International Marketing Final Exam Review, TTU, Duhan
Treaty of Brussels 1967
the institutions of the three European communities merged. It was from this date onwards that one Commission, one Council of Ministers and a European Parliament came into operation.
Common Law
a system of law based on precedent and customs. Came from 12th century vikings and british
Home country laws
affect domestic marketing activities. e.g., a ban on the import or export of specific products, or to and from specific countries, using specific practices
NATO and ECSC
precursor of European union
Sponsorship Function for Trademarks
products from the same producer reach the customer through the same channels of distribution as other products that have provided customer satisfaction in the past.
World Intellectual Property Organization (WIPO)
-Convention Establishing the World Intellectual Property Organization (WIPO) (1967) -WIPO Copyright Treaty (1996) -WIPO Performances and Phonograms Treaty (1996) -Patent Law Treaty (2000)
TRIPS Terms for WTO members
-Copyright terms must extend to 50 years after the death of the author, although films and photographs are only required to have fixed 50 and 25-year terms, respectively. -Copyright must be granted automatically, and not based upon any "formality", such as registrations or systems of renewal. -Computer programs must be regarded as "literary works" under copyright law and receive the same terms of protection. -Patents must be granted in all "fields of technology," (although exceptions for certain public interests are allowed). -Exceptions to patent law must be limited almost as strictly as those to copyright law. -In each state, intellectual property laws may not offer any benefits to local citizens which are not available to citizens of other TRIPs signatories by the principles of national treatment.
Reasons for totalitarianism
-God-given "right" to rule others e.g., theocracies, traditional monarchies, etc. -The "superiority" of specific persons, or groups of people, to rule others e.g., specific individuals (dictatorships), social classes (communist socialism), racial classes (national socialism), etc. -Economic development/efficiency of centralization
Other IP treaties
-Madrid Agreement for the Repression of False or Deceptive Indications of Source on Goods (1891) -Hague Agreement Concerning the International Deposit of Industrial Designs (1925) -Lisbon Agreement for the Protection of Appellations of Origin and their International Registration (1958) -International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (1961) -Convention Relating to the Distribution of Program-Carrying Signals Transmitted by Satellite (1974) -Patent Cooperation Treaty (1970) -Budapest Treaty on the International Recognition of the Deposit of Micro-organisms for the Purposes of Patent Procedure (1977)
Selecting and Developing Criteria
-Market Potential (size, growth rate) -Market Access and Barriers -Logistic / Supply Chain Issues -Appraising Level & Quality of Competition -Product / Service Requirements and Fit
Market Potential
-Markets in every region of the world are potential targets for almost every company •Need to find people / firms willing and able to buy •Developed vs. underdeveloped markets purchasing power •Becomes a selection process -Markets are People with purchasing power -Purchasing power is a result of the efficiency and effectiveness of the country's economy
6 key information decisions
-Political Environment -Market Potential -Economic Performance -Legal/Cultural Infrastructure -Physical Infrastructure -Political Environment Stability Diplomatic relations Internal policies
Trade Secrets
-Process -Controls -Documentation -Security -Awareness
Culture
-The collective programming of the mind that distinguishes the members of one group of people from those of another. -a set of traditional beliefs and values that are transmitted and shared in a given society. -The way in which people solve problems. -give answers to how to fulfill needs
The importance of information depends on:
-The industry in which the business is operating, Product Centricity -The country of destination -The types of transactions
Managing/ Reducing Political Risk
-Utilize joint ventures / share ownership / alliances -Use predominantly local employment -Use predominantly local vendors / financing -Vertically integrate -Participate in civic projects -Lobby, get into the power structure, be neutral -Explore licensing and franchising options
Religion
-define the reasons for being - define ideals for life - include acknowledgement of a higher power - form the basis for values and attitudes, both for individuals and societies. Even in countries with very low levels of active participation in religious activities, religion typically has set the "base-line" for the values of the culture
Product Decisions
-often dependent upon patents for designs, maskings, & production processes, -the trademarked brand is often more important than the product itself
mercantilist policies led to
-over seas colonies -forbidding colonies from trading with each other -monopolizing markets -created barriers to trade
manufacturing develops need for
-power generation -raw materials supply markets customer markets labor and productivity
Pricing Decisions
-sometimes intellectual property protection reduces competition for a limited time. -Price can be used as a weapon to gain share or open up new market segments
Ten Economic Factors of Freedom
1. Trade Policy 2. Taxation 3. Government intervention 4. Monetary Policy 5. Capital flows & foreign investment 6. Banking 7. Wage and Price Controls 8. Property Rights 9. Regulation 10. Black Market
Why does most world trade occurs among the developed countries whose economies are more similar to one another than to undeveloped countries.
