Identifying theories and underlying principles of global Marketspace

Unit Overview

INB20009

Managing the Global Marketplace

Dr Chandana Hewege

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• ‘This unit provides students with the necessary knowledge and skills to enable them to critically analyse the dynamics of global marketplace within which an international firm operates. This unit requires students to apply theories of global marketplace, global consumer culture and global online networks to effectively exploit global marketplace opportunities. Students are expected to develop a thorough understanding of the evolving nature of the global marketplace and the virtual marketspace with a view to adding value to an international firm.

Unit Outline INB20009 Managing The Global Marketplace

Aims

Unit Learning Outcomes (ULO)

After completing this unit, You will be able to;

1. Individually and in groups identify the underlying principles and assumptions underpinning theories of global marketplace, global consumer culture and social networks

2. Describe the key components of virtual marketspace affecting the overall global market approach of an international firm

3. Analyse the interface between virtual and brick & mortar operations of an international firm with a view to developing solutions for apparent misalignment

4. Develop appropriate social network-based strategies with a view to effectively utilising global market opportunities

This unit of study will mainly cover

following areas;

 Evolution of global marketplace and global marketspace

 Global online (virtual) marketspace behaviour and virtual networking

 Integration and fragmentation of global marketplace

 Global consumer culture

 Global consumer identities in global marketspace

 Researching the global marketplace

 Global business firms matching strategies to global marketplace changes

 Global consumer activism and the virtual networking

 Ethicality of global marketplace: developing a global ethical framework for international firms and consumers

Assessments

Tasks and Details Individual or

Group Weighting

Unit Learning

Outcomes that

this

assessment

task relates to

Assessment

Due Date

Assignment 1 Individual 30% 1,2 End of week 6

Assignment 2 Group (report 20%- Presentation 10%)

30% 1,2,3 End of Week 10

Final

Assignment (3)-

Learning

Portfolio

Individual 40% 1,2,3,4 Week 13 (check

Turnitin in

Canvas for

exact

submission

deadline)

Assessments Assignment 1 Assignment 2 Assignment 3

Critical Essay-Identifying theories and underlying principles of global Marketspace

Case presentations (week 8-10+)

The learning portfolio is a flexible, evidence-based activity that combines your reflection and documentation. This learning portfolio should be in the form of a reflective journal demonstrating how concepts and theories are applied in real work (or life) situations.

Due by week 6 Case study analysis report due by week 10

Due by week 13

Readings; Theory, practice and critical perspectives

A collection of referred research articles and a few book chapters

Readings; Theory, practice and critical perspectives Week Referred research articles and a few book chapters

1 Zinkhan, G. M. 2005, The marketplace, emerging technology and marketing theory. Marketing Theory, Vol. 5, No. 1, pp. 105-115. doi: 10.1177/1470593105049603

2 Shah, N 2008, From global village to global marketplace: Metaphorical descriptions of the global Internet. International Journal of Media & Cultural Politics, Vol. 4. No. 1,pp. 9-26.

3 Wirtz, B.W., Schilke, O. and Ullrich, S., 2010. Strategic development of business models: implications of the Web 2.0 for creating value on the internet. Long Range Planning, 43(2), pp.272-290.

4 Berthon, P. R., Pitt, L. F., Plangger, K. & Shapiro, D 2012, Marketing meets Web 2.0, social media, and creative consumers: Implications for international marketing strategy. Business Horizons, Vol. 55, pp. 261-271.

5 Wen Gong , Rodney L. Stump , Zhan G. Li , 2014 "Global use and access of social networking web sites: a national culture perspective", Journal of Research in Interactive Marketing, Vol. 8 Issue: 1, pp.36 –45

6 Agarwal, J., Malhotra, N. K., & Bolton, R. N 2010 A cross-national and cross-cultural approach to global market segmentation: An application using consumers' perceived service quality. Journal of International Marketing, 18(3), 18-40.

7 Ngai, E. W., Tao, S. S., & Moon, K. K 2015, Social media research: Theories, constructs, and conceptual frameworks. International Journal of Information Management, Vol. 35, No.1, pp. 33-44.

8 Aula, P 2010, Social media, reputation risk and ambient publicity management. Strategy & Leadership, Vol. 38, No. 6, pp. 43-49.

9 Thevenot, H. J., Simpson, T. W., Jiao, R. J., & Kenger, P 2008, Product platforming for a global marketplace. Journal of Engineering Design, Vol. 19, No. 6, pp. 461-463.

