International Marketing Exam 11 (ch. 1,2,3,5)

Attractive Emerging Markets

- Have high political stability. - Have sound currency and low inflation. - Have pro-business, fiscally-conservative, transparent government policies, and sound corporate law. - Guarantees for the repatriation of dividends and capital. - Have liquid securities markets reflecting fair prices. - Have work ethics and a culture of integrity.

Geology and the Shortage of Natural Resources

A country's access to natural resources determines whether the country can be a viable trade partner in the international market. Geology determines the natural resources available in the country and its potential for prosperity. There is a shortage of raw materials worldwide and prices are rapidly increasing.

Which of the of the following is not an example of a nontariff barrier?

A tax on imported automobiles

low income countries can maintain some control

Ability to allocate local resources (raw materials, labor). Have control over access to local consumers. Have the ability to lessen economic gap by imposing barriers to international corporations.

The top 100 multinationals...

Account for 7 percent of world economic activity. Control 20 percent of all foreign assets. Employ 6 million workers.

Boycotts

Action group calling for a ban on all goods associated with a particular company and/or country. Target company may be representative of, or even synonymous with, its country of origin.

Paratariff measures: Additional charges; examples:

Advance import deposits. Import charges. Seasonal tariffs. Customs charges.

Consumer protection

Allows favoring local over international firms by applying rigid standards, quality controls, and product origin requirements.

infant industry argument:

Allows low-income countries to protect new industries from international competitors.

Barriers Imposed by International Competition

Among the competitive barriers international companies commonly encounter are: Blocked channels of distribution Exclusive retailer agreements Price cutting Advertising blitzes

common law

Based on prior court rulings (legal precedent); used by many of the former Great Britain colonies.

business hours, business days

Business do not operate on on Sundays in Christian countries, on Fridays in Muslim countries, and on Saturdays, in Israel.

Evaluating political risk

Business periodicals (The Economist, WSJ) Commercial sources (Country Reports, Economist Intelligence Unit, Chase, RUNDT's World Business Intelligence)

National defense

Can result in banning of publications or products that attempt to destabilize the government or that bring outside influence.

Experience Transfers

Companies benefit from lessons they learn in different parts of the world and transfer their knowledge to other markets they serve.

Product Life Cycle Considerations:

Companies prolong the product life cycle of their late-maturity brands by entering growth markets.

competition

Competitive pressure from international companies will force the company to expand to new markets, even less profitable ones.

code/ civil law

Comprehensive written laws that specify what constitutes legal behavior; used by most countries.

environmental quality

Concerns about the environment have led to the active regulation of business, especially in industrialized countries.

converging consumer needs

Consumers' exposure (through media, travel) to global brands created demand for global products and worldwide loyalty to international brands. The emergence of uniform consumer segments facilitates standardized marketing strategies.

Risks related to government economic policy

Controlling foreign investment through taxes or transfer of assets from company to local ownership: Confiscation. Expropriation. Nationalization. Creeping expropriation. Domestication.

religion

Defines a society's relationship to the supernatural. Determines dominant values and attitudes. Religious beliefs are important determinants of consumer behavior and can be linked to cultural behaviors that impact economic development and marketing.

the natural environment of international marketing

Determines access to markets, production and productivity capability, and trade.

spoken/ written language

Differences in meaning in different countries which share the same language. Poses a number of concerns to marketers: Marketers may have difficulties deciding which language to use in unified markets where multiple languages are used. Quality translation can be costly. High costs of translation mistakes. India: 300 minor languages and 3000 dialects.

Tariffs: Taxes imposed on goods entering a particular country to:

Discourage imports of particular goods. Penalize countries that are not politically aligned with the importing country. Generate revenues. U.S. tariffs have traditionally been low, less than 10%; in 2018, however, the U.S. imposed higher tariffs on aluminum, steel, and other products. Other countries can impose tariffs greater than 100% for protected products.

Levels of International Marketing Involvement

Domestic Marketing Export Marketing International Marketing Global Marketing

Firms in high-income countries

Dominate the world economy. Allocate resources based on market potential, rather than based on local needs.

economic growth

Economic growth created markets of high potential for international brands, while also opening previously closed markets.

