International Marketing ch 1-3
Taiping Rebellion
(1850-1864)humiliation from the opium wars on the Chinese led to a loss of confidence in the Chinese government. Hong Xiuquan- a peasant aspiring to be a civil servant failed the qualifying test four times. After the fourth fail he began to evangelize, presenting himself as Christ's brother. Over the years he attracted many followers. Eventually for reasons this book is not explaining to me they decided to rebel against the ruling of Manchus. Chinese opposition forces organized and formed an army against Hong. He ended up killing himself (rip). 20-40 million lives were lost. This event is a lot of the background in China's wary of foreign influences and religious movements
Discuss the five phases of international marketing involvement-
1) No Direct Foreign Marketing: a company does not actively cultivate customers outside national boundaries; however, they might reach a foreign market 2) Infrequent Foreign Marketing: temporary surplus caused by variations in production levels or demand may result in infrequent marketing overseas, sales are made to foreign markets as goods become available with little to no intention of maintaining continuous market representation 3) Regular Foreign Marketing: firm has permanent productive capacity devoted to the production of goods and services to be marketed in foreign markets, company begins to see foreign profit as a need and is dependent on it rather than a bonus in addition to regular domestic profits 4) International Marketing: companies in this stage are fully committed to and involved in international marketing activities. Companies seek markets all over the world and sell products that are a result of planned production for markets in various countries. Company is considered an international or multinational firm 5) Global Market: companies treat the world, including their home market, as one large market. Market segments are defined by income levels, usage patterns, or other factors that frequently span countries and regions INSTEAD of focusing on national borders.
Differences between the three international marketing concepts- This attempts to relate the foreign environment to the marketing process and illustrate the many ways in which culture can influence the marketing task
1) Political Globalization Measures: trade flows, foreign direct investments, income payments to foreigners, mean tariff rates, taxes on international trade 2) Social Globalization Measures: telephone traffic, international tourism, foreign population, internet users, televisions 3) Economic Globalization Measures: embassies in country, membership in international organizations, international treaties, participation in UN missions
Support or refute each of the various arguments commonly used in support of tariffs. Each of the reasons to support tariffs and protectionism are as follows:
1) Protection of an infant industry 2) Protection of home market 3) Need to keep money at home 4) Encouragement of capital accumulation 5) Maintenance of standard of living and real wages 6) Conservation of natural resources 7) Industrialization of a low wage nation 8) Employment and reduction of unemployment 9) National defense 10) Enhancement of business size 11) Retaliation and Bargaining All of these efforts to keep tariffs are hindering a nations realistic adjustment to its world's situations. With the use of free trade growth of purchasing power has increased and we see no negative affect on incomes or employment.
Global awareness
1) tolerance and willingness to learn about cultural differences 2) knowledge of cultures, history, world market potential, and global economic, social, and political trends- aka "cultural intelligence"
Lifelong plan to be globally aware
1) tolerance of and a willingness to learn about cultural differences and 2) knowledge of cultures, history, world market potential, and global economic, social, and political trends. A globally aware person will keep abreast of global economic, social, and political trends, because a country's prospects can change as these trends shift direction or accelerate
Opium Wars in China
1839-1842. a narcotic drug, easy to ship, high value, and addicting. Popular to use in British India but created in China. Chinese officials advocated to legalize, this caused foreign suppliers to boost production and shipments in due of expecting booming sales. Then the emperor ordered opposite action. The British got pissed because they couldn't get their drugs, so they responded by sinking junks in the Pearl River and blocking all Chinese ports. The war became about foreign access to Chinese trade, it yielded more freedoms for foreign traders and provisions allowing Christian evangelism throughout the realm
How does an understanding of history help an international marketer?
A crucial element in understanding any nation's business and political elements is the subjective perception of its history. We cannot fully understand why a country behaves as it does without the knowledge of its historical events.
Monroe Doctrine:
A public statement made by President James Monroe saying three basic dicta- 1) no further European colonization in the New World 2)abstention of the United States from European political affairs and 3) nonintervention by European governments in the governments in the Western Hemisphere • Roosevelt Corollary: an extension of the Monroe Doctrine that states not only would the United States prohibit non-American intervention in Latin American affairs, but it would also police the area (Panama Canal) and guarantee that Latin America meet their international obligations.
Tariff
A tax imposed by a government on goods entering at its boarders
The telegraph, telephone, television, satellites, the computer, mobile phones, and the internet have all had an effect on how international business operate. Discuss how each of these communications innovations affects international business management.
As technology continues to grow and expand we see a facilitated expansion of trade as well. Each new communication method greets the arrival of new business models. When businesses don't adjust to technology changes they soon cease to exist.
Why does the balance of payments always balance, even though the balance of trade does not?
Balance of Payments always balances because it is maintained on a double entry bookkeeping (assets and liabilities or the credits and debits must offset each other) but, just because they balance doesn't mean a nation is in "good or bad" finical condition. Meanwhile, balance of trade is the difference between a countries imports and exports which can easily have an uneven balance due to market access.
