International Marketing Test 1
What is the definition of culture? How it is learned?
"A set of interrelated beliefs, values, attitudes, and ways of doing things that is shared by a similar group of people, Learned through socialization (relations with other humans or human institutions)." Culture gives individuals an anchoring point - an identity - as well as codes of conduct; Culture includes both conscious and unconscious values, ideas, attitudes, and symbols that shape human behavior; Ethnicity has to do with culture. Talking about culture is talking about ethnicity
What percent of its GDP was the U.S. Current Account deficit in 2017?
- 2.3 %
What is the present population growth rate of Japan? What are 2 reasons for this low number? What problems is Japan facing because of this low rate?
-.2% growth rate. Japan's population is projected to decrease by one-third by the year 2060 Why? 1. In Japan it is because of a cultural reason that they do not allow immigration of a different race (Shinto religion stresses the nation is sacred so they don't want other ethnicities coming in). 2. Japan is also decreasing because of a gender evolution. The younger females do not want to get married, instead they want careers and not to be housewives Problem: If the population growth is too slow, it pulls the economy down, because you need people to work and you need customers.
Monetary Barriers:
1. Blocked currency, which is blocking trade in particular currency. This forces that banned country to exchange for a different currency, it can make it difficult for some countries to do trades 2. Differential exchange 3. Government approval
What are some of the largest religions in the world in number of followers?
1. Christianity - 2.1 billion 2. Islam - 1.3 billion 3. Secular/ Nonreligious/ Atheist - 1.1 billion 4. Hinduism - 900 million Hinduism: Major characteristic is that you are born into it and automatically put in a social class when born to the one your family is in. Basic principle of Hinduism is Nirvana. 5. Chinese traditional religion - 394 million 6. Buddhism - 376 million 7. Primal-indigenous - 300 million 8. African traditional - 100 million 9. Sikhism - 23 million 10. Judaism - 14 million 11. Shinto - 4 million
What are the Three Major Accounts of the Balance of Payments Statement?
1. Current Account - deals with international trade in goods and services, and with earnings on investments. 2. Capital and Financial Account - deals with transfers of capital and financial assets. 3. Balancing Account - records transfers of Official Reserve assets
What was the Balance of Trade situation of the United States in 2017? Why don't Americans worry about this situation?
1. Current Account Balance = -$449,140 million 2. Capital and Financial Account = $402,754 million 3. Balancing Account (Official Reserve Transfers) = 0
What are the 3 different strategic orientations in international marketing and the firm classifications they represent?
1. Domestic Market Extension (ethnocentric): When companies simply export, they assume that the foreign market is very similar to their own because you keep the product exactly the same, so this is engaging in ethnocentric behaviors. They are not modifying the product in any way for the needs of the new particular country, they just assume their product is the best and will be the best for them. This only works if the countries are very similar. 2. Multi Domestic Market (polycentric): Each foreign country is different. Requiring separate marketing strategies for each Firm Classification: polycentric Marketing Strategy must be adopted to local country markets if you operate in other countries not very similar to your own, you need to have a multi domestic market, where each subsidiary in each country serves that specific country. This is a polycentric approach. 3. Global Marketing Orientation (regiocentric, geocentric): The entire world is a potential market, with many similarities or differences. Firm Classification: Regiocentric or Geocentric Managers look for global markets with similar needs and try to standardize and/or adapt products and strategies on a global basis Lastly, global marketing is where you make all your regional elements work together, either by region or a complete world basis. This is a regiocentric or geocentric approach. Geocentric is when you integrate all elements from everywhere
What is the economic principle of Absolute Advantage? What is the economic principle of Relative (or Comparative) Advantage? What should countries do in order to trade under each one of these principles?
1. Economic Law of Absolute Advantage Adam Smith (1776) "Countries should specialize and only produce and export what they are most efficient in manufacturing (lower cost) and import the rest". EX of Economic Law of Absolute Advantage: EX: Let's say you have two countries that make the same kind of product. Let's say one country makes automobiles and computers. The two countries are the USA and Japan. The US at any given moment could produce ten cars and twenty computers, whereas Japan can produce 20 cars and 10 computers. So Japan has an advantage in the production of automobiles. But the US has an advantage in producing computers. Over the law of absolute advantage, each country should not waste its research on producing cars and computers, they should specialize. For example, the US should focus on making computers and forget about making cars and instead get cars from Japan. Japan should forget about computers and import computers from the US, and they should focus on cars as they are good at producing cars. Not so cut and dry because countries could worry about giving other countries monopolies 2. Economic Law of Comparative Advantage David Ricardo (1817) "Countries should specialize and only produce and export what they have the highest advantage ratio (lowest opportunity cost) compared to other countries, and import the rest. It is essentially an extension of the principle of Laissez-Faire to international trade, that is, that nations should specialize in producing and exporting goods that they are most efficient in manufacturing and import goods that they are less efficient in producing.
What are some of the trade preference programs that the U.S. government uses to assist countries?
1. Generalized System of Preferences (GSP) (1976) 2. Caribbean Basin Economic Recovery Act (1983) (Reagan) 3. Andean Trade Promotion and Drug Eradication (1991) (Bush) (2002) 4. African Growth and Opportunity Act (2000) (Clinton)
What are the 5 Cultural Dimensions according to Hofstede and what does each indicate about a particular culture?