The most severe nontariff barriers to trade include:

Embargoes

Natural resources conservation and environmental protection

Environmental protection is frequently used as an argument to allow governments to impose trade restrictions aimed at conserving national natural resources.

assimilation

Full adoption and maintenance of the new culture, and resistance to one's old culture.

low-income countries

GNI per capita of less than US $1,045 Primarily agrarian. Located in different regions in Asia and Sub-Saharan Africa. Often neglected or underserved by large multinationals. Represent potential niche markets (small shampoo packets, video vans, women agent leasing phone time

Which entities are liable under the FCPA?

Gas Corp. Gas Corp. and Euro Gas Middleman Inc.

Employment protection and protection of markets with excess labor

Governments erect trade barriers in markets with high levels of excess labor and underemployment to: prevent imports prevent efficient international companies from taking over local enterprises and firing excess workers.

Ehtnocentric Orientation

Guided by domestic market extension concept. Domestic strategies, techniques, and personnel are perceived as superior. International markets are secondary, regarded primarily as outlets for surplus domestic production. International marketing plans are developed in-house by the international division

Geocentric Orientation

Guided by the global marketing concept. Marketing strategies aimed at market segments, rather than geographic locations. Maximizes efficiencies worldwide Provides a standardized offering worldwide. Examples: Global brands such as Coca-Cola, Apple, and most luxury brands.

Regiocentric Orientation

Guided by the international marketing concept. Considers world regions that share economic, political, and/or cultural traits as distinct markets . Divisions are organized based on location. Regional offices coordinate marketing activities, using a region-wide marketing approach. Example: Regional brands such as Unilever's Domestos (household cleaning agent containing bleach, sold only in Central Europe)

Polycentric Orientation

Guided by the multidomestic marketing concept. Focuses on the importance and uniqueness of each international market. Firms establish independent businesses in each target country. Decentralized, minimal coordination across markets. Marketing strategies are specific to each country. Outcomes: no economies of scale. duplicated functions. higher final product costs

international legal environment

International firms are affected by three bodies of law: International Laws Host Country Laws Home Country Laws They must adhere to all three

Facilitators of International Trade

International trade and economic development organizations Government organizations Other institutions and procedures facilitating international trade

gift giving

Knowing what gifts are appropriate, along with the manner in which they should be presented is essential.

factors influencing intellectual property violations

Lack of appropriate legislation. Lax enforcement. Unavailability of authentic products. High prices for authentic products that limit their accessibility to local consumers. Cultural Factors Values that perceive imitation as a form of flattery. Feelings of interpersonal distrust and not getting fair deal. Emphasis on material wealth. Belief that technology is common domain.

elements of culture:

Language Religion Cultural values Cultural norms Food

World Trade Organization

Largest and most influential international trade organization. Ensures free flow of trade. Functions: Provides assistance to developing and transition economies. Offers help for export promotion. Promotes regional trade agreements and economic cooperation. Reviews members' trade policies and engages in routine notification of new trade measures.

improvements in Transportation and Telecommunication

Lower cost and higher quality communication due to satellite technology, teleconferencing, and e-mail. Allow for frequent interaction between subsidiaries in foreign countries and the headquarters. Allow for outsourcing of customer service. The introduction of containers in intermodal transportation and electronic communication between suppliers and customers greatly facilitates the transportation of physical goods.

Protection of markets with excess productive capacity

Markets with excess productive capacity only need a fraction of the resources they allocate to production for optimal performance. To protect state-owned enterprises, national governments limit foreign investment and entrance of foreign competing products.

Non-Tariff Barriers:

Measures, other than traditional tariffs, that are used to distort international trade flows. Raise prices of both imports and import-competing goods. Favor domestic over foreign supply sources by causing importers to charge higher prices and to restrict import volumes.

technology

Media development exposes consumers worldwide to foreign programming and websites. Consumers worldwide are exposed to similar products, services, and entertainment, and marketing communications. The Internet offers small and medium enterprises in both high- and low-income countries unlimited international exposure. Technology offers a broad reach to these businesses, whose advertising budget cannot cover the high cost of international advertising.

