1.9 Key Terms

A KeyKey Terms

“Globalization 1.0”: The first stage of global development, what Friedman calls “Globalization 1.0,” started with Columbus’s discovery of the New World and ran from 1492 to about 1800. Driven by nationalism and religion, this lengthy stage was characterized by how much industrial power countries could produce and apply. 1.6

“Globalization 2.0”: From about 1800 to 2000, was disrupted by the Great Depression and both World Wars and was largely shaped by the emerging power of huge, multinational corporations. Globalization 2.0 grew with the European mercantile stock companies as they expanded in search of new markets, cheap labour, and raw materials. It continued with subsequent advances in sea and rail transportation. This period saw the introduction of modern communications and cheaper shipping costs. 1.6

“Globalization 3.0”: Began around 2000, with advances in global electronic interconnectivity that allowed individuals to communicate as never before 1.6

Administration: Bilateral trade flows show that administratively similar countries trade much more with each other. Administrative distance refers to historical governmental ties, such as those between India and the United Kingdom. 1.6

Culture: Generally, cultural differences between two countries reduce their economic exchange. Culture refers to a people’s norms, common beliefs, and practices. 1.6

Direct Exporting: Is the means of entry into a foreign market, the manufacturer establishes an export department to sell directly to a foreign film. 1.4

Diversity: Exists in global markets and marketers need to understand and respond to this diversity in the goods they offer and the way they market to consumers in these markets. 1.7

Domestic Marketing: This involves the company manipulating a series of controllable variables, such as price, advertising, distribution, and the product, in a largely uncontrollable external environment that is made up of different economic structures, competitors, cultural values, and legal infrastructure within specific political or geographic country boundaries. 1.4

Economics: Economic distance refers to differences in demographic and socioeconomic conditions. The most obvious economic difference between countries is size (as compared by gross domestic product, or GDP). 1.6

Economies of Scale: This refers to the situation where, as the quantity of output goes up, the cost per unit goes down. This is the idea behind “warehouse stores” like Costco or Walmart. In everyday language: a larger factory can produce at a lower average cost than a smaller factory. 1.5

Export marketing: A firm can export its products in one of three ways: indirect exporting, semi-direct exporting, and direct exporting 1.4

Firm Infrastructure: Firm infrastructure refers to how the firm is organized and led by executives. The effects of this organizing and leadership can be profound. For example, Ron Joyce’s leadership of the Canadian doughnut shop chain Tim Hortons was so successful that Canadians consume more doughnuts per person than all other countries. 1.2

Global Marketing: Involves the firm making one or more marketing decisions across national boundaries. At its most complex, it involves the firm establishing manufacturing and marketing facilities overseas and coordinating marketing strategies across markets. 1.1

Global Value Chain: This is when an organization does the full range of activities including supply, production, marketing, sales, distribution, and support to the end consumer, across geographical locations to gain a competitive advantage. 1.2

Gross Domestic Product (GDP): Growth migrates from mature economies, such as the US and EU member states, to developing economies, such as China and India, it becomes highly relevant to capture growth in higher-growth markets. 1.5

Human Resource Management: Human resource management is also important. Human resource management involves the recruitment, training, and compensation of employees. Recent research used data from more than twelve thousand organizations to demonstrate that the knowledge, skills, and abilities of a firm’s employees can act as a strategic resource and strongly influence the firm’s performance (Crook et al., 2011). 1.2

Inbound Logistics: Inbound logistics refers to the arrival of raw materials. 1.2

Increase The Cost and Complexity: Associated with developing and marketing tailored products, its supporters argue that it results in products and marketing strategies that are a better fit for local market needs and ultimately a greater sales success. 1.6

Indirect Exporting: Is a common practice among firms that are just beginning their exporting. Sales, whether foreign or domestic, are treated as domestic sales. All sales are made through the firm’s domestic sales department, as there is no export department. 1.4

International Marketing: This involves the company operating across several markets in which not only do the uncontrollable variables differ significantly between one market and another, but the controllable factor in the form of cost and price structures, opportunities for advertising, and distributive infrastructure are also likely to differ significantly. 1.4

Marketing and Sales: Attracting potential customers and convincing them to make purchases is the domain of marketing and sales. 1.2

Operations: Operations refers to the actual production process. 1.2

Outbound Logistics: Outbound logistics tracks the movement of finished products to customers. 1.2

Primary Activities: Are actions that are directly involved in the creation and distribution of goods and services. There are five primary activities in Porter’s Value Chain namely Inbound Logistics, Operations, Outbound Logistics, Marketing & Sales and Services. 1.2

Procurement: Procurement is the process of negotiating for and purchasing raw materials. 1.2

Public Relations: Public image and branding are critical components of most businesses. Building this public relations potential in a new geographic region is an enormous challenge, both in effectively localizing the message and in the capital expenditures necessary to create momentum. 1.5

Secondary Activities: Are not directly involved in the evolution of a product, but instead provide important underlying support for primary activities. Four activities are attributed as Secondary in Porter’s Value Chain namely Infrastructure, Human Resource Management, Technological Development and Procurement. 1.2

Semi-Direct Exporting: An American exporter usually initiates the contact through agents, merchant middlemen, or other manufacturers in the US. Such semi-direct exporting can be handled in a variety of ways. 1.4

Services: Service refers to the extent to which a firm provides assistance to its customers. Voodoo Donuts in Portland, Oregon, has developed a clever website (voodoodoughnut.com) that helps customers understand their uniquely named products, such as the Voodoo Doll, the Texas Challenge, and the Memphis Mafia, and the Dirty Snowball. 1.2

Technology: Technology refers to the use of computerization and telecommunications to support primary activities. 1.2



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