1. Individualism/Collectivism Index= focuses on self-orientation, initiative 2. Power Distance Index= focuses on authority orientation, hierarchy 3. Uncertainty Avoidance Index= focuses on risk orientation, rules 4. Masculinity/Femininity Index= focuses on achievement orientation, sex roles 5. Long-term Orientation = focuses on long-term commitments and respect for tradition
What are Edward T. Hall's silent languages? What is m-time? What is p-time? As global markets expand, how is P-Time and M-Time changing within business people?
1. Language of Time 2. Language of Space EX is you can tell the power or position an employee has by the size of their office. In other cultures, it may not work this way though. 3. Language of Things 4. Language of Friendship Varies between cultures. How easily are business friendships made and how obligatory are they. In the US, business friendships are probably easily made but not very obligating. 5. Language of Agreements When is a particular agreement considered to be final. P-Time versus M-Time: Monochronic (M-time): Very punctual. Swiss is very good example 1. Tend to concentrate on one thing at a time 2. Divide time into small units and are concerned with promptness 3. Most low-context cultures operate on M-Time Polychronic (P-time): Punctuality not that important. 1. Dominant in high-context cultures 2. Characterized by the simultaneous occurrence of many things 3. Allows for relationships to build and context to be absorbed as parts of high-context cultures. Most cultures offer a mix of P-time and M-time behavior, but have a tendency to be either more P-time or M-time in regard to the role time plays. As global markets expand more businesspeople from P-time cultures are adapting to M-time.
5 major elements of culture
1. Material Elements 2. Social Institutions 3. Belief Systems 4. Aesthetics 5. Language
Top 3 Least Corrupt Countries
1. New Zealand 2. Denmark 3. Singapore
What are the Five Stages of International Marketing Involvement and what do companies do at each stage?
1. No direct foreign marketing A company is purely a domestic company, so they do no direct foreign marketing. However, unbeknownst to them, they may be doing some indirect foreign marketing. If a company produces a product for the US, they may decide to distribute through walmart, and unknown to them walmart may send some of the products to subsidiaries in mexico with no effort from you, so this is indirect foreign marketing 2. Infrequent foreign marketing Selling your product from time to time to foreign customers. Simplest way to penetrate a foreign market is exporting. You keep the same pricing strategy, etc, simply just exporting. 3. Regular Foreign Marketing When you create a department that will be constantly dealing with overseas, mainly still exporting though. 4. International Marketing A company decides there are some countries where they may want to go ahead and open a foreign subsidiary in those countries to serve the specific needs and wants in that country. International Marketing by definition is when you go and open branches in an international country to serve the needs of that particular country. 5. Global Marketing This is when you tie in all of your operations into one big operation. You assign each element of the value chain to the subsidiary that does it best. The value chain is when you go from one operation to the next thus adding value for the customer. A value chain could be engineering, then buying materials, then construction, then marketing. EX: A company would integrate the elements of the value chain. This is done by assigning each element of the value chain to the subsidiary that does it best. So, for example engineering could be assigned to Argentina, materials could have come from a subsidiary in Japan maybe because steel there is cheap, manufacturing could be done in Brazil, construction could be done in Venezuela, and lastly marketing could be done in coral gables.
3 Main Ways you can get lower Tarrifs
1. Regional Trade Agreements 2. Preference Programs 3. Join WTO
Top 3 Most Corrupt Countries
1. Somalia 2. Afghanistan 3. Myanmar
If a country has a deficit in its Current Account, what are the 2 things that it can do to keep its Balance of Payments in balance without touching its reserves? (I actually have four options)
1. They borrow money. They issue sovereign debt/bonds (selling bonds). 2. Eventually nobody will lend them any more money if they are so bad in debt. Here is where the IMF comes in and lends them money (IMF is lender of last resort). There is interest on their loan. The country will only get the loan from the IMF if they agree to not be foolish with the money like they previously did which put them in this position. 3. Selling their State Owned Enterprises (SOEs) SOEs: Argentina got into a really bad situation with balance of payments recently. The IMF said they could balance their payments by selling SOEs, which are assets. For example, Argentina went and privatized (take government business and sell to a company) an oil company and sold it to a Spanish company. (The US doesn't have SOEs, but we can encourage foreign investments in our country (we can sell assets)). EX: The company that bought Ben and Jerries 4. Encouraging foreign investments in their country
What are the 3 principles that GATT established as a code of conduct for international trade?
1. Trade should be conducted without discrimination 2. Tariffs should be reduced through multilateral negotiations. Multilateral means everyone in the GATT gets the same fair treatment 3. Member countries should consult together to overcome trade problems.
US Energy Resources in Perspective
1942 - nearly self-sufficient 1950 - major importer 1973-2000 - increased dependency from 36% to 66% Mid-2000's - predicted to be importing more than 70% of needs The location, quality, and availability of resources will affect the pattern of world economic development and trade well into the 21st century. Many countries that were self-sufficient during much of their early economic growth have become net importers of petroleum during the past several decades and continue to become increasingly dependent on foreign sources. A spectacular example is the United States, which was almost completely self-sufficient until 1942, became a major importer by 1950, and between 1973 and 2000 increased dependency from 36 percent to over 66 percent of its annual requirements. If present rates of consumption continue, predications are that by the mid-2000s the United States will be importing more than 70 percent of its needs.
A nation needs a fertility rate of about...
2.1 children per woman.
What percent of its GDP was the U.S. foreign trade in 2017?
27.1 %
What is an exchange permit and how do countries use them as a non-tariff barrier?
A government permit sometimes required by the importer's government to enable the importer to convert his or her own country's currency into foreign currency with which to pay a seller in another country.
