One of the major developments in the business world during the decade of the 90s was theglobalization of markets. The emergence of a largely borderless world has created a new reality for all types of companies. Today, world trade is driven by global competition among global companies forglobal consumers. With the development of faster communication, transportation, and financial transactions, time and distance are no longer barriers to global marketing. Products and services developed in one country quickly find their way to other countries where they are finding enthusiastic acceptance. Consumers around the world wear Nike shoes and Calvin Klein jeans, eat at McDonald’s, shave with Gillette razors, use Apple and Dell computers, drink Coca-Cola and Pepsi Cola soft drinks and Starbucks coffee, talk on cellular phones made by Nokia and Motorola, and drive cars made by global automakers such as Ford, Honda, and Nissan.

Companies are focusing on international markets for a number of reasons. Many companies in the U.S. and Western Europe recognize that their domestic markets offer them limited opportunities for expansion because of slow population growth, saturated markets, intense competition, and/or an unfavorable marketing environment. For example, U.S. tobacco companies face declining domestic consumption as a result of restrictions on their marketing and advertising efforts and the growing antismoking sentiment in this country. Companies such as R. J. Reynolds and Philip Morris are turning to markets outside the United States such as Asia and South America, where higher percentages of people smoke, nonsmokers are far more tolerant of the habit, opposition is less organized, and consumers are less litigious.3 Many U.S.-based brewers, among them Anheuser-Busch and Coors, are looking to international markets to sustain growth as beer sales in the United States decline and regulatory pressures increase. However, these brewers are facing strong competition from foreign companies that are also targeting international markets. For example, in 2002 the Miller Brewing Co. was purchased by South African Breweries, whose largest markets are in Asia and Africa. The acquisition gives SAB access to the U.S. beer market while expanding opportunities for Miller brands in global markets.

Many companies must focus on foreign markets to survive. Most European nations are relatively small in size and without foreign markets would not have the economies of scale to compete against larger U.S. and Japanese companies. For example, Swissbased Nestlé and Netherlands-based Unilever are two of the world’s largest consumerproduct companies because they have learned how to market their brands to consumers in countries around the world. Two of the world’s major marketers of cellular telephones are from Scandinavian countries. Nokia is based in Finland and Ericsson is located in Sweden. Australia’s tourist industry is a major part of its economy and relies heavily on visitors from other countries. Australia’s major tourist markets experienced dramatic declines in visitors following the global economic downturn in the tourist industry after the terrorist attacks of September 11.

Companies are also pursuing international markets because of the opportunities they offer for growth and profits. The dramatic economic, social, and political changes around the world in recent years have opened markets in Eastern Europe and China. China’s joining of the World Trade Organization in 2001 has provided foreign competitors with access to 1.2 billion potential Chinese consumers, and Western marketers are eager to sell them a variety of products and services. The growing markets of the Far East, Latin America, and other parts of the world present tremendous opportunities to marketers of consumer products and services as well as business-to-business marketers. Many companies in the United States as well as in other countries have long recognized the importance and potential profitability of international  markets. General Electric, Ford, General Motors, Nissan, Nestlé, and Procter & Gamble have made the world their market and generate much of their sales and profits from abroad. Gillette sells over 800 products in more than 200 countries. Colgate-Palmolive generates almost 70 percent of its nearly $10 billion in sales from outside the United States and Canada. Starbucks sells lattes around the world as its name and image connect with consumers in Europe and Asia as well as North America. The company has coffee shops in 28 countries and operates 1,200 international outlets from Beijing to London. Starbucks plans to double its number of stores worldwide to over 10,000 by 2005.8 Coca-Cola, Pepsi, Nike, KFC, Dell, McDonald’s, and many other U.S. companies and brands are known all over the world.

Many U.S.-based companies have formed joint ventures or strategic alliances with foreign companies to market their products internationally. For example, General Mills and Swiss-based Nestlé entered into a joint venture to create Cereal Partners Worldwide (CPW), taking advantage of General Mills’ popular product line and Nestlé’s powerful distribution channels in Europe, Asia, Latin America, and Africa. CPW is now the world’s second-largest cereal company, operating in 75 international markets, and it generated over $800 million in sales in 2002. Nestlé also has entered into joint ventures with Coca-Cola to have the beverage giant distribute its instant coffee and tea throughout the world. Häagen-Dazs entered into a joint venture in Japan with Suntory Ltd., and its premium ice cream, frozen yogurt, and other brands are now sold throughout Asia. International markets are important to small and mid-size companies as well as the large multinational corporations. Many of these firms can compete more effectively in foreign markets, where they may face less competition or appeal to specific market segments or where products have not yet reached the maturity stage of their life cycle. For example, the WD-40 Co. has saturated the U.S. market with its lubricant product and now gets much of its sales growth from markets in Europe, Asia, Latin America, and Australia.

Another reason it is increasingly important for U.S. companies to adopt an international marketing orientation is that imports are taking a larger and larger share of the domestic market for many products. The United States has been running a continuing balance-of-trade deficit; the monetary value of our imports exceeds that of our exports. American companies are realizing that we are shifting from being an isolated, self-sufficient, national economy to being part of an interdependent global economy. This means U.S. corporations must defend against foreign inroads into the domestic market as well as learn how to market their products and services to other countries. While many U.S. companies are becoming more aggressive in their pursuit of international markets, they face stiff competition from large multinational corporations from other countries. Some of the world’s most formidable marketers are European companies such as Unilever, Nestlé, Siemens, Philips, and Renault, as well as the various Japanese car and electronic manufacturers and packaged-goods companies such as Suntory, Shiseido, and Kao.