International Marketing Exam Week 1-3

Free trade

"where products can move freely, without tariffs and restrictions"

Geography, nature and international trade

- As countries prosper and expand their economies, natural barriers are overcome. - Man has been reasonably successful in overcoming or minimising the effects of geographical barriers and natural disasters. - This has not been the case in developing countries: natural disasters and human-assisted catastrophes. - Countries that suffer the most from major calamities are among the poorest in the world.

BRIC

- Brazil, Russia, India, and China - selected markets that have the potential to surpass major economic powers by 2050 - largest emerging markets that are bound to be influential due to size and continuous growt

Importance of ethics

- Consumer awareness is increasing. - National health organisations, consumer organisations, environmentalists question the strategies of MNEs. - Criticism and pressure geared towards the strategic level of companies, but Marketing plays a key role at convincing the market that the company is socially responsible. - Marketing evolution: production, product, selling, marketing, and now Societal Marketing?

Geography

- Geography is the study of the earth's surface, climate, continents, countries, peoples, industries and resources. - This is what we call (uncontrollable). - Climate and topology, social responsibility and environment, Resources, World population trends, Rural and Urban shifts, increasing unemployment, world food production. - there is a tendency to study aspects of it isolated - physical character of a nation is the principal and broadest determinant of the characteristics of a society and the means by which that society undertakes to supply its needs

Who does the research?

- Global companies and those with international experience should be engaged in the most sophisticated and exhaustive kinds of research activities. - Many firms operate in international markets and make decisions without the benefit of all the information needed. - Some firms do not have the apprehension for information nor the adequate time or money for the implementation of research. - Some firms outsource this to global research agencies.

Researcher must have

- High degree of cultural understanding of market - Creative talent for adapting research findings - A Sceptical attitude in handling data

Prior use Versus Registration

- In code-law countries, ownership is established via recitation and not prior use - Islamic law—trademark belongs to whoever registers it first - best to protect IP via registration - there are several international conventions that provide simultaneous registration in member countries

Emerging Markets 4 P's

- Product: low incomes can indicate the need to focus on affordability and durability. - Price: Local firms can sell products at lower prices as they can produce products at lower costs. Foreign firms have often chosen to target high income segments within EMs. - Place: inefficient distribution chains and the dispersed structure of rural populations can create challenges. - Promotion: Some promotion channels may not be appropriate, effective or available in EMs.

Organizing market research

- Research Design: Overall plan for relating a research problem to practical empirical research - Employ local researchers in each country - Coordinate between the client company and the local research companies - Many advertising and professional marketing research firms have established office branches worldwide e.g. Saatchi and Saatchi

Tariff

- a tax imposed by a government on goods entering at its borders - may be used as a revenue-generating tax or to discourage the import of goods - Tariffs generally: - increase - inflationary pressures - special-interest privileges - government control and political considerations in economic matters - the number of tariffs (the beget other tariffs) - weaken - balance-of-payments positions - supply-and-demand patterns - international understanding - restrict - manufacturers' supply sources - choices available to consumers - competition -they are arbitrary, discriminatory and require constant administration and supervision

Cultural imperatives

- business customs and expectations that must be met and conformed to if relationships are to be successful - Chinese refer to it as guan-xi (relationship building/friendship), Japanese ningen kankei (human relationships), etc. - friendship is the key to success, and thus the business person should heavily consider this development

Cultural exclusives

- customs or behavior patterns reserved exclusively for the local people, from which the foreigner is excluded - there are cultural traits that are reserved for locals but a foreigner must refrain from participating in them - Ex: religion, politics, treatment of some and minorities

Domestic Uncontrollables

- domestic environment: "includes home country elements that are outside the control of the manager and that can have a direct effect on the success of a foreign venture: political forces, legal structure, and economic climate" (11) - Political forces, legal structure, economic climate - political decisions can impact domestic foreign policy, which in turn affects a firm's international marketing success - domestic economic climate is important home-based uncontrollable variable with far-reaching effects on a company's competitive position within foreign markets

Code Law

- law based on written (coded) rules - based on the all-inclusive system of written laws - the legal system is generally decided into 3 separate codes of: commerce, civil and criminal - it is considered all-inclusive, but there is a broad interpretations that are possible in order to include everything under the exiting code

Legal recourse in resolving international disputes

- most solve issues with settlement through arbitration - conciliation, arbitration, litigation

Market Research

- the systematic gathering, recoding and analyzing of data to provide information useful in marketing decision making - need to have thorough information as a substitute for uninformed opinion, which is more important - Information is the key component in developing successful marketing strategies and there are two types: - General data: for market opportunities (external related). - Specific Market data: the 4Ps (internal related).

Communications emphasis

- translation is difficult enough but when colloquialisms/slang comes into play it becomes even more difficult - much of business communication relies on implicit messages that are not verbalized - Communication within a high-context culture depends heavily on the context or non-verbal assets of communication whereas the low-context depends more on explicit, verbally expressed communications - low context culture: cultures that demand explicit communication - high context culture: culture the demand implicit communication - takes longer to conduct business because of the more need to know more about a business person - even within low-context cultures, communication its heavily dependent on cultural context - P-Time and M-time are generally either or but the thing is they need to still work together and create a harmonious relationship

Education

- within each society, teach generations what is appropriate, right/wrong, behavior, etc. - literacy rate is important because it talks about the behavior of people, therefore dictating what type of advertising should occur

Voluntary Exports Restraints

-VER - an agreement between the importing country and the exporting country for a restriction on the volume of exports - common in textiles, clothing, steel, agriculture, and motor vehicles - Ex: Japan has a VER on vehicles to France, Italy and the US in that it has agreed to export fixed number of these annually - it is 'voluntary' because the exporting country stets limits; however, it is generally under the threat of stiffer quotas and tariffs that are being set by the importing country if the VER is not established

Social responsibility

-ethics and social responsibility work in tandem - when a company is concerned about the implications of its decisions on society in general that is beyond its economic goals and that makes a constructive contribution towards society's well-being in the long term - recent studies suggest that the role of a company must go beyond profit maximization and self-interest—the more a company behaves responsibly, the more it will create goodwill and its positive corporate image will enhance its positioning - Friedman: "there is only one social responsibility of business, to use its resources and engage in activities designed to increase profits so long as it stays within the rules of the game, and engages in open and free competition without deception or fraud" - from a marketing standpoint, it is the second part is of importance due to the stakeholders - stakeholders: parties that have an interest in the company's activities

Marketing Research process

1) Topic research problem 2) Research design and plan 3) data collection and measurement 4) Data analysis and interpretation 5) Presentation of the findings and reports

Strategies to lessen political risk

MNCs can use other strategies to minimize political vulnerability and risks

Requisites for cultural adaptation

[diagram] Flexibility, adjustability, ability to integrate, knowledge of country, tolerance

Trade Barriers

barriers include: tariffs, quotas, boycotts, monetary barriers, non-tariff barriers and market barriers

Good corporate citizenship

by attempting to identify with the ideals and desire of the host company, the market's activities and products may be less politically vulnerable, which would help reduce the likelihood and frequency of some politically motivated risks

Analysis of elements

can be argued that the more complete the marketing involvement or the more unique the product, the greater the need for thorough study of each cultural element

Collective programming

when groups of people are taught/indoctrinated with certain values.

