Marketing products and services around the world, transcending national and political boundaries, is a fascinating phenomenon. The phenomenon, however, is not entirely new. Products have been traded across borders throughout recorded civilization, extending back beyond the Silk Road that once connected East with West from Xian to Rome on land, and the recently excavated sea trade route between the Roman Empire and India that existed 2,000 years ago. However, since the end ofWorldWar II, the world economy has experienced a spectacular growth rate never witnessed before in human history, primarily led by large U.S. companies in the 1950s and 1960s, then by European and Japanese companies in the 1970s and 1980s, and most recently by new emerging market firms, such as Lenovo, Mittal Steel, and Cemex. In particular, competition coming recently from the so-called BRIC countries (Brazil, Russia, India, China) has given the notion of global competition a touch of extra urgency and significance that you see almost daily in print media such as the Wall Street Journal, Financial Times, Nikkei Shimbun, and Folha de S~ao Paulo, as well as in TV media such as BBC, NBC, and CNN. With a few exceptions, such as Korea’s Samsung Electronics (consumer electronics) and China’s Haier (home appliances), most emerging-market multinational companies are not yet household names in the industrialized world, but from India’s Infosys Technologies (IT services) to Brazil’s Embraer (light jet aircrafts), and from Taiwan’s Acer (computers) to Mexico’s Cemex (building materials), a new class of formidable competitors is rising.1
1 ‘‘A New Threat to America Inc.’’ Business Week, July 25, 2005, p. 114; and also read Martin Roll, Asian Brand Strategy: How Asia Builds Strong Brands, New York: Palgrave Macmillan, 2006.
In this chapter, we will introduce to you the complex and constantly evolving realities of global marketing. Global marketing refers to a strategy for achieving one or more of four major categories of potential globalization benefits: cost reduction, improved quality of products and programs, enhanced customer preference, and increased competitive advantage on a global basis. The objective is to make you think beyond exporting and importing. As you will learn shortly, despite widemedia attention to them, exporting and importing constitute a relatively small portion of international business.We are not saying, however, that exporting and importing are not important. In 2006, the volume of world merchandise trade grew by 8 percent, while world gross domestic product recorded a 3.5 percent increase, which confirms that the trend in world merchandise trade grows by twice the annual growth rate of output since 2000. Total merchandise trade volume reached $16.3 trillion in 2008, compared to $6 trillion in 2000.2
In recent years, improved market conditions in the United States and Europe, as well as strong growth in the Emerging Markets, such as China and India, steadily improved the world economy after the devastating terrorist attacks in the United States on September 11, 2001. However, the aftermath of theU.S.-led war against Iraq, the high oil prices, and most recently, the unprecedented global recession triggered by the subprime mortgage crisis in the United States in 2008, among other things, continue to curb a full-fledged recovery in the world economy. Indeed, at the time of this writing in early 2009, as the global economy is currently experiencing the worst recession since the Great Depression of 1929–1932, World Bank predicts that the world trade volume will shrink in 2009 for the first time in over 25 years,3 and the specter of economic nationalism—the country’s urge to protect domestic jobs and keep capital at home instead of promoting freer international trade—is hampering further globalization