10 Hollenbeck, C. R., & Zinkhan, G. M 2006, Consumer activism on the internet: The role of anti-brand communities. Advances in Consumer Research, Vol. 33, p. 479-485

11 Cassel, D. (2001). Human Rights and Business Responsibilities in the Global Marketplace. Business Ethics Quarterly, 11(2), 261-274

Lesson 1a plan

Concept and theories

1. Introduction to INB20009 Managing Global Marketplace: Three pillars

2. Global marketplace

3. Global marketspace

Introduction to INB20009 Managing Global Marketplace:

Three pillars Globalisation

Global marketplace and

marketspace Integration and

fragmentation of global

markets

Globalisation • There is no commonly agreed definition of the notion “Globalisation”

• A movement

• A debate

• In general, most scholars explain the notion of globalisation in relation to the greater

movements of people, goods, capital and ideas due to increased economic

integration and, trade and investment.

Factors of Globalisation 1. Macro-economic factors: Substantial productivity differentials among countries; continuing fluctuations in exchange rates, accelerating technology transfers among countries; and rapidly increasing populations in emerging economies

2.Political factors: Promotion of regional integration to encourage trade; deregulation of capital, personnel, and raw material flows; increased intervention of third-party supranational entities (i.e., United Nations, International Monetary Fund, World Bank, etc.) to encourage global trade

3.Technological factors: Rapidly declining computing, communication and transportation costs

4.Organisational factors: Shift in strategic attention from efficient management of tangible resources to effective management of intangible assets; shift from economies of “scale” to economies of “scope”; and the development of a “global mindset” of the organisation’s management

Globalisation and Global

Marketplace

• Global economic integration, domestic deregulation, and the

evolution of information and telecommunication technologies have

stimulated organisations to globalise their market positioning options

in the past 5 years (Harvey Novicevic M. 2002).

• A global marketplace is an institutional structure that allows

individuals and organisations to exchange goods, services and

labour anywhere in the world.

• Globalisation of production and consumption are key features

Global Marketplace

• In the late 19th century, department stores

brought an entire marketplace under one

roof.

• The 20th century, malls performed the same

service. Catalogs connected buyers to the

marketplace via the postal service.

Likewise, telephone lines and internet

service connected buyers and sellers in a

different way.

Source: Recommended reading : Zinkhan, G. M. (2005). The marketplace, emerging technology and marketing theory. Marketing Theory, 5(1), 105-115.

The marketplace as an engine of economic exchange and

focus of public life

• Socrates argues that ‘exchange’ is one key reason for human

beings to gather together and form a community.

• In Plato’s dialogue, written more than 2300 years ago. He

understands key economic principles related to marketplaces,

currency, specialization of labour, hierarchy of needs, retailing,

standard of living, importing, and exporting.

• Marketplace became the centre of public life and discourse.

The marketplace as an engine of economic exchange and

focus of public life..contd

• Economic historians estimate that currency money began in Lydia (modern-day Turkey) in the seventh century BC.

• By the time of Solon, a century later, money was weakening the power of inherited aristocracy.

• Replacing the palace, the agora or marketplace became the centre of public life and discourse (Weatherford, 1997).

• In fact, ancient Greek society flourished both because of the economic activities associated with trade in the economic marketplace and because of the free exchange of ideas in the intellectual marketplace (Boardman et al., 2001).

• A marketplace is a website that connects third-party merchants with shoppers. The marketplace platform acts as an intermediary between the two. The marketplace processes the transaction and remits the sale minus a commission to the buyer.

• A pure marketplace is where only third-party merchants sell inventory. The hybrid model is where both the marketplace company sells inventory alongside third-party merchants. Flipkart is an example of this. This means a combination of the traditional and marketplace model.

• Retailers with a physical presence have added the marketplace model to their digital operations, such as Walmart. Digital commerce retailers have added stores. The best examples are Alibaba and Amazon.

• eBayPure

• FlipkartHybrid

• WalmartHybrid + Physical

What is a marketplace?

INTRODUCTION TO MARKETPLACES

Evolving global marketspace

• The natural give and take that exist in the traditional dialogs.

• At the same time, marketplaces serve as a public forum where citizens can meet and exchange both ideas and goods.

• In this way, technological and intellectual advancements go hand in hand.

• In the 21 century, we see the ‘marketspace’ as an innovation that has potential to enhance human experiences via the interactive media.

Global Marketspace • ‘Marketspace’ as an innovation that has potential to enhance human

experiences (Zinkhan 2005, p.105).

• Global Marketspace is an evolving marketplace as a result of emerging

technologies and interactive media (Zinkhan 2005, p.105).

