International marketing test 1
Tariff Barriers tend to weaken:
Balance-of-payment positions Supply-and-demand patterns International relations (they can start wars)
trade barriers tend to increase
Inflationary pressures Special interests' privileges Government control and political considerations in economic matters The number of tariffs they beget via reciprocity
Tariff Barriers tend to restrict:
Manufacturer' supply sources Choices available to consumers Competition
Differentiate between: Pricate ownership and family ownership, and Decentralized and committee decision making.
"Private ownership": ownership by private investors and not government ownerships. "Family ownership": refers to a business dynasty controlled by one or few families. "Decentralized decsision making": subordinates have the authority ot make certain decisions, with top management making the most important ones. "Committee decsision making": emphasis is placed on group participation and the endorsement of a decisino by a group.
Protectionism
- Tariffs, quotas, and nontariff barriers are designed to protect markets from intrusions by foreign countries. - Nations utilize barriers to restrain entry of unwanted goods (Legal / Exchange / Psychological
Globalization 3.0
-2000-present -shrink the world from size small to size tiny -flattening the global economic playing field - era of globalization is built around individuals (degree to which it requires individuals to globalize themselves and think of themselves as connectors collaborators and connecters with other individuals around the world)
Buddhism*
-360 Million followers Desire as source of suffering
Hinduism* -
-860 Million followers Caste system, veneration of cow, arranged marriage
Geography and global market: climate and topography
-Altitude, humidity, and temperature extremes are climatic features that affect the uses and functions of products and equipment -Different seasons between the northern and southern hemispheres also affect global strate-gies. -Mountains, oceans, seas, jungles, and other geographical features can pose serious impediments to economic growth and trade.
Discuss the five phases of international marketing involvement.
-no direct foreign marketing -Infrequent foreign marketing -regular foreign marketing -international marketing -global marketing
social norms
-personal distance -greetings -nonverbal communication -gift giving
problems encountered with foreign marketing
-result from the strangeness of the environment within which marketing programs must be implemented. Success hinges, in part, on the ability to assess and adjust properly to the impact of an unfamiliar circumstance.
us companies/brands and there foreign owners
1. 7-evelen (japan) 2. Ben & Jerry's (UK) 3. Budweiser (Belgium) 4. Chrysler (Italy) 5. Krispy Kreme (Luxembourg) 6. Panera (Luxembourg) 7. Burger King (Canada)
Selected US companies and their international sales
1. Apple GR-$170.9B Outside US-61.3% 2.Avon GR- 10B Outside US- 85.4% 3. Ford GR-$146.9B Outside US- 41.8% 4. IMB GR- $99.8B outside- 65.1% 5. Walmart GR- $474.3B outside - 29%
Discuss the three cultural change strategies a foreign marketer can pursue
1. Culturally congruent strategy-marketing products similar to ones already sold in the market in a way that goes along with existing cultural norms 2. Strategy of planned change-deliberately trying to change the aspects of a culture that would give resistance to a product 3. Strategy of unplanned change- introducing an innovation and then waiting for cultural change that would cause acceptance of the innovation
Differentiate among the three international marketing concepts
1. Domestic Market Expansion Concept- domestic company that wants to sell its domestic products to foreign markets 2. Multi Domestic Market Concept- company wants to market overseas and acknowledge that these markets are unique and different from the domestic market 3. Global Marketing Concept- focuses on one homogeneous global market
average annual hours worked per worker in 2015
1. Mexico 2.south Korea 3. greece 4. chile 5. russia 6. turkey 7. united states
. Discuss the three factors necessary to achieve global awareness.
1. Objectivity- in assessing opportunities, evaluating potential and responding to problems 2. Tolerance towards cultural differences- understanding cultural differences and working with people from other cultures 3. Knowledgeability- about cultures, history, world market potentials, global economy and social trends
largest countries by area
1. Russia- Total area-1st largest rank in pop 9 2. canada- TA-2nd RIP- 37 3. China- TA-3rd RIP- 1 4. US- TA- 4th RIP- 3 5. Brazil- TA- 5th RIP- 5 6. Australia TA-6th RIP- 52 7. India- TA- 7th RIP- 2
Compare the three decsiion-making authority patterns in international business:
1. Top management: only top people are invovled in making decsions 2. Decentralized DM: Heads of departments make the decisions of their own functions. 3: Commiitte DM: Emphasis is placed on group participation, harmong and decision making.
What are the three ethical principles that provide a framework to help distinguish between right and wrong?
1. Utilitarian Ethics: actions that place an emphasis on common good. 2. Rights of the parties: Do these actions respect the rights of the individuals involved 3. Justice or fairness: Does the action respect the parties involved. *These all hlep the marketer determine what actually is harmful and what is actually beneficial.
