International Marketing Exam 3

Advantages of Joint Ventures

- Allows for risk sharing-financial and political - Provides an opportunity to learn a new environment - Provides an opportunity to achieve synergy by combining the strengths of partners - May be the only way to enter the market given barriers to entry

Global Brand development questions

- Are aimed to answer by Aackers and Jochimsthaler's research.

Chaebol (South Korea)

- Comprised to dozen of companies, centered around a bank or holding company, and dominated by a founding family. -- Samsung -- LG --Hyundai --Dacwoo

Joint venture

- Entry strategy for a single target country in which the partners share ownership of a newly created business entity. - Builds upon each partners strength

Keiretsu (Japan)

- Inter business alliance or enterprise groups in which business families join together to fight for market share. - Often cemented by bank ownership of large blocks of stock and by cross ownership of stock between a company and its buyers and nonfinancial suppliers. - Keiretsu executives can legally sit on earth other's board, share information, and coordinate prices.

Forms of FDI

- Joint Ventures - Minority or Majority equity stakes - outright acquisition

Disadvantages of Joint Ventures

- Requires more investment than a licensing agreement - Must share rewards as well as risks - Requires strong coordination - Potential for conflict among partners - Partner may become a competitor

When do you test new products

- Whenever a product interacts w/ human, mechanical, or chemical elements because there is the potential for a surprising and unexpected incompatibility.

Licensing provides

- additional profitability w/ little initial investment - methods of circumventing tariffs, quotes, and other export bargains - Attractive ROI - Low costs to implement - utilize cross-technology agreements to share developments and create a competitive advantage.

Contractual Manufacturing

- company provides technical specifications to a subcontractor or local manufacture. - Allows a company to specialize in product designs while contractors accept responsibility for manufacturing facilities.

Local Products and Brands

-Brands that have achieved success in a single national market -Represent the lifeblood of domestic companies -Entrenched local products/brands can be a significant competitive hurdle to global companies

Brands

-Bundle of images and experiences in the customer's mind -A promise made by a particular company about a particular product -A quality certification -Differentiation between competing products -The sum of impressions about a brand is the Brand Image

Alliances with Asian Competitors

-Four common problem areas --Each partner had a different dream --Each must contribute to the alliance and each must depend on the other to a degree that justifies the alliance --Differences in management philosophy, expectations, and approaches --No corporate memory

Disadvantages to Licensing

-Limited participation -Returns may be lost -Lack of control -Licensee may become competitor -Licensee may exploit company resources

Global Product Planning: Stage 1

-Product communication extension May be very profitable Almost no adaptation Same advertising and promotional appeals Used w/ B2B or industrial products

5 Attributes of True Global Strategic Partnerships

-Two or more companies develop a joint long-term strategy -Relationship is reciprocal -Partners' vision and efforts are global -Relationship is organized along horizontal lines (not vertical) -When competing in markets not covered by alliance, participants retain national and ideological identities

Strategic international alliance

A business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective

Strategy

A company may establish spirit GSP w/ different partners; strategy must be thought out up front to avoid conflicts.

Licensing

A contractual agreement whereby one company (the licensor) makes an asset available to another company (the licensee) in exchange for royalties, license fees, or some other form of compensation

Price ceiling

A legal maximum on the price at which a good can be sold

Price floor

A legal minimum on the price at which a good can be sold

strategic alliance

A long-term partnership between two or more companies established to help each company build competitive market advantages.

If a distributor's margins are based on the "landed" price of an import shipment, they will be based on: A) ex-works price. B) transportation costs. C) insurance costs. D) VAT. E) All of these

All of these

Which of the following is an appropriate guideline for companies selecting independent distributors in international markets? A) Select distributors; don't let them select you. B) Look for distributors capable of developing markets. C) Treat local distributors as long-term partners. D) Maintain control over marketing strategy from day one. E) All of these are appropriate guidelines.