• e-Marketplace: the internet, as a place where organisations and consumers

exchange information and do business (Cambridge Business English

Dictionary 2015)

• The Internet was not simply included within the global marketplace but

synonymous with it and hence notion of the global marketspace can be

described as an Electronic Herd of . . . stock, bond, and currency

traders and multinational investors, connected by screens and

networks (Shah, N,2008).

Understanding the impact of a new

technology on the global

marketspace Understanding the notion of ‘global marketspace’ through McLuhan's (1964) framework for

understanding the impact of a new technology (cited in Zinkhan 2005, p.110)

• (1) What will this thing enhance?

The internet can enhance the power of human information processing and the human

voice.

• (2) What will this tool render obsolete?

Traditional functions of a sales force cease to exist (i.e., Dell caters its business clients

directly)

• (3) What will this tool retrieve from all the things that we've lost?

The internet is a powerful tool for retrieving lost information

• (4) What are the ripple effects?

Potential impacts of the internet

Marketplace Vs Marketspace

• Emergence of the virtual world

• Actual (tangible) Vs virtual (intangible)

• Interface between actual (physical) and virtual (online)

• Actual (brick and mortar) Vs Virtual (click)

Class/Tutorial Activity 1

Reflect on any international or local firm which manages the interface between

actual (physical) and virtual (online) business activities (un) successfully. Share

your experience with your peers.

Lecture summary: Key concepts

Key Concepts Description

Globalisation Globalisation implies that while people and societies may live together in local,

provincial and national realms, they also subsist in transborder spaces where

the world is a single unit or space (Scholte, 2005).

Global marketplace A global marketplace is an institutional structure that allows individuals and

organisations to exchange goods, services and labor anywhere in the world.

Global marketspace An evolving marketplace as a result of emerging technologies and interactive

media.

References

• Business Dictionary viewed 27 February 2015 http://www.businessdictionary.com/definition/marketspace.html#ixzz3SzPqAfhL

• Cambridge Business English Dictionary 2015 viewed 27 February 2015 <http://dictionary.cambridge.org/dictionary/business-english/e-marketplace>

• Cambridge Business English Dictionary 2015 viewed 27 February 2015 < http://dictionary.cambridge.org/dictionary/business-english/the-global-

marketplace?q=Global+Marketplace >

• Crosby, M., and Bodman, P ‘When the US Sneezes, Do We Need to Catch a Cold? Historical and Future Linkages between the Australian and US

Business Cycles’ viewed 27 February 2015 < http://www.rba.gov.au/publications/confs/2005/pdf/crosby-bodman.pdf >

• Das, Dilip K., Globalisation and an Emerging Global Middle Class. Economic Affairs, Vol. 29, Issue 3, pp. 89-92, September 2009. Available at SSRN:

http://ssrn.com/abstract=1484161 or http://dx.doi.org/10.1111/j.1468-0270.2009.01927.x

• Harvey, M., & Novicevic, M. M. 2002. The hypercompetitive global marketplace: the importance of intuition and creativity in expatriate managers.Journal

of World Business, 37(2), 127-138.

• Ustuner, Tuba and Douglas Holt (2007), ‘‘DominateScholte, J. A. (2005) ‘The Sources of Neoliberal Globalization’, United Nations Research Institute for

Social Development, Program Paper

• No. 8, Geneva (October).

• Simon, S. J. 2000. The impact of culture and gender on web sites: an empirical study. ACM SIGMIS Database. 32, no. 1: 18-37.

• Luna, D., Peracchio, L. A. & De Juan, M. D. 2002. Cross-cultural and cognitive aspects of web site navigation. Journal of the academy of marketing

science. 30, no. 4: 397-410.

• d Consumer Acculturation: The Social Construction of Poor Migrant Women’s Consumer Identity Projects in a Turkish Squatter,’’ Journal of Consumer

Research, 34 (June), 41-56.

• Zinkhan, G. M. 2005, The marketplace, emerging technology and marketing theory. Marketing Theory, Vol. 5, No. 1, pp. 105-115. doi:

10.1177/1470593105049603

• Images

• Wisco Histon.d., [image], daugherity.com, viewed 27 February 2015, <http://wiscohisto.tumblr.com/post/63588676271/the-bitker-family-and-other-local-

merchants-dress>.

• Micework, 2012 [image], , viewed 27 February 2015, http://www.margopp.co.id/V3/you-talk-they-listen.html

Lesson 1b Plan

Applications

1. Recent developments in the global marketplace

2. Key trends that could change the way we manage global marketplace

Recent developments in the global

marketplace (1) The global marketspace and the growth of internet

users, web 2.0 based businesses

(2) Globalisation, global consumers and global consumer

culture

(3) New capacity: New Markets

(4) The global economic crisis and FDI flows to emerging

markets

(5) The Asian century

(1) The global marketspace and the growth

of internet users, web 2.0 based businesses

• The Internet population is increasing continuously, and the Internet

allows consumers around the world to access to market globally

without national boundaries.