Parallel translation

when more than two translators are used for a back translation and a comparison of the results is taken

Ethnocentrism

when we behave in an ethnocentric way, there is an exaggerated tendency to believe our own values/norms/culture are superior to those of others

Commercial law within the countries

- laws that regulate marketing activities in promotion, product development, labeling, pricing and channels of distribution - There are different rules about "premium offers" or sales

Internationalization of business

- now more involved with foreign customers, competitors, and suppliers - more competition from every part - domestic companies are now foreign controlled - foreign investment in western countries is quite common - foreign earnings often make an important overall contribution to total corporate profits

Emerging markets

- "are countries which are transitioning from developing to developed markets due to rapid growth and industrialization" - only countries that have engaged in major reforms, increased participation in global business and achieved steady growth can be considered emerging markets - most are moving to a market-based economy from closed economies - there are efforts for sustained growth, increased participation in world trade, ongoing improvements in business environment, and improvements in living standards that differentiate emerging markets from less-developed markets - Generally EMs are countries which are transitioning from developing to developed markets due to rapid growth and industrialisation. - The definition can be confusing as different authors and institutions focus on a diverse range of factors in defining them. - Only countries that have engaged in major reforms, increased their participation in global business and achieved steady growth can be referred to as emerging markets. - Most EMs are also in the process of moving towards a market-based economy from relatively closed economies.

Labeling countries

- Developed Economies, Newly industrialised countries, Emerging Markets, Developing countries, Least Developed Countries. - The need for accurate labelling systems that distinguish each term from one another. - One would not classify China as an emerging market that is in the same category or level of development as a country such as Kenya or Ghana. - The label 'emerging markets' or 'newly industrialised markets' should apply to countries such as those in Asia that have witnessed significant changes and progress with respect to their economic development, such as China and South Korea. - Other countries that have made sufficient progress or have positive outlooks could be considered as 'less advanced emerging markets' or 'secondary emerging markets'. - Countries with little progress could be labelled as 'least developing countries'. - Suggested labels - Newly Industrialised Countries (S. Korea, Hong Kong, Singapore) - Advanced Emerging Markets (China, India) - Secondary Emerging Markets (Egypt, Colombia) - Developing Countries (Kenya) - Less/Least Developed Countries (Uganda)

Ethical Environment

- Differences in regulations and culture with respect to how companies should operate. - Companies have moved from being defensive and reactive to proactively promoting the company as socially responsible e.g. Shell and McDonald's. - Two-thirds of consumers claim that their purchasing decision is influenced by ethical considerations ?... - mangers have realized that they can use ethical issues to proactively market tools - ex McDonald's after being accused of selling 'junk food' to children - firms marketing products that are not a high priority or fall from favor can face unpredictable government restrictions - ex: Continental Can Company's joint venture to manufacture cans for the Chinese market faced many restrictions when the economy weakened; China decreed that the canned beverages were wasteful, thus banning them from all state functions and banquets; there was an increase in price and tariffs

The EPRG Framerwork

- EPRG schema: Ethnocentric, Polycentric, Regiocentric, or Geocentric Orientations - classifies firms by their orientation of the EPRG elements - depends on the international commitment of the firm - a key assumption is the degree to which internationalization in management is committed or willing to move towards affects that the specific international strategies and decision rules of the firm - it is incorporated into the discussion of the 3 concepts - Ethnocentric: Everything is centred on the domestic market. - Polycentric: several important foreign markets exist. - Regiocentric: the market is composed of several large economic regions. - Geocentric: the world is one large global market.

World population trends

- Estimates claim that there are around 6.2 billion people in the world. - The majority of people will reside in developing countries by 2025 (world Bank). Useful for estimating consumer demand. - Knowing a countries population, rates of growth, age levels and rural/urban distribution can affect international marketing decisions. - Most difficult is to change basic cultural beliefs about the importance of large families. Too much demand is placed on institutions responsible for change and improvement. - the number of people is significant in appraising potential consumer demand - ex: current population, rates of growth, age levels and rural-urban population distribution are closely related to today's demand for various categories of goods

Multi-domestic market orientation

- FMCG companies like Unilever. (Polycentric) - a company guided by the multi-domestic strategy has a strong sense that country markets are vastly different and that market success requires an almost independent program for each country - subsidiaries operate independently of one another in establishing marketing objectives and plans, while domestic markets and other country markets have separate marketing mixes with little interaction in between - products are adapted for each market with minimal coordination with other country markets—advert campaigns are localized along with pricing and distribution - companies aim too adapt to the local markets - control is decentralized to help reflect the belief that the uniqueness of each market requires local marketing input and control - polycentric orientation

Complexity of international marketing

- Globalisation of world markets. - Increased competition from emerging market firms and new industrialised nations. - Consumers' convergence yet also divergence. - The difficulty of choosing the right strategy and organisational structure when operating in multiple markets and coordinating these activities. - "What makes marketing interesting is the challenge of moulding the controllable elements of marketing decisions within the framework of the uncontrollable elements of the marketplace (competition, politics, laws, consumer behavior, level of technology and so forth) in such a way that marketing objectives are achieved" (10) - the environment is what dictates the differences of marketing from country to country

Developing a global awareness

- Objectivity - allowing to assess opportunities opportunities, evaluate potential and respond to problems - Tolerance towards cultural differences - tolerance: understanding cultural differences and accepting to work with others whose behavior may differ - Knowledge of cultures, history - knowledge is cultures to help understand the behavior in the marketplace or corporate culture - knowledge of history help to understand how people think and what influences - World market potential - Global economic, social, and political trends

Political environments

- Governments control and restrict a company's activities by encouraging and offering support or by discouraging and banning its activities. - A country's overall goals for its economic, political and social systems form the base for the political environment. - The political climate: political parties with different philosophies, response to pressure from nationalist and self-interest groups, weakened economic conditions that change trade commitments, bias against foreign investors. - every country has the right to grant or withhold permission to do business within its political boundaries and to control where its citizens conduct business - governments controls and restricts a company's activities via offering support or discouraging/banning - country's overall goals for the economic, political and social systems form the base for the political environment - national environments differ widely—economic development, access to resources, etc. - ideal political climate is one that is stable and friendly governmeet - political climate: political environment/conditions - changes in attitudes and goals can change a once friendly situation into one that is risky

Consumption in Emerging Markets

- Growth and Industrialisation in EMs has led to urbanisation and rising incomes, which indicates a sharp increase in consumption. - Markets evolve from a three way interaction of the economy, the culture, and the marketing efforts of companies. - Middle income classes in emerging economies are growing rapidly and income levels are increasing significantly BUT International Marketers have to consider the distribution of income and the income level of different segments. - higher income levels in turn mean that the consumption patterns are bound to change from stable goods to consumption goods - there is also a urbanization and growth in cities, highlighting the need for investment into growth f cities - markets evolve due to economy, the culture and marketing efforts of companies - there is a shift in the awareness of other cultures via globalization - changing incomes raise expectations and the ability to buy more and different goods - marketers still need to consider the distribution of income and the income level of different segments - in emerging markets, the distribution income is relatively uneven - there is a wealth gap between the middle-income levels of developed market and emerging market consumers - When economies grow and markets evolve, the range of tastes, preferences and variations of products sought by the consumer increases. - Consumers demand more and better/different products. - As countries prosper and their people are exposed to new ideas and behaviour patterns via global communication networks, new patterns of consumer behaviour emerge.