7 insane ways americans waste money
1. eating way to much meat- to much red meat is bad for health, is the most expensive item in grocery basket, less expensive sources of protein 2. fast fashion obsession-went from 9 to 30 outfits that an average americans owns, causing an issue with storage 3. things we don't or cant use- sign up for things that seem like a good deal but turn out not to be (gym, time shares) 4.Huge homes- average size of square feet has grown dramatically, everything that takes to run the house, space between homes and neighbors has increased social problems 5. keeping things ice cold- costs us financially and environmentally 6. not cooking- on average americans eat a meal made for them 18.2 times a month 7. always needing new things- 90% have smartphones, most sales are people replacing things that are perfectly new
World population by region 2014-2050 (millions)
1. world: 2014- 7,243 2050-9,550 2.more developed regions: 2014-1,255 2050- 1,350 3.less developed regions: 2014-5,985 2050-8,247 4. least developed regions: 2014- 918 2050- 1,810 5. Africa: 2014- 1,137 2050- 2,047 6. asia: 2014- 4,342 2050-5156
Discuss how your interpretations of Manifest Destiny and the Monroe Doctrine might differ from those of a native of Latin America
Citizens of the US feel that they have been good neighbors. they see the manifest destiny and monroe doctrine as protection for latin america from european colonization and the intervention of europe in the governments of the western hemisphere. Latin americans, in contrast, tend to see the monroe doctrine as an offensive expression of us influence in latin america. " europe keep your hands off-Latin america is only for the US"
International Marketing
Companies in this stage are fully committed to and involved in international marketing activities. Such companies seek markets all over the world and sell products that are a result of planned production for markets in various countries
Economic and Political Unions
Complete political and economic integration, either voluntary or enforced Commonwealth of Independent States (CIS)-9 former Soviet states, including Russia European Union (EU)-28 member states -Not Switzerland, Iceland, or Norway -Brexitvote 2016; planned 2019
Social Norms:terms
Cultural imperatives Cultural electives Cultural exclusives
Cultural sensitivity
Cultural insensitivity can take many forms and poses an obstacle to successful international marketing.
management style: authority and decision making
Culture influences the authority structure of business -E.g., PDI:top-downvs. bottom-up mgmtstyle; UAV affects risk aversion, face-saving
Cultural exclusives -
Customs or behavior patterns reserved exclusively for the locals (prayers)
Common Market
Customs union that also removes all restrictions on the free flow of capital and labor among member nations European Economic Community (EEC) 1957; predecessor to EC (European Community); absorbed by EU in 2009
Arguments for trade barriers
Economic, political and social
POLITICAL GLOBALIZATION MEASURE
Embassies in country Membership in international organizations International treaties Participation in UN
social norms: greetings
Europe-kiss, soft handshake -Slavic-embrace -France-"Bonjour" Latin America-kiss, embrace Asia-bow, aversion to casual contact
components of culture
External, material culture Internal, mental culture
Power Distance Index
Focuses on authority orientation Measures the tolerance of social inequality -- I,e., power inequality between superiors and subordinates within a social system. • Low vs. High ( eg. Denmark -- low, China -- more towards high, U.S.A- a little below the middle)
Uncertainty avoidance Index
Focuses on risk orientation • Measures the tolerance of uncertainty and ambiguity among members of a society • Low vs. High ( high -- a need to feel secured) ( eg. HIgh- Japan)
Individualism/collectivism Index
Focuses on self-orientation High individualism: refers to the preference for behavior that promotes one's self-interest • Low vs High Ind ( eg. Indonesia -- low, and U.S.A - high)
Bribery: A Complicated Issue
Foreign Corrupt Practices Act Omnibus Trade and Competitiveness Act (1988)-
Education:
Formal education plays a key role in a society - The number one most educated country is Canada. - Schools teach basic facts about the social and political nature of a society - Cultural norms are also taught indirectly at school - The use of a grading system
free trade Vs protectionism
Free trade -International trade left to its natural course without tariffs, quotas, or other restrictions Protectionism-efforts by a country to protect its domestic industries from international competition
Customs Union
Free trade area plus a common external tariff on products imported from countries outside the union. France and Monaco, Italy and San Marino, and Switzerland and Liechtenstein
The Greater Arab Free Trade Area (GAFTA)
GAFTA was declared within the Social and Economic Council of the Arab League as an executive program to activate the Trade Facilitation and Development Agreement that has been in force since January 1st, 1998. The GAFTA includes in its membership 17 Arab countries.
Social norms: nonverbal communication
Hand gestures -Thumbs up -Pointing -Okay Eye Contact -US vs. Asia
Strategy of unplanned change:
Introduce a product and hope for the best
Cultural congruence:
Involves marketing products similar to ones already on the market in a manner as congruent as possible with existing cultural norms, thereby minimizing resistance.
benefits of international marketing
It can enrich you, your family, your company, and your country. And ultimately, when international marketing is done well, by large companies or small, the needs and wants of customers in other lands are well understood, and prosperity and peace are promoted along the way.3
Jack Ma, World Economic Forum
Jack Ma, is a Chinese business magnate who is the founder and executive chairman of AlibabaGroup,
Political and Social arguments for trade barriers
Jobs Foreign policy -Sanctions Fairness -Retaliation, labor and environmental standards
social norms: personal distance
Latin, closer; Nordic, further Affected by population density
Communication Styles
Low context, explicit cultures High context , implicit cultures
concept of time
Monochronictime Polychronictime
Economic Development- other groupings (2 of 2)
NICs (Newly Industrialized Countries)- BEMS (Big Emerging Markets) BOPMs (Bottom-of-the-Pyramid Markets)-
Moral Obligations
NNCs have power that comes from their control over resources and their ability to move production from country to country • Moral philosophers argue that with power comes the social responsibility for corporations to give something back to the societies.
