of Information Industry MNCs multinational corporations MNEs multinational enterprises NAFTA North American Free Trade Agreement NCR no licence required

xxvi List of abbreviations

NICs newly industrialized countries NVOCCs non-vessel operating common carriers OBUs operating business units [Avon] OECD Organization for Economic Cooperation and

Development OEMs original equipment manufacturers OFC offshore financial centres OLAP online analytical processing OPEC* Organization of Petroleum Exporting Countries PAIS Public Affairs Information Service PC* personal computer PCT Patent Cooperation Treaty PLC product life cycle POP point of purchase POS point of sale PRC People’s Republic of China PROEXPO [Columbia] Government Trade Bureau PSE Personal Selling Ethics Scale R&D* research and development RFID radio frequency identification RIP Regulation of Investigatory Powers (Act) ROI* return on investment RTA ready-to-assemble RTBs regional trading blocs RvA Dutch Council for Accreditation SAR Special Administration Region SARS severe acute respiratory syndrome SBU strategic business unit SDR* Special Drawing Rights SICA Central American Integration System SITC* Standard International Trade Classification SKUs* stock keeping unit SMEs small and medium-sized companies SRC self-reference criterion SUV sports utility vehicle SWIFT Society for Worldwide Interbank Financial

Telecommunications SWOT* strengths, weaknesses, opportunities, threats TEU 20 foot container equivalent units TGW things gone wrong TPOs trade promotion organizations [public sector] TQM total quality management TRIPS Agreement Agreement on Trade-Related aspects of Intellectual

Property Rights UNCTAD United Nations Conference on Trade and Development UNIDO United Nations Industrial Development Organization USAID US Agency for International Development

List of abbreviations xxvii

URL uniform resource locator VALS values and life styles VAT value added tax VCR video cassette recorder VERs voluntary export restraints VRA voluntary restraint agreement WAPs wireless application protocols WFOE wholly foreign-owned enterprise WIPO [UN] World Intellectual Property Organization WTO World Trade Organization WWW World Wide Web

Publisher’s acknowledgements

xxviii

We are grateful to the following for permission to reproduce copyright material:

Figures

Figure 3.3 adapted from The BRICS: The Trillion Dollar Club, Figure: Why They Matter The Economist, 15/04/2010, © The Economist Newspaper Limited, London 15/04/2010; Figure 5.2 from Entry Strategies for International Markets, 2nd ed. revised and expanded, John Wiley & Sons (Root, F.R. 1998) p. 56, Fig 8, Model for selecting a target country, Entry Strategies for International Markets, 2nd ed. revised and expanded, Root, F.R. Copyright © 1998 John Wiley & Sons. Reproduced with permission from John Wiley & Sons, Inc.; Figure 6.1 from Marketing Research an International Approach, Pearson Education (Schmidt, M. and Hollensen, S. 2006) p. 587, Fig 18.1; Figure 6.2 from Fundamentals of Marketing Research, Sage Publications (Smith, S. and Albaum, G. 2005) p. 39, Fig 2.1, Fundamentals of marketing research by ALBAUM, GERALD S. Copy- right 2004 Reproduced with permission of SAGE PUBLICATIONS INC BOOKS in the format of textbook via Copyright Clearance Center; Figure 6.7 from Salzberger, T., Department of International Marketing and Management, Vienna University of Economics and Management, ‘Problems of Equivalence in Cross-Cultural Marketing Research’, unpublished working paper, 1997, the figure on Aspects of Equivalence, p. 3; Figure 6.8 from Equivalence of survey data: relevance for international marketing, European Journal of Marketing Vol. 39 (3/4), p. 356 (van Herk, H., Poortinga, Y. and Verhallen, T. 2005), © Emerald Group Publishing Ltd, all rights reserved; Figure 7.1 from Interna- tional new ventures: the cross-border nexus of individuals and opportunities, Journal of World Business, 43, p. 191 (DiGregorio, D., Musteen, M. and Thomas, D.E. 2008); Figure 7.4 from Entry Strategies for International Markets, Lexington Books (Root, F.R. 1982); Figure 7.7 adapted from Experiencing Inter- national Business and Management, 2ed., Thomson South-Western (Punnett, B.J. 1994) p. 80, from Exhibit P4.1, From PUNNETT, Experiencing International Business and Management, 2E. © 1994 South-Western a part of Cengage Learning, Inc. Reproduced by permission, www.cengage.com/permission- scengage.com/permissions; Figure 7.8 from The global retailer’s strategic