All of these are appropriate guidelines.

Which of the following statements is not an example of local products or brands? A) Coca-Cola developed several branded drink products for Japan. B) Coca-Cola markets Kinely brand bottled water in India. C) BMW uses "the ultimate driving machine" slogan in India. D) Diageo PLC markets Gordon's Edge, a gin-based ready-to-drink beverage in the United Kingdom. E) Coca-Cola developed a noncarbonated, ginseng-flavored beverage for Japan.

BMW uses "the ultimate driving machine" slogan in India.

Which of the following companies would be most likely to use some form of countertrade when selling its products in developing countries? A) Procter & Gamble B) Bell Helicopter Textron C) Nokia D) Mercedes-Benz E) Coca-Cola

Bell Helicopter Textron

________ can also be thought of as an asset representing the value created by the relationship between the brand and its customers over time. A) Brand extensions B) Co-branding C) Brand image D) Brand equity E) Brand loyalty

Brand equity

Market expansion

By - Searching new markets in existing countries - Searching new country markets for already identified and served market segments

Adaptation

Changing elements of design, function, and packaging according to needs of different country markets.

country diversification and market concentration

Classic strategy where company searches worls market for a product

Semantech

Consortium of 14 tech companies tasked with saving the U.S. chip-making industry

Which of the following most accurately describes the relative length of consumer and industrial distribution channels? A) Consumer channels tend to be longer (consist of more intermediaries) than industrial channels. B) Industrial channels tend to be longer (consist of more intermediaries) than consumer channels. C) Both consumer and industrial channels tend to be long (consist of several intermediaries). D) Both consumer and industrial channels tend to be short (consist of few intermediaries). E) Consumer channels tend to be shorter (consist of few intermediaries) than the industrial channels.

Consumer channels tend to be longer (consist of more intermediaries) than industrial channels.

Franchising

Contract between a parent company-franchiser and a franchisee that allows the franchisee to operate a business developed by the franchiser in return for a fee and adherence to franchise-wide policies

country and segment diversification

Cooperate strategy of a global, multi business company such as Musushita. - Musushita is a multi country in scope and its various business units and groups serve multiple segments

Collective agreements

Employment contracts that result from negotiations between an employer and union (employees) that set out wages and working conditions for a particular organisation

If a commodity raw material comes from Africa, gets refined in Asia, then shipped to South America for finishing, and finally transported to the Middle East and then sold around the world this represents a similar process used for products marketed by: A) Exxon. B) McDonald's. C) Caterpillar. D) IKEA. E) Sears.

IKEA.

Global Product Planning: Stage 5

Innovation - Important for reacting mass markets in less undistinguished nations and certain segments in industrialized countries.

organizations

Innovative structures and design maybe needed to offset the complexity of multi country management

A global product meets the wants and needs of a global market, including the Triad which includes the following countries: A) Brazil, Russia, and China. B) Japan, Western Europe, and the United States. C) China, the United States, and Europe. D) China, India and Brazil. E) Japan, China, and Western Europe.

Japan, Western Europe, and the United States.

Packaging is an important consideration for products that are shipped to markets worldwide. Which of the following statements related to packaging is not true? A) Nestlé's worldwide network of packaging teams gives improvement suggestions on a quarterly basis. B) Japanese prefer plain soft colors on their packages. C) The Aquafresh Ultimate tube was designed to stand vertically. D) Coca-Cola had contour bottles in both glass and plastic versions in many countries. E) Nestlé asked suppliers to find a glue to make the clicking sound louder when a tube of Smarties brand chocolate candies are unwrapped.

Japanese prefer plain soft colors on their packages.

The disadvantages of joint venturing can include all of the following except: A) Joint venture partners must share rewards as well as risks. B) Joint ventures allow partners to achieve synergy. C) Joint ventures can have the potential for conflict between partners. D) A dynamic joint venture partner can evolve into a strong competitor. E) A company incurs very significant costs by joint venturing.