International Monetary Fund (IMF)
Created to assist nations in becoming and remaining economically viable. Helps maintain stability in the financial markets and by assisting countries that are seeking economic development and restructuring.
Differentiate among current account, balance of trade, and balance of payments.
Current Accounts refers to a record of all merchandise imports, exports, and services. Balance of trade is the difference between a country's imports and exports. Balance of Payments is the system of accounts that records a nations international financial transaction, this presents an overall view of its international economic position.
World Trade Organization (WTO)
Encompasses the current GATT structure to extend it to new areas not adequately covered in the past. WTO is an institution not an agreement. It sets many rules governing its 160 members and issues binding decisions
Enumerate the ways in which a nation can overcome an unfavorable balance of trade?
Eventually once an imbalance becomes too extreme will require an adjustment through a change in exchange rates, prices, and/or income. Once the wealth of a country whose expenditures exceed its income has been exhausted, that country, like an individual, must reduce its standard of living.
Discuss the impact of GATS, TRIMs, and TRIPs on global trade.
GATS provided the first comprehensive multilateral disciplines and procedures covering trade and investment in services. TRIMs established the basic principle that investment restrictions can be major trade barriers and are included under GATT procedures. TRIPs establishes substantially higher standers of protection for a full range of intellectual property rights, provides effect enforcement both internally and at the border.
Discuss globalization of US economy.
Globalization is the influence of businesses to develop international influence. Many people have begun to protest the acts of globalization due to America's involvement in WTO. Consequences of globalization include: environmental concerns, worker exploitation, domestic job losses, cultural extinction, higher oil prices, and diminished sovereignty of nations.
Why study a country's history?
History helps define a nation's "mission", how it perceives its neighbors, how it sees its place in the world, and how it sees itself. We must learn that history also influences business decisions such as foreign direct investments, market entry, and even personal choices.
Discuss how your interpretations of Manifest Destiny and the Monroe Doctrine might differ from those of a native Latin American.
History is a matter of perspective. The way we learn things in America is often focused to show our nation as a victim or good guy, meanwhile the same story can be viewed from a different point of view in the opposing nation. In regards to the Monroe Doctrine the United States views it as a justifiable part of our foreign policy, meanwhile Latin America see the agreement as an unwelcoming intrusion in Latin American affairs. It's all a story of he said she said.
Some say that the global environment is a global issue rather than a national one. What does this mean?
It is viewed that environmental protection is not an optional extra; it is an essential part of the complex process of doing business. Many view the problem as a global issue as one that poses common threats to humankind and thus cannot be addressed by nations in isolation.
The Tokyo Round of GATT emphasized the reduction of non-tariff barriers. How does the Uruguay Round differ?
Many issues were not covered in the Tokyo round of GATT and free trade still suffered. The Uruguay round placed more of an emphasis on services trade and intellectual property rights. GATS (general agreement on Trade in Services) was created and served as the first multilateral, legally enforceable agreement covering trade and investment in the services sector.
"Theoretically, the market is an automatic, competitive, self-regulating, mechanism which provides for the maximum consumer welfare and which best regulates the use of the factors of production" explain.
Market changes will happen! The Nation will automatically correct itself to the fluctuations in economy.
"The marketers' task is the same whether applied in Texas or Tanzanian"
Marketing concepts, processes, and principles are generally the same. A business' goal is to make a profit by promoting, pricing, and distributing products for which there is a market.
Why is there a love-hate relationship between Mexico and the United States?
Mexicans see the United States as a threat to their political, economic, and cultural sovereignty. United States claim that 'geography has made us neighbors, tradition has made us friends" while Mexico states "Geography has made us closer, tradition has made us far apart". The US loves Mexico and Mexico hates the US
Protectionism
Nations utilize legal barriers, exchange barriers, and psychological barriers to restrain the entry of unwanted goods
Does widespread unemployment change the economic logic of protectionism?
Protectionism becomes more popular during times of unemployment or declining wages, yet it rarely leads to growth in a declining industry. The jobs that are saved from practicing protectionism are saved at a very high cost, which constitutes a tax that consumers unknowingly pay.
Discuss the main provisions of the Omnibus Trade and Competitiveness Act of 1988
The Omnibus Trade and Competitiveness Act focuses on assisting businesses to be more competitive in world markets as well as correcting perceived injustice in trade practices. The Act addresses three areas for critical improvement 1) Market Access: gives the US president authority to restrict sales of a country's products in the US market if that country imposes unfair restrictions on US products. 2) Export Expansion: problems with US export competitiveness stem from impediments on trade imposed by US regulations and export disincentives. This act reaffirmed the government's role in being more responsive to the needs of the exporter. Export licenses could be obtained more easily for products on export control list as well as computer-based procedures to file for and track export license request 3) Import Relief: Provides a menu of remedies for US businesses severely affected by imports. Companies injured can petition the government for temporary relief while they adjust to import competition and regain competitive edge
Discuss the evolution of world trade that led to the formation of the WTO.