Local content requirement

Met by manipulating and/or assembling the product on the territory of the importing country, usually in a foreign trade zone.

time orientation

Monochronic time (M-time) - attributed to cultures where individuals usually do one thing at a time, sequentially. Polychronic time (P-time) - attributed to cultures where individuals perform multiple tasks at once, and tend to see time as fluid.

the technological environment is changing rapidly:

New product development proceeding at fast pace Thousands of patents and trademarks are registered worldwide on a daily basis. Technology has greatly changed international marketing.

High New Product Development Costs:

New-product-development costs are rapidly increasing and product life cycles are decreasing...As a result, firms must look beyond the home-country to fully recover high product development costs and to make a profit.

political risk signals

Poor economic performance. Repression of ethnic groups and/or general repression by the elite. Internal diversity and incongruent interests. Radically changing government structures. Fierce nationalist sentiment.

antitrust legislation

Prevent anticompetitive activities such as the creation of monopolies and cartels

Standardization, Scale Economies, Cheap Labor

Price competition during the maturity stage of the product life cycle drives firm to new international markets in search of cheap labor. The firm lowers costs - and prices - as it takes advantage of: Economies of scale Standardization, and Cheap labor.

population

Problematic, in light of the scarcity of natural resources. Population growth rate is highest in South Asia and Sub-Saharan Africa.

The primary firm drivers for international expansion are:

Product Life Cycle High New Product Development Costs Standardization Economies of Scale Cheap Labor Experience Transfers

Embargos

Prohibiting all business deals with the target country; affects third parties.

nonverbal communication

Proxemics: The relationship between physical space and the process of communication. Postures, orientations, and oculesics: Individuals' positioning relative to their counterpart and the use/avoidance of eye contact during communication. (See Conan's video) Chronemics: The timing of verbal exchanges in a conversation with others. Haptics: The use of touch while conversing. Kinesics: Movements of parts of the body to facilitate communication, such as gesturing (Bulgaria)

Sanctions

Punitive trade restrictions applied by a country or group against another country for noncompliance.

opposing forces

Reduction of trade barriers is a main concern of multinational firms and governments of the multinational firms. National and local governments erect barriers to protect small and medium enterprises from multinationals.

government barriers

Restrictions placed on international corporations by imposing: Tariffs Import quotas Other limitations, such as restrictive import license awards.

the world bank

Specialized agency of the United Nations. Largest international bank that sponsors economic development. Employs international specialists in economics, finance, sectoral development. Focus on health and information technology.

islamic law

System of law based on the interpretation of the Koran, Islam's holy book, and the practices and sayings of the Prophet Muhammad. Establishes rules for business practices that can affect firm operations. Used in North Africa, the Middle East, the South Asia.

Risks related to government trade policies:

Tariffs and quotas. Exchange-rate controls and export/import license requirements. Other trade barriers.

Which of the following statements is not true regarding the U. S. Foreign Corrupt Practices Act?

The Act makes it illegal for companies to bribe government officials. . The Act prohibits payment to third parties when the company has good reason to assume that part of the payment is being used for bribery purposes. Companies can be forced to pay fines if they are found guilty of violating the Act. (all of the above)

special trade status and legislation

The United States offer the Permanent Normal-Trade-Relations (PNTR) Status, granting preferential tax treatment on imported products from selected countries that are not part of a trade agreement. The Generalized System of Preferences allows 143 low-income countries to export 4,650 specified duty-free goods to the United States.

Global Marketing

The firm coordinates its marketing activities across different countries without a country or regional focus. This strategy is viable due to the emergence of uniform global consumer segments. The strategy entails an efficient global allocation of company resources.

International Marketing

The firm focuses on international consumers in one or more countries. Firm's sales offices, subsidiaries, joint ventures are in different countries, but firm activities are not coordinated across different countries.

Domestic Marketing

The firm has the least commitment to international marketing Focus on domestic consumers and on the home-country environment.

Export Marketing

The firm is indirectly or directly involved in exporting. The firm considers the international market as an extension of the domestic market.

Transition to a Market Economy

Transition to a market economy created important new markets and opportunities to transform inefficient government-owned companies into successful enterprises.

