International Marketing Final Exam

"master of destiny" viewpoint:

"People can substantially influence the future"

Social Responsibility and environmental management

-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 rather than a national issue and as one that poses common threats to human kind and thus cannot be addressed by nations in isolation

History is Subjective

1. Historical events are viewed from one's on biases and SRC 2. Historian traditionally try to be objective, but few can help filtering events through their own cultural biases

Arbitration

A disinterested and informed party or parties as referees to determine the merits of the case and make a judgment that both parties agree to honor. Most arbitration is conducted under the auspices of one of the more formal domestic and international arbitration groups organized specifically to facilitate the resolution of commercial disputes. -formal rules for the process and experienced arbitrators to assist. In most countries, decisions reached in formal arbitration are enforceable under the law. Although an arbitration clause in a contract can avert problems, sometimes enforcing arbitration agreements can be difficult. Arbitration clauses require agreement on two counts: The parties agree to arbitrate in the case of a dispute according to the rules and procedures of some arbitration tribunal and They agree to abide by the awards resulting from the arbitration. -Difficulty arises when the parties to a contract fail to honor the agreements.

Franchising

A legal process whereby a firm agrees to let another firm use its manufacturing process, trademarks, patents, trade secrets, or other proprietary knowledge in return for a fee or royalty. Licensing can be effective in situations in which the technology is unique and the risk is high. Of course, there is some risk assumed, because the licensee can refuse to pay the required fees while continuing to use the technology.

Masculinity

A society in which men are expected to be assertive, competitive, and concerned with material success, and women fulfill the role of nurturer: Japan and Austria.

Quota

A specific unit or dollar limit applied to a particular type of good. Quotas restrict the quantity of a specific item that can be imported: tend to increase prices

What is adaptation?

Adaptation does not require business executives to forsake their ways and change to local customs: Executives must be aware of local customs and be willing to accommodate those differences that can cause misunderstandings. Managers must be aware of their own culture and the recognize that differences in others can cause anxiety, frustration, and misunderstanding of the host's intentions. Be aware of self-reference criterion .

cultural borrowing

An Illusion A culture borrows and then adapts and customizes to its own needs and idiosyncrasies Cultures can be distinct even with some commonalities: Common language, race, heritage do not guarantee similarities Growing economic unification in Europe: Consider each country's consumer behavior independently

sustainable development

Approach toward economic growth described as a cooperative effort among businesses, environmentalists, and others to seek growth with "wise resource management, equitable distribution of benefits, and reduction of negative efforts on people and the environment from the process of economic growth"

Tariffs downside

Arbitrary, discriminatory Require constant administration and supervision Sometimes used as reprisals against protectionist moves of trading partners. -trade war Tariff barriers tend to restrict: -Manufacturers' supply sources -Choices available to consumers -Competition

low power distance

Austria and Scandinavia egalitarian views

Cultural electives

Behavior or customs that cultural aliens may wish to conform to or participate in, but not required Optional activities that a foreigner may or may not want to engage in Examples: drinking aperitifs (strong alcoholic drinks) before lunch in the Czech Republic or coffee in Saudi Arabia. No offense is taken if one refuses to participate in these cultural customs.

The Japanese and Spaniards love seafood:

Being surrounded by water explains preference for seafood

The marketing manager for Glorious Products wants to export the company's line of fashion boots to an EU country. However, she discovers that there is a complete restriction on the import of any form of leather into that country. This is an example of a(n)

Boycott

Cultural Imperatives

Business customs and expectations that must be met and conformed to or avoided "must do" things in another culture Examples: meeting and greeting, or exchange of business cards in Asian cultures (e.g., China, Japan and Korea).

Common Law vs. Civil Law

Common: Based on tradition Not all-inclusive Ownership of intellectual property based on use Agreements binding as long as proof of agreement is established Acts of God interpreted as unforeseeable occurrences of nature Code: Based on system of written rules Catchall provisions with broad interpretations possible Ownership of intellectual property based on registration Agreements not enforceable unless properly notarized or registered Acts of God interpreted as unforeseeable occurrences of nature and human acts

High context communication

Communication in a high-context culture depends heavily on the contextual (who says it, when it is said, how it is said) or nonverbal aspects of communication High context=nonverbal communication Italian, Spanish, Latin American, Arabian, and Japanese