Population Shift Expectations for 2050...
A population shift to Africa: Africa's population is projected to increase the most and make up a greater share (25%) of the global population by 2050. Nigeria will replace the U.S. as the world's 3rd most populous country: By 2050, the population of Nigeria is projected to be 440 million, while the U.S. is projected to be 401 million. India will replace China as the world's most populous: India's population is expected to increase by 400 million by 2050 to a projected total of 1.6 billion, almost equal to the populations of the U.S. and China combined.
Main functions of the WTO
Administers and implements the multilateral trade agreements; Acts as a forum for multilateral trade negotiations; Seeks to resolve trade disputes; Oversees national trade policies; Cooperates with other international institutions involved in global economic policy-making.
How relatively populated are Africa, the Middle East, and Latin America?
Africa, the Middle East, and Latin America are by comparison, thinly populated.
What are Agent Fees? What is the position of the Foreign Corrupt Practices Act (FCPA) on the use of agent's fees to facilitate bribery?
Agent's Fees are when a businessperson is uncertain of a country's rules and regulations, it may be beneficial to hire a local agent to represent the company in that country. However, the U.S. Foreign Corrupt Practices Act (1977) prohibits the use of intermediaries to pay bribes.
What is the Balance of Payments of a Nation
An accounting of a country's international transactions for a particular time period (usually a calendar year). Must always be in balance.
What is a Quota?
Another form of a trade barrier. It is a limitation on the amount of a product that a country allows to come in. EX: US limiting the amount of orange juice that can come in from a different country.
How do countries punish dumpers? How do countries punish subsidized imports?
Antidumping Penalties: Legal by rules of WTO. If an importer is selling their product in your country under cost, it is considered dumping which is illegal under the GATT and WTO, so countries can increase tariffs to make the price of the foreign product what it should be in the first place. With dumping, countries are considered guilty until proven innocent. The US is notorious for using anti dumping penalties as a trade barrier. Subsidy Punishments: The punishment is countervailing duties. In other words, the victim of this unfair competition can now raise their tariffs against that product to bring up the price to what it should be.
What continent contains 6 of the 10 most populous countries?
Asia
What is the most densely populated region in the world?
Asia
When in Foreign Markets...
Be able to interpret effectively the influence and impact of the culture in which you hope to do business (Cultural adjustments) Establish a frame of reference Avoid measuring and assessing markets against the fixed values and assumptions of your own culture
What is a boycott? What is an embargo? What is a similarity?
Boycott is a prohibition to buy a foreign product. So, with a boycott a country does not allow their citizens to buy a foreign product. The embargo is a prohibition to sell. So, with an embargo a country talks to producers in their country and tells them they cannot sell their product to a particular country. These two are total prohibitions to trade, there is no trade at all with these two.
What was the purpose of the Bretton Woods Conference and what institutions were created as a result of it?
Bretton Woods Conference: officially called the United Nations Monetary and Financial Conference, met from July 1-22, 1944 at Bretton Woods, New Hampshire. It was attended by delegates from 44 states and nations, and it laid the foundations of the postwar international monetary system, including plans for the International Monetary Fund and the World Bank. Bretton Woods was the financial conference of the countries that were successful in winning the war. The purpose was to create a new world economic order. They believed this was necessary because they felt a main reason for WWll was the great depression of 1933 and they now needed to work to prevent any big financial l disasters which could then also create wars Breton Woods created 3 things: The International Monetary Fund, the World Bank, and the GATT
Difference between Bribery and Extortion
Bribery: When a payment is offered voluntarily to an official by someone seeking unlawful advantage. Extortion: When someone in authority extracts payments under duress from a person seeking only what he/she is lawfully entitled to.
What major religion is considered to be "reform Hinduism"?
Buddhism: Could be called refined Hinduism. Same/similar principles of Hinduism but without the caste system. Popular in Asia. The ultimate goal is also nirvana.
What two countries had the largest population in 2018:
China (1.415 billion) and India (1.354 billion)
What are the present rates of population growth in China and India? Why the difference? What are some of the problems this situation could bring to these countries?
China has a growth rate 0f .4% in 2018 with a doubling rate of 173 years, India has a growth rate of 1.1% in 2018 with doubling rate of 63 years Why? China has restrictions on population growth, India does not, hence the huge difference in doubling rate. The US makes up for the lack of a growing population with immigration, so we do need immigrants. The population of China grew very slowly for a period of 25 years because of the one child per family rule. The consequences of this were the fact that you have less workers, the children that were born now have the responsibility of taking care of aging parents and grandparents (1,2,4: 1 child takes care of 2 parents and four grandparents). There is also a gender imbalance in China. It is slowly getting better but it was originally about 40 million males rather than females, which creates a problem of reduced population and also there will be a lot of males who cannot start families. This has been reduced to currently around a 20 million difference
What is the Balance of Trade of a country? What constitutes a positive or a negative Balance of Trade? What happens to a country's official reserves if it has a negative Balance of Trade (trade deficit)? What happens to a country's official reserves if it has a positive Balance of Trade (trade surplus)?
Countries get into a balance of payment problems when they buy more than they sell, when you import more than you export. So, the balance of trade is the difference between imports and exports.
What is an SDR? How is its value presently determined?