Economic arguments for trade barriers
National defense, infant industry, developing nation
Ethnocentrism
Notion that one's own culture or company knows best (Disney bans alcohol at EuroDisney.)
Hofstede's Dimensions of Cultural Values
Power Distance Index (PDI) Individualism versus Collectivism (IDV) Masculinity versus Femininity (MAS) Uncertainty Avoidance Index (UAI) Long Term Orientation versus Short Term Normative Orientation (LTO) Indulgence versus Restraint (IND)
Explain the role of price as a free market regulator
Price regulates the market because if a product is priced too high, demand will be low. If a product is priced very low, demand will be very high.
Management Objectives and Aspirations
Security and mobility -Japan: Lifetime employment Work-life balance -Europe: August off; Mexico: Lunch w/family Affiliation and social acceptance -Mitsubishi man Power and achievement -South American countries
Cultural Insensitivity
Self-reference criterion (SRC) Ethnocentrism
Economic environment: Barriers to Trade
Tariff Quota Monetary barriers- Anti-dumping penalties Local content laws
SOCIAL GLOBALIZATION MEASURES
Telephone traffic International tourism Foreign population Internet users Television
Infrequent Foreign Marketing
Temporary surpluses caused by variations in production levels or demand may result in infrequent marketing overseas. The surpluses are characterized by their temporary nature; therefore, sales to foreign markets are made as goods become available, with little or no intention of maintaining continuous market representation. -little or no change is seen in the company organization or product lines.
Geography and global markets: resources
The availability of minerals and the ability to generate energy are the foundations of modern technology. The locations of Earth's resources, as well as the available sources of energy, are geographic accidents. The world's nations are not equally endowed, and no nation's demand for a particular mineral or energy source necessarily coincides with domestic supply. - The location, quality, and availability of resources will affect the pattern of world eco-nomic development and trade well into the 21st century
The Anti-Globalization Movement
The basic complaint...is the amalgam of unintended consequences of globalizing: -Environmental concerns -Worker exploitation -Domestic job losses -Cultural extinction -Diminished sovereignty* of nations
Inner circle or Controllable elements of the marketing task
The controllable elements can be altered in the long run and, usually, in the short run to adjust to changing market conditions, con-sumer tastes, or corporate objectives.
Cultural imperialism-
The culture of a large and powerful country, organization, etc. having a great influence on another less powerful country
Discuss the conditions that have led to the development of global markets.
A global market has emerged due to new communications technology, travel and increased exposure to the other parts of the world. Through these conditions, needs and demands are converging into one global market such as the need for high quality, reasonably priced, standardized products.
Costs of Protectionism
A recent study on 21 protected industries showed that while jobs are protected, consumers pay much higher prices because of protectionism: U.S. consumers pay about $70 billion per year in higher prices because of tariffs and other protective restrictions. At the same time, the average cost to consumers for saving one job in these protected industries was $170,000 per year.
Cultural values
A society's commonly held and enduring ideas about what is good, right, fair, and just
Define and discuss the idea of global orientation.
Approaching all individual markets and one single market. It does not disregard cultural differences, but also does not adapt marketing mix for every single cultural difference
G20-
Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States—along with the European Union (EU)
social norms: gift giving
Asia-expected, no clocks, no 4s Mid East-writing instruments Europe, US-less expected
Economic and political organization
Association of Southeast Asian Nations (ASEAN) Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar, and Vietnam
culture
The sum of the values, rituals, symbols, beliefs, and thought processes that are learned, shared by a group of people, and transmitted from generation to generation.
what is the difference between domestic and international marketing?
The uniqueness of foreign marketing comes from the range of unfamiliar problems and the variety of strategies necessary to cope with different levels of uncertainty encountered in foreign market -international marketer must deal with at least two levels
The Economic Argument for Free Trade
Theory of Comparative Advantage (David Ricardo-Principles of Political Economy and Taxation, 1817) -Countries can gain by specializing in those occupations in which they are relatively efficient and should export part of that production and take in exchange those goods in whose production they are at a comparative disadvantage. Evidence? -Smoot-Hawley Tariff Act (1930)
Major Religions
Christianity Islam Hinduism* Buddhism* Confucianism*
Business Ethics and Corruption
Value judgments differ widely among culturally diverse groups In various parts of the world, profits, consumerism, and even intellectual property protection are seen as a kind of corruption
Why should a foreign marketer be concerned with the study of culture
a foreign marketer should study culture in order to avoid making blunders which would not be made if he or she had cultural knowledge culture should be studied because it affects the consumer´s desire and ability to buy
The primary obstacles to success in international marketing are
a person's self-reference criterion (SRC) and an associated ethnocentrism. T
justice or fairness
a. Does the action respect the canons of justice or fairness to all parties involved • Focused on the attainment of a just distribution of economic goods and services.
The key to successful international marketing is a
adaptation to environmental differences from one market to another.