Cultural Sensitivity

Cultural Sensitivity and Tolerance should be a starting point for successful foreign marketing Being attuned to ______ of a culture Viewing it ________, evaluating and appreciating it Reduces conflict Improves communication Makes collaborative relationships successful Understand how own culture impacts view of other cultures. Just because a culture is different doesn't mean it's wrong

cultural congruence

Cultural congruence involves marketing products similar to ones already on the market in a manner as congruent as possible with existing cultural norms, thereby minimizing resistance. Example: Nathan decided it would be best for his company to introduce a low-calorie drink product into the South American market that is similar to other products already in place in the country. He felt this would lead to less resistance on the part of the South American consumer and the products would sell well

Implication

Cultural distance s a multidimensional concept continues to be quite useful in the area of international marketing research. International marketers can use general pattern. The patterns displayed is NOT definitive, only ____________. Not every culture fits every dimension precisely. Still important to learn about culture individually.

Symbols

Culture is communication; Includes ability to accurately interpret symbols The successful international marketer must achieve expert communication, which requires a thorough understanding of the language as well as the ability to speak it. Advertising copywriters should be concerned less with obvious differences between languages and more with the idiomatic and symbolic meanings expressed.

Importance of culture

Culture is pervasive in all marketing activities, including pricing, research, promotion, channels of distribution, product, packaging, and styling

Cultural Exclusives

Customs or behaviors that foreigners are barred from and must not participate in Things you never engage in or do when in another culture. Politics and religion are taboo in conversations in any cultures, particularly for foreigners Examples: In Mexico, McDonald's used the national symbol of the Mexican flag on paper placemats and insulted the people (as you treat anything with the national symbol with the utmost respect).

Common law

Derived from English law: Found in England, U.S., Canada, and other countries once under English control Based on tradition, practices, precedents: Set by past courts' interpretations of statutes, legal legislation, and rulings - "interpretation through the past decisions of higher courts which interpret the same statutes or apply established and customary principles of law to a similar set of facts."

Civil/code law

Derived from Roman law -Found in Germany, Japan, France -Non-Islamic and non-Marxist countries Based on all-inclusive system of written rules of law 3 main codes: commercial, civil, and criminal All laws are codified, but broad interpretations are possible

Cultures pervasive impact on consumption

Different types of food are consumed in different cultures -In hot, tropical countries, spicy food is eaten as spices preserve the food even without refrigeration. -The geography of the country also shapes food habits

Social institutions: school

Education, one of the most important social institutions, affects all aspects of the culture, from economic development to consumer behavior. The literacy rate of a country is a potent force in economic development. Numerous studies indicate a direct link between the literacy rate of a country and its capability for rapid economic growth. Communicating with a literate market is much easier than communicating with one in which the marketer must depend on symbols and pictures.

social institutions: religion

First social institution infants are exposed to outside the home Religion impacts the value systems of a society and the effect of value systems on marketing. It affects people's habits, their outlook on life, the products they buy, the way they buy them, and even the newspapers they read. Marketers with little or no understanding of a religion will likely offend.

Expropriation

Government seizes investment but makes some reimbursement for the assets. In 2008 the Chavez regime in Venezuela expropriated Mexico's CEMEX operations, paying a negotiated prices. Often the expropriated investment sometimes becomes government-run entity (nationalized).

French and Italians consume the most wine:

Grapes grow best there; alcohol laws more relaxed

relationship oriented

High context Collectivism High power distance (including gender) Bribery more common* High distance from English Linguistic indirectness Polychronic time Face-to-face Background Reduce transaction costs

high power distance

Hong Kong and France hierarchical

Domestication

Host country gradually gains control of investment through a series of government decree that mandate local ownership and greater national involvement in a company's management. The ultimate goal is to force foreign investors to share more the ownership, management, and profits with nationals than was the case before domestication.

Cultural Change: Unplanned or Planned

However, when marketing programs depend on cultural change to be successful, A company may decide to leave acceptance to a strategy of unplanned change—that is, introduce a product and hope for the best. Or a company may employ a strategy of planned change—that is, deliberately set out to change those aspects of the culture offering resistance to predetermined marketing goals.