1. Trade is multilateral. 2. Trade involves products that are from many countries 3. it isn't easy to determine advantage. 4. Competition is often regional or global
Building of new transportation capacity comes as
1. the industry makes a transition away from decades of hauling other raw materials in manufacturing regions to moving finished consumer goods from ports to major cities, and 2. to new higher-volume routes, called corridors, often serving the South, where the rail system is less developed and the population is rising.
Industrial Revolution
17th-19th centuries
Berne Convention for the protection of Literary and Artistic Works
1886. Worked toward international copy write protection
State Failure Task Force Study
45 years of data on 114 state failures Four Kinds of failures included: -Revolutionary wars -Ethnic wars -Adverse regime changes -Genocides / politicides
WTO Dispute Settlement Process
60 day consultations panel procedures (arguments in front of 3 members, takes 6 months to process) apeal- 60 days to apeal and 60 days to review binding arbitration
Public Domain
A creative work becomes property of all after a certain time frame
Confiscation
A government taking property without compensation. A direct political risk
Trademark
A guarantee by a government of control over some item used to uniquely identify the product (or service in some countries). It could be: a word, logo, package design, slogan, or other identifying mark
Patent
A guarantee by a government of rights to control the use of an invention. Patents protect the original idea and the way it is implemented (in some countries) -17-20 years protection -Many different types of patents
Mask Work
A guarantee over the control of an electrical circuit design. Generally a microchip design
Copyright
A guarantee over the control of an original work. Any type of artistic, dramatic, digital, literary or musical work
Language
A mechanism for communication using words and symbols with rules for their assembly into sentences, etc., It reflects (and can shape) ways of thinking. Non-verbal aspects (e.g., body language, gestures, etc.) and successful interpretation of these forms of communication, are often even more culturally dependent that verbal communication.
Territoriality
A trademark owner has the right to control a trademarks' distribution.
Exhaustion
A trademark owner relinquishes all rights to the product and its identity after the product has been sold for the first time
GATT/WTO, EU, NAFTA/USMCA, ect.
Agreements made between and among nations that create a legal environment specific to trade among those countries
Hanseatic League
An economic and defensive alliance of the free towns in northern Germany, founded about 1241 and most powerful in the fourteenth century.
The Family
An institution that has a profound effect on culture and is strongly influenced by the culture that surrounds it. A major, if not the major means by which culture is transmitted from one generation to another. Cultural change has modified the nature of families. For instance, the acceptability of women working outside of the home, have changed the nature of families
Companies looking to expand globally should reduce political risk by:
Avoid high-risk unstable country situations Purchase risk insurance -Private insurance -OPIC (Overseas Private Investment Corp)
Bryggen
Buildings where the Hanseatic League did business
Reference Groups
Can be both peer groups and role models. •Provide guidance regarding many patterns of behavior that is not specifically provided by cultural norms. •They are particularly important to socially conspicuous behavior such as clothing styles.
Treaty of Lisbon
Changed from unanimity to qualified majority in the Council of Ministers Gave EU more power gave members the right to leave
customs union
Common external barriers around group
Expropriation
Confiscation with inadequate compensation. A direct political risk
Silk Roads
Connected West and East Eurasia. Spanned 2,500 miles. Before 600 B.C.
Foreign Corrupt Practice Act 1977 (FCPA)
Criminalized bribery of foreign public officials. Prohibits American companies from making payments to foreign officials for the purpose of obtaining, keeping, or directing business. Prohibits a payment to any party knowing some or all of the payment will be used for the above purpose. Requires accounting practices of recording all transactions virtually
Characteristics of Culture
Culture is: Prescriptive Socially Shared Enduring Cumulative facilitates communication learned
Country Failure Study Analysis: Some Conclusions
Democracy generally lowers risk of state failure However, poor democracies are generally less stable High infant mortality rates appear to be a good predictors of failure High levels of trade openness inoculate any kind of regime against failure A large percentage of young adults in the population increases risk of ethnic war High population size and density leads to 30-40% greater chance of failure.
IP Enforcement
Depends on each country's own institutional systems and enforcements
Important legal considerations within countries
Domestic influences, foreign influences, International influences
Trade-Related Aspects of Intellectual Property Rights (TRIPs)
Establishes minimum standards for IP protection in WTO member countries TRIPs addresses: copyrights, (rights of performers, production and broadcast organizations), geographical indications, industrial designs, integrated circuit designs, patents (including new varieties of plants), trademarks and trade secrets
The Muslim Faith
Expanded into China, Spain, Mongolia, and Africa through trade from 600 B.C. to 1500 A.D.