• Globally, Internet users exceeded $2.8 billion in 2014 (Internet World

Stats, 2014). How many in 2018?

• Further, business-to consumer (B-to-C) e-commerce sales reached

$1.4 trillion in 2014, and this figure increased approximately 20%

over 2013 (eMarketer,2014).

(2) Globalisation, global consumers

and global consumer culture

• Globalisation implies that while people and societies may live together in

local, provincial and national realms, they also subsist in transborder spaces

where the world is a single unit or space (Scholte, 2005).

• The role and evolution of consumer culture and its interaction with

globalisation is important for understanding how markets transition as they

develop.

• Consumers in the emerging markets may not be acculturated to their new

globalised social reality (Ustuner and Holt 2007).

• International customers prefer to use culturally adapted websites (Luna,

Peracchio, & de Juan, 2002; Simon, 2001)

(3) New capacity: New Markets • Globalisation has expanded the size of the global middle

class.

• This expansion will change consumption patterns and

shift the balance of spending power to middle-income

economies.

• Rapid growth rates of the middle class in China and

India have played a decisive role in creating the middle-

income bulge.

• By 2030 the global middle class has been projected to

grow to two billion.

New capacity: New Market

(4) The global economic crisis and FDI flows

to emerging markets

• The rapid growth of global FDI—which has grown faster

than world GDP—reflects major underlying policy

changes toward FDI in host and home countries.

• The global economic and financial crisis has had a major

impact on FDI flows.

• Emerging markets will attract considerable FDI and

probably more than developed countries.

More readings: Kekic, L.(2011).The global economic crisis and FDI flows to emerging markets.FDI PERSPECTIVES,2.

(4) The global economic crisis and FDI

flows to emerging markets…contd

• Just under 60% of companies expect to derive more than 20% of their total

revenue in emerging markets in five years' time – almost double the present

proportion of 31%.

• General Motors sales in the United States have declined, but the growth

opportunities have arisen elsewhere.

• Emerging markets are an important avenue for growth: Currently, General

Motors sells more cars in China than it does in the United States (Barboza

and Bunkley 2010).

(5) The Asian century

• Historically, the triad regions have dominated world trade

– North America, Western Europe and Japan

• Increasingly, it is the Big Emerging Markets (BEMs) which are now

having an impact

– CEA,(Chinese Economic Area),India, South Korea, Mexico, Brazil,

Argentina, South Africa, Poland, Turkey and ASEAN

– Second-tier emerging markets (referred to as the Next 11), such as

Indonesia, Egypt, Nigeria, Mexico, the Philippines and Vietnam

The Asian century…contd

• Increasing amount of competition coming

from the BEMs.

• There is a desire for modernity in these

markets which fuels their competitiveness

and growth.

• Infrastructure and energy needs will prove

to be problematic as they grow.

© Euromonitor International PASSPORT 36STRATEGY BRIEFING: UNDERSTANDING GLOBAL MARKETPLACE TRENDS

 The largest (and the

oldest with the exception

of JD.com) marketplaces

give a peek into what the

future of the marketplace

model looks like.

 Amazon, Alibaba, eBay,

JD.com and Rakuten have

built ecosystems (to

varying degrees) that keep

consumers and third-party

merchants spending time

and money with them.

 The tables are a limited

list of key features that

these giants offer to keep

consumers and

businesses locked into

their ecosystems.

The leading marketplaces hint at the future

INTRODUCTION TO MARKETPLACES

Features for Consumers in 2017

Feature Amazon Alibaba eBay JD.com Rakuten

TV, film, other

entertainment

production

X X

Social media

elements X X X X

Payments X X X X

Financial services X X X

Features for Businesses in 2017

Feature Amazon Alibaba eBay JD.com Rakuten

Fulfilment X X X X X

Cloud computing X X X

Advertising X X X X X

Financial services X X X X X

© Euromonitor International PASSPORT 37STRATEGY BRIEFING: UNDERSTANDING GLOBAL MARKETPLACE TRENDS

 According to a survey

conducted on behalf of

Pitney Bowes in 2017,

consumers in 12 countries

prefer marketplaces over

traditional retail websites

due to the assortment and

price.

 For all but one country

(Australia), consumers start

their product searches on a

marketplace. When

shopping online, consumers

now habitually start with

marketplaces.

 Consumers are also

attracted by the

convenience marketplaces

offer through simple

checkout processes, as well

as offers of faster and free

delivery.

