Why International Marketing strengthens Freedom

freedom-to-trade-internationally

Source: www.dreamstime.com

You may ask what freedom has to do with international marketing. Freedom is about options. If there is no alternative, there is no freedom. A true alternative provides the opportunity to make a decision, to exercise virtue. In the blaze of the klieg lights, it is easy to make the “right’’ decision. at is not an exercise in virtue, because real alternatives arr effectively removed. e true selection among alternatives takes place in the darkness of night when nobody is looking.

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Will the TTIP deal be ratified?

Hopes are for Obama Administration to push for TTIP ratification before the new U.S. Congress is sworn in, says Georgetown University’s Michael Czinkota. Check the video below to see the latest interview of Prof. Michael Czinkota on TTIP with CNBC.

Will the TTIP deal be ratified?

Sailors On the Ship Europa: No Easy Cruise Ahead

They say more marriages might survive if the couple realized that sometimes the better comes after the worse. Unfortunately, political partners tend to have little patience and loyalty. We have seen the referendum in Scotland that nearly tore the United Kingdom asunder. Now the British exit (BREXIT) from the European Union is rearranging the deck chairs on the ship Europa.

While sailors on the ship, marketers do not have the captain’s power to change the game, but they can help to achieve a less painful adjustment by understanding and preparing for the major transformations and significant effects in marketing on both sides of the Atlantic.

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Strategic Trade Part II

Repetition

Some firms in some industries have inherent competitive advantages, often efficiency based, from simply having produced repetitively for years. Sometimes referred to as “learning-by-doing,” these firms may achieve competitive cost advantages from producing not only more units (as in the scale economics described above) but from producing more units over time. A government that wishes to promote these efficiency gains by domestic firms can help the firm move down the learning curve faster by protecting the domestic market from foreign competitors. Again similar in nature to the infant industry argument, the idea is not only to allow the firm to produce more, but to produce more cumulatively over time to gain competitive knowledge from the actual process itself.

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Strategic Trade Part I

Often criticized as being simplistic or naïve, trade theory in recent years has, in the words of one critic, grown up. One fundamental assumption that both classical and modern trade theories have not been willing to stray far from is the inefficiencies introduced with governmental involvement in trade. Economic theory, however, has long recognized that government involvement in trade. Economic theory, however, has long recognized that government can play a beneficial role when markets are not purely competitive. This theory has now been expanded to government’s role in international trade as well. This growing stream of thought is termed strategic trade. There are (at least) four specific circumstances involving imperfect competition in which strategic trade may apply, which we denote as price, cost, repetition, and externalities.

Price

A foreign firm that enjoys significant international market power—monopolistic power—has the ability to both restrict the quantity of consumption and demand higher prices. One method by which a domestic government may thwart that monopolistic power is to impose import duties or tariffs on the imported products. The monopolist, not wishing to allow the price of the product to rise too high in the target market, will often absorb some portion of the tariff. The result is roughly the same amount of product imported, and at relatively the same price to the customer, but the excessive profits (economic rent in economic theory) have been partly shifted from the monopolist to the domestic government. Governments have long fought the power of global petrochemical companies with these types of import duties.

Cost

Although much has been made in recent years about the benefits of “small and flexible,” some industries are still dominated by the firms that can gain massive productive size—scale economies. As the firm’s size increases, its per unit cost of production falls, allowing it a significant cost advantages in competition. Governments wishing for specific firms to gain this stature may choose to protect the domestic market against foreign competition to provide a home market of size for the company’s growth and maturity. This strategic trade theory is actually quite similar to the traditional arguments for the protection of infant industries, though this is protection whose benefits accrue to firms in adolescence rather than childhood.