G8-
add Russia, currently suspended
Cultural exclusives
are customs that are only for locals. You will break a deal if you try to partake in these customs. If you are a Christian, don't go to the Middle East and attempt to act like a Muslim because that is insulting their religion. Similarly, never joke about a country's politics or criticize their customs. Just like here, you can joke about your own family, but if someone else does you'll want to fight them
Cultural electives
are customs that you may conform to, but you don't have to. There are many things in different cultures that can make you feel uncomfortable. Be aware of what the cultural customs are so you won't be surprised and you know how to politely decline. In the Czech Republic, liqueur is offered at the start of business meetings, even if it is 8 in the morning. It is to build friendship and trust, so politely accept and take a ceremonial sip. Arabs will offer coffee as a way to signal friendship, so you should also accept it even if you don't intend to drink it. Most customs fall into the cultural elective category.
Cultural imperatives -
are customs that you must conform to if you want to be successful. An example of a cultural imperative is relationship building. In many Asian countries such as China and Japan and Latin American countries, business understand the importance of building a relationship. Businesspeople do not do business with companies, they do business with people. If you want to do business in these countries, it is a cultural imperative to spend time building that relationship before you even bring up business. Never underestimate the importance of building trust with your business partners. It will make or break a deal. Another cultural imperative for Asian countries is that you can't cause someone to lose face. Never raise your voice or correct someone in public. If you aren't aware of these cultural imperatives you will fail on your business venture. - Guanxi for chinese, ningen kankei for japanese,
Cultural electives -
areas of behavior or to customs that cultural aliens may wish to conform to or participate in but that are not required (gift-giving)
High context , implicit cultures-
context (who, when, how it is said) is important in understanding communication (Italian, Spanish, Latin American, Arabian, Japanese)
No Direct Foreign Marketing
does not actively cultivate customers outside national boundaries; however, this company's products may reach foreign markets.
Monetary barriers-
e.g., limit on currency exchange (e.g., Uzbek som)
Low context, explicit cultures-
emphasis on explicit, verbally expressed communication (Swiss, German, Scandinavian, North American, French, English-UK)
balanceof trade
exports minus imports
Imports
goods and services purchased from other countries
Exports
goods and services sold to other countries
relationship-oriented
high context collectivism high power distance bribery more common high distance from english linguistic indirectness polychromic time face to face background reduce transaction costs
Extortion -
if payments are extracted under duress (pressure) by someone in authority from a person seeking only what he or she is lawfully entitled to.
Differences in the American and Japanese office structure
individualismreflectedintheAmericancubiclesandthecollectivismdemonstratedbytheJapaneseofficeorganization.
More-developed countries (MDCs):
industrialized countries with high per capita incomes; Europe, Northern America, Australia, New Zealand, Japan
Less-developed countries (LDCs):
industrially developing countries just entering world trade with relatively low per capita incomes: all regions of Africa, Asia (excluding Japan), Latin America, Melanesia, Micronesia, Polynesia
Least-developed countries (a subset of LDCs):
industrially underdeveloped, agrarian, subsistence societies with rural populations with extremely low per capita income levels, and little world trade involvement: 48 countries, 33 in Africa, 9 in Asia, 1 in Latin America, 5 in Oceania.
dimensions of culture
information-oriented (IO) relationship-oriented (RO)
World Bank-
international organization designed to provide long term capital to developing nations
World Trade Organization-
international organization to regulate and promote trade ~164 members; MFN status
Subordination -
involves giving large sums of money -- frequently not properly accounted for -- designed to entice an official to commit an illegal act on behalf of the one offering the bribe.
Lubrication -
involves in a relatively small sum of cash, a gift, or service given to a low-ranking official in a country where such offerings are not prohibited by law. - the purpose of such a gift is to facilitate or expedite the normal, lawful performance of a duty by that official.
Top ten KOF globalization index
ireland Belgium netherlands austria singapore Denmark Sweden Portugal Hungary Finland
Economic Development (UN Classifications)
more developed countries less developed countries least developed countries
David Ricardo
publishes Principles of Political Economy and Taxation, in which he proposes modern trade theory: Comparative advantage drives trade; countries will produce and export goods for which they have a comparative advantage as oppos
Quota-
restriction on quantities of imports
Dumping-
selling in another country at below cost (relate to predatory pricing)
Polychronictime-
simultaneous occurrence of many things, common in high context cultures (Greece, Mexico, Italy, Carribean)
Tariff-
tax on imports
How can the increased interest in international marketing on the part of U.S. firms be explained
with the increasing globalization of markets, companies find they are unavoidable enmeshed with foreign customers , competitors and suppliers, even within their own borders.
global economic organizations
world trade organization world bank IMF (international Monetary Fund)
Costs of Protectionism
• A recent study on 21 protected industries showed that while jobs are protected, consumers pay much higher prices because of protectionism: o US consumers pay about $70 billion per year in higher prices because of tariffs and other protective restrictions. o At the same time, the average cost to consumers for saving one job in these protected industries was $170,000 per year.
Managerial Implications:
• Ethnocentrism: Belief in the superiority of one's own culture - Cross-cultural literacy - Culture and competitive advantage ( especially when we talk about education) - Culture and Business ethics • "When in Rome, do as the Romans do"??? BE careful with this approach! • Knowledge of culture • Adaptability • Employment of locals • Transfer executives overseas if necessary.
Worker Shortage and Immigration
• Europe will need 1.4 billion immigrants over the next 50 years • Japan and the U.S. will need 600 million immigrants between now and 2050 • A Modest Proposal?