Global marketing orientation

- IKEA, NIKE, McDonalds, Starbucks. (Regiocentric or Geocentric) - global company: generally the marketing activity is global and its market coverage is the world - strive for efficiencies of scale through developing a product to be sold in the global market similarly as the home market - concept that drives the global marketing concept is that markets are being "driven towards a converging commonality" - constitute significant market segments with similar demands for the same basic product throughout the world - company tries to standardize as much of the company in as practical on a worldwide basis as possible - world in its entirety is viewed as the market, and the firm develops a global marketing strategy BUT pricing, advertising, and distribution of channels may differ in different markets - global marketing company can fit the regiocentric or geocentric classifications of the EPRG schema - views the entire set of country markets as a single unit, which identifies groups of prospective buyers with similar needs as a global market segment, developing a marketing plan that strives for some level of standardization - most effective orientation for firms involved in the marketing into another country are the multi-domestic or global orientation - operating as if all the country markets in a company's scope of operations are approachable by standardizing the overall marketing strategy and adapting the marketing mix as much as possible according to the cultural and other uncontrollable factors

International Marketing Defined

- International Marketing: "the performance of business activities that direct the flow of a company's goods and services to consumers or users in more than one nation for a profit" (7) - domestic marketing only occurs in one country - The difference between domestic and international is that international marketing accounts for the complexity and diversity that is within the international marketing operations - goal of business is to make a profit via promotion, price, and distribution - the main difference between domestic and international marketing is within the environment in which marketing plans need to be implemented - there are many uncontrollable elements - Marketing concepts, processes and principles to an extent are universally applicable and the Marketer's task is the same. - It differs from domestic marketing in terms of the environment within which marketing plans must be implemented.

International Marketing and International Business

- International business is a recognised field in its own right and draws on other disciplines, including International marketing. International business looks at the firm as a whole. Topics include FDI, MNE growth, SME and MNE Internationalisation. - International business theories: Dunning's OLI paradigm, Uppsala Model and Born Globals. - Do Emerging Market firms and Service firms challenging existing theory? - International Marketing also focuses on a firm's international activities, but specifically on issues that impinge on the marketing strategy and decisions.

Planned cultural change

- Introducing an idea or product and setting about overcoming resistance and causing change to accelerate the rate of acceptance. - Process of change is accelerated by the change agent. - Two options to introducing an innovation to culture: wait or cause change - first requires waiting for eventual cultural changes that prove innovations of value to culture - second involves introducing an idea or product and deliberately setting about overcoming resistance and causing change that accelerates the rate of acceptance - innovations that have advantages but requires a culture to learn ways to benefit—establishes a basis for eventual cultural change - unplanned change and strategy of planned change produce cultural change - unplanned change proceeds culturally congruent strategy BUT planned change is the process in which change is accelerated by the change agent - when culturally congruent strategy, strategy of unplanned change and strategy of planned change are not clearly articulated in international marketing literature —> efforts become part of the fabric of culture

Encouraging foreign investment

- Knowledge/technology transfer. - Learning from foreign multinationals. Local 'insider' knowledge and networks. - 'Technical' knowledge trade off for 'market' knowledge. Depends on trust and willingness to share. - Knowing the current favourable/unfavourable regulations impact on international marketing (e.g. Pepsi and Coca-Cola in India). - governments encourage foreign investment - some foreign businesses fall prey to politically induced harassment while others may be protected or receive preferential treatment from the government but it lies in the evaluation of a company's contribution to the national interest - encourage foreign investment because of the its ability to accelerate the development of an economy - want to encourage foreign investment with specific guidelines that are aimed at specific economic goals - can be done via direct encouragement from a host country - a company may receive assistance form the home government because the intent would be to encourage investment via helping to minimize and shift some of the risks encountered in some foreign markets - export credit guarantee: when a government/organization ensures to give a loan to an exporter

Marketing Relativism

- Like three layers: - Easy to say one understands a culture. - Harder to experience and interpret it. - Hardest is to take a step back and understand that even experiencing a different culture is interpreted by one's own culture and experience

Resources

- Location of resources are geographical accidents. - Each country is not equally endowed and demand does not necessarily coincide with domestic supply. - Good example is Oil in the Middle East (accounts for around 65% of the world's reserves). Western countries consume most of this. - Issues in Saudi Arabia, Dubai and Qatar. - Marketers need be aware of resources, quality, and availability in given locations for investment decisions, and how feasible it is to transform resources into products. - foundations of modern technology: availability of minerals and ability to generate energy - location of the earth's resources and the available sources of energy make it so that not every nation is equally endowed - energy - energy is necessary to power machinery and to extract and process the resources that are necessary to produce the goods that reflect economic prosperity - location, quality and availability of resources will affect the pattern of world economic development and trade for at least the remainder of the century - the disparity in the location of the earth's resources means that world trade between those who do not have all they need and those who have more than they need and are willing to sell due to the disparity in the location of the earth's resources - the location, quality and availability of resources will affect the pattern of world economic development and trade for at least the remainder of the century, meaning that it needs to be considered in making worldwide in terminational investment decisions - importers of the most of the resources are industrial nations that have insufficient domestic supplies - there isn't an immediate cause for concern about the availability of supply of new resources

Emerging market characteristics

- Lower than average per capital income. - Rapid Economic growth: economic development and reforms to a more industrialised economy. - High Volatility: natural disasters, external price shocks and domestic policy instability. - Less Mature Capital Markets. - Higher than average returns for investors.

Multinational Market Information Systems

- MMIS is a system designed to generate an orderly flow of relevant information and to bring all the flows of recorded information into a unified whole for decision making. - it considers scope as it has more than one country - it has different levels of information - MMIS covers more than one country and more levels of information than a domestic MIS. - The system includes a subsystem for each country designed for operational decision making (CMIS). - need to have a country marketing information system (CMIS) for each country/market - CMIS generally has different data requirements - Each CMIS provides information to an MMIS designed to provide for corporate control and strategic long-range planning decisions. - each country/market has an overall MMIS for the world wide operation is designed - each level of management has substantially different data need because country/market systems are designed to provide information for day-to-day operations - MMIS can be designed as a basic system that provides only a source of information or as a highly sophisticated system that includes specific decision modes

Self Reference Criterion

- Making decisions based on one's unconscious reference to their own cultural values, experiences, and knowledge. - adaptation to the environmental differences from one market to market is of the utmost importance - Adaptation: the conscious effort to anticipate the influences of both the foreign and domestic uncontrollable environments on a marketing mix and to adjust the marketing mix to minimize the efforts - impedes the ability to assess a foreign market in its true light - evaluating SRC with ethnocentrism - both can influence the evaluation of appropriateness of a domestically designed marketing mix for a foreign market - most effective way to control the influence of the SRC is via recognizing its existence in behavior - should be noted that not every activity within a marketing program differs from one country to another - SRC is Ethnocentrism, meaning that Marketers may evaluate the 'marketing mix' based on their own values and therefore neglect cultural differences that require adaptations

International Marketing research

- More specifically, the broader scope of international marketing research entails collecting and assessing information that includes the following: - economic: growth of economy, inflation, business cycle trends, profitability, specific industry economic studies, analysis of overseas economies, and key economic indicators for the home country and major foreign countries - social and political climate: a general non-economic review of conditions affecting the company's business; also covers ecology, safety, leisure time and potential impact on the company's business - overview of market conditions: detailed analysis of market conditions the division faces by market segment, including international - summary of the technological environment: a summary of the state-of-the-art technology as it relates to the company's business, carefully broken down by product segments - competitors: a review of competitors' market shares, methods of market segmentation, products and apparent strategies on international scale - For domestic marketing, most of this information has been acquired after years of experience with a single market, but in foreign markets this information must be gathered for each new market.

