Chapter 8

Which global entry strategy has the most risk and why?

Direct investment has the most risk because it requires a firm to maintain 100 percent ownership of its plants, operation facilities, and offices in a foreign country, often through the formation of wholly owned subsidiaries. This entry strategy requires the highest level of investment and exposes the firm to significant risks, including the loss of its operating and/or initial investments

Which global entry strategy has the least risk and why?

Exporting has the least risk because it requires the least financial risk but also allows for only a limited return to the exporting firm. Global expansion often begins when a firm receives an order for its product or service from another country, in which case it faces little risk because it has no investment in people, capital equipment, buildings, on infrastructure

What are the three global product strategies?

Global product strategies: Sell the same product or service in both the home country market and the host country. Sell a product or service similar to that sold in home country but include minor adaptations. Sell totally new products or services.

Why are each of the BRIC countries viewed as potential candidates for global expansion?

Great potential for growth in the global community

What types of government actions should we be concerned about as we evaluate a country?

Tariffs, quotas, boycotts, exchange controls, and trade agreements

What are key metrics that can help analyze the economic environment of a country?

The general economic environment, the market size and population growth rate, and real income.

tariff

a tax levied on a good imported into a country

trade agreement

an intergovernmental agreement designed to manage and promote trade activities for a specific region

quota

designates the maximum quanitty of a product that may be brought into a country during a specified time period

assessing global markets

economic analysis using metrics, infrastructure and technology, sociocultural analysis, government actions

global entry strategies

export, franchising, strategic alliance, joint venture, direct investment

evaluating real income

firms can make adjustments to an existing product or change the price to meet the unique needs of a particular country market

economic analysis using metrics

general economic environment, market size and population growth, real income

BRIC countries

Brazil, Russia, India, China

What are five important cultural dimensions?

Cultural Dimensions include power distance, uncertainty avoidance, individualism, masculinity and time orientation

What are the components of a global marketing strategy?

Determining the target markets to pursue and developing a marketing mix that will sustain a competitive advantage over time.

boycott

pertains to a group's refusal to deal commercially with some organization to protest against its policies

sociocultural analysis

power distance, uncertainty avoidance, individualism, masculinity, time orientation

exchange control

refers to the regulation of a country's currency exchange rate, the measure of how much one currency is worth in relation to another

government actions

tariff, quota, exchange control, trade agreement

global marketing mix pricing strategies

tariffs, quotas, anti-dumping policies, economic conditions, competitive factors

infrastructure

the basic facilities, services, and installations needed for a community or society to function

cultural imperialism

the belief that one's own culture is superior to that of other nations

infrastructure and technology

transportation, channels, communication, commerce