Created by the IMF in 1969 to support the Bretton Woods fixed exchange system. Originally needed because the international supply of gold and US dollars was inadequate for supporting the expansion of world trade and financial development that was taking place at that time. Originally valued at 0.888671 grams of fine gold = 1 U.S. dollar (essentially, "paper gold") When the Bretton Woods system collapsed in 1973, the SDR was redefined as a basket of currencies. The IMF used to lend countries in need dollars. But now there are not enough to lend, so they created a Special Drawing Right. The SDR is like a debit card. The IMF gives countries a SDR and it gives you access to many billions of dollars. A SDR is now one of several reserve currencies of countries. Countries have in their central bank dollars, pounds, euros, etc, but they also have SDRs. So SDRs can be used to pay debt. The SDR valuation basket is reviewed and adjusted every 5 years. How the SDR is used today: Today, the SDR has only a limited use as a reserve asset, and its main function is to serve as the unit of account of the IMF The IMF lends countries in SDRs Holders of SDRs can exchange them for the currencies they need by either: voluntary exchanges with member countries, or the IMF can designate members with strong external positions to purchase SDRs from members with weak external positions.
What are Cultural Imperatives? Cultural Electives? Cultural Exclusives?
Cultural imperatives: customs that you must conform to if you want to be successful. An example of a cultural imperative is relationship building. In many Asian countries such as China and Japan and Latin American countries, businesses understand the importance of building a relationship. Businesspeople do not do business with companies, they do business with people. If you want to do business in these countries, it is a cultural imperative to spend time building that relationship before you even bring up business. Cultural electives: customs that you may conform to, but you don't have to. There are many things in different cultures that can make you feel uncomfortable. Be aware of what the cultural customs are so you won't be surprised and you know how to politely decline. In the Czech Republic, liqueur is offered at the start of business meetings, even if it is 8 in the morning. It is to build friendship and trust, so politely accept and take a ceremonial sip. Cultural exclusives: customs that are only for locals. You will break a deal if you try to partake in these customs. If you are a Christian, don't go to the Middle East and attempt to act like a Muslim because that is insulting their religion. Similarly, never joke about a country's politics or criticize their customs. Just like here, you can joke about your own family, but if someone else does you'll want to fight them. Be careful with cultural exclusives.
How is culture transmitted?
Culture is not biologically transmitted, it is learned, shared, and transmitted by society from one generation to another; Culture is transmitted by family, social organizations, special interest groups, government, schools, and the church.
Is culture static(fixed)?
Culture is not static, but dynamic (capable of action or change). Culture is dynamic in nature, not static. Culture may be viewed as the accumulation of a series of best solutions to problems faced in common by members of a given society.
Cultural Empathy
Deep rooted understanding of a different culture. Essential for effective international marketing.
Relation of Aesthetics to International Marketing. Design, Color, Music, Brand Names
Design: buildings, products, packaging must be culturally sensitive to local ideas of form and beauty (McDonald's outlets). Color: significance and preference vary internationally (black and white).In China, white is not a good idea because it is considered to be the color of death (opposite of Western Civilization). Music: commercials must fit local tastes. Brand names: should be pleasing to local consumers (standardize vs. adapt?)
Domestic Environment Controllable's
Domestic Environment Controllable's: Product Price Place (Distribution) Promotion
What are the uncontrollable environments in international marketing? How do they differ from domestic marketing?
Domestic Environment Uncontrollable's: Political and legal forces Economic climate Competition Level of technology Structure of distribution Geography and infrastructure Cultural forces Foreign Environment Uncontrollable's: Political and legal forces Economic forces Competitive forces Level of technology Structure of distribution Geography and infrastructure Cultural forces Therefore, the Difference is in the Environments. In other words, international marketers must not only take into consideration their domestic environment, but the environmental forces in each one of their foreign markets.
What is dumping? What is a Subsidy?
Dumping in international trade: Dumping is to go ahead and export a product to a foreign country and price it under your costs. Anybody caught doing this is punished by allowing the country that is being dumped on to increase the tariffs by applying anti dumping duties. Subsidy: When the government of a foreign country helps to pay for the costs of exporting a product. This is also considered to be unfair competition.
Andean Trade Promotion and Drug Eradication (1991) (Bush) (2002)
Duty free access for many products from 4 countries (Bolivia, Columbia, Ecuador, Peru) Bolivia was removed from this because their president started to do anti American activities Peru and Colombia graduated to a free trade agreement with US therefore was no longer a part of this preference program
Caribbean Basin Economic Recovery Act (1983) (Reagan)
Duty free access for most products from 17 countries Authorized until September 30, 2020
Generalized System of Preferences (GSP) (1976)
Duty free treatment for up to 5000 products from designated beneficiary countries and territories throughout the world Renewable every 10 years Authorized until December 31st, 2020
African Growth and Opportunity Act (2000) (Clinton)
Duty-free entry for all products from 40 countries in Sub-Saharan Africa Presently authorized until 2025
What is the WTO? When was it established? Where is it located?
Established January 1, 1995 Successor to GATT Based in Geneva, Switzerland 164 members as of 2018, accounting for over 97% of world trade Over 25 others are presently negotiating membership (Russia entered in Aug. 2012) Over 75% of members are developing or least-developed countries Countries must prove to the WTO they are not protectionists to be able to join
What is Ethnocentrism
Ethnocentrism is the second thing you want to avoid when doing international marketing. This is an attitude that your culture is superior to any other foreign culture: "let's do it my way because my country is best". One problem is this comes off as very arrogant. The second problem is you will miss out on a potentially better way to get things done.
Who consumes more energy Europe or North America? Where is oil emphasized? Where is coal emphasized? Where is natural gas emphasized? Who consumes the most energy and who is second?