Geography and Topology

- Physical Terrain and Climate have effects on Marketing: product adaptation and the development of marketing systems. - Products that perform well in temperature zones may deteriorate, require special cooling or lubrication to function adequately in tropical zones. - Think of construction equipment that are exposed to different temperatures (heat and Dust) in Arabic countries. - Location explains a nation's political and trade relationships, which affect a company's operations. - physical terrain and climate of a country are important for the environmental considerations of appraising a market - altitude, humidity and temperature extremes are also climatic features that affect the uses and functions of products and equipment - harshness of climate needs to be considered in all facets of product development - some use physical barriers as protection for political and economic statements - ex: English Channel and bridge between Denmark and Sweden

Domestic market extension orientation

- SMEs and MNEs with export activities, such as dairy producers. (Ethnocentric) - illustrated by the domestic company seeking sales extension of its domestic products into foreign markets - views the international ops as secondary to its domestic ops - domestic business is its priority and foreign sales are seen s a profitable extension of domestic ops - minimal efforts are made to adapt the marketing mix to foreign markets - seeks markets where demand is similar to the home market and the domestic product is acceptable

Resistance to change

- The gradual cultural growth does not occur without some resistance. - human culture always changes - cultures tend to be ethnocentric - complicates the process of cultural assimilation

Marketing in Emerging markets

- The markets are different in terms of economic landscape, infrastructure and consumer characteristics and formulate their strategies accordingly - Institutional voids are often emphasized - Institutional voids: inefficiencies in capital - institutions provide information, resources and services that help market functions - intermediaries can help distribute firm's products, obtain funds for growth, and assist in consumers with purchases BUT sometimes they do not exist or are inefficient in emerging markets, making it more expensive. - physical infrastructure of a company: the country's facilities, which enable its economy to function and determine living conditions - considered with the factors of quality and efficiency of transportation and communication systems - in emerging markets, the infrastructure may be inadequate or inefficient, highlighting potential difficulties in distribution, logistics, and difficulties in communicating with potential consumers - characteristics of emerging markets that influence the marketing process: - limited information availability - dispersed nature of the market population - disparities among income levels - constant rapid change - product features must be adjusted in emerging markets to fulfill specific needs - sometimes, the limited infrastructure within emerging markets can result in a higher emphasis on the product's durability and the availability of after-sales services - Pricing: firms from developed countries may be challenged to lower their prices - This means that developed countries may look at only targeting high income segments, but there are limited growth opportunities - need to consider that the middle-income segments have limited budgets and are generally lower than those of developed market consumers - Challenges: limited infrastructure, limited availability of efficient distribution chains and the dispersed structure of rural populations can create challenges in distribution for international marketers AND the promotional channels are bound to influence marketing in emerging markets - there are cultural differences, needs and wants that need to be considered for products of developed countries - need to consider the culture's approach to new products and change in planning their marketing strategy and developing the marketing mix in emerging markets - ex: if the culture is resistant to change or especially cautious

Marketing and economic development

- The stage of economic growth within a country affects attitudes towards foreign business activity, the demand for goods, distribution systems. - economic level of a country is the most important environmental element in which the foreign marketer must adjust the marketing task - challenge of economic development - necessary to gain empathy - economic development must be studied in regards to market potential - economic development: an increase in national production that results in an increase in the average per capita GDP - need to consider infrastructure, which is necessary to understand profitability of trade and the impact of a firm's ability to market effectively if a country's infrastructure is underdeveloped - marketer cannot superimpose a sophisticated marketing program on an underdeveloped company, but rather it must be tailored to each situation - the more developed an economy, the greater the variety of marketing functions are demanded and the more sophisticated and specialized the institutions to perform marketing functions become - part of the marketer's task in studying the economy is to understand what in the foreign environment is useful and how much adjustment is needed to carry out stated objectives - Infrastructure is a crucial component of the uncontrollable elements facing marketers. - Institutions that are specialised and sophisticated to support the implementation of effective marketing activities: - Advertising agencies - Facilities for marketing research - Repair services - Specialised consumer financing agencies - Storage and warehousing facilities - These do not appear overnight and may have to institute the foundations of a modern marketing system.

Breadth and scope of International Marketing Research

- Think of international marketing research as broader in scope. Research can be divided into three types based on information needs: 1) general information about the country, are and/or market 2) information necessary to forecast future marketing requirements by anticipating social, economic and consumer trends within specific markets or countries 3) specific market information used to make product, promotion, distribution and price decisions and to develop market plans - within domestic, there is more emphasis on the 3rd type

Ethical Test

- Transparency - Effect - Fairness - Check

WTO

- Was established in 1995 and is an institution not an agreement like GATT. - International body that promotes free trade by persuading. countries to abolish import tariffs and non-tariff barriers. - Deals with the rules of trade between nations. - Settles trade disputes between governments. - Organises trade negotiations. - China joins in 2008. Russia joins in 2011 after 18 years of negotiating. - an institution (whereas GATT was an agreement) - sets the rules that governs trade between the members, provides a panel of experts to hear and rule on trade disputes, and make binding decisions - Membership has grown over the years, while world trade has also been booming too - Foreign direct investment (FDI) measure of international economy integration soared - Customs Union: creation of a common external tariff that applies for non-members of a common trade policy and the elimination of rules - all member states have equal representation in the WTO's ministerial conference - Ministerial conference meets at least every 2 years to vote for a director-general who appoints other officials - trade disputes are gone through a panel of experts, who listen to both sides and issues a decision; the winning side is allowed toe retaliate with trade sanctions if the losing country does not change practices. WTO doesn't have a way to enforce things, but international pressure influences - trade sanctions: stringent penalties imposed on a country by means of import tariffs or other trade barriers - WTO ensures that members agree to the obligations of all the agreements - Criticism - Criticised by those who are worried about the effects of free trade and globalisation: worker's rights, child labour and the environment. - WTO is too powerful that it can compel sovereign states to change laws and regulations by declaring these to be a violation of free trade rules. - WTO is run by the rich for the rich and does not give significant weight to the problems of developing countries. - WTO lacks democratic accountability in that its hearings on trade disputes are closed to the public and the media. - Support for the WTO - Supporters argue that it is democratic as the rules were written by its member states who select its leadership. - Supporters argue that by expanding world trade the WTO is in fact helps to raise living standards around the world. - Supporters argue that the WTO reduces non-tariff barriers, such as quotas, local content requirements and subsidies.

Conciliation

- a non-binding agreement between parties to resolve disputes by asking a third party to mediate - EX: it is considered to be effective when resolving disputes with organizations like Chinese business partners because they are less threatened by conciliation than arbitration and they believe that friendly negotiation should be used to solve the problem - it can be formal or informal - informal conciliation: established by both sides that are on a third party to mediate - problem: as it is not legally binding, there should be an arbitration clause

Culture

- a set of espoused values and norms followed by a group of people; it is the human-made part of the human environment - it is often defined as 'ethical habit' due to its orientation of values and ideas - a set of values and norms followed by a group of people. (e.g. corporate culture, foreign culture, and popular culture). - to satisfy economic wants, humans consume - culture dictates how and in what manner consumers consume

Decentring

- a successive integration process of translation and retranslation of a questionnaire, each time by a different translator - There is an initial translation, then translated back by a different translator. The two initial versions of the initial language is compared, and where there are differences the original English version is modified and the process is repeated. If there are differences between the translations of the initial language, it is changed and then repeated.