Joint ventures allow partners to achieve synergy.

Continuous innovation

Least disrupting influence or established consumption patterns

Which of the following does not fit in with the factors that should be considered by companies forming GSPs? A) Partners are competitors to each other. B) Harmony is not the most important measure of success. C) All employees and managers must understand where cooperation ends and competitive compromise begins. D) Learning from partners is critically important. E) None of these

None of these

International products and brands

Offered in several markets in a particular region -'Euro-brands' -Honda 5-door hatchback auto is known as Fit in Japan and Jazz in Europe

Extension

Offering product virtually unchanged in markets outside of home country

Which of the following is not a characteristic of global strategic alliances? A) Participants maintain independence outside the framework of alliance. B) Participants share benefits as well as control. C) Participants make ongoing contributions in technology, products, and other areas. D) Participants focus on an individual country market. E) Participants share benefits of the alliance.

Participants focus on an individual country market.

Types of licensing

Patent Trade secret Brand name Product formulation

Country of origins as Brand Element

Perceptions about and attitudes toward particular countries often expand to products and brands known as to originate in those countries.

Culture

Personal chemistry is important, as in the successful development of a shared set of values.

Managment

Potentially decisive issues must be identified in advance and clear, unitary lines of an authority established that will result in commitment by all partners

Global Product Planning: Stage 3

Product adaptation communication extension - Adapt the product to local use but the message stays the same

Global Product Planning: Stage 4

Product communication and adaptation - Both may need to change for legal, cultural, or other environmental reasons.

Global Product planning: Stage 2

Product extension-communication adaptation - Products may serve the same or different needs in different markets. - no product changes reduce expenses - Costs in market research advertising, sales, promotion, point of sale material

Discontinuous innovations

Requires new consumption patterns and the creation of previously unknown products

Dynamic continuous innovations

Some disrupting influence or established consumption patterns

Asian Hierarchy of needs

Status Admiration Affiliation Safety Physiological

Mission

Successful GSP creates win-win situations, where participants pursue objectives on the basis of mutual need or advantage.

All of the following stores are categorized as "superstores" except: A) Toys "R" Us. B) Home Depot. C) IKEA. D) Babies "R" Us. E) The Body Shop.

The Body Shop.

Brand Equity

The added value that accrues to a product as a result of investments in the marketing of the brand. - An asset that represents the value created by the relationship between the brand and customer overtime.

Global marketers must understand the importance of visual aesthetics embodied in the color or shape of a product, label, or package. Which of the following statements is not true regarding the use of color in selected countries? A) Yellow color on Caterpillar's earthmoving equipment is acceptable worldwide. B) Packaging aesthetics are particularly important to the Japanese. C) White color is associated with death and bad luck in some Asian countries. D) The red Marlboro color had to be changed in some Asian countries. E) Chinese consider the red color to be lucky.

The red Marlboro color had to be changed in some Asian countries.

Which of the following is true about Japanese keiretsu? A) Toyota is a vertical keiretsu, Mitsubishi is a horizontal keiretsu. B) Toyota is a horizontal keiretsu, Mitsubishi is a vertical keiretsu. C) Toyota and Mitsubishi are both horizontal keiretsu. D) Toyota and Mitsubishi are both vertical keiretsu. E) None of these

Toyota is a vertical keiretsu, Mitsubishi is a horizontal keiretsu.

Global Brand leadership

Using organizational structures, processes, and cultures to allocate brand-building resources globally, to create global synergies, and to develop a global brand strategy that coordinates and leverages country brand strategies

Procter & Gamble recently introduced Pampers Rash Guard. Rash Guard does not represent a new product per se; rather, the diapers are being marketed as an alternative to regular Pampers. What type of innovation do Pampers Rash Guard diapers represent? A) a continuous innovation B) a dynamically continuous innovation C) a discontinuous innovation D) a platform-based innovation E) None of these

a continuous innovation

greenfeild investment

a parent company creates a subsidiary in a different country, building its operations from the ground up.