Masculinity/Femininity Index
• Focuses on the relationship between gender and work roles • Low vs High ( eg. Japan - high, Sweden - low)
Population Trends
• Global population trends determine today's demand for goods Rural/urban population shifts Rates of growth Age levels Population control • Exhibit 3.5 World Population by Region, 2011-2050, and Life Expectancy at Birth, 2005-2010 (millions)
History is Subjective
• Historical events always are viewed from one's own biases and SRC • E.g. Manifest Destiny and the Monroe Doctrine
History Perspective in Global Business
• History helps define a nation's mission How it perceives its neighbors How it perceives itself Its place in the world
History and Contemporary Behavior
• Japanese history Seven centuries under the shogun feudal system The isolation before the coming of Admiral Perry in 1853 Threat of domination by colonial powers Rise of new social classes Western influences Humiliation of World War II Involvement in the international community • Historically, loyalty and service, a sense of responsibility, and respect for discipline, training, and artistry were stressed to maintain stability and order • A historical perspective gives the foreigner a basis on which to begin developing cultural sensitivity and a better understanding of contemporary Japanese behavior
Culture and Gender
•US: Women represent less than 20% of the employees who are chosen for international assignments •In many cultures women not typically found in upper levels of management, and are treated very differently from men
Islam -
-1.2 Billion followers Ramadan, no pork, no alcohol, public separation of sexes, 5x daily prayer, no "riba"
Globalization 1.0
-1492- early 1800s -shrunk the world from a size large to a size medium -defined by countries globalizing (you went global thru your country) -dynamic agent of globalization was the country
Confucianism*
-150 Million followers Humans are teachable, improvable, and perfectible
Christianity -
-2 Billion followers Christmas, hard work and frugality Bible Verses about Work
To be globally aware is to have (1) tolerance of and a willingness to learn about cultural differences and (2) knowledge of cultures, history, world market potential, and global economic, social, and political trends.
(1) tolerance of and a willingness to learn about cultural differences (2) knowledge of cultures, history, world market potential, and global economic, social, and political trends.
Foreign Corrupt Practices Act
(1977)-prohibits US firms from engaging in bribery of foreign officials
Omnibus Trade and Competitiveness Act
(1988)-allows for grease payments
BEMS
(Big Emerging Markets) BRICS-Brazil, Russia, India, China; South Africa (added 2010)
BOPMs
(Bottom-of-the-Pyramid Markets)-The 4 billion people across the globe with annual incomes of less than $1,200.
NICs
(Newly Industrialized Countries)-Chile, Brazil, Mexico, South Korea, Singapore, and Taiwan
Problems with Hofstede:
- Assumes one to one relationship between culture and the nation state - Research may have been culturally bound - May reflect certain biases - Survey respondents were from a single industry (computer) and a single company (IBM)
Beyond the First Decade of the 21st Century
- G8 Economy has slowed dramatically. - World growth (except China) also slowed: The Organization for Economic Cooperation and Development (OECD) estimates 3% average annual growth for next 25 years - Developing countries will grow faster: a- From an annual rate of 4% in the past quarter to a rate of 6% for the next 25 years. b- Share of world output will range from one-sixth to one-third.
Global Perspective (Trade Barriers - An International Marketer's Minefield): - Countries take advantage of open markets while putting barriers in the way of imports - Tariff and nontariff barriers to trade are major issues confronting international marketers - To realize the benefits of the social, political, and economic changes, free trade must prevail throughout the global marketplace: 1- WTO (World Trade Organization). 2- GAFTA (Greater Arab Free Trade Area). 3- GCC (Gulf Cooperation Council
- Countries take advantage of open markets while putting barriers in the way of imports - Tariff and nontariff barriers to trade are major issues confronting international marketers - To realize the benefits of the social, political, and economic changes, free trade must prevail throughout the global marketplace: 1- WTO (World Trade Organization). 2- GAFTA (Greater Arab Free Trade Area). 3- GCC (Gulf Cooperation Council
The International Monetary Fund:
- Created to assist nations in becoming and remaining economically viable. - Objectives of the IMF: a- Stabilization of foreign exchange rates. b- Establishment of freely convertible currencies to facilitate the expansion and balanced growth of international trade. - Special Drawing Rights (SDRs) "Paper gold".
the changing face of us business
- Current interest in international marketing can be explained by changing competitive structures, coupled with shifts in demand characteristics in markets throughout the world. - With the increasing globalization of markets, companies find they are unavoidably enmeshed with foreign customers, competitors, and suppliers, even within their own borders. -They face competition on all fronts—from domestic firms and from foreign firms. A huge portion of all consumer products—from automobiles to dinnerware—sold in the United States is foreign made. -Companies with only domestic markets have found increasing difficulty in sustaining their customary rates of growth, and many are seeking foreign markets in which to expand. -Companies with foreign operations find that foreign earnings are making an important overall contribution to total corporate profits
Employment practices
- Ethical issues associated with employment practices abroad include: When work conditions in a host nation are clearly inferior to those in a multinational's home nation, what standards should be applied? • While few would suggest that pay and work conditions should be the same across nations, how much divergence is acceptable?