Europe consumes more energy than North America (as shown in Exhibit 3.4). Also notice that oil is emphasized in North America, coal in Asia, and natural gas in Europe. Although the United States continues to consume the second greatest quantities of energy of any country (about 22 percent of the world total), China is first. Finally, there is some good news on this topic. China is beginning to curtail its use of coal in favor of renewables, with demand there predicted to peak before 2020. Also, the United States and China recently agreed on targets to cut carbon emissions, spurring the global efforts for cutting greenhouse gases.
What is the WTO position on: Most Favored Nation (MFN) treatment? National treatment? Quotas? Tariffs? Dumping? Subsidies? Developing countries?
Everyone gets most favored treatment in the WTO National Treatment: You have to treat an imported product as if it was your own local product. You cannot try to block them so your own local products can be sold at higher numbers. Quotas are outlawed Tariffs are reduced Anybody caught dumping is punished by allowing the country that is being dumped on to increase the tariffs by applying anti dumping duties. The punishment for subsidies is countervailing duties. In other words, the victim of this unfair competition can now raise their tariffs against that product to bring up the price to what it should be. Developing countries are given transition periods to adjust to WTO provisions
What is Free Trade? What is the advantage of it?
Free trade is trade without barriers. Free trade refers to commerce that is relatively unrestricted and unaided by government regulations, such as tariff, quotas, and subsidies. Advantages of Free Trade: The Economic Laws of Absolute and Comparative Advantage
How Successful was the GATT in reducing world tariffs?
GATT was very successful in lowering tariffs and making trade more free
What was the GATT? What is its successor organization?
General Agreements on Tariffs and Trade was an international agreement (treaty) with over 120 member nations and associated countries covering over 80% of world trade. Its successor organization is the WTO (World Trade Organization)
Why is the rate of population growth important to a country? What are the consequences for a country if it grows too fast or too slow?
Growth rate is a factor in determining how great a burden would be imposed on a country by the changing needs of its people for infrastructure, resources, and jobs. If the population grows faster than the economy of the country, the population will smother the economy of that country as not everyone will be able to get fed, get treatment, etc. The opposite is also bad; if the population growth is too slow, it pulls the economy down, because you need people to work and you need customers.
What is usury and what major religion prohibits it and what do they do instead?
Has different meanings. Western Civilization defines it as charging a very high level of interest on a loan (loan shark, etc.). In Islam, you cannot charge interest on a loan. What they do is if you want to buy a car, they do not give you a loan. They figure out what kind of car you want, they buy it for you, then they sell it for you. So, profit is ok, but interest is not.
How does communication differ in high context from low context cultures?
High Context Culture: implicit Information Verbal and Non-Verbal Cues Trust and Contact Oriented Low Context Culture: Explicit Information Written, Formal Specifications Competency Oriented
What country has the highest score in individualism according to Hofstede? The highest score in masculinity?
Highest individualistic country is the US with a score of 91. Japan has the highest Masculinity with a score of 95.
What major religion promotes a caste system, the veneration of the cow, and arranged marriages?
Hinduism
Who is Geert Hofstede and what is the significance of his research on culture?
Hofstede created five Cultural Dimensions to help identify what types of culture countries have
What is a cultural translator? What is a backward translation?
In marketing, you need to transfer your commercial language into the foreign language your product will be selling in. Dictionary translations are not enough A Cultural Translator is someone familiar with the best way to make appropriate. A backwards translator is somebody who will then translate it back to your own language so you can understand what the foreign country is saying
USA VS Japan Scores for Hofstede's Cultural Dimensions
Individualism: 91 for US, 46 for Japan Power Distance: 40 for US, 54 for Japan Uncertainty Avoidance: 46 for US, 92 for Japan Masculinity/Femininity: 62 for US, 95 for Japan Long Term Orientation: 29 for US, 80 for Japan
What major religion considers the Koran as the ultimate guide?
Islam
Japan and Middle East Vs US and Northern Europe. Which is more low context and which is more high context?
Japan and Middle east are more High, US and Northern Europe are more low
Altitude: Highest capital city in the world?
La Paz, Bolivia (3,600m - 12,000ft.) Lack of oxygen requires changes in social behavior (no need for fire dept., "coca tea" to alleviate headaches and provide energy, legalization of coca cultivation and use, part of indigenous culture)
How does the level of technology of a culture effect marketing?
Level of Technology of a culture is reflected in its mechanical skills, understanding of how things work. Economics will determine the need for products. The way of using products or solving problems changes with each culture
Material Elements (culture)
Level of Technology of a culture is reflected in its mechanical skills, understanding of how things work. Economics will determine the need for products. The way of using products or solving problems changes with each culture
What was the doctrine of the Manifest Destiny and what U.S. actions did it justify?
Manifest Destiny (1840's territorial expansion from the Atlantic to the Pacific): Americans are a chosen people ordained by God to create a model society. Used to justify Mexican War (1846-1848)
Doubling Rate
Means at a particular rate of growth, how long will it take for a certain population in an area to double.
What is the "Most-Favored Nation (MFN)" treatment in international trade?
Most favored nation is a way a country can get the lowest tariffs.The USA grants this treatment to countries only for one year. Congress votes and decides to give it to a particular country. A country wants it all the time though. During BIll Clinton's presidency, he wanted to go ahead and open up the doors with China, so he created the Permanent Normal Trade Relations (given to China). But China doesn't just want the most favored nation, they want it for every country. To do this you need to join the World Trade Organization. The US got China into the WTO by lobbying for China and China did get in. By being a member of WTO, China is obligated to give the most favored nation treatment to all the other countries in it as well, so it's a two way street.
