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P6 Challenges of globalisation when using internet marketing

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Markets are becoming global. This can present great opportunities with extreme rewards. However, customers and entire markets can be won and lost in the blink of an eye. In order to reap the rewards and manage the risks, a business first needs to understand the global forces affecting supply and demand.

"Customers, vendors, partners and shareholders no longer live in isolated pockets and are becoming more interconnected. Physical market boundaries mean very little nowadays. This is the core of globalization," says Paul Prabhaker, Ph.D., associate dean of Graduate Programs in the College of Business at Northern Illinois University. "Globally efficient markets relentlessly drive human resources, capital and materials. These markets do not respect national boundaries, traditions or cultures."

Smart Business spoke with Prabhaker about how businesses can deal with these interconnected marketplaces and globally networked supply chains to stay competitive in a furiously evolving marketplace.
What are some key things business leaders need to understand about doing business globally?
Be aware of the underlying trends driving the two sides of globalization: the supply side and the demand side. You ultimately need to proactively place bets around the future you want. This means you'd better understand the fast-changing global trends well enough because the future of your business is at their mercy.

Understand and accept that these global trends affect not just large, multinational firms, but, in fact, present greater risks and rewards to small local businesses. Be intentional in adapting your business on the supply side and demand side. Do you wish to serve markets locally by leveraging the efficiencies of a global supply chain? Or do you wish to serve markets globally by leveraging the nimbleness of a local supply chain?
How can companies deal with the interconnected marketplaces and the rise of networks?
An interconnected world creates customers who are at least aware of what other markets have access to. This awareness is heightened by the proliferation of technologies that provide information on demand to the global population. People all across the world are touched by the same information — information co-generated by providers and users simultaneously. It's then just a matter of time before behavior starts becoming similar.

For example, teenagers in Asia want to look and act like Western teenagers. They mimic television programs and movies and align their purchases and behaviors to the Western model. Awareness is everywhere now, and that's the difference. Because people are more aware, their behavior conforms to the new global model.

Markets are also no longer respecting national boundaries. Capital increasingly flows in the direction of wherever the market returns are higher. Human and material resources also do not have much respect for national boundaries, for example, the shift of technology skills and manufacturing skills from the West to the East. Businesses now have to rethink their capital-sourcing and human resource management strategies for a global marketplace.

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How to compete in a global marketplace - Smart Business Magazine

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Markets are becoming global. This can present great opportunities with extreme rewards. However, customers and entire markets can be won and lost in the blink of an eye. In order to reap the rewards and manage the risks, a business first needs to understand the global forces affecting supply and demand.

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For the committed business student..... How will this administration impact on globalisation

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As President-elect Donald Trump "pivots from campaigning to governing," some realities at home and abroad will become clear, said Wharton Dean Geoffrey Garrett, who is also a management professor at the school. For one, while Trump has sharply criticized international trade deals like the Trans-Pacific Partnership (TPP) and NAFTA, his best options may be to rewrite the former and make peace with the latter, Garrett noted. Another challenge is in delivering on his promises to Americans who have suffered from growing inequality and stagnant incomes in recent decades as globalization and technological change drove economic growth.

The way forward is to convince people that the U.S. does benefit from globalization, but make it inclusive at the same time, Garrett said. At the same time, the U.S. would see substantial "positive impact" if it manages to achieve a sustainable annual GDP growth rate of 3% or more, he added. He discussed some of the challenges and options facing Trump on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111. (Listen to the podcast at the top of this page.)

"There's less certainty around what the core of the Trump agenda will be internationally than domestically," said Garrett. He noted that much of Trump's domestic agenda, led by the promise of tax cuts, is "conventional Republican" fare.

Garrett described Trump's comments on international affairs as essentially "general statements" that are critical of U.S. policies. Here, he referred to Trump's argument that the U.S. is not getting "enough bang for its buck with allies" in the Middle East and also that it is "losing to China and losing on trade."

"If your growth drivers also narrow the benefits, that creates a big political and social challenge, but that is also an economic challenge."

Walking the Talk on TPP, NAFTA
Of the various international issues on Trump's agenda, "the more burning and the more pressing issue is what to do with TPP," according to Garrett. "My preferred go-forward path would not be to try to ink the TPP deal as it is currently written, but go back closer to scratch."

Putting the TPP in perspective, Garrett said the idea behind it was important in that it espoused a free trade agreement spanning both sides of the Pacific, uniting the U.S., Canada and Mexico with the big East Asian countries. The TPP deal that Barack Obama championed was not about economics, but about geopolitics, he added. "It was an effort by Obama to say to the world that we write the rules of the road to the 21 st century, not China."

