International Marketing

Strategy and Theory

Sak Onkvisit, John Shaw, John J. Shaw

• Publisher: Routledge
• Year: 2009
• eBook ISBN: 9781135275464
• Edition: 5
• Topic: Business
• Subtopic: International Business
• Index: Business

Marketing is a universal activity that is widely applicable, regardless of the political, social or economic systems of a particular country. However, this doesn't mean that consumers in different parts of the world should be satisfied in the same way.The fifth edition of International Marketing has been written to enable managers and scholars to meet the international challenges they face every day. It provides the solid foundation required to understand the complexities of marketing on a global scale.

Fully updated, this book includes topical case studies, examples of contemporary marketing campaigns, the most relevant discussion topics and up-to-date theories, references and research findings. It is this combination of theory and practice that makes this textbook truly unique, presenting a fully rounded view of the topic rather than solely an anecdotal or descriptive one.

Part 5
Financial decisions

Chapter 18
Financial strategies

Financing and currencies

Owe your banker a thousand pounds, and you are at his mercy. Owe him a million, and the position is reversed.

John Maynard Keynes

Chapter outline

• Marketing strategy: the Big Mac Index
• Trade finance
• Nonfinancial institutions
  • Self-financing and debt financing
  • Equity financing
• Financial institutions
• Government agencies
• International financial institutions/development banks
• International Monetary Fund (IMF)
• Money
• Foreign exchange
• Foreign exchange market
• Foreign exchange rate
  • Currency equilibrium
  • Effect of devaluation
• Exchange rate systems
  • Gold Standard
  • Par value (adjustable peg)
  • Crawling peg (sliding or gliding parity)
  • Wide band
  • Floating (flexible) system
• Official classification of exchange rate regimes
• Evaluation of floating rates
• Financial implications and strategies
  • Early warning systems
  • Hedging
  • Leading and lagging
  • Invoicing
  • Pass-through costs
  • Other strategies
• Conclusion
• Case 18.1 Ups and downs: a foreign exchange simulation game

Marketing strategy

The Big Mac Index

The Economist charts the cost of a Big Mac at McDonald’s restaurants in 120 countries. The Big Mac Index is a measure of what it costs to buy a Big Mac in various parts of the world. Some people use the Big Mac Index as a convenient substitute for the purchasing–power–parity theory, which states that, although short-term factors may once in a while unduly affect exchange rates, purchasing power should be the same all over the world. If a Big Mac costs $3.43 in New York City, but costs $2.29 (or 33 percent less) in Tokyo, then the interpretation is that the Japanese yen is 33 percent undervalued compared to the U.S. dollar.

The Big Mac Index is a surprisingly accurate comparative of international currency. It found in 1994, for example, that the Japanese yen was overvalued by more than 60 percent. While it is true that short-term factors (e.g., politics, trade deficits, and interest rates) can greatly affect currency valuations, ec...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• List of illustrations
• Preface
• Part 1Overview of world business
• Part 2 World market environment
• Part 3 Planning for international marketing
• Part 4 International marketing decisions
• Part 5 Financial decisions