The 20th to the 21st Century:
- First Half of the Twentieth Century (Depression / WW I and WW II). - Marshall Plan - Officially "European Recovery Program" (ERP). - Move toward international cooperation among trading nations - General Agreement on Tariffs and Trade, (GATT). - Last half of the 20th century marred by competing approaches to economic development (Socialist Marxist / Democratic Capitalist). - Rapid growth of war-torn economies and previously underdeveloped countries. - Large-scale economic cooperation and assistance. - Rising standards of living.
The international marketing task
- Inner circle represents the controllable elements of a marketers decision area (Strategy, Products, Pricing, Place(distribution), and promotion) -As the outer circles illustrate, each foreign market in which the company does business can (and usually does) present separate problems involving some or all of the uncontrollable elements. ----Thus, the more foreign markets in which a company operates, the greater is the possible variety of foreign environmental factors with which to contend.
The World Bank Group:
- Institution created to reduce poverty and improve standard of living (By promoting sustainable growth and investment in people). - The World Bank has five institutions which perform the following services: a- Lending money to the governments of developing countries b- Providing assistance to governments for developmental projects to the poorest developing countries c- Lending directly to the private sector d- Providing investors with guarantees against "noncommercial risk" e- Promoting increased flows of international investment
World Trade and Multinationals:
- New global marketing opportunities. - 1950s - Companies began to export and make significant investments in foreign marketing and production facilities. - 1960s - Multinational corporations (MNCs) faced major challenges on two fronts: a- Resistance to direct investment (FDI). b- Increasing competition in export markets. -American MNCs confronted by a resurgence of competition from all over the world a- NIC (Newly Industrialized Countries). b- SOE (State-Owned Enterprises). - The balance of merchandise trade - U.S. trade deficit. - U.S. dilemma of how to encourage trading partners to reciprocate with open access to their markets without provoking increased protectionism -WTO (World Trade Organization) -NAFTA -AFTA (American Free Trade Area) -APEC (Asia-Pacific Economic Cooperation Conference)
General Agreement on Tariffs and Trade:
- Paved way for first effective worldwide tariff agreement. - Basic elements of the GATT: a- Trade shall be conducted on a nondiscriminatory basis. b- Protection shall be afforded domestic industries through customs tariffs, not through such commercial measures as import quotas. c- Consultation shall be the primary method used to solve global trade problems. - Eliminating international trade barriers - Uruguay Round a- The General Agreement on Trade in Services (GATS). b- Trade-Related Investment Measures (TRIMs). c- Trade-Related aspects of Intellectual Property Rights (TRIPs)
Language:
- Spoken ○ Verbal cues ○ Language structures perception of world - Unspoken ○ Body language ○ Personal space
World Trade Organization:
- WTO is an institution - not an agreement. a- Sets many rules governing trade between its 148 members. b- Provides a panel exports to hear and rule on trade disputes between members. c- Issues binding decisions. d- All member countries will have equal representation. e- Member countries have open their markets and to be bound by the rules of the multilateral trading system.
G7 -
-(Group of 7) finance ministers and central bank governors from Canada, France, Germany, Italy, Japan, UK, US
Geography and global market: Geography, Nature, and Economic Growth
-Always on the slim margin between subsistence and disaster, less-privileged countries suffer disproportionately from natural and human-assisted catastrophes. Climate and topography coupled with civil wars, poor environmental policies, and natural disasters push these countries further into economic stagnation. -As countries prosper, natural barriers are overcome. Tunnels and canals are dug, air con-ditioning systems are constructed,16 to adapt to climate, topography, and the recurring extremes of nature. -As the global rush toward industrialization and economic growth accelerates, environmental issues become more apparent.17 Disruption of ecosystems, relocation of people, inadequate hazardous waste management, and industrial pollution are problems that must be addressed by the industrialized world and those seeking economic development. -Sustainable development
Regular Foreign Marketing
-At this level, the firm has permanent productive capacity devoted to the production of goods and services to be marketed in foreign markets. - The primary focus of operations and production is to service domestic market needs. However, as overseas demand grows, production is allocated for foreign markets, and products may be adapted to meet the needs of individual foreign markets.
global Marketing
-At this stage, companies treat the world, including their home market, as one market. -Market segmentation decisions are no longer focused on national borders. Instead, market segments are defined by income lev-els, usage patterns, or other factors that frequently span countries and regions. O
georgraphy and global markets: Social Responsibility and Environmental Management
-Environmental protection is not an optional extra; it is an essential part of the complex process of doing business. -Governments, organizations, and businesses22 are becoming increasingly concerned However, the with the social responsibility and ethical issues surrounding the problem of maintaining economic growth while protecting the environment for future generations.23
events and trends driving globalization
-Growth of WTO and regional FT areas -Acceptance of the FM system in developing countries -Mature markets in developed countries -Internet, mobile phones, and other global media on the dissolution of national borders
Ethical Issues in International Business:
-In the International business setting, the most common ethical issues involve • Employment practices • Human rights • Environmental regulations • Moral obligation of multinational corporations • Corruption
Utilitarian Ethics:
-Maximize the good, minimize the harm -Does the action optimize the common good or benefits of all constituencies? -Holds that the moral worth of actions or practices is determined by their consequences ---An action is judged to be desirable if it leads to the best possible balance of good consequences over bad consequences.
stages of international marketing involvement
-No Direct Foreign Marketing -Infrequent Foreign Marketing -Regular Foreign Marketing -International Marketing -Global Marketing
orientation of international marketing
-The United States may be the largest economy in the world, yet both China and Germany exported more goods and services last year -The US ranked 32nd on the most recent KOF Globalization Index. -As the three summary categories show, the United States does well with respect to political globalization (#18) but poorly on economic globalization (#87). When we take an even closer look at the data we find that U.S. strength in social globalization (#28) is mostly related to technological connectiv-ity, ranking #11 in Internet users and #12 in television ownership among all countries. -United States ranks only 53rd in international tourism.