However, Garrett said "the TPP is, in essence, dead on arrival as written in Washington, D.C." He noted that unwinding the TPP as it stands "potentially creates some real challenges in Asia, because a lot of the Asian countries that signed up to the TPP did so because the U.S. asked them to do that."

One crucial shortcoming of the TPP in its current form is that it doesn't include China, even though it is the world's largest trading nation and Asia's largest economy, said Garrett. He argued that China should be a part of such a deal.

Trump will need to come up with some alternative to the TPP, "and the alternative that I would encourage is one that includes China," said Garrett. "Mr. Trump said he is good at negotiating deals. The Chinese are deal makers. I'd encourage him to try to strike a deal that's win-win for China and the U.S. on trade."
Why Strike a Deal with China?
Garrett said there is a strong case for China to be included in the TPP. "Obviously, Asia has become an incredibly important growth engine for the world so we should never forget that," he said. "But when it comes to China in particular, all Americans are going to have to come to terms with two very important realities. One is the centrality of the Chinese market and Chinese consumers to American firms." He noted that while Apple assembles its devices in China, that country accounts for a quarter of the company's worldwide market. "It's a massive consumer market, and American firms benefit enormously form that."

The second reality Americans have to appreciate is Chinese investments in U.S. companies, said Garrett. Outbound Chinese investments in the last 20 years or so have found their way into U.S. companies that covet the Chinese domestic market, he added.

"Mr. Trump said he is good at negotiating deals. The Chinese are deal makers. I'd encourage him to try to strike a deal that's win-win for China and the U.S. on trade."

"Going forward, we are going to be dealing with a lot of outbound Chinese investments," said Garrett of what the Trump administration would need to factor in. "Of course, we have seen that movie before," he added, citing Japanese investments into the U.S. in the 1990s. "It took a while for Americans to come to grips with that, but having a lot of Toyotas - good cars made cheaply in the U.S. - has ultimately been a great benefit to the U.S. I hope and expect that would be true with Chinese investments; maybe not tomorrow, but if we measured in 10-year chunks, that would be an important new reality for this economy."

Compared with the TPP, Trump may have much less opportunity to walk away from the North American Free Trade Agreement, or NAFTA, between the U.S., Canada and Mexico. "It would be ... very difficult to unwind NAFTA, and very unwise to do so," said Garrett.

Garrett referred to the "gravity model of trade" in international economics that explains how bilateral trade flows work based on the economic sizes of trading partners and the distance between them. "It makes more sense to do more trade with countries that are closer to you," he said. "The fact that the U.S. shares very large land borders with both Canada and Mexico makes trade among those three countries an absolute natural." He predicted that despite the anti-NAFTA rhetoric in the campaign, that trade agreement will probably endure.
GDP Growth Challenge
Many commentators have talked of a GDP growth rate of 4% in Trump's presidency. But Garrett doesn't think such a growth rate is sustainable. Historically, GDP growth in the U.S. after World War II has ranged between 3.25% and 3.5%, he noted. "If the U.S. could get back to that ... that would have an enormous positive impact, not only economically but also politically in the country," he said. "I wouldn't be thinking of a sustainable 4% [GDP growth rate]; you might be able to juice it up to that with some short-term stimulus."

Economic growth is the pot of gold the financial markets want as they welcomed Trump's victory. The markets cheered him for two reasons, according to Garrett. One is the prospect of corporate tax cuts, and the other is his promise to invest in infrastructure improvements. "Both of those stimulate the economy in the short term," he said. "But the bigger issue is the longer-term one: Can you keep the growth rate north of 3%?"

Those questions bring into focus the big drivers of growth, according to Garrett. "The big drivers in the past 20 years or so are technology and globalization," he said. "The challenge that comes with both of them is that they have had a narrowing effect - not a broadening effect - when it comes to income distribution. If your growth drivers also narrow the benefits, that creates a big political and social challenge, but that is also an economic challenge."

What could Trump do to make sure everybody can benefit from globalization? "Using the bully pulpit to begin with is important," said Garrett. "To my mind, the most important thing to say is that everyone in America does benefit from globalization. We benefit because the things that we consume on a daily basis are just much cheaper. 'Made in America' is a lovely slogan, but if we sourced, produced and made everything in this country, prices for the stuff we buy would be much higher."

"'Made in America' is a lovely slogan, but if we sourced, produced and made everything in this country, prices for the stuff we buy would be much higher."