FCPA Penalties
Fines up to $100,000 per instance SEC Fines up to $500,000 per instance 5 years in prison per instance Loss of export privileges
political union
Full integration of governance, foreign & defense policy, etc
Economic Union
Full integration of social and economic policies
International Influences
GATT, WTO, EU, NAFTA, ect.
WTO Founded
Geneva, Switzerland 1 January 1995 Uruguay Round negotiations (1986-94) 148 countries (on 13 October 2004) 600 staff
Domestic Influences
Home country
Foreign influences
Host Country
Precursor of Hanseatic League
In 1241 Lübeck formed an economic alliance with Hamburg.
Hofstede's Cultural Dimensions
Individualism-Collectivism, Power Distance, Uncertainty Avoidance, Masculinity-Femininity, Long-Term--Short-Term Orientation
1500 AD
Knowledge of the world was expanding. Voyages of discovery happened. Trade grew world-wide
Elements of culture
LANGUAGE - spoken and written RELIGION VALUES AND ATTITUDES MANNERS AND CUSTOMS MATERIAL OBJECTS AESTHETICS EDUCATION SOCIAL INSTITUTIONS
Harmonized Law
Many legal traditions overlap in a process called harmonization
Marketing Phenomena
Many theories are primarily focused on commodities rather than value added products (mostly services and goods). The ignore many __________ such as product differentiation
Market distortions
Many theories tend to ignore trade restrictions which are often established for the purpose of creating distortions in trade relationships
Linked many ancient civilizations
trade in textiles, carpets, ivory, gold, spices, and ceramics
common market
No barriers of labor and capital
Anarchy
No centralization of any powers
Free trade area
No internal barriers for merchandise
Arguments against Intellectual Property
No natural scarcity of ideas and creativity A form of monopoly and therefore anti-competitive Thus, IP should not exist or it should be only temporary
Promotion Decisions
Often use slogans, songs or other communications that become part of the product image and need to be protected.
Distribution Decisions
Ownership, use, and rights
Nationalization
Partial or complete government takeover of assets. A direct political risk
comparative advantage
Relative production costs are more meaningful (in determining what trade should take place) than absolute production costs. Even if a country has an absolute advantage in the production of all products (or no products), it should produce those products for which it has the greatest comparative advantage (or the lowest comparative disadvantage) and it should import other products. (David Ricardo)
Marxist-socialist systems
Remember that Marxism was developed in opposition to capitalism and explicitly denies the legitimacy of most private property rights (which are fundamental requirements for market exchanges to occur)
Supported by Eurasian trade
Roman, Arab, and Chinese
Service Mark
Some item used to uniquely identify a service (in some countries). It could also be a word, logo, package design, slogan, or other identifying mark.
Chinese trade in Venice
Stimulated the renaissance of European art
USMCA added
Sunset clause- renegotiate every 16 years exchange rate curbs- deters countries from artificially weakening exchange rates Dispute resolution- arbitration clause tariff reviews
Types of political systems
TOTALIANARISM (all government) Democratic Socialism Radical Interventionism (USA) Light Interventionism (Singapore) Laissez-Faire Capitalism (the USA of the Founding Fathers) ANACHARCY (no government)
factor endowment
The advantage of a country may be due to factors that are not common to various countries. Physical geography, cultural influences on skill levels or demand levels which in turn influence domestic supply and demand levels can alter the absolute and comparative advantages.
arguments for Intellectual Property
The work of creators is uniquely theirs (a natural right) IP protection provides economic incentives for creative processes. Thus, IP should be permanent or at least long term
45,000 years ago
There was an explosion of cultural development because of tool making, technology, and exchange
Paris Convention for the Protection of Intellectual Property in 1883
This was the first major treaty designed to help people in one country obtain IP protection (patents) in other countries. International IP Protection
Totalitarianism
Total centralization of all powers.
Universality
Trademark is only an identification of the source of a product, and remains part of the product.
Domestication
Transfer of ownership to local individuals or organizations. A direct political risk
General Instability Risks
Uncertainty regarding the likelihood of government actions in the future.
Extraterritoriality
When citizens of a country travel abroad but some laws from their home country still apply to them
Product-Market Profiles
Who purchases the product? What need or function does the product serve? What problem does the product solve? How do customers currently satisfy the need and/or solve the problem for which the product is targeted? What are they paying for the current solution? Where is the product purchased? Why is the product purchased?