What is the importance of cultural empathy to foreign market-ers? How do they acquire cultural empathy?
-The importance of "cultural empathy" to the foreign marketer is that being sensitive allows one to objectively see, evaluate and appreciate another culture. -One can obtain cultural empathy by studying culture and immersing oneself in it
Outter circle of the marketing task
-The outer circles surrounding the marketing decision factors represent the levels of uncer-tainty created by the domestic and foreign environments. -Although the marketer can blend a marketing mix from the controllable elements, the uncontrollable elements are precisely that; the marketer must actively evaluate and, if needed, adapt. -That effort of the adaptation of the marketing mix to these environmental factors—determines the outcome of the marketing enterprise. -The process of evaluating the uncontrollable elements in an international marketing program, however, often involves substantial doses of cultural, political, and economic shock.
AlibabaGroup,
-a Chinese e-commerce company that provides consumer-to-consumer, business-to-consumer and business-to-business sales services via web portals. -It is the world's largest retailer as of April 2016, surpassing Walmart, with operations in over 190 countries.
Culture in the Workplace:
-cultural values • Individualism/Collectivism Index • Power Distance Index • Uncertainty Avoidance Index • Masculinity/Femininity Index
Sustainable development-
-development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
globalization 2.0
-early 1820s- year 2000 - shrunk the world from size medium to size small -era was defined by companies globalization (went global from companies searching for markets and for labor)
Thomas Friedman 3 eras of globalization
-globalization 1.0 -globalization 2.0 -Globalization 3.0
To adjust and adapt a marketing program to foreign markets
-marketers must be able to interpret effectively the influence and impact of each of the uncontrollable environmental elements on the marketing plan for each foreign market in which they hope to do business.
Language
A component of culture that both reflects and influences other aspects of culture Linguistic Distance from English -German, Dutch: 1 -French, Spanish: 3 -Japanese, Korean: 4 -Arabic: 5 -Taiwanese: 6 -Bahasa (Indonesia): 7
External, material culture
Aesthethics(art, music), practical (housing, clothing), protection (weapons), enjoyment (books, movies), technology
Free trade area
An agreement between two or more countries to reduce or eliminate customs duties and nontariff trade barriers. -NAFTA (1994)-North American Free Trade Agreement (Mexico, US, Canada) -United States-Mexico-Canada Agreement -Agreement between the United States of America, the United Mexican States, and Canada is a signed but not ratified free trade agreement between Canada, Mexico, and the United States. Signed: 30 November 2018. Not yet ratified.
Differentiate among the current account, balance of trade, and balance of payments
Balance of Payments- The system of accounts that records a nations international financial transactions It includes 3 accounts: current account, the capital account, a record of direct investment, portfolio investment and short term capital movement to and from countries, and the official reserves account, records of exports and imports of gold. Of the three, current account is of primary interest in international business. Current Account-portion of the balance of payments statement that shows a record of all merchandise exports, imports, and services, plus unilateral transfer of funds. Balance of Trade- This is the difference in value over a period of time between a country's imports and exports. It explains: the relationship between imports and exports- a nation's trade balance in goods, if a country exports more goods than it imports it is said to have a "favorable" balance of trade, and if a country imports more goods than it exports, it is said to have a trade deficit
Human Rights
Basic human rights still are not respected in many nations -What is the responsibility of a foreign multinational when operating in a country where basic human rights are trampled on? • The question that must be asked of firms operating internationally is:
Formality and Tempo
Breezy informality and haste characterize American business relationships
Cultural imperatives -
Business customs and expectations that must be met (siesta)
cultural change
Change is a result of a society seeking ways to solve the problems created by changes in its environment. - One view is that culture is the accumulation of a series of the best solutions to problems faced in common by members of a given society. In other words, culture is the means used in adjusting to the environmental and historical components of human existence. - - Societies have found answers by looking to other cultures from which they can borrow ideas. - Cultural borrowing is common to all cultures.
who is our largest trading partner?
China canada Mexico japan germany south Korea
Planned change:
Deliberately set out to change those aspects of the culture offering resistance to predetermined marketing goals.
rights of parties
Does the action respect the rights of the individuals involved? • Recognize that human beings have fundamental rights and privileges • Establish the minimum level of morally accepted behavior.