Process of learning

Humans make adaptations to changing environments through innovation. Individuals learn culture from social institutions through socialization (growing up) and acculturation (adjusting to a new culture). Individuals also absorb culture through role modeling, or imitation of their peers Finally, people make decisions about consumption and production through application of their cultural-based knowledge.

Culture Profoundly Impacts Business

Important for marketers to analyze to be successful Cultural analysis and understanding gives competitive edge Business etiquette a crucial component Adaptation, or at least accommodation, is a crucial concept in international marketing. This includes open tolerance and affirmative acceptance.

Political Sanctions

In addition to economic risks, one nation or a group of nations may -Boycotts another nation, thereby stopping all trade between the countries, or -Issue sanctions against the trade of specific products. History indicates that sanctions are almost always unsuccessful in reaching desired goals, particularly when other major nations' traders ignore them.

Global Marketing

In the global marketing stage, the firm starts viewing the world, including their home market, as one market. The major change is the orientation toward world markets and the activities directed at supporting this view.

International Marketing

In this stage a firm has planned production and marketing to many countries around the world with specific targets for each overseas country market. It involves not only marketing but also production of goods in overseas markets.

Geographical influence

Includes climate, topography, flora, fauna, microbiology As geography changes, humans can adapt almost immediately. Jared Diamond: "Innovations spread fastest East to West than North to South" Philip Parker: "Geography has a strong influence on history, economics, and consumer behavior"

Hofstede's Cultural Dimensions

Individualism-Collectivism Power Distance Uncertainty Avoidance Masculinity-Femininity

Individualism/Collectivism Index (IDV)

Individualist cultures: Each member of society is primarily concerned with his or her own interest and those of the immediate family. (U.S. and Europe) Collectivist cultures: All of society's members are integrated into cohesive in-groups. (Japanese and other Asian cultures) loyalty to groups I vs. We

Nationalism

Intense feeling of national pride and unity National interest and security more important than international relations A nation's people to pride in their country. -anti-foreign-business sentiment in the nation. War, terrorism or recession can create feelings of nationalism as well -The reaction of the American people and businesses toward Muslim nations following 9/11

lubrication

Involves a relatively small sum of cash, a gift, or a service given to a low-ranking official in a country where such offerings are not prohibited by law. Requests for a person to do a job more rapidly or more efficiently. Facilitates or expedites the normal, lawful performance of a duty by that official

M-time (monochronic)

Linear view, time is important, promptness Most North Americans, Swiss, Germans, and Scandinavians. Concentrate on one thing at a time. Most low-context cultures

Symbols: language

Linguistic distance Determines differences in values across countries and the amount of trade between countries. Demonstrates a direct influence of language on cultural values, expectations, and even conceptions of time.

Information Oriented

Low context Individualism Low power distance Bribery less common Low distance from English Linguistic directness Monochromatic time Internet Focus on the foreground Competition

Geography, Nature, and Economic Growth

Many factors can lead to economic stagnation -Climate and topography coupled with civil wars, poor environmental policies, and natural disasters Examples -Poor irrigation and water management causes droughts, floods, and soil erosion, and ultimately causes creeping deserts -Population increases, deforestation, and overgrazing intensify impact of drought and lead to malnutrition and ill health

Beliefs

Many of our beliefs are secular in nature. Mainly stem from religious training, varies by culture Relationship between superstition and religion unclear (number 13, number 4) Important part of cultural fabric of a society Influence all manners of behavior

Tariffs

May be used as revenue-generating taxes or to discourage the importation of goods, or for both reasons. Tariff rates are based on value or quantity or a combination of both. In the United States, for example, the types of customs duties used are classified as follows: Ad valorem duties; Specific duties; a compound duty

natural resources

Minerals and ability to generate energy are necessary - located all around earth - demand does not necessarily coincide with domestic supply Human labor creates energy in underdeveloped world Human energy is supplemented by - animals, woods, fossil fuels, nuclear power - oceans tides, geothermal power, the sun - petroleum dominant source; easy to store and transport

P-time (polychronic)

Multi-tasking, involvement with individuals High-context cultures, where the completion of a human transaction is emphasized more than holding to schedules.