What is Edward T. Hall's theory of cultural context and linguistic communication? What are the two big groups?
Nonverbal aspects of communication. Using hands, bodies, where we look. These all convey different messages. Two big groups: Low context culture and high context culture
Climate and Topography
People live differently based on adjustments they make due to climate and topography
Is the population homogenous
Population in the world is not homogenous, there are big pockets of population around the world (India, China...)
What is a Preference Program? What is a Regional Trade agreement and the difference?
Preference programs are trade agreements. They are unilateral, so "if I give you this, don't expect anything back". Preference programs are not forever, they are limited to an amount of years. Preference programs can graduate and become regional agreements Regional trade agreements are reciprocal, meaning if I give you free trade, you give me free trade.
What is the purpose of the IMF? How did it originally promote currency exchange stability? How does it do it now?
Promotes exchange stability and orderly exchange arrangements among member countries (189 in 2018) Originally set a system of fixed currency exchange rates between member nations. Now controls floating rates by exercising "firm surveillance" over exchange rates. Countries have to have faith that their currency won't lose value. The IMF was meant to build a system where it would be easy to deal with foreign currencies in trade. They did this by setting a fixed exchange system called the Gold Standard. Everything was related to everything else by one ounce of gold, which was then related to a certain number of US dollars. Worked well but in the 1960s, the US and UK went out of the gold standard. Now the IMF has controlling floating rates by exercising "firm surveillance" over exchange rates. They look at countries' balance of payments to see how the countries' currencies are doing. Today, the job of the IMF is also to be the lender of last resort. When a country gets into a balance of payment problems (spending more money than they are making), countries will borrow money (bonds is ex). If no one buys their bonds anymore, countries can face bankruptcy. Then the IMF can come in and lend these counties money. The IMF does not give the money for free; they lend it at very low interest rates. One problem is the amount it takes to rescue a country continues to greatly increase. Countries with balance of payments problems can borrow foreign exchange from the IMF on condition that they follow anti-inflationary & austerity policies to correct their difficulties.
What is protectionism and why do countries do it? Who Usually uses protectionism?
Protectionism is the practice by governments of shielding domestic producers from foreign competition through tariff and non-tariff barriers, and subsidies. Protectionism is usually used by developing nations and was commonly practiced by European countries and the United States during their growth. The U.S. remained protectionist until the 1930s. Protectionism is when barriers are put up by countries to protect their own products.
What branch of Christianity promotes individualism and no distinction between secular and religious life?
Protestant
What are some of the reactive reasons that drive companies to market their products internationally? What are some of the proactive reasons?
Reactive Reasons: Responding to unsolicited offers from abroad Loss of domestic competitiveness Defensive purposes (foreign competition) Proactive Reasons: Expanded market potential and growth. Geographic diversification to spread risk Economies of scale and optimal productivity Product at end of its life cycle Overseas markets as source of new products, ways of doing business
What was the Roosevelt Corollary to the Monroe Doctrine? Its slogan?
Roosevelt Corollary to the Monroe Doctrine (1903) - U.S. Interventionism ("Whatever is good for the United States is justifiable") The United States will police the area and guarantee that Latin American nations meet their international obligations. Used to intervene in the Dominican Republic in 1905, in the acquisition of the Panama Canal Zone in 1903, etc.
What is the self-reference criterion (SRC)? What are the dangers of the SRC?
SRC is one of two things you definitely do not want to do in international marketing: Self Reference Criteria: This consists of interpreting a foreign situation or a foreign behavior in terms of your own culture. So if you look at a behavior in a foreign country and you act like you know what they are trying to say based on past experiences in your own (very different) country, you are making a big mistake. EX: An American company that established a manufacturing plant in Mexico. To establish good relations, they sent the head of the American human resources department to talk to them and tell them what they do to make it nice for employees. They told the Mexican employees if there is any trouble they are having, that there will be a complaint box for them to write a note if they want. After the first week there were no notes in the box, so the Human Resource guy intercepted this as there were no complaints. In the third week all the employees were on strike. The US were dumb and interpreted the no letters in the box as meaning everything was good, but they interpreted that based off their own US culture.
What is considered to be the official religion of Japan?
Shinto: Official religion of Japan but very few followers compared to the total population of Japan. It is mostly ancestor worship. Shinto teaches the Japanese that they are divine, meaning they don't need a savior. They teach progress should always be attained through creative activity.
What is the present world population? At what rate is it growing today?
So in 2018, world population was 7.616 billion with a 1.1% growth rate and a doubling rate of 63 years
Social Institutions (culture)
Social Institutions: There are social classes. In the US, you can move between classes, but in places like India, you cannot really leave your social class. Every country may have a different social structure.
What is "cultural borrowing" and what does it have to do with finding solutions?
Sometimes cultures find better solutions in other cultures, so they adopt them.
Difference between Lubrication and Subornation
Subornation and Lubrication are two terms that determine the actual size of the product: Subornation: 1. Giving large sums of money, frequently not properly accounted for, designed to entice an official to commit an illegal act on behalf of the one offering the bribe. Lubrication: 1. Giving a relatively small sum of cash, a gift, or a service to a low-ranking official in a country where such offerings are not prohibited by law. 2. Lubrication is to more or less get people to do their job faster. It is legal and not against the law because it is just to enhance someone's performance of something legal
Belief Systems (culture)
Superstition: It is kind of like an attempt to interpret things. Astrology is an example; it was the earliest attempt to figure out the cosmos. Animism (the belief that objects, places, and creatures all possess a distinct spiritual essence) Religion: More of a system. It is a formal institution with practices and rules of conduct. It tells you what is acceptable and not acceptable.
