International Marketing

MKT303 International Marketing

Trade relations Workshop 7

Copyright Notice

COPYRIGHT COMMONWEALTH OF AUSTRALIA

Copyright Regulations 1969 WARNING

This material has been reproduced and communicated to you by or on behalf of Kaplan Higher Education pursuant to Part VB of the Copyright Act 1968 (the Act).

The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of

copyright protection under the Act.

Do not remove this notice

What will we be learning? Week Topic

1 Introduction to International Marketing

2 Political and economic factors impacting international marketing

3 Social and technological factors impacting international marketing

4 Legal and environmental factors impacting international marketing

5 Assignment presentations

6 Study week (Attendance is compulsory).

7 Trade relations

8 Culture and communications

9 Market entry – an international marketing approach

10 Getting a product to the customer – international context

11 Product management and surviving in an international market

12 Future of international marketing and ethics

Why am I learning this?

Trade relations are integral to realising market opportunities.

Knowing trade relations lets you identify potential markets to build international

marketing opportunities.

Workshop Activity

Revision

What did we discuss last week? Identify the three main points that you’ve learned during

last week’s class.

Share your thoughts with the rest of the class.

This Topic’s Big Idea

“Global trade has advantages. For starters, it allows those of us who live through winter to eat

fresh produce year-round.”

David Suzuki

Learning Outcomes

1. Understand the history of trade. 2. Gain context of Australia and how it conducts

trade with international trade partners. 3. Comprehend how international trade works. 4. Understand the role of key trade bodies. 5. Discuss key concepts such as imports, exports

and tariffs.

The History of Trade • Trade has existed since the

foundations of humanity – exchanging a surplus of products for another

• Modern trade arrangements began after World War II (1945) – General Agreement on

Tariffs and Trade (1947- 1994)

– World Trade Organisation (1995 onwards)

• International trade was a way to reduce potential for conflict

Watch: bit.ly/mkt303wto

Source: https://www.wto.org/english/thewto_e/thewto_e.htm

Workshop Activity

In groups of three to four discuss:

What are some of the advantages of encouraging international trade?

What are some of the disadvantages of international trade?

World Trade Organisation (WTO)

• Global body that deals with the rule of trade between countries.

• Goal: “ensure that trade flows smoothly, predicably and as freely as possible.”

• 160 are members of the organisation representing 98% of total trade.

• Based in the Centre William Rappard in Switzerland.

Source: https://www.wto.org/english/thewto_e/thewto_e.htm

International Monetary Fund (IMF)

• Maintains the stability of the world’s monetary system.

• Founded in 1945 • Goal is to foster global

monetary cooperation. • 189 members, some of these

countries provide funding for loans that are given out by the organisation.

• Undertakes: – Economic surveillance – Lending – Capacity development

• Based in Washington DC, USA

World Bank • 189 members • Mission: “reduce extreme

poverty to 3% by 2030. Promote share prosperity by increasing incomes of the poorest 40% of people in every country”

• Provides funding and knowledge

• Currently undertaking over 12,000 development projects around the world

• Headquartered in Washington DC, USA

Workshop Activity

In groups of three to four pick one of these international bodies and discuss how it has

helped in support international trade

What has the international organisation done?

What more could it do?

Forms of Trade Protection • Tariffs

– Taxes on imported products or services

– Raises prices for international goods making them more expensive than domestic

• Quotas – Restrictions on the amount

of imported products or services

– Limits the potential for foreign products or services to enter a market

• Subsidies – Government support to

particular industries – Not necessarily trade

protection but can help these industries compete

• Regulations – Laws or compliance

required to operate in a market

– Not necessarily trade protection but does place requirements on competition

Free Trade vs Protectionism • Free trade is the removal

trade barriers • Protectionism is the

increase of trade barriers • But the reality is less

simple – Varies between

countries – Varies between

industries • Countries trend towards

these two directions

World War I

•1914-1918 •Limited civilian economies

‘Spanish Flu’