Global Strategic Partnerships

a sophisticated market entry strategy via an alliance with one or more business partners for the purpose of serving the global market

Which of the following forms of countertrade does not require use of money or credit between parties? A) barter B) switch trading C) offset D) compensation trading E) None of these

barter

Companies that use "contract manufacturing" provide all of the following advantages except: A) technical specifications to subcontractors. B) technical specifications to local manufacturers. C) licensing firm can specialize in product marketing. D) limited commitment of financial resources. E) considerable commitment of management resources

considerable commitment of management resources

packaging

consumers packaged goods refers to products whose packaging in designed to protect or contain the product during shipping, at retail, or point of use.

McDonald's success in franchising in global markets can be attributed to several factors which do not include: A) a well known global brand name. B) a business system that can be easily replicated. C) local market knowledge. D) cross licensing. E) granting franchisees leeway to tailor menu offerings to suit local tastes.

cross licensing.

When British entrepreneur Richard Branson established the first Virgin Megastore in France, he invested a great deal of money to develop a retail space on the famous Champs-Elysées. Judging by the approach Branson used, he and his management team must have viewed France as: A) culturally close and easy to enter. B) culturally distant and easy to enter. C) culturally close and difficult to enter. D) culturally distant and difficult to enter. E) culturally difficult and easy to enter.

culturally close and easy to enter.

Creation

developing new products for the world market

Governance

discussion and consensus must be the norms. Partners must be viewed as equal

If a company sells products in export markets at prices that are below fair market value and that can harm producers in the export market, then that company may be accused of: A) market skimming. B) using offsets. C) pursuing artificially high margins. D) dumping. E) gray marketing.

dumping.

In the Uruguay round of GATT negotiations, many countries took issue with the U.S. system of laws, in part because historically the U.S. Commerce Department almost always ruled in favor of the U.S. company that filed the complaint. This was related to the laws pertaining to: A) black marketing. B) market skimming. C) gray marketing. D) dumping. E) licensing.

dumping.

The Advanced Photo System (APS) created by Kodak and its partners combines traditional chemical photo processing with digital technology. One benefit of the system is that shutterbugs can choose 3 different print sizes. The APS would best be described as a: A) continuous innovation. B) dynamically continuous innovation. C) discontinuous innovation. D) platform-based innovation. E) new and improved innovation.

dynamically continuous innovation.

If company managers decide to set the export price for a particular product at an amount equivalent to the home-country price, they would be using which approach to pricing? A) ethnocentric B) polycentric C) regiocentric D) geocentric E) extension pricing

ethnocentric

For Starbucks and other companies whose business models include a service component, it is not recommended that they use one of the following methods for going global. A) joint ventures B) licensing C) 100-percent ownership D) exporting E) franchising

exporting

The specialty retailing industry, as well as the fast-food industry, favors ________ for global growth. A) licensing B) investment C) franchising D) joint ventures E) strategic alliances

franchising

Relationship enterprise

groupings of firms from different industries and countries with common goals and act as one entity

A freighter loaded with 40-foot shipping containers leaves a port in Europe and sails to New York, where the containers are transferred to railroad cars and transported to the West coast. At the port of San Francisco, the containers are loaded onto another freighter bound for Japan. The term that best describes this situation is: A) intermodal transportation. B) inventory management. C) greenfield investment. D) hypermarketing. E) containerization.

intermodal transportation.

In a joint venture with Russian manufacturer AvtoVAZ, GM executives were planning to have a stripped-down re-engineered car based on its Opel model. However, the market research revealed that a "Made-in-Russia" car would only be acceptable if: A) it has a German name. B) it sported a very low sticker price. C) it has an American name. D) it has a very high sticker price. E) it has a Russian name.

it sported a very low sticker price

NIH (not invented here) syndrome

managers ignore the advancements of subsidiaries overseas

Global Products and Brands

meet the wants and needs of a global market are offered in all world regions. - global brands have the same names and similar images and positioning throughout the world.