Reasons for Tariffs
Tariffs are put in place so countries can make money. Reason number two is for political reasons, to control competition like maybe block products they feel could be a danger to the economy.
What is a Tariff? What are safeguard restrictions?
Tariffs: Taxes on imports. Becoming less and less a problem. Safeguard Restrictions: A restriction a country is allowed to impose on a product if imports of that product are increasing so as to cause, or threaten to cause, serious injury to a domestic industry that produces a similar or directly competitive product. If there's an emergency, a country could say they need to "safeguard" their economy.
Why does the government force an imported garment to show what country it is coming from?
Taxes. Every country in the world taxes imports, this is called tariffs. So everything that comes in is taxed. The government needs to know where the shirts are coming from and the first person to see these things coming in are the US customs department. The customs department controls imports and exports. They need to know because they don't charge every country the same tariff. The US Customs deals with The Tariff schedule of the USA (TSUSA). This is a table that has different columns. First they record the item that is coming in. Which country would get the lowest tariff? Obviously our allies.
Technical Standards
Technical Standards: Is a technical requirement that is imposed on an import. It could be a legitimate technical standard, like for example the US can't import anything unless it meets a certain standard. But many countries, instead of imposing legitimate standards, they use bogus technical standards purely for protectionism (protecting their country from foreign products)
Language (culture) in International Marketing. What do you do with language when you go abroad? Are dictionary translations enough? If not then what is needed?
The #1 way in which a culture manifests itself. Language is a cultural mirror; so learning the language is a key to understanding the culture. Language differences frequently divide countries into separate societies - and market segments (Canada). Language can be a problem in communication, affecting advertising, branding, packaging, personal selling, and market research. In marketing, you need to transfer your commercial language into the foreign language your product will be selling in. Dictionary translations is not enough, you need a cultural translator
What is the name of the present round of WTO trade negotiations and what is its present status?
The Doha Round (2001-??): Two groups fighting against each other, US and European Union vs India and Brazil. The US and European Union wanted lower tariffs on industrial goods in India and Brazil. India wanted lower tariffs on agricultural products in the European Union and US.
Monroe Doctrine: What was it and its slogan? What were the 3 principles of the Monroe Doctrine? How are they commonly known?
The Monroe Doctrine (1823) ("America for the Americans") Monroe Doctrine: Speech given by President Monroe in a reaction to events secretly being planned in Europe by the former colonial powers there. Monroe used spies to find out different European powers were getting together to try to re-colonize Latin America. 3 Principles: 1. No further European colonization in the New World 2. No U.S. intervention in European political affairs 3. No European intervention in the governments of the Western hemisphere This doctrine made the US neutral until 1917, when they decided to take part in WW1.
What are some of the present complaints against the WTO, IMF and other global institutions?
The basic complaint against the WTO, IMF and others is the amalgam of unintended consequences of globalizing: 1. Environmental concerns 2. Worker exploitation and domestic job losses 3. Cultural extinction 4. Higher oil prices 5. Diminished sovereignty of nations
What was Mercantilism and why is Free Trade sometimes accused of being a new form of Mercantilism (neo-mercantilism)?
The concept of free trade was first delineated in the early 18th century in reaction to Mercantilism, a philosophy whereby the major nations traded with their colonies on the basis of importing raw materials from them and exporting finished goods to them. Mercantilism: an economic theory prevalent during colonial times that had as its goal the preservation of a country's capital by maintaining a constant positive balance of trade (encouraging exports, limiting imports only to raw materials). Under mercantilism, colonies cannot industrialize. Some people may say free trade is like mercantilism. Mercantilism is conservation of your capital. In order to conserve a country's capital, countries would encourage exports but limit imports only to raw materials. The colonial power would export finished goods to the colony, and the colony would only export raw materials. This is how the colonial power was able to conserve their capital because the ones getting rich were the colonial power. People say free trade is like mercantilism because instead of colonial power some may say we have developed nations, and instead of colonies we now have developing nations. Developing nations want to export finished goods and import raw materials. Under this situation the developing nations cannot develop because they cannot compete against developed nations economies of scale. This is why trade barriers/tariffs can be important. EX: When the US was a colony, they got power by imposing tariffs which allowed them to develop. This is why developing countries do not want to remove trade barriers because they believe if they do, it will be right back to mercantilism, and they will never be able to develop. The already developed countries want free trade because it allows them to get the cheapest prices. Why is free trade accused of being neo-mercantilism? Because free trade removes the protective tariffs that developing countries need to industrialize, forcing them to only export raw materials
What happens to the elements of culture when you change one of them?
The elements of culture are interrelated; changes in one element will affect others as well.
Worker shortage could be helped by immigration...
The free flow of immigration will help to ameliorate the dual problems of explosive population expansion in less-developed countries and worker shortage in industrialized regions.
What is the population of the world projected to be in 2050?
The global population is expected to increase by 38%, from 6.9 billion in 2010 to 9.6 billion in 2050.
Global Population Age Expectations for 2050. Which countries will be among the oldest? What is expected to happen in most countries with the age groups of 65 and older and the younger than 15 groups? How will an old age population effect workers?