Minimizing Political Risk

Understand both ruling and opposition parties. Remain politically neutral. Be exemplary corporate citizens. Sell a quality product or service that is essential for local development. Partner with local companies and create local expertise. Use local suppliers. Obtain insurance coverage against expropriation, nationalization, confiscation, and terrorism.

intellectual property rights

Violation of intellectual property rights is the most significant threat to the competitiveness of international corporations. Losses attributed to the violation of intellectual property rights are estimated to be more than $225 billion a year.

Antidumping and countervailing duty actions

When used as price controls, they involve initiating investigations to determine if products were sold below fair value to either Get rid of excess inventory (dumping). Or as a result of foreign subsidies (countervailing) Such measures can be used to intimidate importers.

culture

a continuously changing totality of learned and shared meanings, rituals, norms, and traditions among the members of an organization or society. society's personality

climate

affects economic development: Arid lands are inhabitable only at high cost; excessive rain destroys the infrastructure.

self-reference criterion

an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions

legal systems

common law, civil law, islamic law

Primary drivers in the business environment:

competition Regional Economic and Political Integration Technology Improvements in Transportation and Telecommunication Economic Growth Transition to a Market Economy Converging Consumer Needs

Which of the following refers to "the seizing of company assets and/or investors' assets without any compensation.

confiscation

Ricardo's theory of comparative advantage:

countries benefit from specialization in an industry in which they have comparative advantage and from trading with one another. Opening up the home market increases competition, thus lowering prices for local consumers. Multinationals encourage efficiency in local manufacturing and services. Free trade also means that firms no longer have to limit themselves to the local, national market. Firms increase production, achieve economies of scale, and offer lower prices to world markets.

hydrology

determines access to markets. Hydroelectric power is essential to economic development.

Topography and Access to Markets

determines access to the market and affects distribution decisions.

In which type of marketing does a firm have the least commitment to international marketing?

domestic marketing

Successful industries are emerging aimed at creating alternative energy sources and reducing the cost of electricity consumption in an effort to improve ____.

environmental quality

Markets with excess productive capacity:

frequently use protectionistic measures to keep the factories running.

Regional Economic and Political Integration

integration facilitates international trade for companies in member countries, and for companies from countries outside of the area.

Which type of marketing best describes a company's approach to international marketing if the company is present in different countries with sales offices, subsidiaries, or is an active partner in strategic alliances with local companies and that does not coordinate activities across the different countries or regions.

international marketing

Acculturation

learning a new culture

TRIPS agreement (Trade-Related Aspects of Intellectual Property Rights):

member countries of the World Trade Organization, must sign the TRIPS agreement.

At a trade show in Shanghai, Widgets Co., a Kansas City, Mo., company that wants to expand its presence in Asia, invites current and prospective customers out for drinks and pays the bar tab. Those invited include midlevel executives at companies owned or controlled by the Chinese government. Is this a violation of the FCPA?

no

international property protection

patent, copyright, trademark, trade secret

Big Emerging Markets (BEMs)

present the greatest potential for international trade and expansion. Set the pace for the economy in the region. Examples: China, India, Argentina, Brazil, Mexico.

Anti-corruption legislation

prevent multinational corporations from using unethical means to obtain competitive advantage in a particular market. Foreign Corrupt Practices Act makes it illegal to engage in bribing to gain competitive advantage or market access.

When a company from the United States exporting products to multiple countries in the European Union only has to go through customs once, this is an example of:

regional economic & political integration

Obstacles to Internationalization

self-reference criterion, government barriers, and competitive barriers.

subculture:

subcomponents of a society's culture, northern German versus Southern German (Bavaria) Northern Italian versus Southern Italian Ethnic, Language, regional differences

Enculuration

the process by which we learn about our culture

After drinks, Widgets Co. executives invite executives at one of China's state-owned utility companies to the U.S. to talk about a lucrative contract with the utility on which the American firm is bidding. Widgets pays for the officials to fly first class with their spouses to Las Vegas and puts them up in a casino hotel for a week before meeting with the Chinese executives on the final day of the trip to discuss the contract. Is this a violation of the FCPA?

yes