1 Grundlagen zum internationalen Marketing

1.1 Internationalization and the World Economy | S. Sutyrin

One could hardly disagree with the fact that today international marketing is of the crucial significance in order to secure successful performance of the companies - not only large ones, but also small and medium enterprises (SMEs) - from almost each and every country all around the globe. The reasons behind this is the intrinsic nature of world economy. The point is that it should be defined as a totality of individual national economies interacting with each other. The key word in the definition is interacting. Without the latter we would have just a certain number of separate countries simultaneously located on the Earth. It is the interaction that strictly speaking creates the world economy. It generates economic synergy which on average provides people living on our planet with the scale and scope of goods and services much beyond of the amount and diversity feasible for the same national economies operating independently.

More than that, as time went by the interaction under review tended to intensify and to expand. This brings us to the notion of internationalization as the main sustainable trend in the world economy development at least during last seven decades. In our analysis, we in general deal with a market economy. Regardless of the differences in its specific national and regional models, market economy is ultimately based upon private property and private companies making own decisions on "what", "how" and "for whom" to produce their products. Taking this under consideration we have all good reasons to look at internationalization from micro-?economic perspective.

Definition | Internationalization is a process of subsequent relatively large-?scale expansion of standard/routine operational cycle beyond national borders.

With respect to this definition two extra comments should be made:

1. Large-?scale expansion assumes that the size of "foreign activities" has to be significant for the overall commercial results of the respective business entity.

2. "Foreign activities" are carried out on a regular basis. There is nothing extraordinary in them both for the company itself and for its clients as well as suppliers.

Foreign activities would typically include two major forms of international economic cooperation, namely foreign trade and foreign investment either as alternatives or as complementing to each other. Available macroeconomic data ( Table 1.1) demonstrate that in relative terms they tend to expand faster than overall economic performance. This clearly supports the definition of internationalization given above.

1990

2000

2010

2018

2020

2021

World export of goods and services / World GDP (%%)

19.0

24.3

29.2

29.7

26.7

29.1

World Inward FDI stock / World GDP (%%)

17.3

32.6

29.9

37.6

48.9

46.8

Growing significance of international economic transactions | Calculated on the basis of World Bank Open Data 2023, World Investment Report 2022, World Investment Report 2021, World Investment Report 2019, World Investment Report 2009

In order to assess the process of internationalization from the point of view of individual companies, that is from a microeconomic perspective, one should stick to other indicators. One of the most frequently used is the transnationality index (TNI). It is calculated as the average of the following three ratios: foreign assets to total assets, foreign sales to total sales and foreign employment to total employment. World Investment Report (WIR) 2020 presented the figure that demonstrated developments of TNI and its components for the period of 1990-2019.

In spite of the fact that during last decade TNI did not grow fluctuating around 65%, an overall longer-?term expansion trend could hardly be denied. As for certain companies - mostly advanced in terms of their internationalization - TNI was much higher. In particular, in 2021 it equaled in case of Rio Tinto Plc Limited to 99.7%, in case of Barrick Gold Corp -to 98.2%, in case of Nestlé SA - to 90.4%. More than that, average TNI for 5-top (ranked by foreign assets) multinational enterprises - Shell Plc., Toyota Motor Corp., Total Energies SE, Volkswagen Group, and Deutsche Telekom AG - in 2021 increased up to 72.3% in comparison with 68.7% in 2020.

In spite of the fact that regarding future prospects WIR 2021 did not exclude a real possibility of TNI contraction, in particular due to repercussions of COVID pandemic, WIR 2022 claims: "International production gained further strength in 2021, with all indicators of foreign direct investment (FDI) rising, albeit at different growth rates".

Starting from the second half of 1980-s, the process under review has gradually gained a new significant feature. That is substantial increase - rather qualitative than simply quantitative - in the amount of countries being targeted by the companies for internationalization of these or that elements of their operational cycles. So, the concept of "globalization" entered both scientific and public lexicon.

Definition | Likewise a definition given to internationalization, the globalization could be defined a process of subsequent relatively large-?scale expansion of standard/routine operational cycle towards major economic regions of the globe.

From this perspective, relationship between two concepts looks as follows. Globalization should be perceived as a modern stage of internationalization. In its turn, the latter constitutes more general process in terms of time as well as in terms of substance. Both routine character and relative commercial significance are 'common denominators' for internationalization and globalization. As for the main difference, it is economic-?geographical dimension. In other words, to participate in the process of internationalization the company, for example, from Germany could expand only towards other Western European countries. In contrast to that, globalization requires that the same hypothetic company in addition to Western Europe would also have operations in North America and Eastern Asia. KOF Globalisation Index introduced by the KOF Swiss Economic Institute is one of possible ways to measure globalization (KOF Globalisation Index 2022).

In the current millennium, the transformation countries actively join the process of internationalization. According to the World Trade Organization (WTO) calculations, they either outperformed or equaled the performance of developed economies in world trade in most of the past ten years. In particular, India, Vietnam and United Arab Emirates were the most dynamic in increasing their rankings among the world's leading exporters and importers. At the level of individual firms, those from transformation countries successfully compete with the traditional American, Japanese or West European leaders, displacing the latter from a list of the largest global companies.  Table 1.2 demonstrates the trend quite clearly by the ranking of Fortune Global 500.

The Fortune Global 500 compiled and published annually from 1989 by Fortune magazine is an annual ranking of the top 500 companies worldwide. All of them are deeply involved in international operations.  Table 1.2 demonstrates that it has been Chinese companies that have experienced the most impressive expansion. In particular, only in 2009 a company from this country, namely Sinopec, for the first time entered the list of top 10 in Fortune Global 500. It occupied there the 9th position. In contrast to that, there are 3 Chinese companies in top 5 of Fortune Global 500 for 2020. For the first time China becomes number 1 country in terms of a number of its representatives, overtaking the USA. All in all, geographical palette of the countries/territories in the list modestly expanded from 28 in 2000 up to 35 in 2019 and 30 in 2020. Newcomers originate in particular from Indonesia, Saudi Arabia, Singapore, Thailand, Turkey and United Arab Emirates.

In 2021, the year on which the 2022 ranking is based, Fortune Global 500 companies from Greater China posted a record $11.5 trillion in revenue, accounting for 31% of the $37.8 trillion total revenue for all companies on the list - and topping, for the first time, the $11.2 trillion revenue reported by U.S. firms.

2005

2008

2012

2019

2020

2021

leading developed...