1 – Challenge of Globalization
International marketing spotlight : Red Bull
* Dietrich Mateschitz, inventor and 49% owner. 2003: will stay CEO at least 7 years more. He will focus on strategic issues, taking a global perspective on business. “Only 1 market: the world Global brand philosophy, global pricing, global media plans. But Austria don’t have a great number of global consumer brands (usually, export to Germany is already being a pioneer!)” * The Yoovidhya, a rich family in Thailand, 51% owner.
* 2003: Fleming Sundo, Danish, Chief operating officer at the headquarter in Austria. * 2007: loss of sales in Germany because of a deposit system, but the US, UK and Southeast Asian markets helped boost sales. What are the challenges of globalization to management?
Globalization of trade
World trade started with barter between neighboring communities, but the result is the same: Provide customers with more and different goods at lower prices. OECD (Organization for Economic Cooperation and Development): * 30 Members, representing only 20% of the world population, but more than 2/3 of total world production, and up to 4/5 of aid to industrially developing countries. (It has a global reach thanks to active relationships with other countries) * Planning, coordination and deepening of economic cooperation and development. * Active in all economically and socially relevant sectors. Growth of the global economy:
1. Growing for 200 years, then 300 years stagnation
2. 1820: Asia was the most important region in the world in terms of production. 70% of the world’s population produced 58% of the world’s total goods. 3. With growing industrialization Europe took the lead. In Asia, traditions and bureaucracy impeded the economic and social changes needed. 4. WW: Industrial dominance by the US.
5. Today: East and Southeast Asia are the most economically dynamic region again. Europe is in danger of a setback due to too much bureaucracy and social inflexibility. From 1820 to 2005, population rose from 1 billion to 6.5 billion. Average per capita income rose from $650 to $5,120. This more than proportional increase is due to: * Technological change
* Accumulation of capital (to finance improvements, etc)
* Human resources: better education, specific skills, more efficient management * Liberalization of trade More competition productivity gains, improvements in the quality, etc. 2003: World trade reached $9,220 billion.
* 63% was contributed by the triad (= the most highly industrialized nations of Western Europe, North America and Japan). These 20 nations represent 900 million consumers, less than ¼ of the world’s population, but 70% of the world’s GNP. * The leading countries in the world trade were the same than in the previous years: US, Germany, Japan, France and UK. But China moved from rank 11 in 1994 to rank 3 in 2003. Countries from East and Southeast Asia are climbing the ranks: Newly Industrialized Countries (NICs). The economically Less Developed Countries (LDCs) of Africa and Asia contributed to only 0,5% of international trade (political instability, high national debt, disease). Customers all over the world want to obtain the best products at the best possible prices. To be successful today, most businesses must be able to market to, and to satisfy, customers in a global marketplace. Potential problem of this development? * E.g. Ethics Box 1.1 Exploitation of financed Taylor’s terror Taylor was president of Liberia. In 1999, The Dutch businessman Gus van Kouwenhoven bought 5 concessions for cutting timber from the Liberian government. For the operations he cooperated with the Oriental Timber Corporation (OTC) and erased 4’500 hectares of rainforest, villages were burned, fields left behind. European and US timber purchasers were impressed by the efficiency and reliability of OTC’s business. Plus, prices were comparatively low,...
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