Publisher’s acknowledgements xxix

proposition and choice of entry mode, International Journal of Retail & Distri- bution Management, Vol. 36, No 4, 284 (Park, Y.; Sternquist, B. 2008), Figure 1, Emerald Group Publishing Limited; Figure 9.1 from Entry Strategies for Inter- national Markets, 2 ed., John Wiley & Sons (Root, F.R. 1998) p. 155, Fig 15 (‘Evaluation of political risks of a foreign investment entry decision process’), Entry Strategies for International Markets, 2nd ed. revised and expanded, Root, F.R. Copyright © 1998 John Wiley & Sons. Reproduced with permission from John Wiley & Sons, Inc.; Figure 9.2 from Brownfield entry in emerging markets, Journal of International Business Studies, Vol. 32, No 3, p. 581 (Meyer, K. and Estrin, S. 2001), Journal of International Business Studies, published by The Academy of International Business (AIB), reproduced by permission of Palgrave Macmillan.; Figure 9.4 from A struggling partnership: TNK-BP joint venture, International Journal Strategic Business Alliances, Vol. 1, No 1, p. 93 (Ekin, A.C. and King, T. R. 2009), © Inderscience Enterprises Limited; Figure 9.6 from Performance and survival of joint ventures with non-conventional owner- ship structures Journal of International Business Studies Vol. 29, No 4, p. 801 (Makino, S. and Beamish, P.W. 1998), Journal of International Business Studies, published by The Academy of International Business (AIB), reproduced by permission of Palgrave Macmillan.; Figure 10.8 from International marketing adaptation versus standardization of multinational companies, International Marketing Review, Vol 26 (4/5), p. 492 (Vrontis, D. et al 2009), Emerald Group Publishing Limited; Figure 10.13 from Erik Burbank, J.P. Marketing, Helly Hansen; Figure 10.14 from ‘Visual and verbal communication in the design of eco-label for green consumer products’, Journal of International Consumer Marketing, Vol. 16, No 4, p. 88 (Tang, E., Fryxell, G.E. and Chow, C.F. 2004); Figure 13.2 from Body language basics, Budget Travel, May, p. 28 (Berger, T., Lee, J. 2010), Courtesy of Budget Travel and Courtesy of Budget Travel

Tables

Table 3.3 adapted from Doing Business Internationally, Irwin Professional Publishing (Brake, T. et al 1995) pp. 46–7, Reproduced with permission of The McGraw-Hill Companies.; Table 3.4 from Experiencing International Business and Management, 2e, Wadsworth (Punnett, B. J. 1994) p. 15, Exhibit 1.4, Thomson Learning, From PUNNETT, Experiencing International Business and Management, 2E. © 1994 South-Western, a part of Cengage Learning, Inc. Reproduced by permission. www.cengage.com/permissions; Table 3.6 from www.worldbank.org/data.countryclass/, World Bank; Table 4.1 adapted from ‘Unravelling Asia’s “noodle bowl” of trade pacts’, IMF Survey, p. 151 (Tumbranello, P. 2007), International Monetary Fund; Table 4.4 adapted from A Stranger in a Strange Land: Micro Political Risk and the Multinational Firm, Business Horizons, Vol. 52, p. 131 (I Alon and T.T. Herbert 2009), Column 1 of Table 1 listing Variables Affecting Micro Political Risk, This article was pub- lished in Business Horizons, Vol. 52, I Alon and T.T. Herbert, A Stranger in a Strange Land: Micro Political Risk and the Multinational Firm, p. 131, Copy- right Elseiver 2009; Table 5.5 adapted from ‘Export strategy: concentration on