Trade flourished
With or without empires
Distribution Agreements
a contract between a supplying company with products to sell and another company that markets and sells the products. The distributor agrees to buy products from the supplier company and sell them to clients within certain geographical areas. Subject to local laws and arbitration at termination
absolute advantage
a country should export those products which it can produce at lower cost than other producers, and it should import those products which can be produced at lower cost by others. (Adam Smith, ...Wealth of Nations)
intellectual property (IP)
a general term for the product of human creativity. Intellectual activity- creativity property- a person's ability to have ownership of these creations
Exchange within communities of people
allows the specialization of labor and skills, which increases efficiency and effectiveness
Extraterritoriality examples
antitrust laws (monopoly), national security laws (imports and exports), boycott laws (cuba), foreign corrupt practice act
markets and trade
are ancient human phenomenon
Wars of independance
broke up colonies and loosened barriers to trade
exchange among communities of people
causes more ideas to be shared, adopted, and adapted. This accelerated the rate of cultural evolution
Treaties of Rome 1957
created the European Atomic Energy Community (EURATOM) and the European Economic Community (EEC). The member states also started removing trade barriers among them and made plans for a "common market"
1979
direct elections held for EU candidates
mercantilism
economic doctrine in which government control of foreign trade is used to ensure the prosperity and military security of that state
FCPA applies to____
employees, distributors, consultants, and contractors
Hanseatic Cities
had their own legal systems. Were not a state or confederation of states
Geographic Indications / ID
indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin. EX: Parmesan Cheese
Treaty of Maastricht 1992
introduced further integration (e.g., "justice and home affairs") and effectively created the European Union (EU)
Customary law
law based on tradition and the customary practices of traditional societies; usually passed on orally between generations
Host Country Laws
limit some practices, products and / or trading partners
The invention of invention
new technologies are created by combining existing technologies (Brian Aurthur,The nature of technology)
trade began when
people were able to produce surpluses and exchange with one another
20th century
rapid expansion of trade. Realization that economic trade leads to peace
importance of marketing in society
related to the specialization of labor and dependance upon markets
prosperity
results from narrowing what you sell and diversifying what you consume
poverty
results from self-sufficiency and a lack of trade
Religious Law
systems which are often similar to Civil law but are more heavily rooted in religious documents and traditions. Primary example Shari'ah Law(Muslims)- Islamic finance
Civil/Code/Statute Law
systems which are the most widespread in the world. The central source of law in such systems is codified in statutes which are explicitly written, broadly inclusive, and intended to be interpreted as read
collective brain
things and thoughts created by exchange. the more collective brain, the faster technology changes
Why is Intellectual Property important for marketing?
· Product decisions · Promotion decisions · Pricing decisions · Distribution decisions
Comparing markets
• -"Product-centric"... What is necessary for potential customers to acquire and use your products (Goods, Services or Ideas)? Ex: Knowledge of and about the product, Purchasing power, Infrastructure, Technical or other Support -Ability to reach market, Ex: Availability of distribution channels -Stability of the economy -Profitability of the potential market (size, margins, costs, etc.) Legal and other restrictions
Economic Performance
•Amount of foreign long-term debt (loans) •Inflation rate •Unemployment rate •Nationalized industries and trends Purchasing power parity (PPP)
Evaluating markets
•Based on a number of criteria: -market-related characteristics -cost-related aspects -the regulatory framework -tariffs, duties & non-tariff trade barriers •Decision may vary by country (weights of the components)
Types of Intellectual Property
•COPYRIGHT •MASK WORK •TRADEMARK (SERVICE MARK) •PATENT •TRADE SECRET •PLUS ALL KNOWLEDGE OF THE FIRM
Indirect political risks
•Economic planning failures •Currency limits / inconvertibility •External conflicts •Corruption (especially in government) •Racial or nationality tensions •Quality and strength of the legal system •Civil strife •Contract repudiation •Negative government actions & policies
Spatial Interaction
•Flows (of messages, goods & people) •Distances and direction •Routing (networks, distribution channels etc.) •Origins and destinations
Spatial Differentiation
•Location (retail, industrial, residential etc.) -Relative location and spatial access •Density -Degree of concentration (clustering) or dispersion •Size (of cities, facilities, etc.) •Place attributes
Corporate Issues
•Strategy and Objectives •Access to market •Logistics and supply chain •Country infrastructure •Foreign Exchange •Cost of entry and •Opportunity Costs
Communications
•Telephone (land lines and cells systems) •Internet Service •Cable/Satellite Systems
