INTRODUCTION - College of Business - Iowa State University by dffhrtcv3

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									       MKT 509
INTERNATIONAL BUSINESS
DR. SANJEEV AGARWAL
Professor & Dean’s Fellow, Marketing
        Iowa State University
   3137 Gerdin Business Building
            515-294-9822
        sagarwal@iastate.edu
www.bus.iastate.edu/sagarwal/mkt509
     GLOBALIZATION
Challenges for America and the
            World!
                          U.S. Merchandise Trade Balance:
                                downhill since 1971
                          100
Billions of U.S.Dollars




                           0
                     -100
                     -200
                     -300
                     -400
                     -500
                     -600
                        1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003
             Sources of pain: in 2003.
                  -55

            169     224 $b

      118                    165
-66                                -101   152
                                                -124
       52                    266          28
            97      138
              -41
 In the 70s and 80s, the culprit
          was Japan!
  They sold us their products.
And, they bought our companies.
  They were not alone though.
        Others came too.
Japan just happened to be there at the
   wrong time (and more visible).
                           120
Billions of U.S. Dollars



                           100
                           80                                        U.K.
                           60                                        Japan
                                                                     Germany
                           40                                        Netherlands
                           20                                        Canada
                            0
                           -20
                            87
                                  89
                                       91
                                            93
                                                 95
                                                      97
                                                           99
                                                                01
                           19
                                 19
                                      19
                                           19
                                                19
                                                     19
                                                          19
                                                               20
So, America pleaded…
 The corporate world
      supported…
Anti-Japan feelings were
       revived...
So, the U.S. put pressure on Japan
            to import…
         It did some good!
  You could see American food
products in Japanese retail stores.
  Then, the big three went to
    Japan... they whined...
                 Chrysler CEO
                 Lee Iacocca:

“They say all the problems are our fault.
That’s like blaming our Army and Navy for
 Pearl Harbor because we weren’t ready.
  No, we don’t have to show any more
      patience toward Japan. None.”
         and, whined...
                            GM CEO
                      Robert Stempel:

“(In America) we gave our distribution
  network to Japan. Our best dealers sell
Toyotas and Hondas. We’d like the same
 reciprocity. We are not asking that they
            give us anything.”
              and whined.
                         Ford Motor CEO
                           Harold Poling:
“They (Japan) have had an essentially closed
 market for 40 years. It’s time for it to open.
  When all of the auto manufacturers in the
   world can get less than 3% of a seven-
    million vehicle market, something is
                   wrong.”
  Sure, something IS wrong.
 Honda CEO Nobuhiko Kawamoto:

    “The Americans say that their
automobiles are as competitive as other
  makes. This message has not been
 properly transmitted to the Japanese
             customers.”
          It’s quality, stupid!
       Nissan CEO Yutaka Kume:
 “…I want Americans to stop saying there is
  an imbalance because Japan is unfair. The
        U.S. must make more efforts.”
“…in the future…even if the cost is a bit high,
  we may accommodate American suppliers.
   But not if the parts are of low quality.”
Is Corporate America serious?
                        Toyota President
                         Hiroshi Okuda:

 “The only Americans serious about
selling cars in Japan are the politicians.
The way they’ve conducted operations
                is stupid.”
  Is this the job of politicians?
Did the CEOs know Japanese put
 steering on the “wrong” side?
And drove on the “wrong” side?
     and needed smaller cars!
    Never mind! It is easy to
complain than to do something.
 Steel industry is expert at that.
                            In 90s, we encountered more
                           problems--Mexico…and China
                              0
Billions of U.S. Dollars




                             -20
                             -40
                             -60
                                                                                    China
                             -80                                                    Japan
                            -100
                            -120
                            -140
                                   1991   1993   1995   1997   1999   2001   2003
       They use prison labor.
... crush democratic rights of their
             citizens,
    And pollute the environment.

So, we should not trade with them
      or others like them!
    Noble Sentiments. But,
 Politics and Trade don’t Mix.
  Let us not blame others for our
              failure to:
       make what they need/want,
 sell them where and when they want,
figure out what motivates them to buy.
   And, more importantly,

 Let us not blame others for the
        imbalance in trade.

It is our desire to buy from them.
 They are not forcing us to buy.
     Corporate America:
    Please, “No excuses”.

The biggest barrier that exists for
 U.S. firms is the attitude of the
        American CEOs.
      Learn from those who are
              winning.
•   Kodak
•   Levi’s
•   McDonald’s
•   Pepsi
•   CocaCola
•   Citibank
Many of the best in the world are
    American companies!
1 Pepsi (U.S.)        7 Johnie Walker (U.S.)
2 Coca Cola (U.S.)    8 Maggi-Knorr (Swiss)
3 Nescafe (Swiss)     9 Guinness Book (U.K.)
4 Nivea (Germany)    10 McDonald’s (U.S.)
5 Chanel (France)    11 Philips (Netherlands)
6 Levi’s (U.S.)      12 Gillette (U.S.)
           U.S. Exports have risen!
               15%     5%             South America
                             20%      Canada
         20%                          Japan
1991                                  Europe
                              11%
421 $b                                Asia-Rest
                     29%              Rest
                                    South America
                 14% 3% 8%          Canada
                             23%    Japan
2001
                                    Europe
719 $b         20%                  Asia-Rest
                             8%
                      24%           Mexico
    Scorecard: The Winners
•   Pharmaceuticals        A
•   Forest Products        A
•   Aerospace              B+
•   Chemicals              B
•   Food                   B
•   Scientific Equipment   B
•   Petroleum Refining     B
            and the losers.

• Motor Vehicles              C
• Metals                      C-
• Consumer Electronics        D
 But, the threats from low cost
      countries are real…
They know what the West wants.
   Where and when it wants.
    And, what makes it buy!

    We can’t afford to react.
WE HAVE TO
    BE
PROACTIVE!
     Understand the drivers of
          Globalization

Travel
Communication
Media
Digitization
       Where should we start?
• Learn about Geography..
• Learn about the history, leaders, and their
  views..
• Visit them…
• Notice the differences…
• Observe the people...
• Check out the competition...
If you interested in going
          global,
    Then say: “I feel at home
           (anywhere).”
       “I love this place.”
       “I love the people.”
        “I will persevere.”
   “I will go after that elusive
            customer.”
 They have the same needs.
They want to feel special too!
They want to look pretty too!
And, who doesn’t want to buy
 the very best in the world?
   And, they have money!
     So, adapt and reach.
       Learn the rules.
   Figure out the logistics.
Find a partner. Even giants do!
Be prepared to face resistance.
    Research the markets.
    Plan and take action.
      Become an insider.

								
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