MKT 341 - Exam 1

International Marketing

What are reasons for the internationalization of U.S. businesses?

• Advances in technology make global business easier & more profitable

• To diversify risk

• To spread product development costs over a

  wider market

What are the risks in global business?

• Not understanding foreign customer preferences

• Underestimating foreign regulations and incurring unexpected costs

• Lacking managers with international experience.

• Changes in the foreign environment

• Not understanding the foreign country’s business culture

True or False:

Even if a company is not global oneself, it is still affected by international business.

True

True or False:

The major difference between domestic and international marketing is the environment.

True

Which internationalization approach is the process treated as an evolutionary, sequential build-up of foreign commitments over time, due to the interaction between increasing knowledge of markets and resource commitment?

Contingency approach

____________consists of the activities and processes across national borders that create, communicate, deliver, and exchange offerings that deliver value.

International Marketing

Market Penetration Strategy

Existing products, existing markets

Product Development Strategy

New products, existing markets

Market Development Strategy

Existing products, new markets

Diversification

New products, new markets

What are controllable elements?

• Product

• Price

• Promotion

• Channels of distribution

• Research

Domestic Environment (uncontrollable elements)

• Political/legal forces

• Competitive forces

• Economic climate

Foreign Environment (uncontrollable elements)

• Political/legal forces

• Cultural forces

• Geography and infrastructure

• Structure of distribution

• Level of technology

• Competitive forces

• Economic forces

International Marketing Strategy

• Global Market Participation

• Marketing Mix Development (4 P’s)

• Concentration of Marketing activities

• Coordination of Marketing activities

• Integration of Competitive moves

Single Country Marketing Strategy

• Target Market Strategy

• Marketing Mix (4 P’s)

True or False:

Typically, the most challenging and important adaptations international marketers must make are cultural adjustments.

True

True or False:

Ethnocentrism is an unconscious reference to one’s own cultural values, experiences, and knowledge as a basis for decisions.

False

_____________ is the notion that people in one’s own company, culture, or country know best how to do things.

Ethnocentrism

___________ is an unconscious reference to one’s own cultural values, experiences, and knowledge as a basis for decisions.

Self-reference

Geocentric Orientation

Firms accept a worldwide approach to marketing and its operations become global. It views the world as one market. The company develops global products and focuses on global market segments.

Ethnocentric Orientation

All foreign marketing operations are planned and carries out from home base, with little or no difference in the marketing mis between home and overseas markets.

Polycentric Orientation

Firms attempt to organize its international marketing activities on a country to country basis. Each country is treated as a separate entity and individual strategies are worked out accordingly.

Regiocentric Orientation

Firms accept a regional marketing policy covering a group of countries which have comparable market characteristics. The operational strategies are formulated on the basis of the entire region rather than individual countries.

If Samsun regularly redesigns its cell phone in each market, the company can be said to have what management orientation?

Polycentric

If Apple assumes that it can sell its iPhone which was originally designed for the U.S. market virtually unaltered in every market, the company can be said to have what management orientation?

Ethnocentric

In the ___________ orientation, the company views the world as one market and does not consider any market its home or domestic market.

Geocentric

In the _____________ orientation, the company designs the product for its domestic market and feels that it does not have to make adaptations when entering a foreign market.

Ethnocentric

What are reasons we would use the PESTLE model?

• helps to spot opportunities and gives advance warning of threats

• helps prevent unconscious assumptions when entering a new country, regions, or market

• helps avoid projects that are likely to fail for reasons outside of the company’s control

• reveals the direction of change within the business environment

What can be considered part of the political dimension of the PESTLE model?

• Political stability

• Government policies

• Political parties

• Lobbying

When considering business in another country it is important to understand the attitudes that the political parties in that country have towards:

• International trade

• Nationalism

• Other countries (targeted fear and/or animosity)

True or False:

Nationalism is an intense feeling of national pride and unity, an awakening of a nation’s people to pride in their country.

True

Confiscation

The seizing of a company’s assets without payment

Expropriation

Where the government seizes an investment but makes some reimbursement for the assets

Domestication

When host countries gradually causes the transfer of foreign investments to national control and ownership

Local-content laws

Countries may require a portion of any product sold within the country to have local content.

Import Restrictions

Selective restrictions often on the import of raw materials, machines, and spare parts

Tax Controls

Taxes can be used to control foreign investment

Price Control

Government may set prices of certain types of products

Labor Issues

In many countries labor unions have strong support for the government

Embargo

A refusal to sell to a specific country

Boycott

Restriction against the purchase and importation of certain goods and/or services from other countries

The economic dimension of the PESTLE model consists of:

• Economic freedom

• Inflation rates

• Exchange rates

• Trade barriers

Tariffs

Tax imposed by a government on goods entering its borders

Quotas

Specific unit or dollar limit applies to a particular type of good

Voluntary export restraints

When one country voluntarily agrees to limit its exports to another

Standards

Where governments sets regulations about the specifications a particular product needs to meet in order to import it into the country

The social dimension of the PESTLE model consists of:

• Lifestyles

• Social classes

• Family size and structure

• Buying habits

• Religion

The technological dimension of the PESTLE model consists of:

• Infrastructure

• Technological development

• Investment in research and development

• Communication technology/infrastructure

• Technology access

The legal dimension of the PESTLE model consists of:

• Anti-trust law

• Intellectual property law

• Jurisdiction

• Conflict resolution

True or False:

Civil law is a legal system based on tradition, past practices, an legal precedents while common law is all-inclusive legal system of written rules (codes) of law

False

________________ is a legal system based on tradition, past practices, and legal precedents

Common Law

____________ is an all-inclusive legal system of written rules (codes) of law.

Civil or Code Law

True or False:

Typically common law countries award patents based on prior use while civil law countries award patents based on registration.