The similarities between the two growth drivers of technological change and globalization form one of Trump's biggest challenges ahead. "One similarity is [both have] reduced demand for less skilled labor," said Garrett. "We saw that in the Rust Belt states swinging to Trump from the Democrats. So now, President-elect Trump really has to take that one on."
What Helped Trump Win?
In drawing insights from Trump's victory, "the big story is economic, not social," said Garrett. "The temptation to focus on the uniqueness of Donald Trump as a candidate is clear. But what he was actually doing was riding a big structural wave of change in the United States."

That "structural wave" revolved around inequality and stagnant incomes, and "Trump's unique personality probably catalyzed that," Garrett explained. "Think about inequality, for example: We tend to associate that with post-2008, post-financial crisis, but inequality in the U.S. started increasing dramatically in the latter 1980s and went up a lot under Bill Clinton in the 1990s." Similarly, many Americans have coped with stagnant incomes over the past 15 years or so, he continued.

Now, in taking forward his election pitch, Trump has to "pivot from campaigning to governing," said Garrett. "It also creates the Trump agenda, which should be to increase growth, but to do so in a way that includes more people in it."
The First 100 Days
Could one expect to see policy action on some of those issues in Trump's first 100 days as president? "The '100 Days' thing tends to be mostly about symbolism," said Garrett. "I would expect a lot of symbolic chart-the-course kind of things. The realities of governing tend to take much longer than that. High-level political theater is bound to be a core part of the game. And of course Mr. Trump has proved incredibly adept at that."

In addition to symbolic actions, Garrett predicted that Trump will also send out some "big international signals" in his first 100 days. Those would include assertions that the U.S. is going to get tough on terrorism and that it doesn't like the nuclear deal that the Obama administration cut with Iran, he said. He also expected some negative actions such as the repudiation of the current TPP agreement, but hopes "there would be some signaling of a forward path as well" on that front.

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What a Trump Presidency Will Mean for Globalization - Knowledge@Wharton

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As President-elect Donald Trump "pivots from campaigning to governing," some realities at home and abroad will become clear, said Wharton Dean Geoffrey Garrett, who is also a management professor at the school. For one, while Trump has sharply criticized international trade deals like the Trans-Pacific Partnership (TPP) and NAFTA, his best options may be to rewrite the former and make peace with the latter, Garrett noted.

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How it is competing in a global market

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A number of questions were raised, and are being raised, on Starbucks' growth trajectory. A behemoth like it ought to slow down eventually. With the June quarter's results coming in with lower than expected comparable sales growth, many believed it to be the start of the end for the coffee-giant. However, since then the company has convinced many otherwise. Even as the company concentrated on diversifying its business away from coffee, to its consumer product goods segment and food, it came out with new and innovative products, such as substituting dairy with soy-milk, or almond-milk. Furthermore, according to the research firm Sense360, the traffic at Starbucks stores has improved considerably in the recent months, despite a slowdown in the restaurant industry. All of this contributed towards dispelling some of the negative sentiment which had formed around the company. In this note, we talk about some of the ways by which Starbucks maintains its edge over competitors like Dunkin' Brands and McDonald's McCafe.

Starbucks has always maintained its competitive advantage by being the leader in product innovation. Pumpkin spice latte, one of the seasonal favorites at Starbucks, was recently relaunched. The launch followed more than 150,000 incremental visits on the first two days, as stated by Sense360. As a result, Starbucks saw a share of its national QSR market increase by roughly 30 basis points to 6.96%. On the other hand, its competitors, McDonald's and Dunkin', which launched the same coffee a week earlier, saw their market share recede.

Market Share Of Leading Players In The Coffee Industry

Capitalizing on changing consumer preferences

Starbucks has maintained its popularity through time by being flexible. It has been open to adapting to changing consumer tastes and preferences. Its flexibility is also a part of the reason that allowed it to succeed in the tough and primarily tea-drinking market of China. Thus, the introduction of almond milk in its stores, in addition to other non-dairy alternatives such as coconut milk and soy milk, comes as no surprise. The bend towards dairy-free products can be understood by the following piece of research. According to Mintel, a research firm, nearly 49% of Americans consume non-dairy milk, although not exclusively. Consequently, the sales of dairy milk are projected to drop by 11% by 2020. The move is expected to help the company boost its average spend per customer on beverages, by charging consumers an additional $0.60 to use this as a substitute in their beverages.

Size Of The Non-Dairy Market

Opening stores in economically backward regions

Starbucks has always had a social consciousness, as opposed to other multinational companies. A proof of this can be seen in how well it treats its employees in regions all over the world, and the resultant low attrition rate.

