the Global Marketplace Is also Local

the Global Marketplace Is also Local
the Global Marketplace Is also Local

the Global Marketplace Is also Local

Exhibit 1-1 Salvatore Ferragamo, based in Florence, Italy, is one of the world’s leading fashion brands. Emerging markets represent important opportunities for luxury goods marketers. As Ferruccio Ferragamo notes, “We cannot make enough to keep up with demand from the Chinese. They want their shoes not just ‘Made in Italy’ but often ‘Made in Florence.’”

To show its support for socially responsible initiatives, Ferragamo recently introduced a new shoe line called Ferragamo WORLD that utilizes eco-friendly production processes. A portion of the proceeds from every pair sold supports Acumen Fund’s anti-poverty efforts in East Africa, India, and Pakistan. Source: Roussel Bernard/Alamy.


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Learning Objectives

1 Use the product/market growth matrix to explain the various ways a company can expand globally.

2 Describe how companies in global industries pursue competitive advantage.

3 Compare and contrast single-country marketing strategy with global marketing strategy (GMS).

4 Identify the companies at the top of the Global 500 rankings.

5 Explain the stages a company goes through as its management orientation evolves from domestic and ethnocentric to global and geocentric.

6 Discuss the driving and restraining forces affecting global integration today.

Which brands are Japanese? American? Korean? German? Indian? Where is Nokia headquartered? When is a German car not a German car? Can a car be both German and American? Consider:

• An American-built Ford Mustang has 65 percent American and Canadian content; an American-built Toyota Sienna XLE mini- van has 90 percent American and Canadian content.2

• China’s Shanghai Automotive (SAIC) owns the rights to the MG, the legendary two-seat British sports car. In 2008, SAIC began manufacturing a limited-edition TF model at a plant in Longbridge, UK. In 2011, production of the MG6 sedan began in Birmingham.3 India’s Tata Group recently paid $2.4 billion to acquire Land Rover and Jaguar from Ford.

• German carmaker BMW exports the X5 sport-utility vehicle that it builds in Spartanville, South Carolina, to more than 100 coun- tries.

At the end of this chapter, you will find the rest of Case 1-1. Taken together, the two parts give you the opportunity to learn more about the global marketplace and test your knowledge of cur- rent issues in global marketing. You may be surprised at what you learn!

Now consider a second proposition: We live in a world in which markets are local. In China, for example, Yum! Brands’ East Dawning fast-food chain competes with local restaurants such as New Asia Snack and Haidi Lao.1 France’s domestic film industry generates about 40 percent of local motion picture box office receipts; U.S.-made movies account for about 50 percent. In Turkey, local artists such as Sertab account for more than 80 per- cent of recorded music sales. Kiki, a Japanese magazine for teen- age girls, competes for newsstand sales with Vogue Girl, Cosmo Girl, and other titles from Western publishers. In Germany, the children’s television powerhouse Nickelodeon competes with local broadcaster Super RTL. In Brazil, many consumers are partial to Guaraná Antarctica and other local soft drink brands made from guaraná, a berry that grows in the Amazon region.

The “global marketplace versus local markets” paradox lies at the heart of this text book. In later chapters, we will investi- gate the nature of local markets in more detail. For now, how- ever, we will focus on the first part of the paradox. Think for a moment about brands and products that are found throughout the world. Ask the average consumer where this global “horn of plenty” comes from, and you’ll likely hear a variety of answers. It’s certainly true that some brands—McDonald’s, Dos Equis, Swatch, Waterford, Ferragamo, and Burberry, for instance—are strongly identified with a particular country. In much of the world, Coca- Cola and McDonald’s are recognized as iconic American brands, just as Ferragamo and Versace are synonymous with classic Italian style (see Exhibit 1-1).

However, for many other products, brands, and companies, the sense of identity with a particular country is becoming blurred.

Part one


1Laurie Burkitt, “China Loses Its Taste for Yum,” The Wall Street Journal (December 3, 2012), p. B9. 2Jathon Sapsford and Norihiko Shirouzu, “Mom, Apple Pie and . . . Toyota?” The Wall Street Journal (May 11, 2006), p. B1. 3Norihiko Shirouzu, “Homecoming Is Set for MG,” The Wall Street Journal (March 16, 2011), p. B8.

Introduction and overview as the preceding examples illustrate, the global marketplace finds expression in many ways. Some are quite subtle; others are not. While shopping, you may have noticed more multilanguage labeling on your favorite products and brands. Your local gas station may have changed its name from Getty to Lukoil, reflecting the russian energy giant’s expanding global reach. on the highway, you may have seen a semitrailer truck from Fedex’s Global Supply Chain Services fleet. or perhaps you took

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