Interpretive knowledge

- ability to understand and appreciate fully the nuances of different cultural traits and patterns - ex: meaning of time, attitudes towards other people and certain objects, understanding of one's role in society, meanings of life - considers feelings—type of knowledge that is dependent on past experiences for interpretation and most prone to misinterpretation of relying on one's self-reference criterion (SRC) - Self-Reference Criterion (SRC): considering our own conditions, values and norms while evaluating others - foreign marketer should possess the kinds of knowledge about a market - facts can be found in published material about that culture - argues that it is necessary to live with the people for some time to fully appreciate the culture - alternatives: consultation and cooperation with bilingual nationals with marketing backgrounds

Islamic Law

- basis for Shari'ah is the interpretation of the Koran - Shari'ah: Islamic law - encompasses religious duties and obligations along with the secular aspect of law regulating human acts - Islamic law defines a complete system that prescribes specific patterns of social and economic behavior for all individuals like property rights, economic decision making and types of economic freedom - one unique aspect is the prohibition of the payment of excessive interest - any given transaction should be devoid of riba - riba: the unlawful advantage by way of excess of deferment; that is excessive in terse or usury - impacts banking practices, which is seen with the creation of the interest-bearing loan that banks finance trade via buying some of the borrower's stock which then sells back to the company at a higher price

Environmental adaptations

- broad uncontrollable elements - culture - difficulty facing the marketer in adjusting to culture is due to the fact that they do not understand the importance of its impact - within the domestic market, the reaction to the cultural uncontrollable is automatic - marketers may accidentally use their own culture's influences, but these may be unacceptable in different environments - marketing relativism: marketing strategies and judgements are based on experience, which is interpreted by each marketer in terms of his/her own culture and experience

Socialist Laws

- cluster around the core concept of economic, political and social policies of the state; socialist countries are, or were, those whose laws derived from he Roman or code-law system - generally those that formally had laws derived from the Roman or code-law system - the basic premise on which socialist law is based that law is strictly subordinate to the prevailing economic conditions - property, contract and arbitration have different realities because of the collectivization of the means of production and state planning - socialist countries have become more liberal, and as such there has been a movement to reconcile the differences between socialist law and the common or code law that prevails in the industrialized world - the international marketer is concerned with the differences amongst systems when operating between countries because the rights of the principals of a contract or some other legal document can be significantly different from country to country

How to organize marketing research

- company in need of foreign market research can rely on an outside foreign-based agency or on a domestic company with a branch within the country in question - can conduct research via own facilities or through the research force with the assistance of an outside agency - ideal approach involves local researchers in each country - two stages that are necesary - individual country: all issues involved in each country must be identified - multicountry level: the information must be distilled into a format that addresses the objectives - if a company wants to use a professional marketing research firm, many are available

Belief system

- considers religion, superstitions, power structures - value systems: values that are followed unconsciously - need to consider religion and value systems in marketing, as these are what influence citizen's POV of life - religion is especially sensitive - superstition plays a large role in a society's belief system in parts of the world (not so much in Western) - ex: ghosts, fortune-telling, palmistry, phases of the moon, etc. - can be a huge mistake to make light of superstition in other cultures

Protection of IP

- it is estimated that there are £10 million fake Swiss watches carrying famous brand names like Cartier and Rolex - there is an estimated loss of sales from unauthorized patents, trademarks and copyrights of approx $100bn annually - trademarks: registered 'mark' or logo for a company or business - patent: any product or formula/technology registered with the relevant office that establishes who possesses the right of ownership - failure to protect IP can lead to a loss of rights in potentially profitable markets - sometimes companies discover that people are using their IP without a license or reimbursement and are considered the rightful owners in the countries that operating - there are cases where companies are legally lost the rights to trademarks and have to rebuy the rights or royalties - Ex: McDonald's and the Golden Arches in Japan - golden arches were owned by an enterprising Japanese company, and only with the support of the Japanese Supreme Court was McDonalds able to regain exclusive rights to use the trademark in Japan by buying it

Geert Hofstede

- culture is always a collective phenomenon because it shared with people who lived or lived within the same environment in which they learned it - Collective programing: when groups of people are taught/indoctrinated with certain values - Carried out research while working for IBM to understand how values in the workplace are influenced by culture in 1980. - More than 11,600 questionnaires conducted in more than 50 countries with IBM employees. - 5 dimensions of culture were identified: - Individualism/collectivism. - Power distance. - Masculinity/femininity. - Uncertainty avoidance. - Long/short term orientation - Culture is represented when - members of a group share a set of ideas and values, which are transmitted by symbols from one generation to another - culture is an outcome of past actions of a group or its members - culture is learned - culture shapes behavior and our perception of the world - it is reinforced by components such as language, behavior and 'nation' - Hofstede's dimensions: individualism/collectivism, power distance, masculinity/feminity and uncertainty avoidance - frame of reference: structure of concepts, views, customs etc. through which an individual interprets the world - market's frame of reference must be that markets evolve as a response to marketing effort, economic conditions, and other cultural influences - markets and market behavior are part of a country's culture - cultural change: change in cultural conditions (ex: Americanization) - Criticisms - Based on one company (could be influenced by corporate culture). - Outdated and radical changes in the world have occurred in the last 30 years. - Some studies do support his dimensions, while others question his research. - Methodology issues: use of scaling and participant bias - Definition issues: 'Culture' is open to interpretation

Primary Data

- data that has been collected for the research at hand - question the firm's sales force, distributors, middlemen and/or customers - researcher questions respondents to determine what they think about a topic or how they might behave - problems with gathering primary data: stem from cultural differences among countries and range from inability of respondents to communicate their opinions of inadequacies - Problems encountered - Unwillingness or inability of many to respond to research surveys - Lack of adequate demographic data and census data in sampling - Sampling: Selection of potential respondents - Demographic data: Information on characteristics of the population in a country/city/area - Census data: Record of population and its breakdown in a country

Define the problem and establish research objectives

- difficulty: converting a series of business problems into a tightly drawn and achievable research objectives - need to understand the foreign markets as unfamiliar environment, which tends to cloud problem definition - Unfamiliar environment: That with which a company is not familiar, such as a foreign market - Problem definition: Explaining and understanding the research problem - researcher often fail to anticipate the influence of the local culture on the problem or fail to identify the SRC thus treating the problem definition as if it were located in the the home environment - sometimes a company will conduct research but will not actually ask the right questions - consumption patterns: how consumers buy and consume a particular product

Cultural Change

- dynamic character of culture is significant in assessing new markets even if changes occur in the face of resistance - societies often look to other cultures to borrow ideas - Cultural borrowing, similarities are an illusion, differences within countries, resistance to change

Global Culture Characteristics

- educated - more are getting educated, particularly in higher education - connected - ICTs - pragmatic - more concerned with getting things done - unintimidated by national boundaries and cultures - flexible and open - demonstrateg and ability to adapt to changes and unexpected circumstances - begin from a position of trust

Cultural characteristics that must be known

- imperatives: customs that must be recognized and accommodated - adiaphora:customs to which adaptation is optional - exclusives: customs in which an outsider must not participate - need to appreciate the nuances of these three

Political risks

- import restrictions: when it is not permitted to import into a country - confiscation: seizing a company's asset without payment - most severe political risk - domestication: taking steps to transfer foreign investments to national control and ownership through a series of government decrees - Tax controls: can be raised by a government without warning and in violation of formal agreements (squeeze on profits). - Labour problems: labour unions have strong government support (layoffs may be forbidden, profits may have to be shared). - need to consider political risk even though there is a more positive attitude toward MNCs and foreign investment -Economic risks -Exchange controls -local content laws -import restrictions - tax controls - price controls - labor problems

Expanding the investment base

- include several investors and banks in financing an investment in the host country - advantage of engaging the power of the banks whenever any kind of government takeover or harassment is threatened - strategy is powerful if banks have made loans in the host country of if the government threatens expropriation/other types of takeover

International Marketing Task

- international marketing must manage two levels of uncontrollable uncertainty - "Uncertainty is created by the uncontrollable elements of all business environments, but each foreign country in which a company operates adds its own unique set of uncontrollable" (10) - each foreign market has separate problems that have uncontrollable elements; therefore the more foreign markets that an organization is involved in the "greater the possible variety of foreign environmental uncontrollable with which to contend" (10) - Marketing Controllables - no matter how much a manager my plan a marketing program for optimal adjustment, there is still a large level of uncertainty due to uncontrollables - inner circle: area under control of the marketing manager - blend of price, product, promotion and channels-of-distribution activities to capitalize anticipated demand - controllable elements: can be altered in the long and short run to help adapt to changing market conditions or corporate objectives - outer circle: the surrounding the market controllable represent the levels of uncertainty that are created by the domestic and foreign environments - uncontrollable are an active adaptation - elements that are outside the control of managers but still need to be dealt with