As part of a national initiative, Starbucks last summer announced a program to support economic development in some of America's low to medium income communities. The opening up of a new store in Englewood, IL is an initiative in line with this, aimed at creating 26 jobs, and help to solve some of the problems plaguing the region. At the opening in Englewood, the director of community investment at Starbucks said "this is not just an opportunity to grow our business, but to be part of a local solution for social change." The company also announced plans to open five similar stores in other communities, beginning in 2017. Some of these regions include Baltimore, Birmingham, Long Beach, CA, the Miami metropolitan area, and the Greater Seattle Area.

Food sales now represent 20% of Starbucks' revenue and have been consistently contributing almost a percentage point to comps. Further, the company has found that each day part is far below its saturation level in terms of food offerings. To fully leverage the gaining popularity of its complementary coffee and food menu, the company is working towards establishing partnerships and making food one of its major future growth drivers. To this end, Starbucks announced its entry into the brunch business. It is currently testing a new weekend brunch menu in 70 locations in the western part of the U.S., which would be available on Saturdays and Sundays from 8 a.m. until 2 p.m., or until supplies run out. Another attempt at this is the partnership with the Italian bakery, Princi. The company will be serving fresh Princi food at its new premium restaurants.

Food Sales As A % Of Revenue

Starbucks' store network is much smaller in magnitude than other players in the QSR industry like KFC, McDonald's, and Subway. Consequently, the company is working on expanding its footprint, while changing its store mix. Instead of opening more dine-in restaurants, the coffee giant is concentrating on drive-thrus in the outer edges of urban and suburban areas. In addition, Starbucks is opening up express stores which essentially function as walk-thrus in New York, Boston, and Seattle. This strategy is aimed at increasing the company's store penetration, while avoiding cannibalization.

No franchising in a 100% franchisee world

While most quick-service restaurants are concentrating on turning their model towards one with 100% franchisees, Starbucks refuses to franchise its stores. A franchise model, by allowing the franchisor to outsource risk on its own capital, leads to much higher margins than a company operated restaurant. Further, through increased store expansion speed, the model enables the company to stay profitable and grow. Despite the benefits, Starbucks opposes the strategy as it believes that the company's value and culture are what continuously drive it forward, ahead of its peers. In his book, "Pour Your Heart Into It," the CEO, Howard Schultz, says, "To me, franchisees are middlemen who would stand between us and our customer."

Have more questions on Starbucks? See the links below.

For our model and valuation, please refer to our complete analysis for Starbucks
See More at Trefis | View Interactive Institutional Research (Powered by Trefis)

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Starbucks Is Maintaining Its Competitive Edge

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A number of questions were raised, and are being raised, on Starbucks' growth trajectory. A behemoth like it ought to slow down eventually. With the June quarter's results coming in with lower than expected comparable sales growth, many believed it to be the start of the end for the coffee-giant.

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Globalization: Past, Present, and Future

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A picture slideshow set to the 1812 Overture that chronicles how globalization and free trade have shaped the world we live in today. All attempts have been made to source each image. No claims of ownership of the photos are expressly made in this video and all rights belong to the photos' orginal creators.

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For bachelors of business administration students or related degree, these videos will guide you!

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Alternative video to help you understand globalisation and its impacts

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Alternative video to help you understand globalisation and its impacts

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Bee Business Bee Globalisation and Emerging Markets Presentation

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Join BeeBusinessBee in this short session that covers the Business Studies topic of Globalisation and Emerging Markets. This video looks at what they are and the impacts that they have on the decision making of business organisations. These resources are useful for your AQA BUSS4 Business Studies Course.

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A simple video which identifies some of the impacts of globalisation

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A simple video which identifies some of the impacts of globalisation

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The Impacts Of Globalisation - Just think about it.

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The impact of globalisation on the way we do business

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The impact of globalisation on the way we do business

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How Globalisation Has Changed The Way We Do Business

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Music by www.purple-planet.com Globalization has fundamentally changed the nature of business. The worlds largest media owner doesn't create any content, the leading software provider doesn't create its own apps and the most popular taxi company doesn't own a single cab. The world is more connected, making goods and services easily accessible.

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What are the advantages of globalisation? This will help you determine what they are

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What are the advantages of globalisation? This will help you determine what they are

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Gains from Globalisation I A Level and IB Economics

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Video to help explain the concept of globalisation

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Video to help explain the concept of globalisation

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What is Globalisation? I A Level and IB Economics