xxx Publisher’s acknowledgements

key markets vs marked spreading’, Journal of International Marketing, Vol. 1, No 1, p. 64 (Piercy, N. 1981), American Marketing Association, Reprinted with permission from Journal of International Marketing, published by the American Marketing Association, N. Piercy, 1981, Vol 1, No 1, p. 64; Tables 5.7, 5.8 from 3 March 2010, www.ikea.com; Table 6.2 adapted from Export marketing information-gathering and processing in small and medium-sized enterprises, Marketing Intelligence and Planning, Vol. 24, No 5, p. 478 (Williams, J.E.M. 2006), Emerald Group Publishing, © Emerald Group Publishing Limited all rights reserved; Table 6.4 from ‘Manager’s guide to forecasting’, Harvard Busi- ness Review, Jan-Feb, p. 111 (Georgeoff, D.M. and Murdick, R.G. 1986), Harvard Business School; Table 6.5 from ‘Theoretical justification of sampling choices in international marketing research’, Journal of International Business Studies, Vol. 34, No 1, p. 82 (Reynolds, N.L., Simintiras, A.C. and Diamantopoulos, A. 2003), Journal of International Business Studies, published by The Academy of International Business (AIB), reproduced by permission of Palgrave Macmillan.; Table 8.2 from Exploring export sales management practices in small- and medium-sized firms, Industrial Marketing Management, Vol. 32, p. 470 (Katsikea, E. and Morgan, R.E. 2003), Elsevier Science; Table 8.5 adapted from Export Performance Measurement: An Evaluation of the Empirical Research in the Literature, Academy of Marketing Science Review, No. 09, pp. 9–10 (Sousa, C.M.P. 2004), Courtesy of Academy of Marketing Science, Courtesty of Acad- emy of Marketing Science; Table 8.7 adapted from Urban Outfitters’ Grow- Slow Strategy, Bloomberg Businessweek, 1 March, p. 5 (Arndt, M. 2010), Bloomberg, Reprinted from 1 March 2010 issue of Bloomberg Businessweek by special permission, copyright © 2010 by Bloomberg L.P.; Table 9.3 from Power and control in international retail franchising, European Journal of Marketing, Vol. 40 (11/12), p. 1310 (Doherty, A.M.; Alexander, N. 2006), Table II, Emerald Group Publishing; Table 9.4 from The Shifting Geography of Offshoring, A.T. Kearney Global Services Location Index, p. 2 (2009), The Global Services Loca- tion Index. A.T. Kearney, copyright 2009; Table 10.1 from ‘Transnational corpo- rations: market orientations and R&D abroad’, Columbia Journal of World Business (Behrman, J.N. and Fisher, W.A. 1980), This article was published in Columbia Journal of Word Business, 15 (3), J.N. Behrman and W.A. Fisher, ‘Transnational corporations: market orientations and R& D abroad’, pp. 55–60, Copyright Elsevier, (1980); Table 10.3 adapted from The 50 Most Innovative Companies, Bloomberg Businessweek, 25 April, pp. 38–40 (Arndt, M. and Einhorn, B. 2010), Bloomberg, Reprinted from 25 April 2010 issue of Bloomberg Businessweek by special permission, copyright © 2010 by Bloomberg L.P.; Table 10.7 from Best Gobal Brands, Business We e k, 29 September, pp. 56–7 (Helm, B. 2008), Bloomberg, Reprinted from 29 September 2008 issue of Bloomberg Businessweek by special permission, copyright © 2008 by Bloomberg L.P.; Table 11.1 adapted from ‘How do you know when the price is right?’ Harvard Business Review September-October, p. 178 (Dolan, R.J. 1995), Harvard Business School Publishing Corporation; Table 11.3 from Interna- tional Dimensions of Marketing, 2 ed., Thomson South-Western (Terpstra, V. 1988) p. 138, with the kind permission of Vern Terpstra; Table 13.1 from www.worldbank.org/data

Publisher’s acknowledgements xxxi

Text

Case Studies 1.1, 1.2, 2.1, 2.2 from Duerr, M., 2010; Exhibit 1.8 adapted from Marketing Management: The millennium edition, 10 ed., Prentice-Hall (Kotler, P. 2000) p. 6, Pearson Education, Inc., KOTLER, PHILIP, MARKETING MANAGEMENT: MILLENNIUM EDITION, 10th, © 2000. Printed and Elec- tronically reproduced by permission of Pearson Education, Inc., Upper Saddle River, New Jersey.; Exhibit 3.3 adapted from ‘What would Confucius say now?’ The Economist, 25/07/1998, pp. 23–8, © The Economist Newspaper Limited, London 25/07/1998; Exhibit 5.4 adapted from The Economist, 14 March, p. 69 (2009), © The Economist Newspaper Limited, London 14/3/2009; Exhibit 7.4 adapted from Experiencing International Business and Management, 2 ed., Thomson South-Western (Punnett, B.J. 1994) p. 80, Exhibit P4.1, From PUN- NETT, Experiencing International Business and Management, 2E. © 1994 South-Western a part of Cengage Learning, Inc. Reproduced by permission, www. cengage.com/permissions; Case Study 7.4 adapted from How Not to Sweat Details, Business We e k, 25 May, pp. 52–4 (Einhorn, B. and McConnon, A. 2009), Bloomberg, Reprinted from 25 May 2009 issue of Bloomberg Business- week by special permission, copyright © 2009 by Bloomberg L.P.; Case Study 9.1 adapted from Imagination Entertainment: games and media company, Next Step the World: Resources for Education, International Business Studies, Series 3, pp. 17–20 (Australian Education Programs 2009), Australian Trade Commission, 2009, Australian Trade Commission; Case Study 9.4 adapted from Gloria Jean’s Coffees, Next Step the World: Resources for Higher Educa- tion, International Business Studies, Series 3, pp. 13–15 (Australian Education Programs 2009), Australian Trade Commission, 2009; Exhibit 9.5 adapted from America’s high-tech sweatshops, Business We e k, 12 October, pp. 34–9 (Hamm, S. and Herbst, M. 2009), Bloomberg, Reprinted from 12 October 2009 issue of Bloomberg Businessweek by special permission, copyright © 2009 by Bloomberg L.P.; Exhibit 10.1 adapted from At the sharp end, The Economist, 3 March, p. 73 (2007), © The Economist Newspaper Limited, London 3/3/2007; Case Study 10.6 adapted from Thinking Simple at Philips, Business We e k, 11 December, p. 50 (Capell, K. 2006), Bloomberg, Reprinted from 11 December 2006 issue of Bloomberg Businessweek by special permission, copyright © 2006 by Bloomberg L.P.; Case Study 10.7 from Building a Better Brand, Market- ing News, 15 September, pp. 14–17 (Sullivan, E. 2009), Reprinted with permis- sion from Marketing News, published by the American Marketing Association, 15 September 2009, pp 14–17; Exhibit 11.1 adapted from ‘Cost transparency: the Net’s real threat to prices and brands’, Harvard Business Review, March-April (Sinha, I. 2001), Harvard Business School Publishing; Exhibit 13.1 adapted from Heated Arguments, The Economist, 6 June, p. 65 (2009); Case Study 13.4 adapted from Tang gets a Second Rocket Ride, Bloomberg Businessweek, 26 April–2 May, pp. 32, 34 (Stanford, D. D. 2010), Bloomberg, Reprinted from 26 April–2 May 2010 ssue of Bloomberg Business- week by special permission, copyright © 2010 by Bloomberg L.P.