Intellectual property rights

- laws governing the ownership of intellectual property - offer the most striking differences between common law and code law - common law - ownership is established by use - code law - ownership is determined by registration - generally there is a mixture of common law and code law, especially for international marketers

Aesthetics

- looks at arts, folklore, music, drama, and dance - they are a particular interest to the marketer because of their role in interpreting the symbolic meanings of various methods of artistic expression, color and standards of beauty - uniqueness of a culture can be spotted via symbols that have distinct meanings - without a culturally correct interpretation of a country's aesthetic values, a whole host of marketing problems can arise - product styling must be aesthetically pleasing in order to be successful

Ethical behavior in international marketing

- marketers need to adhere to individual and collective responsibilities—i.e need to consider their own marketing campaign within the context of all marketing campaigns that target the same segmeent - salesperson/buyer relationships often see a lot of bribery and other illegal/immoral payment procedures. In countries like Hong Kong, Russia, and Indonesia, there are both a formal way and informal way of doing business, and the informal is much faster but includes bribes/"commissions" - a number of countries have signed a convention against bribery, but there is not a guarantee that the bribery will not occur—for example, China, India and Indonesia have passed anti-ribry laws - product safety is important for marketing ethics - "Consumers have the right to be protected from harmful products," so consumers have the right to know information about the product - universal price codes or barcodes - do not always allow customer to see and compare prices, and as such it is the duty of the seller/retailer to provide information on price for each product - the customer has there might to know about the hidden costs - advertising is considered the most crucial aspect of marketing in regards to ethical issues, but it is often misleading or deceptive and customers are led to believe a false claim esp when packaging does not correspond with the mentioned price - ex: buy one get one free or 30% free - unethical to market food knowing that it is unhealthy or harmful

Globalization of Markets

- markets are global to a certain extent—there are market segments that have similar demands or the same product - ex: Levi Strauss, Revlon, Toyota, Apple, Philips, Starbucks, McDonald's and Coca-Cola - for some products, adaptation is not necessary but for others it is necessary - the issue of adaptation v. standardization of marketing effort is complicated though - McDonald's hamburgers needs a different marketing mix - McDonald's in Manhattan NY: target customers are working people for breakfast or lunch - lunch/breakfast - McDonald's restaurant in Maastricht: target customers are families with children - not night - Jakarta: more well-to-do youngsters and yuppies - night time - marketers want to present products that fulfill the perceived needs and desires of the customer - a standardized product is still modified according to the tastes and wants of the customers in different markets - Marketing internationally entails looking for market segments with similar demands that can be satisfied with the same product, standardizing the components of the marketing mix that can be standardized, and require parts of the marketing mix t be culturally adapted and adapting - marketing internationally requires for the market segments with similar demands that can be satisfied with the same product, standardize the same components of the marketing mix, and there are significant cultural differences that require parts of the marketing mix to be culturally adapted

Arbitration

- mediation done by a third party in case of a commercial dispute - normally international commercial disputes are resolved via arbitration, where the procedure is for parties involved to select a disinterested and informal party or parties as referees - Tribunals for arbitration - most are conducted under the auspices of one of the more formal domestic and international arbitration groups organized specifically to facilitate the mediation of commercial disputes. For the most part, the decisions that are reached are enforceable under law - most arbitration is successful, but the success depends heavily on the willingness of both parties to a accept the arbitrator's rulings

International Marketing Orientation

- most problems that foreign marketers face is due to the unfamiliar environment that marketing programs implement - success hinges largely due to the ability to assess and adjust properly the impact of new environments - orientation: an environmental and cultural approach to international strategic marketing - attempts to relate the foreign environment to the marketing process and illustrated how the environment can influence the marketing task - concerned with company marketing in/into another country/groups of countries

Nationalism

- nationalism: an intense feeling of national pride and unity; an awakening of a nation's people to pride in their country - public opinion tends too come anti-foreign businesses and minor harassments and controls of foreign investment are supported - Economic nationalism: the preservation of national economic autonomy - national interest and security are more important than international consideration - can take form of buying local products, restriction on imports, restrictive tariffs, etc. - can lead to control over foreign investment - the more a country feels threatened by some outside force, the more nationalistic it becomes in protecting itself against the intrusion - nationalistic feelings are often found in economically prosperous countries - attitudes towards foreign companies and investments have completely transformed within the last two decades where most countries welcome foreign companies and sometimes compete to attract foreign firms

Estimating Market Demand

- need to acquire reliable historical data - when desired statistics are not available, can make close approximation with local production figures plus imports, with adjustments for exports and current inventory levels - Historical data: Information over a period of time - Analogy -Income elasticity

Multicultural research

- need to learn the characteristics across diverse cultures to be compared for similarities and differences before a company proceeds with a marketing strategy - multicultural studies often have the same issues as already spoken to - multicultural studies: studies that are performed in different cultures - comparability and equivalence: information that is comparable and is understood in the same way as intended - in order to achieve the desired results, it may mean a different research method should be carried out in each country

Language

- need to understand language in order to achieve expert communication—really need to understand idiomatic meanings - idiomatic interpretation: interpretation according to the characteristics of a particular language - need to master the vernacular

Economic Wants

- nonessential and arise from desire for satisfaction and due to their non-essential quality are limitless - not spontaneous and not characteristic of lower animals - arises from an inner desire for preservation of self or species

Qualitative Research

- open-ended and in-depth, seeking unstructured responses. Express the respondent's thoughts and feelings - interprets what the 'people in the sample are like, outlooks, feelings, dynamic interplay of feelings and ideas, attitudes and opinions, and resulting actions - most often used forms of qualitative questioning is focus group, interviews and case studies - used in international marketing research to formulate and define a problem that is more clearly and to determine relevant questions to be examined in subsequent research - it helps to reveal the impact of sociocultural factors on behavior patterns and to develop a research hypotheses - research hypotheses: a theory that can be proved or rejected via research

MNC

- operate in lots of different countries, in which legal and ethical standards differ - there are many differences as to what dictates right and wrong - there are differences in laws (ex: cigarettes, alcohol, packaged food) - MNCs invest in emerging countries, which helps their economic development BUT it can also have an impact on the environment and cause other social issues - MNCs may believe that they do not have to abide by the same standards when in emerging countries

politically sensitive products

- political risk assessment is the attempt to forecast political instability to help management identify and evaluate political events and their potential influence on current and future business decisions. - here are about the same amount of reasons for a product's political vulnerability as political philosophies, economic variations and cultural differences - there aren't any absolute guidelines a marketer can follow to determine whether or not a product will be subject to political attention - EX: beef in Hindu countries and McDonald used beef flavors in French Fries; genetically modified and the EU, where Unilever announced that it would stop using its food products in Britain

Similarities: an illusion

- product, promotional message, British and American English. The idea of a 'European consumer'. - there are illusions of similarity that actually do not exist - cannot automatically assume that a product is acceptable to one culture and will be readily acceptable in another or that a promotional message that succeeds one place will in another - common language does not guarantee - There is a tendency to speak of the "European consumer" but there are still cultural differences within

Monetary barriers

- putting monetary restrictions trade - exchange-control restrictions: when rate of exchange (i.e. for money) is controlled or fixed by the autnon-tarfhority - government may enact restrictions to preserve the balance-of-payments position or specifically for the advantage of encouragement of particular industries - barriers to consider: blocked currency, differential exchange rates and governmental approval requirements for securing foreign exchange

Analogy

- reasoning from parallel/similar cases/examples - assumes that demand for a product develops in the same way in all countries as comparable economic development occurs in each country - a relationship must be established between the item to be estimated and a measurable variable in a country that is to serve as the basis for the analogy - estimator can attempt to draw an analogy between the known situation and the country in question - Caution: this method assumes that factors other than the variable used are similar in both countries like the similar culture, tastes, taxes, prices, selling methods, availability of products, consumption patterns, etc.