•1918-1920 •Social isolation •Restrictions on travel

Great Depression

•1930-1939 •Trade protectionism

•Mass unemployment

World War II

•1939-1945 •Limited civilian economies

Cold War

• 1945-1989 • Colonial independence • Capitalism vs

Communism • Creation of trading

blocs

Post- Cold War

• 1989-2000 • Collapse of USSR • Economic growth in

China • Bilateral trade

agreements • Expansion of EU

Internet Era

• 2000-2015 • Growth of Internet

access • Use of e-commerce • Reductions in trade

barriers • Reduction of US

influence

Current

• 2015-onwards • Brexit and US

protectionism • Decline of US

influence • COVID-19 • Travel restrictions

Workshop Activity Since World War II the general trend has been

towards removing trade barriers

Yet the UK is leaving the European Union and Donald Trump was elected to the US to impose

trade barriers. COVID-19 has also disrupted global supply chains and trade

In groups of three to four discuss what you think will be the general trends in global trade

over the next five to ten years.

Australia and Trade Australia is dependent on global trade to bolster the

economy

Source: https://www.dfat.gov.au/sites/default/files/trade-investment-glance-2020.pdf

Exports out of Australia

Source: https://www.dfat.gov.au/sites/default/files/trade-investment-glance-2020.pdf

Imports to Australia

Source: https://www.dfat.gov.au/sites/default/files/trade-investment-glance-2020.pdf

Workshop Activity Cars in Australia used to be manufactured in Australia,

however this is no longer the case:

Watch: bit.ly/mkt303holden

In groups of three to four discuss:

How did global trade impact this decision?

Was this the right approach in your view?

Source: General Motors

Facilitating Global Trade • Trade needs

agreement between countries: – Multilateral (many

countries) – Regional (group of

countries) – Bilateral (between two

countries) • While the goal is ‘free

trade’ some barriers do remain

Watch: bit.ly/mkt303brookings

In groups discuss:

What are the advantages and disadvantages of trade agreements?

What is your view on this?

Regional Trading Blocs • Group of countries that

protect themselves from imports from non-member countries.

• Trading Blocs are a form of economic integration, and increasingly shape the pattern of world trade.

• There are 4 major types of integration. 1. Free Trade Areas 2. Customs Unions 3. Common Markets 4. Monetary Unions

Gillespie, K. and Hennessey, H.D., 2010. Global marketing. Cengage Learning.

Source: http://marketbusinessnews.com/financial-glossary/single-market/

c

Economic Integration Types

3.Common Markets

Same as free trade areas but… Agreed common external tariff or trade barrier to non member nations is exercised. Capital or labour cannot be moved freely between member nations.

e.g. SACU

2.Customs Unions

Simplest form of integration. * Nations agree to drop all or some barriers among member nations but can still trade outside of the group. * Capital or labour cannot be moved freely between member nations. e.g. NAFTA e.g. ASEAN

1.Free Trade Areas

4.Monetary/ Economic Unions

Same as common unions but… Free flow of resources is encouraged amongst member nations & capital and labour are able to move freely.

e.g.EU

Same as common market but… Member nations no longer regulate their own currencies. They all operate under the one currency controlled by a supranational central bank. e.g.EU

Gillespie, K. and Hennessey, H.D., 2010. Global marketing. Cengage Learning.

European Union (EU)

• Promotes economic growth for countries in Europe.

• Peace within Europe • Goal: “stability, a

single currency, mobility and growth.”

• 27 members. • Headquarters in

Brussels, Belgium.

Source: https://europa.eu/european-union/about-eu/eu-in-brief_en

Recent Trade Blocs • Regional Comprehensive

Economic Partnership (RCEP) – Negotiations from: 2011 – Signed: 2020 – 15 Members – India withdrew

• Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CoTPP) – Negotiations from: 2015 – Signed: 2018 – The US withdrew

• Regional trade blocs complement bilateral agreements

Australian Free Trade Agreements

Source: https://www.dfat.gov.au/sites/default/files/trade-investment-glance-2020.pdf

Austrade • The Australian Trade

and Investment Commission (Austrade)

• Helps Australian businesses expand internationally through: – Supporting foreign direct

investment – Advice on export

markets – Potential finance for

export development

Austrade | A case study Published on 17 Sep

2015

Watch: bit.ly/mkt303austrade

Workshop Activity

• BHP is one of the largest companies in Australia

• Focus is on global resources and worldwide mining operations

• Think Big campaign: bit.ly/mkt303bhp

In groups discuss what do you think of BHP’s

approach to marketing, taking a global

approach?

Next Week

Culture and communications