In some instances we have been unable to trace the owners of copyright material, and we would appreciate any information that would enable us to do so.

Chapter 1, in which we look at:

● A problem in the decade of the 2010s, and longer-range prospects;

● The importance, opportunities and challenges of international market- ing, factors affecting its growth: current problems and long-range opportunities;

● Being effective: the nature and practice of international marketing;

● Export marketing strategy and planning, and relationship to importing;

● The increasing impact of the Internet, World Wide Web, and e-business; the critical importance of technological advances, increased competition and innovations; the growth of non-traditional exports; and

● How the book is designed to be of use to students, entrepreneurs and mar- keting professionals.

Five case studies are provided at the end of the chapter, offering examples of how the material in the chapter (and book) relate to current opportunities and problems in international business and marketing. In Case 1.1 Voice4u, a small business, looks for ways for promotion. Case 1.2, NUMMI, examines the rea- sons for formation of the Toyota-GM joint venture, obstacles overcome, lessons learned, benefits obtained by each of the partners and reasons for the closure of the company in 2010 after 25 years of successful operation. Case 1.3 Export of art goods discusses questions facing a potential exporter. Case 1.4 eBay, Inc. shows how an emerging technology and entrepreneurship created a new

International marketing and exporting

2 International marketing and export management

Introduction

The growing importance of international marketing and export management

Recession and renewed growth

A recession beginning in 2007–2008 temporarily reversed a long period of eco- nomic growth and international trade. As will be shown, renewed growth in international trade is necessary for economic recovery and resumption of growth. Because of this, international marketing will continue to be of great importance in the future. While this chapter will discuss the recession, the pri- mary focus will be on the opportunities and challenges facing business in the near and long-range future.

The recession that began in 2007–2008 has been called the ‘Great Reces- sion’ because of its wide, serious, and prolonged effects (Zukerman, 2010). It sharply reduced demand in most of the nations around the world. Inter- national trade, which had been increasing more rapidly than investment and gross domestic product (GDP) for several decades, was directly affected. In 2009, for the first time in 50 years, the volume and value of international trade decreased. At the time of writing, international trade and recovery from the recession are progressing slowly. There is some fear that some economies may regress into a ‘double-dip’ recession because of the present sovereign-debt crisis in Europe or other problems (Premack, 2010). Whatever the short-range changes in the world economy, the other factors discussed below will retain their importance. Some comments regarding the causes, development and repercussions of the recession are given in the Appendix to this chapter.

As growth resumed in a number of countries in 2010, even though it was uneven and serious concerns remained, three things became apparent.

1. The importance of international business to national and regional economies, companies of all sizes, workers and consumers, in regaining growth.

2. The role of exports, along with innovation, as critical engines of economic growth (this was demonstrated again, as it had been in the past, by the ex- perience of China and others).

type of international marketplace. Case 1.5, Dell Inc. shows how changing consumer demands and competition forced an international company to change its business model.

Chapter 1 International marketing and exporting 3

3. All of the factors that brought about previous rapid growth in inter- national business and the growing importance of international marketing will continue to drive increasing globalization and economic development in the future.

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