Cultural borrowing

- responsible effort to borrow those cultural ways that seem to be helpful in the quest for better solutions to a society's particular problems - once the adaption becomes commonplace, it passed on as cultural heritage - cultural heritage is what differentiates humans and other animals - culture is learned because societies pass on the success to succeeding generations solutions to problems, and they instantly build and expand on it - although much behavior is borrowed from other cultures, it is combined in a unique manner

Secondary data

- secondary data: information that somebody else has collected but that we can use for our purpose - shortcomings: availability of data, reliability of data, comparability of data - Need to check the consistency of secondary with other data to show validity - Validating data - Reliability: Whether information/results of a study are trustworthy - Source, purpose, and methodology used to collect the data - Validity: Whether the measures used are reasonable to measure what is to be measured

Foreign uncontrollables

- significant source of uncertainty is the number of uncontrollable foreign business elements - in order to evaluate the uncontrollable elements within a foreign market involves considerations of cultural, political and economic shock - some countries are political polar opposites and there can be dynamic upheavals within certain states that illustrates major changes in cultural, political and economic climates - significant elements in uncontrollable foreign environments that constitute uncertainty that international marketer must cope with for the design of a marketing program - political/legal forces - economic forces - competitive forces - level of technology - structure of distribution - geography and infrastructure - cultural forces - when marketers become too accustomed to one environment, they might not be able to recognize the potential impact of certain uncontrollable elements within - warnings may not be interpreted correctly - level of technology is an uncontrollable element that can be misread because of the differences that exist between home and foreign countries - alien status: increases the difficulty of properly assessing and forecasting the dynamic international business climate - type 1: alien in that business is controlled by foreigners - type 2: alien in that culture of the host country is alien to the foreign company - for example, political environment impacts alien status

Social institutions

- social organization and political structures are concerned with the ways in which people relate to one another, organize their activities to live in harmony with one another and govern themselves - ex: positioning of men/women, family, social classes, group behavior and age groups can be interpreted fiferently - cultures with social organization of close-knit family units means that it is probably more effective to aim a promotional campaign at the family unit than individuals - impact of SRC: when someone is too close or too far away, we feel uncomfortable and therefore adjust the distance, relying on SRC

Assessing political vulnerability

- some may be more politically vulnerable than others in that they receive special government attention - special attention can result in positive actions towards a company or negative attention - often times countries seek investments in high-priority industries and excuse companies from taxes, customs, duties, quotas, exchange controls, and other impediements - high-priority industries: when some industries are given extra benefits by the authorities because they are considered important - politically sensitive products - Forecasting political risk

Factual Knowledge

- something that is usually obvious but that must be learnt - ex: different meaning of colors, different tastes, other traits indigenous to a culture - has meaning that is straightforward fact about culture but assumes additional significance when interpreted within the context of the culture - ex: 98% of Mexico is Roman Catholic - factual in the numbers but also need to recognize what Roman Catholicism means to Mexicans specifically

Economic Needs

- spontaneous and limited needs - ex: minimum food, drink, shelter and clothing - humans have a minimal need for food and clothing

Licensing

- strategy that can eliminate almost all risks via licensing technology for a fee - effective in situations where the technology is unique and the risk is high - risk: if the licensee refuses to pay for there required fees but continues to use the technology

Quantitative Research

- structured questioning, producing answers that can easily be converted to numerical data - questions are designed to get a specific response to aspect of the respondent's behavior, intentions, attitudes ,motives and demographic characteristics - provides marketer the responses that can be presented with precise estimations - survey research is generally associated with quantitate research

Cultural sensitivity and tolerance

- successful foreign marketing begins with cultural sensitivity - cultural sensitivity: being attuned to the nuances of culture, which thus can be viewed objectively, evaluated and appreciated - Cultural empathy must be cultivated carefully, by recognizing the culture as neither right nor wrong but rather different

Expropriation

- taking companies away from their owners and into state ownership - post WWII, where expropriation of foreign companies was common - India imposed restrictive practices on foreign investments that companies like Coca-Cola, IBM, etc. chose to leave instead of face the uncertainty of a hostile economic climate

Litigation

- taking the other party to court - believed that the victories are spurious because of cost, frustrating delays and extended aggravation that the cases produce more oppressive by far than any matter of comparable size - best to seek a settlement than sue - settlement of dispute should follow: 1) placate the injured party 2) conciliate and arbitrate and 3) litigate - only move on to the next step if the other fails

Developing a research plan

- tasks to be undertaken should be specified and alternative methodologies should be evaluated - need to create a methodology - methodology: a way of collecting and analyzing data/information - quantitative or qualitative? - Appropriate methodology: should be selected with regard to the comparability of research findings and their usefulness. - pick models/theories here to find the answers to research questions that are identified here

Back translation

- text translated into another language then translated back to the original language by another party. Helps to pinpoint misinterpretation and misunderstandings. - may not always be accurate because of the commonly used idioms

Cultural adiaphora

- the areas of behavior or customs that cultural aliens may wish to conform to or participate in but are not required - follow the custom in question and the majority of customs fit this category - a symbolic attempt to participate in adiaphora is acceptable and can sometimes establish a rapport - jokes don't often translate well

Reducing political vulnerability

- there are measures that can lessen the degree of susceptibility of a specific business venture to politically induced risks - foreign investors are frequently accused of exploiting a country's wealth at the expense of the national population and for the sole benefit of the foreign investor - reducing corporate citizenships, strategies to lessen political risk, joint ventures, expanding the investment base, marketing and distribution, licensing

Protectionism

- there are tariffs, quotas and non-tariff barriers that are designed to protect a country's markets from intrusion by foreign companies - staes use legal, exchange, and psychological barriers to restrain entry of unwanted goods - businesses work together to establish private market barriers - complex distribution systems (like the one in Japan) cannot be considered a trade barrier

Demand in Emerging Markets

- there is an every-expanding and changing demand for goods and services, which is reflecting of the markets being dynamic - when economies grow and markets evolve beyond substitenece levels, the range of tastes and preferences and variations of products increases—higher quality and/or different products - as countries prosper, people are exposed to new ideas and behavior patterns via global ICTs - there is an expectation that emerging markets will experience economic growth that will lead to higher income levels, which in turn implicate increased consumption and a growing middle class - emerging markets will increase consumption by US $30 trillion by 2025 and US $12 trillion by 2010

Domestic and international marketing

- there is generally a difference on the kinds of information needed, the limited variety of appropriate tools and techniques available, and the difficulty of implementing the research process that constitutes the challenge facing most international marketing management researchers - A marketer must find the most accurate and reliable data possible BUT must take into account time and cost. - the tools and techniques remain the same for foreign and domestic marketing but the environments in which they are applied are different - The tools and techniques for research are the same for foreign and domestic marketing BUT the environments within which they are applied are different. - The mechanical problems of implementing foreign marketing research might vary from country to country. - The main issues of carrying out research in a foreign environment are related to kinds of information needed, limited variety of tools and techniques available, and implementing the research process.