What energy source contributes to over 60% of world energy consumption

Oil and gas

Ethnocentrism

One's own country, culture, or country is best; most problematic when affluent countries work with less affluent

Guide to Adaptation

Open tolerance Flexibility Humility Justice/fairness Ability to adjust to varying tempos Curiosity/interest Knowledge of the country Liking for others Ability to command respect Ability to integrate oneself into the environment

Rituals

Patterns of behavior and interaction that are learned and repeated Associated with major life events: marriage, funerals, graduation Also smaller rituals: dinner at restaurant, grooming, visit to store Important function of culture: Coordinate everyday interactions and special occasions; Let people know what to expect

Extortion

Payments are extracted under duress by someone in authority from a person seeking only what they are lawfully entitled to.

Domestic environment, Uncontrollable elements, Second Circle

Political/legal forces, economic climate, and competitive structure

Foreign Environment, Uncontrollable, third circle

Political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces

balance of payments

Presents an overall view of its international _______ _______ and is an important economic measure used by treasuries, central banks, and other government agencies whose responsibility is to maintain external and internal economic stability. Records all financial transactions with other countries (usually one year): Credits and debits must offset each other; Double-entry bookkeeping system must be in balance

Since 1953, the United States has limited the amount of raw peanuts that can be imported to 1.7 million pounds a year. This is only about one-tenth of 1 percent of all domestic edible peanut consumption in the United States. This limitation is an example of a(n)

Quota

Conciliation

Resolve dispute by asking third party to mediate The track record for the conciliation process is excellent, with a majority of disputes reaching settlement and leading to the resumption of business between the disputants. -Not legally binding Discussion during mediation is confidential: May not be used in future litigation or arbitration Considered especially effective in resolving disputes with the Chinese as it is nonthreatening.

Nationalism can be manifested in a variety of ways

Restrictions on imports from certain countries (imposition of tariffs on shrimp imports from Vietnam, Thailand, and India in 2005 to project U.S. shrimp farmers in the Gulf region), Restrictive _tariffs_ (such as the one France imposed on South American bananas) Other barriers such as specific product standards or health standards that only the country's industries are able to comply with.

Culture pervasive impact on birth rate

Smaller families are becoming favored. Gradual decline beginning in 1960s . -Shift from agricultural to industrial to services economies -Government policies or use of birth control technology -Global change in values about family size World population may actually begin to decline after the middle of the century unless major breakthroughs in longevity intervene.

Geert Hofstede:

Software of the mind; A guide for humans on how to think and behave; it is a problem-solving tool."

Licensing

Sometimes required by countries to regulate an imported commodity Import licenses is more flexible than quota: Quotas permit importing until the quota is filled; licensing limits quantities on a case-by-case basis.

Definitions of Culture

Sum of values, rituals, symbols, beliefs, and thought processes that are learned and shared by a group of people, then transmitted from generation to generation Resides in the individual's mind Large collective of people can be like-minded -The best international marketers not only will appreciate the cultural differences pertinent to their businesses, but they also will understand the origins of these differences

tariff barriers

Tariff barriers tend to Increase: __________ pressures Special interests' privileges Government control and political considerations in economic affairs The number of tariffs resulting from countries impacted by your country's tariffs (reciprocity)

Uncertainty Avoidance Index (UAI)

The extent to which the members of a society are uncomfortable with unclear, ambiguous, or unstructured situations. —> Highly intolerant of ambiguity; high level of anxiety and stress. Members of uncertainty accepting cultures are more tolerant of persons whose opinions differ from their own. Low —> more empirical research High —> absolute truth

Social Institutions: Media, Government & Corporation

The four social institutions that most strongly influence values and culture are schools, churches, families, and, most recently, the media. Media time has replaced family time Government: Less influential; Governments try to influence the thinking and behavior of adults; Use of propaganda, laws to influence Corporations: Merchants and traders throughout history have been the primary conduit for the diffusion of innovations.

low-context culture

The low-context culture depends more on explicit, verbally expressed communications Low Context= explicit, verbal communication French, North American, Scandinavian, German, and Swiss

confiscation

The most severe political risk Seizing of a company's assets without payment Most prevalent in the 1950s and 1960s when many underdeveloped countries saw confiscation, albeit ineffective, as means of economic growth. Confiscation of U.S. property occurred when Fidel Castro became the leader in Cuba.