True

True or False:

Laws governing marketing are the same in all countries

False

Laws governing marketing can be __________ in all different countries.

different

True or False:

Some U.S. laws still apply to U.S. businesses while operating in other countries, such as the Foreign Corrupt Practices Act and national security laws.

True

Conciliation

Nonbinding agreement between parties to resolve disputes by asking a third party to mediate differences

Arbitration

Procedure in which parties in a dispute may select a disinterested third party or parties as referee to determine the merits of the case and make a judgement that both parties agree to honor.

Litigation

Process in which a dispute between parties is contested in a formal judicial setting.

The environmental dimension of the PESTLE model consists of:

• Natural resources

• Sustainability

• Environmental regulations

• Energy

• Climate

Origins of culture consists of:

• Geography

• History

• Technology and Political economy

• Social institutions

Elements of culture consists of:

• Cultural values

• Rituals

• Symbols

• Language

• Aesthetics

• Beliefs

• Thought processes

In a culture with _______ individualism, the focus is on individual achievement.

High

In a culture with _______ power distance, society is more egalitarian.

Low

In the culture with ______ uncertainty avoidance, people are more likely to avoid ambiguity and risk.

High

True or False:

Aesthetics include art, folklore, music, drama, dance, and dress

True

True or False:

Superstitions can play a large role in a society’s belief system and therefore, to make light of superstitions in other cultures can be a mistake.

True

True or False:

When looking at a picture, Eastern cultures tend to look at the context and big picture while Western cultures tend to focus in on the major, central elements.

True

True or False:

Unplanned cultural change involves introducing an idea or product and deliberately trying to overcome resistance and cause change that accelerates the rate of acceptance.

False

Planned cultural change involves:

Introducing an idea or product and deliberately trying to overcome resistance and to cause change that accelerates the rate of acceptance.

True or False:

Management style is the business culture, management values, and business methods and behaviors existing in a country

True

True or False:

Adaptation requires that business executives to abandon their culture/customs and adapt local customs.

False

____________ does NOT require business executives to abandon their culture/customs and adopt local customs.

Adaptation

Cultural electives

Relate to areas of behavior or customs that foreign business people may wish to conform to or participate in but are not required to

Cultural exclusives

Customs or behavior patterns reserved solely for the locals

Cultural imperatives

Business customs and expectations that must be met and conformed to (or avoided) if relationships are to successful (vary from culture to culture)

True or False:

Cultural imperatives are the same in every country.

False

True or False:

Participating in cultural electives can show interest good will, and sensitivity to that culture.

True

True or False:

A cultural elective in one country may be a cultural imperative in another.

True

True or False:

Criticizing or joking about another country’s politics mores, and customs is a cultural elective.

False

Criticizing or joking about another country’s politics, mores, and customs is a ___________.

Cultural exclusive

Toyota and Japanese MNC are most likely to use a _______________ authority pattern.

Committee decision making

Family-owned local car dealership would most likely use a _____________ authority pattern.

Top-level management

General motors and US MNC would most likely use a _______________ authority pattern.

Decentralized management

True or False:

Committee decision making is by group or consensus. This type of decision making is most likely found in large collectivist MNCs.

True

True or False:

In low power distance countries understanding the rank and status of clients and business partners is much more important than in high power distance societies.

False

In ______-PDI countries understanding the rank and status of clients and business partners is much more important than in more egalitarian (low-PDI) societies.

High

True of False:

In high-PDI countries, subordinates are more likely to contradict their boss than in low-PDI countries.

False

True or False:

Communication in low-context cultures depends heavily on the contextual (who says it, when it is said, how it is said), whereas in high-context cultures, it depends more on explicit, verbally expressed communications.

False

Communication in high-context culture depends heavily on…

The contextual (who says it, when it is said, how it is said), whereas in low-context cultures, it depends more explicit, verbally expressed communications.

Monochronic time (M-time)

Views time as something linear and an asset that can be saved, wasted, spent, and lost. Tend to concentrate on one thing at a time and value promptness.

Polychronic time (P-time)

Operates on the view that the completion of a human interaction is more important than holding its schedules. Characterized by the simultaneous occurrence of many things and is more focused on completeness.

Relationship-Oriented (RO) cultures:

• High context

• Collectivism

• High power distance

• P-time

• Face-to-face meetings

• Background

• Linguistics indirectness

Information-Oriented (IO) cultures

• Low context

• Individualism

• Low power distance

• M-time

• Internet meetings

• Foreground

• Linguistic directness

True of False:

A basic objective of the market research function is providing management with information for decision making.

True

True of False:

Business people should be able to differentiate between good and bad research.

True

True or False:

The ability to conduct and analyze research is an unimportant skill.

False

Issues in International Market Research include:

• Complexity in research design due to environmental differences

• Potentially less or inaccurate secondary data

• Time and costs associated with collecting primary data

• Coordination of multi-country research efforts

• Difficulty in establishing comparability across multi-country studies

The Research Process

1. Define the decision problem(s)

2. Develop a research design

3. Determine information needs

4. Determines the sources of information

5. Collect the relevant data

6. Analyze the data, interpret, and summarize the results

7. Communicate the findings to the key decision-makers

Latent Market

an undiscovered market segment in which demand for a product would materialize if an appropriate product were offered