Discuss the impact of GATS, TRIMs, and TRIPs on global trade
GATT: General Agreement on Tariffs and Trade- Trade shall be conducted on a nondiscriminatory basis, protection shall be afforded domestic industries through tariffs(not through such commercial measures as import quotas), and consultation will be the modus to solve trade problems TRIMs: Trade related investment measures, established the basic principle that investment restrictions can be major trade barriers and therefore are included under GATT procedures. An initial set of specific practices were prohibited. As a result of TRIMs, restrictions in Indonesia which prohibit foreign firms from opening their own wholesale or retail distribution channels can be challenged. And so investment restrictions in Brazil TRIPs:Trade Related aspects of Intellectual Property Rights- Another objective of the U.S from the Uruguay Round was achieved by agreement on trade related aspects of intellectual property rights. The TRIPs agreement establishes substantially higher standards of protection for a full range of intellectual property rights (patents, copyrights, trademarks, etc.) than are embodied in current international agreements and it provides for the effective enforcement of those standards both internally and at the border.
. Differentiate between a global company and a multinational compan
Global company: has locations in multiple countries, but has created 1 company culture with 1 set of processes that facilitates a more efficient and effective single global organization. Multinational company: has locations and facilities in multiple countries, but each location function in its own way, essentially as its own entity.
Internal, mental culture
Ideas and points of view shared by most members of a society. Includes knowledge systems (language, science), belief and value systems (religious, political), social normative system.
The Globalization Backlash
Increasing nationalism -Brexit -Trump Factors -Global recession
Distinguish between P-time and M-time
M-time: Monochronic (generally N. America, German etc. --> LOW CONTEXT.) In M-Time, teams will divid into small units and they will concentrate on one task and devote there whole time to doing it and doing it efficently. They try to avoid wasting time, and it is considered the most tangible because of the amount of time that is being saved etc. ex: American style of getting straight to business is an example of the M-Time philosophy. P-Time: Polychronic (Generally in LOW CONTEXT societies, example Japan). In P-time many things are happening at the same time, and it involves high involvement with people. P-time allows relationships to form and allows context to be absorbed into the culture. ex: Allows for looser time schedules and calls for deeper committment from individuals (EX. Latin would rather be late than cancel an appointment.) *Many times cultures can be a combination of both M-Time and P-Time.
Economic Development - other groupings (1 of 2)
Major Advanced Economies (IMF) G7 G8 G20
What role does the marketer play as a change agent?
Marketers are constantly adjusting their efforts to cultural demands of the marketplace. Indeed, markets are simultaneously 1) a result of culture and 2) an extension of culture.
Economic and Monetary Union (EMU)
The EMU, a provision of the Maastricht Treaty: Established a common currency, the euro, currently adopted by 19 EU countries-all of original 15 but Britain, Denmark, Sweden
Planned and Unplanned cultural change:
The First step in bringing about planned change in a society is to determine which cultural factors conflict with an innovation, thus creating resistance to its acceptance. - The next step is to change those factors from obstacles to acceptance into stimulants for change. - - Marketers have two options when introducing an innovation to a culture. 1) Wait for changes to occur 2) They can spur change - Not all marketing efforts require change to be accepted.
ECONOMIC GLOBALIZATION MEASURES
Trade flows Foreign direct investment flows Income payments to foreigners Mean tariff rates Taxes on international trade
TPP and CPTPP
Trans-Pacific Partnership(TPP) -Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and United States -Cut over 18,000 tariffs; IP and environmental provisions -Defunct: US withdrew 2017 Comprehensive and Progressive Agreement for Trans-Pacific Partnership(CPTPP) -Came into force for the initial six ratifying countries on 30 December 2018. -Two-thirds of the provisions in the signed CPTPP are identical to the TPP draft at the time the United States left the negotiating process.
Self-reference criterion (SRC)
is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions -consider misunderstandings that can occur about per-sonal space between people of different cultures. In the United States, unrelated individuals keep a certain physical distance between themselves and others when talking or in groups. We do not consciously think about that distance; we just know what feels right without think-ing. When someone is too close or too far away, we feel uncomfortable and either move farther away or get closer to correct the distance. In doing so, we are relying on our SRC. -self-reference criterion can prevent you from being aware of cultural differences or from recognizing the importance of those differences. Thus, you might fail to recognize the need to take action, you might discount the cultural differences that exist among countries, or you might react to a situation in a way offensive to your hosts.
Bribery -
is the voluntarily offered payment by someone seeking unlawful advantage
Information Oriented
low context individualism low power distance bribery less common low distance from english linguistic directness mono-chronic time internet foreground competition
trade barriers
o Barriers to trade are one of the major issues confronting international marketers o They can be tariff or non-tariff barriers - Countries continue to use non-tariff barriers for a variety of reasons
3 Types of Monetary Barriers:
o Blocked currency o Differential exchange rates o Government approval
Omnibus Trade & Competitiveness Act (1988)
o Many countries are allowed to trade freely with the United States but do not grant equal access to U.S products in their countries o Covers three areas for improving U.S trade: Market access Export expansion Import relief
World Trade Organization
o More enforced than GATT, a sort of institution rather than an agreement o Set rules governing trade and its 132 members o REVIEW FURTHER
Monochronictime-
one thing at a time, punctuality important (US, Swiss, Germans, Scandanavians)
IMF (International Monetary Fund) -
organization formed to maintain par values for currency but now provides short term liquidity to countries
International marketing-
the performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit.
The most effective way to control the influence of ethnocentrism and the SRC is
to recognize their effects on our behavior.
developing global awareness
tolerance of cultural differences and knowledge of cultures, history, world market potential, and global economic, social, and political trends