The marketplace model proves popular with consumers

INTRODUCTION TO MARKETPLACES

Source: Pitney Bowes’ 2017 Global Ecommerce Report

Note: Survey conducted by ORC Research in August 2017

With 12,000 consumers who had made an online purchase in the past year

Countries: US, UK, Australia, Canada, France, Germany, India, china, Hong Kong, Japan, South Korea,

Mexico

© Euromonitor International PASSPORT 38STRATEGY BRIEFING: UNDERSTANDING GLOBAL MARKETPLACE TRENDS

 The lines between the traditional retail model and the marketplace model will continue to blur. It is likely

that the most successful marketplaces will have a traditional model, a marketplace model and a physical

outlet – in other words, the hybrid model with stores.

 Operating as a traditional retailer online has advantages. The retailer can get exclusive products, receive

inventory commitments and create wide-margin private label products. It also gives retailers more control

over third-party merchants, as they are competing against the traditional model. The competition drives

prices lower, sets a standard for customer service and helps keep delivery efficient.

 Adding a store component means that the retailer can offer an omnichannel experience and more

convenient logistics. At some point, although not in the next five years, digital commerce will mature, and

having stores will allow previously pure online-only retailers to compete in store-based retailing.

 However, the giant marketplaces, such as Amazon, Alibaba and Rakuten, are not just focused on selling

products. They are looking to build ecosystems that lock consumers in with entertainment, financial

services, and payments. The future is open for their innovation to keep customers returning to their assets.

Additionally, their strong network effects may mean that digital commerce becomes an almost winner-

takes-all market.

What does the future marketplace model look like?

WHAT DOES THE FUTURE HOLD?

Lesson summary: Key concepts

Key Concepts Description

Recent

developments in the

global marketplace

(1) The global marketspace and the growth of internet users

(2) Globalisation, global consumers and global consumer culture

(3) New capacity: New Market

(4) The global economic crisis and FDI flows to emerging markets

(5) The Asian century

References

• Business Dictionary viewed 27 February 2015 http://www.businessdictionary.com/definition/marketspace.html#ixzz3SzPqAfhL

• Cambridge Business English Dictionary 2015 viewed 27 February 2015 <http://dictionary.cambridge.org/dictionary/business-english/e-marketplace>

• Cambridge Business English Dictionary 2015 viewed 27 February 2015 < http://dictionary.cambridge.org/dictionary/business-english/the-global-

marketplace?q=Global+Marketplace >

• Crosby, M., and Bodman, P ‘When the US Sneezes, Do We Need to Catch a Cold? Historical and Future Linkages between the Australian and US

Business Cycles’ viewed 27 February 2015 < http://www.rba.gov.au/publications/confs/2005/pdf/crosby-bodman.pdf >

• Das, Dilip K., Globalisation and an Emerging Global Middle Class. Economic Affairs, Vol. 29, Issue 3, pp. 89-92, September 2009. Available at SSRN:

http://ssrn.com/abstract=1484161 or http://dx.doi.org/10.1111/j.1468-0270.2009.01927.x

• Harvey, M., & Novicevic, M. M. 2002. The hypercompetitive global marketplace: the importance of intuition and creativity in expatriate managers.Journal

of World Business, 37(2), 127-138.

• Ustuner, Tuba and Douglas Holt (2007), ‘‘DominateScholte, J. A. (2005) ‘The Sources of Neoliberal Globalization’, United Nations Research Institute for

Social Development, Program Paper

• No. 8, Geneva (October).

• Simon, S. J. 2000. The impact of culture and gender on web sites: an empirical study. ACM SIGMIS Database. 32, no. 1: 18-37.

• Luna, D., Peracchio, L. A. & De Juan, M. D. 2002. Cross-cultural and cognitive aspects of web site navigation. Journal of the academy of marketing

science. 30, no. 4: 397-410.

• d Consumer Acculturation: The Social Construction of Poor Migrant Women’s Consumer Identity Projects in a Turkish Squatter,’’ Journal of Consumer

Research, 34 (June), 41-56.

• Zinkhan, G. M. 2005, The marketplace, emerging technology and marketing theory. Marketing Theory, Vol. 5, No. 1, pp. 105-115. doi:

10.1177/1470593105049603

• Images

• Wisco Histon.d., [image], daugherity.com, viewed 27 February 2015, <http://wiscohisto.tumblr.com/post/63588676271/the-bitker-family-and-other-local-

merchants-dress>.

• Micework, 2012 [image], , viewed 27 February 2015, http://www.margopp.co.id/V3/you-talk-they-listen.html