The amount of tariff and nontariff trade barriers hinders many countries and business from adequately being able to conduct international business. The first formation of the GATT provided a process to reduce tariffs and create an agency to serve as a watch dog over trade. While successful the agreement had many kinks (of which being the slow process to see changes throughout trade). This led to the creation of the World Trade Organization. The WTO allows its members access to a panel of experts to hear and rule on trade disputes and issue binding decisions.
Manifest Destiny
The expansion of the United States from Atlantic to Pacific ocean, when it is translated it means that Americans were the chosen people by God to create a model society
balance of payments
The system of accounts that records a nation's international financial transactions, records all financial transactions between its residents and those of the rest of the world during a given period of time (usually a year).
Why study geography in international marketing?
This gives us the ability to be able to place locations and understand the physical strain of location or the ease of trade based on location. This also includes an understanding of how a society's culture and economy are affected as a nation struggles to supply its people's needs within the limits imposed by its physical makeup.
The world population pattern is shifting from rural to urban areas. Discuss the marketing implications.
This population shift is largely a result of a desire for greater access to sources of education, healthcare, and improved job opportunities. Marketers are too understand these shifts to best provide a market for immigrants into developed urban areas.
"World trade routes bind the world together." Discuss.
Trade routes minimize distance, natural barriers, lock of resources, and the fundamental differences between people and economies. Trade routes represent the attempts of countries to overcome economic and social imbalances created in part by the influence of geography.
The marketer "should also examine the more complex effect of geography on general market characteristics, distribution systems, and the state of economy." Explain.
Understanding a Nation's geography goes further than just understand physical location. We must have an understanding of the cultural and economic effects on geography to best understand a nations market.
Explain the role of price as a free market regulator.
When being imposed to tariffs and other protective restrictions, research shows that US consumers pay about 70 billion per year in higher prices. The cost to consumers for saving one job in protected industries was $170,000, much higher than the wages and benefits of the average American manufacturing worker.
Difference between a global company and a multinational company
a global company is catalyzed by a company's crossing of the threshold at which more than half of its sales revenue come from abroad, the entire operation of the company begins to take on a global perspective
GATT
a move toward international cooperation among trading nations was manifested in the 1986-1994 negation of the General Agreement on Tariffs and Trade, a forum for member countries to negotiate a reduction of tariffs and other barriers to trade
Current Account
a record of all merchandise exports, imports, and services plus unilateral transfers of funds. Important because it includes all international merchandise trade and service accounts- accounts for the value of all merchandise and services imported and exported and all receipts and payments from investments and overseas employment
Voluntary Export Restraints (VERs)
an agreement between the importing country and the exporting country for a restriction on the volume of exports. A VER is called voluntary because the exporting country sets the limits; however, it is generally imposed under the threat of stiffer quotas and tariffs being set by the importing country if a VER is not established
Confucian Philosophy
an idea taught throughout Japan's history, emphasizes the basic virtue to loyalty- in all aspects of life- but most importantly a subject to its lord (a citizen to its country). This reflects the importance of cooperation for the collective good
self-reference criterion
an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions
Greenhouse-gas emissions
any gaseous compound in the atmosphere that causes heat to be trapped in the atmosphere and causes global warming
How can increased interest in international marketing on the part of US firms be explained
companies with only domestic marketing have begun to see increasing difficulty in sustaining their customary rates of growth, and many are seeking foreign markets to expand. Companies with foreign operations find that foreign earnings are making an important overall contribution to total corporate profits.
Uncontrollable elements
competition, politics, laws, consumer behavior, level of technology- level of uncertainty created by domestic and foreign environments
Expropriation
confiscation of foreign investments
Conditions that have led to the development of global markets
international operations of business in global marketing reflect the heighten competitiveness brought about by the globalization of markets, interdependence of the world's economies, and the growing number of competing firms from developed to developing countries vying for the world's market.
The idea of global orientation
operating as if all the country markets in a company's scope of operations (including the domestic market) were approachable as a single global market and standardizing the marketing mix where culturally feasible and cost effective
Domestic environment uncontrollables
political/legal forces, economic climate, competitive structure- home country elements that can have a direct effect on the success of a foreign venture
Foreign Environment Uncontrollables
political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces- the process of evaluating the uncontrollable elements in an international marketing program involves substantial doses of cultural, political and economic shock
Controllable Elements
product, price, promotion, place, research
Sustainable development:
the joint approach among those who (ex: governments, businesses, environmentalist) seek economic growth with "wise resource management, equitable distribution of benefits and reduction of negative effects on people and the environment from the process of economic growth".
International Marketing
the performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit
nontariff barriers
to encourage development of domestic industry and protect existing industry, governments may establish such barriers to trade as US tariffs and a variety of non-tariff barriers including- quotas, boycotts, monetary barriers, and market barriers
