T
he world is rapidly shrinking with the advent of faster communication, transportation,
and financial flows. Products developed in one country—Gucci purses, Mont Blanc
pens, McDonald’s hamburgers, Japanese sushi, Chanel suits, German BMWs—are find-
ing enthusiastic acceptance in other countries. A German businessman may wear an Ar-
mani suit to meet an English friend at a Japanese restaurant who later returns home to
drink Russian vodka and watch an American soap on TV.
Since 1969, the number of multinational corporations in the world’s 14 richest coun-
tries has more than tripled, from 7,000 to 24,000. In fact, these companies today control
one-third of all private-sector assets and enjoy worldwide sales of $6 trillion. International
trade now accounts for a quarter of U.S. GDP, up from 11 percent in 1970.^1
True, many companies have conducted international marketing for decades. Nestlé,
Shell, Bayer, and Toshiba are familiar to consumers around the world. But global com-
petition is intensifying: Domestic companies that never thought about foreign competi-
tors suddenly find these competitors in their backyards. Newspapers report on Japanese
victories over U.S. producers in consumer electronics, motorcycles, copying machines,
cameras, and watches; the gains of Japanese, German, Swedish, and Korean car imports
in the U.S. market; and the loss of textile and shoe markets to Third World imports.
Many companies that are thought to be American firms are really foreign firms: Bantam
Books, Baskin-Robbins Ice Cream, Firestone Tires, Dr. Pepper soft drinks, and Pillsbury
cake mixes.
Although some U.S. businesses may want to eliminate foreign competition through
protective legislation, the better way to compete is to continuously improve products at
home and expand into foreign markets. Ironically, although companies need to enter and
compete in foreign markets, the risks are high: shifting borders, unstable governments,
foreign-exchange problems, corruption, and technological pirating.^2 But we argue that
companies selling in global industries have no choice but to internationalize their opera-
tions. To do this, they must make a series of decisions (Figure 6-1).■ Aglobal industry is an industry in which the strategic positions of competitors
in major geographic or national markets are fundamentally affected by their over-
all global positions.^3 Aglobal firm is a firm that operates in more than one coun-
try and captures R&D, production, logistical, marketing, and financial advantages
in its costs and reputation that are not available to purely domestic competitors.Global firms plan, operate, and coordinate their activities on a worldwide basis. Ford’s
“world truck” has a European-made cab and a North American–built chassis, is assembled
in Brazil, and is imported into the United States for sale. Otis Elevator gets its door sys-
tems from France, small geared parts from Spain, electronics from Germany, and special
motor drives from Japan, and uses the United States for systems integration. A company
need not be large to sell globally. Small and medium-size firms can practice global niche-
manship. Even a sports league can be global:■ The NBA When the NBA season is over, basketball’s big stars don’t head to
Florida for rest and recreation. No, Shaquille O’Neal is off to South Korea, Karl
Malone to Hong Kong, Allen Iverson to Chile. Deployed by the NBA and global
sponsors Coca-Cola, Reebok, and McDonald’s, these well-paid traveling salesmen
hawk soda, sneakers, burgers, and basketball to legions of young fans. Boys in
China wear Bulls gear because they all want to be like Michael Jordan. The NBA,part three
Developing
Marketing(^366) Strategies