The number of people 65 and older is projected to triple by mid-century, from 531 million in 2010 to 1.5 billion in 2050. In the U.S., the population of seniors is expected to slightly more than double, from 41 to 86 million. Who will be among the oldest? By 2050, the majority of people in Japan, South Korea and Germany are expected to be older than 50. Trading young for old: By 2050, most countries, including the U.S., are projected to see the share of their population that is 65 and older surpass the share that is younger than 15. Pressure on workers: As populations age, working age people in the developed world may have to support more dependents.
What was the Original Role of the World Bank and what does it do now?
The original purpose of the IBRD (its original name) was to build war torn Europe. There had to be money to provide to these countries so they could rebuild. The money back then was coming back very slowly, so the US decided to take care of the situation with the Marshall Plan (foreign aid bill). It was a great deal for the US because the only economy that could sell stuff to you for rebuilding was the US. World Bank provides money (loans at cheap rates) so countries can build roads, bridges, etc
2050: Who is expected to be the population losers?
The populations of Japan, Russia and Germany are expected to decrease by more than 10% by 2050.
What is the Triad? What % of the world population did they represent in 1995? In 2010? What % of the world GNP did they represent in 1995? In 2010? Why the change?
The triad is North American (not including Mexico), Japan, and the EU. In 1995: they represented only around 14% of the population of the world. But 76% of the world GNP (Important for Test). In 2010: They represented around 13% of the World Population and had 61% of the Worlds GDP The emergence of China and India has decreased the % of the triad in terms of GDP.
What is the Value Chain and how do global companies optimize it?
The value chain is when you go from one operation to the next thus adding value for the customer. A value chain could be engineering, then buying materials, then construction, then marketing. EX: A company would integrate the elements of the value chain. This is done by assigning each element of the value chain to the subsidiary that does it best. So, for example engineering could be assigned to Argentina, materials could have come from a subsidiary in Japan maybe because steel there is cheap, manufacturing could be done in Brazil, construction could be done in Venezuela, and lastly marketing could be done in coral gables.
To whom does the IMF lend money and under what conditions? From where does the IMF get the money that it lends?
They are the lenders of last resort to member nations. When a country gets into a balance of payment problems (spending more money than they are making), countries will borrow money (bonds is ex). If no one buys their bonds anymore, countries can face bankruptcy. Then the IMF can come in and lend these counties money. The IMF does not give the money for free; they lend it at very low interest rates. One problem is the amount it takes to rescue a country continues to greatly increase. Countries with balance of payments problems can borrow foreign exchange from the IMF on condition that they follow anti-inflationary & austerity policies to correct their difficulties. The IMF gets their money from quotas that are assessed on the member nations.
The package of measures agreed by the WTO in Bali has three main elements:
Trade facilitation This is a binding pledge by all WTO countries to make it easier for goods to cross borders. It involves simplifying customs procedures, removing red tape and rooting out corruption. Hailed by the WTO as one of the biggest reforms since it was founded in 1995, benefits to the global economy have been estimated at between $400bn (£244bn) and $1tn. Poorer countries will be given time and financial help to improve infrastructure and training. 2. Food security Talks in Bali almost foundered owing to US pressure on India to stop stockpiling subsidized grain. New Delhi said domestic support was needed to feed India's poor. A "peace clause" was agreed in which India was allowed to keep its regime in place but only on the basis that the agreement was temporary, with a permanent deal to be concluded within four years. 3. Help for the least developed countries. Many Western countries have already agreed duty-free and quota-free access to their markets for goods from more than 30 of the world's poorest countries. Those that have not done so for at least 97% of products "shall seek" to improve product coverage. In addition, there will be simplified "rules of origin" for the world's poorest countries. The WTO says these will help the least well off countries identify products as their own goods, making it easier to get preferential treatment in importing countries.
Org called __________ that does an annual survey of businessmen and women and they measure the perception of corruption.
Transparency International
Which kind of countries presently have the highest population growth rates? Which kind has the lowest? (specific numbers)
Unfortunately, low-income countries have the highest population growth rates: Low Income Countries have a growth rate of 2.6%, so a doubling rate of 27 years Lower middle income has 2.2% growth rate, so doubling rate of 31 years Upper Middle income has 1.7% growth rate so doubling rate of 41 years High income countries have .6% growth rate so doubling rate of 115 years
What is a Value? What are some core American values?
Value: an enduring belief that a specific mode of conduct is personally or socially preferable to another mode of conduct. Core American Values: 1. Importance of hard work, success 2. Ownership of tangible goods 3. Religious and political freedom 4. Importance of technological advances 5. Looking young 6. Capitalism
What is a Voluntary Export Restraint (VER)? Example of an incident?
Voluntary Export Restraints (VER): Where a country voluntarily limits their exports to another country. Happened in the 1980s In US when Japan started to import competitive small cars. They were hurting the American automobile industry, so the US asked Japan to voluntarily limit these cars to the US. Japan eventually agreed.
What is the trend in urbanization of the World population? What % will live in Urban areas by 2030?
Worldwide migration from rural to urban areas is increasing. By 2030, estimates indicate that more than 61 percent of the world's population will live in urban areas. Result of a desire for greater access to sources of education, health care, and improved job opportunities.
Does cultural adaptation require that businesspeople give up their customs when working overseas?
Yes, you must adapt to the customs of other countries in order to succeed and work successfully with them
Aesthetics (culture) (list of aesthetics)
arts folklore music drama dance
The most important deterrent to population control is...
cultural attitudes about the importance of large families.
What % of the people of the world live in the 10 most populous countries?
60%