"Successful GSPs create win-win situations, where participants pursue objectives on the basis of mutual advantage." When applied to global strategic partnerships, this statement indicates the importance of which factor? A) mission B) strategy C) governance D) culture E) organization

mission

"Organized retail" is a term used to describe: A) modern chain stores. B) grocery stores. C) local retail chains. D) supermarkets. E) hypermarkets.

modern chain stores.

Foreign direct investment

partial or full ownership of operations outside of a home country.

Coca-Cola Company's global marketing leadership position is based in part on its ability to put Coke "within an arm's reach of desire"; in other words, it is the ability to create: A) place utility. B) time utility. C) form utility. D) information utility. E) All of these

place utility.

A manufacturer attempting to set prices for its products in export markets must realize that CIF, VAT, and distributor markup all lead to: A) currency devaluations. B) dumping charges. C) market skimming. D) price escalation. E) market penetration.

price escalation.

Before Ben & Jerry's launched their ice cream in the United Kingdom, the company conducted extensive research to determine whether the package design was appropriate. The research indicated that British consumers perceived the colors differently than U.S. consumers. The package design was changed accordingly. This type of strategy can be defined as: A) product-communications extension. B) product extension-communications adaptation. C) product adaptation-communications extension. D) product-communication adaptation. E) product invention.

product extension-communications adaptation

To promote its Centrino wireless chip, Intel launched a global ad campaign that features different combinations of celebrities. These celebrities were chosen because they are widely recognized in the key world markets. This type of strategy is referred to as: A) product-communications extension. B) product extension-communications adaptation. C) product adaptation-communications extension. D) product-communication adaptation. E) product invention.

product extension-communications adaptation.

In less-developed countries the most important channel of distribution is: A) door to door. B) public marketplaces. C) wholesale marketplaces. D) pyramid schemes. E) retail stores.

public marketplaces.

In the axis which differentiates between retailers, IKEA falls in: A) quadrant A. B) quadrant B. C) quadrant C. D) quadrant D. E) quadrant E.

quadrant A.

In July 2001, the euro's value relative to the dollar was about 1.00 = $0.85. By November 2009, the euro had strengthened to 1.00 = $1.48. In February 2012, one euro was equal to $1.33. All other things being equal, if a European-based global company wants to preserve margins for goods exported to the U.S. market, the company should: A) raise prices in dollars. B) switch to cost-based pricing. C) adopt a policy of market penetration pricing. D) reduce prices in dollars. E) use skimming pricing.

raise prices in dollars.

Which of the following is not one of the levels in the Asian version of Maslow's hierarchy? A) physiological B) safety C) affiliation D) admiration E) self-actualization

self-actualization

country segment and segment diversification

serves many markets in few countries. Implemented by European countries that remained in Europe and sought growth by expanding into new markets.

Market skimming

setting a high price for a new product when a firm has a unique or highly differentiated product with low price elasticity of demand

Penetration Pricing

setting a low initial price on a new product to appeal immediately to the mass market

If the manufacturer of a sophisticated new consumer electronics product determines that many target consumers qualify as "innovators" and "early adopters" with relatively inelastic demand curves, the company should use the ________ pricing strategy. A) gray market B) skimming C) penetration D) market holding E) cost-based

skimming

Country and market concentration

targeting a limited number of customer segments in a few countries - Starting point for most countries

Joseph Quinlan, chief marketing strategist at Bank of America, estimated that about 25% of U.S. merchandise exports represent shipments by American companies to their foreign affiliates and subsidiaries. This situation underscores the importance of ________ in global marketing. A) dumping B) gray marketing C) transfer pricing D) price skimming E) price fixing

transfer pricing