Chapter 19
Joint venturing
When a firm joins with foreign companies to produce or market products or services. Joint venturing differs from exporting in that the company joins with a host country partner to sell or market abroad.
Quotas
limits on the amount of foreign imports a country will accept in certain product categories to conserve on foreign exchange and protect domestic industry and employment.
Raw material exporting economies
rich in one or more natural resources but poor in other ways. Much of their revenue comes from exporting these resources.
direct exporting
whereby they handle their own exports. The investment and risk are somewhat greater in this strategy, but so is the potential return.
An international company must take a _________ of the problem of distributing products to final consumers.
whole-channel view
General Agreement on Tariffs and Trade (GATT):
-A 61-year-old treaty -Designed to promote world trade -Reduces tariffs and other international trade barriers
World Trade Organization:
-Enforces GATT rules -Mediates disputes -Imposes trade sanctions
Income Distribution:
-Low-income households -Middle-income households -High-income households
Rank potential global markets based on:
-Market size -Market growth -Cost of doing business -Competitive advantage -Risk level
According to the text, what location does coca cola consider a promising long term growth opportunity?
Africa
Formed in 1957, the ________ set out to create a single European market by reducing barriers to the free flow of products, services, finances, and labor among member countries and developing policies on trade with nonmember nations.
European Union
Which of the following was designed to help foster trade between nations?
GATT
_______ and _______ economic factors reflect a country's attractiveness as a market.
Industrial structure, Income distribution
global firm
Minimizes the importance of national boundaries and develops global brands: -operates in more than one country -gains marketing, production, R&D, and financial advantages not available to purely domestic competitors -sees the world as one market
Before a company decides to go global it must evaluate all of the following environments except the _____ environment.
Natural
Bias against bids made by American companies is an example of _____.
Non tariff trade barriers
_____ was established to replace GATT in 1995, and now oversees the original GATT provisions.
WTO
Exchange controls
a limit on the amount of foreign exchange and the exchange rate against other currencies.
Management contracting
a low-risk method of getting into a foreign market, and it yields income from the beginning. The arrangement is even more attractive if the contracting firm has an option to buy some share in the managed company later on.
Standard markup pricing
a price based on a percentage of cost but can cause problems in countries with high costs.
Nontariff trade barriers
biases against bids or restrictive product standards that go against American product features.
Uniform pricing
charges the same price in all markets but does not consider income or wealth where the price may be too high in some or not high enough in other markets.
Product invention
consists of creating something new for a specific country market. -Maintain or reintroduce earlier products -Create new products
Which of the following major decisions should a company make immediately after it decides to operate internationally?
deciding which markets to enter
The drawbacks of contract manufacturing are...
decreased control over the manufacturing process and loss of potential profits on manufacturing.
The biggest involvement in a foreign market comes through ______.
direct investment
A _____ community is a group of nations organized to work toward common goals in the regulation of international trade.
economic
Certain countries have formed free trade zones or _______.
economic communities
A _____ serves to limit the amount of foreign exchange and exchange rate against other currencies?
exchange control
emerging (industrializing) economies
fast growth in manufacturing results in rapid overall economic growth.
Economic communities are also known as _____.
free trade zones
Risks of global trade include all the following except ______.
increased opportunities for growth
A ____ firm is one that by operating more than one country gains advantages that are not available to purely domestic competitors.
global
Immediately after deciding which markets to enter, a company should determine ____.
how to enter the market
The country's ________ shapes its product and service needs, income levels, and employment levels.
industrial structure
Adapted marketing mix
involves adjusting the marketing mix elements in each target market, bearing more costs but hoping for a larger market share and ROI.
Product adaptation
involves changing the product to meet local conditions or wants.
Standardized marketing mix
involves selling the same products and using the same marketing approaches worldwide.
Industrial economies
major exporters of manufactured goods, services, and investment funds. They trade goods among themselves and also export them to other types of economies for raw materials and semifinished goods.
Straight product extension
means marketing a product in a foreign market without any change.
Channels within nations
move the products from their foreign point of entry to the final customers.
Channels between nations
move the products to the borders of the foreign nations.
A _____ is a limit on the amount of goods that importing country will accept in certain product categories.
quota
Seller's headquarters organization
supervises the channel and is also a part of the channel.
Tariffs
taxes on certain imported products designed to raise revenue or to protect domestic firms.
Direct investment
the development of foreign-based assembly or manufacturing facilities. It offers a number of advantages including: -Labor -Logistics -Control -Government incentives -Lower costs -Raw materials
Contract manufacturing
when a firm contracts with manufacturers in the foreign market to produce its product or provide its service. Benefits include faster startup, less risk, and the opportunity to form a partnership or to buy out the local manufacturer.
Licensing
when a firm enters into an agreement with a licensee in a foreign market. For a fee or royalty, the licensee buys the right to use the company's process, trademark, patent, trade secret, or other item of value.
Joint ownership
when one company joins forces with foreign investors to create a local business in which they share joint ownership and control. Joint ownership is sometimes required for economic or political reasons.
Exporting
when the company produces its goods in the home country and sells them in a foreign market. It is the simplest means involving the least change in the company's product lines, organization, investments, or mission.
Subsistence economies
where the vast majority of people engage in simple agriculture. They consume most of their output and barter the rest for simple goods and services.
indirect exporting
working through independent international marketing intermediaries. Indirect exporting involves less investment and risk because the firm does not require an overseas marketing organization or network.