The International Marketing Task

The performance of business activites designed to plan, price, promote, and direct flow of a company's goods and services to consumers or users in more than one nation for a profit

Social institutions

The roles and status positions found within a society are influenced by the dictates of social institutions Cultural interpretations are impacted by The positions of men and women in society The role of family Social classes Group behavior Age groups Societal definitions of decency and civility

Social institutions: family

The technology of birth control has tremendously affected families and reduced family sizes Women not only are putting off child bearing, but in some countries, they are putting off marriage as well. Single parenthood: In America, single women are choosing to have children without marriage. What constitutes a family is also a changing cultural norm: Same-sex marriage; Divorce Family forms and functions vary substantially around the world, even around the country.

Power Distance Index (PDI)

This is the extent to which the less powerful members of a society accept power to be distributed unequally. —> general distrust of others "All societies are unequal, but some are more unequal than others."

The self criterion (SRC)

Unconscious reference to own cultural values, experiences, knowledge; problematic when used as basis for decisions

Cultural values

Underlying the cultural diversity that exists among countries are fundamental differences in cultural values, that is, the importance of things and ideas. The most useful information on how cultural values influence various types of business and market behavior comes from seminal work of Geert Hofstede . A variety of studies have shown cultural values can predict such consumer behaviors.

Geography

Understanding of how a society's culture and economy are affected as a nation struggles to supply its peoples needs within the limits imposed by its physical makeup

Thought process

Ways of thinking vary across cultures Impact snap judgments more than long deliberations Deeply impact sensory perceptions, particularly aromas. Asians tend to see the whole picture and can report details about the background and foreground. Westerners alternatively focus on the foreground and can provide great detail about central figures but see relatively little in the background.

Local content laws

When countries often require a portion of any product sold within the country to have local content—that is, to contain locally made parts. All countries and regions may have local-content laws. For example, NAFTA has a 62.5% local-content requirement for cars originating from the NAFTA region, and the EU has a 45% local-content requirement that forces companies to use local components.

Joint ventures

With a joint venture, a domestic firm assumes an equity position (partial ownership) in a foreign firm to manufacture and/or market the domestic company's goods. Typically less susceptible to political harassment, joint ventures can be with locals or other third-country multinational companies; in both cases, a company's financial exposure is limited. A joint venture with locals helps minimize anti-MNC feelings, and a joint venture with another MNC adds the additional bargaining power of a third country. Example: U.S.-based Procter & Gamble and Italian-based Fater agreed to produce and market diapers for the European market.

General Agreement on Tariffs and Trade (GATT)

Worldwide agreement after WW II (U.S. and 22 other countries) Main provisions: 1.Trade shall be conducted on a nondiscriminatory basis 2.Protection shall be afforded domestic industries through customs tariffs, not through such commercial measures as import quotas 3.Consultation shall be the primary method used to solve global trade problems The original agreement provided a process to reduce tariffs and created an agency to serve as a watchdog over world trade. Periodically, member nations meet to reevaluate trade barriers and establish international codes designed to foster trade among members.

Edward Hall

believes cultural differences are often invisible and that marketers who ignore them often hurt both their companies and careers.

Femininity

by contrast, describes a society in which the social roles of men and women overlap, with neither gender exhibiting overly competitive behavior: Spain, Taiwan, and the Netherlands

The Germans, British, and Japanese love chocolates:

cooler temperatures allow for easier storage

James Day Hodgson

describes culture as a "thicket" - tough to get through

Targets animosity

directed toward a particular country

One country refuses to sell goods to its neighboring country based on the belief that the neighboring country harbors radicals and terrorists. In this case, the refusal is referred to as a(n)

embargo

The finance minister of a developing country demands a heavy payment for the approval of a multimillion dollar contract with a foreign company. This demand for the lump sum payment is called?

extortion

high-context cultures score

high on power distance and low on individualism.

Business customs

imperatives, electives, and exclusives

Embargo

is a refusal to sell to another country

Firm characteristics, Controllable Elements, First circle

product, price, promotion, place, and research

low-context culture scores

relatively low on power distance and high on individualism

Boycott

restricts the purchase and importation of good and services from other countries. This restriction even can include travel bans

Elements of culture

values, rituals, symbols, beliefs, thought processes

Climate and topography

• Impacts function of products and equipment; requires adjustments • Extremes in altitude, humidity, and temperature • Different seasons between northern and southern hemispheres • Climate can be diverse even within single market • Geographical features impede economic growth and trade • Mountains, oceans, seas, and jungles