Legal environment

- there isn't a single uniform international commerce law that governs foreign business transactions, and as such there must be special attention to the legal environment of each country within which it operates - Bases for legal systems - two common heritages form the bases of the majority of the legal systems of the world - common law - derived from English law - civil or code law - derived from Roman law - Islamic law - derived from the interpretation of the Koran - Socialist law - derived from the Marxist-socialist system - determining whose legal system has jurisdiction is a problem within international marketing - jurisdiction: overall legal authority - there isn't a single body that has the authority to deal with such legal commercial problems

Stability of government policies

- top of political conditions is the concern that foreign businesses is the stability or instability of prevailing government policies - there might be shifts in power within a government but the main concern of the foreign firm is the continuity of the set of rules/code of behavior regardless of who is in power - radical changes towards foreign business can occur in most stable governments - if there is potential for profit and if permitted to operate within a country, companies can function under any type of government as long as there is some long-run predictability and stability

Common Law

- tradition, past practices and legal precedents set by the courts through interpretations of statues, legal legislation, and past rulings - it seeks the "interpretation through the past decisions of higher courts, which interpret the same statues or apply established and customary principles of law to a similar set of facts"

Growth of emerging markets

- traditional developing markets: protected domestic firms, significant trade and investment barriers, political instability and votality - too risky for business and aced severe economic crises - export income was low, and governments often subsidized economies via borrowing, which increased their dependence on foreign capital and generated a significant debt burden - after the economic crisis, emerging markets had structural and economic reforms to increase stability and instigate growth - Today, foreign investors are seen as vital partners in economic development - emerging markets with state own businesses proved to be not great for governments - state-owned enterprises (SOE) were mismanaged and create inefficient drains on state treasurers, further proving the importance of the private sector investing in effective means for economic growth - privatization of SOes and other economic monetary trade policy reforms show a shift away from inward-looking policies of import substitution and protectionism - production in emerging markets have increased rapidly - trade institutions (WTO and credit proving agencies like the IMF) support the growth of emerging markets and boost their participation in global trade and investment via providing assistance in their trade and foreign investment policy reforms - Foreign investors are seen as vital partners in economic development and Western MNEs - State Owned Enterprises (SOEs): results were disappointing as SOEs were often mismanaged. - Privatisation: Leaders turned away from traditional closed policies of the past and implemented positive market oriented reforms, such as privatisation of SOEs, a move away from protectionist barriers, and import substitution. - Support from agencies such as WTO and IMF.

Joint Ventures

- typically less susceptible to political harassment - can be with local or third-country multinational companies, both of which a company's financial exposure is limited - helps to minimize the anti-MNC feeling and a joint venture with another MNC adds the additional bargaining power of a third country

Marketing the distribution

- used effectively if an investment should be expropriated, where ether expropriating country would lose access to world markets - useful for MNCs in the extractive industries where world markets for iron ore, copper, etc. are crucial to the success of th einvestment

Income Elasticity

- when higher or lower income would influence demand for a product - the income elasticity ratios: sensitivity of demand for a product to income changes is measured - income elasticity measurements are not substitutes for original market research when it its economically feasible and time permits

Forecasting political risk

- which takes into account economic indicators, such as GDP, inflation, competition. Social aspects, such as population and preferences in taste and consumption. - a number of firms are employing systematic methods of measuring political risk - political risk: an attempt to forecast political instability to help management identify and evaluate political events and their potential influence on current and future business decisions - political risk assessment can: help managers decide if risk insurance is necessary - devise an intelligence network and an early warning system - help managers develop contingency plans for unfavorable future political events - build a database of political events for use by corporate management - interpret the data gathered by its intelligence network to advise and forewarn corporate decision makers about political and economic situations - a necessary part of any market analysis is the assessment of the probable political consequence of a marketing plan, with some marketing plans more susceptible than others

Theodore Levitt

-'The Globalization of Markets" - World markets are being driven 'towards a converging commonality'. - Substantial market segments with common needs: high quality, reasonably priced, standardised product. - The 'global corporation sells the same thing in the same way everywhere'. - marketing activities: global marketing, global business, global advertising, and global brands - world markets are being driven "towards a converging commonality" - substantial market segments with common needs: i.e. high quality, reasonably priced, standardized product - "the global corporation sells the same thing in the same way everywhere" - argument that segmenting international markets based on political, country markets, national/regional preferences are not cost effective - argues that the companies of the future are those that have the POV that only one market sells a global product - Levitt's approach greatly contrasts with the global orientation that suggests a commonality in marketing needs and a standardized product for the world in entirety - Levitt's approach greatly considers the informational communication technologies

General Agreement on Trade in Services

-(GAT) - Post-WWII but not all countries participated - First effect worldwide tariff agreement - original agreement: process to reduce tariffs and create an agency to serve as a watchdog over world trade - Tokyo round: addressed non-tariff barriers - non-tariff barriers: hurdles or restrictions on trade that are other than tariff rates (i.e. quotas) - Uruguay-round goal of ⅓ reduction in tariffs, where nearly all 10 vital industrial sectors with key trading partners were eliminated - Trade Related Investment Measures (TRIMs): established the basic principle that investment restrictions can be major trade barriers and were therefore included for the first time under GATT procedures - there were an initial set of prohibited practices, which included local content requirements that specified the amount of the value of the investor's production that needed to be purchased from local sources or produced locally - Trade Related Aspected: established the substantially higher standards of protection for a full range of intellectual property rights than are embodied in current international agreements, and it provides for the effective enforcement of those standards both internally and at the border

Cultural Knowledge

-2 types: factual knowledge and interpretive knowledge -Cultural sensitivity and tolerance

Different Marketing Ops

-Difference in international orientation and approach to international markets that guide the international business activities of companies can be described by ⅓ to international marketing management -3 types: Domestic market extension orientation, multi-domestic market orientation, global marketing orientation - differences in complexity and sophistication of a company's marketing activity depends on which of the orientations guides its operations - ideas expressed in the concept that reflect the philosophical orientation that can be associated with successive stages in the evolution of the international operations in a company - EPRG Schema

Non-tariff barriers

-include quality standards on imported products, sanitary and health standards, quotas, embargo and boycotts - specific limitations on trade - quotas; import licensing requirements; proportion restrictions of foreign to domestic goods; minimum import price limits; embargos - customs and administrative entry procedures - valuation systems; anti-dumping practices; tariff classifications; document requirements; fees - standards - standards disparities; intergovernmental acceptances of testing methods and standards; packaging, labelling, marking standards - Governmental participation in trade - government procurement policies; export subsidies; countervailing duties; domestic assistance programs - charges on imports - prior import deposit requirements; administrative fees; special supplementary duties; import credit discriminations; variable levies; border taxes - other - voluntary export restraints; orderly marketing agreements - Standards (standards to protect health, safety and product standards) - Local content requirements a certain percentage of the intermediate goods used in the production process have to be sourced from domestic manufacturers. - Anti-dumping duties Dumping occurs when goods are exported at a price lower than their normal value. Generally, this results in goods being sold in another country for less than their price in the original market or at less than production costs.

Two perspectives of Business Ethics

1) follow absolute principles (ex. religion) 2) follow a consequential approach - evaluate consequences of decisions and if they do not violate the ethical standards then they are fine - many follow this approach within normal decision-making models

5 Most dynamic trends that influence international business

1) interdependence of world economies 2) rapid growth of regional free-trade areas 3) increase in wealth and growth all over the world leading to enhanced purchasing power and volatility in financial markets 4) evolution of emerging markets 5) availability of advanced methods of communication and transportation

Culture and its elements

1) material culture - technology, economics 2)social institutions - social organization, political structures 3) education - literacy rate - role and levels 4) belief systems - religion, superstitions, power structure 5) aesthetics - graphic and arts; folklore; music, drama and dance 6) language - use of foreign language; spoken v. written language - all 6 encompass the activities of social heritage that constitute culture - al elements are instrumental to the success or failure of a marketing effort because they constitute the environment within which the marketer operates - since we react automatically to some of these factors,we must purposely learn them in another - how the elements interact are critical to understanding the marketing system of any society

Analyzing and intercepting research information

cannot accept the information at face value but rather look at it with a high degree of cultural understanding of the markets in which the research is being conducted, be able to adapt research findings, and be skeptical in handling both primary and secondary data

ethnocentric

ethnocentric: have intense identification with the known and the familiar of a particular culture and at tendency to devalue the foreign and unknown of other cultures