MKGT 2080 Chapter 8 Review Mcgraw Hill Connect

Globalization

refers to the processes by which goods, services, capital, people, information, and ideas flow across national borders

What are the fundamental changes in globalization that made marketing flourish in other countries?

-reductions of trade barriers

-decreasing concerns of distance and time

-standardization of laws across borders

-globally integrated production process

What is the key challenge in global marketing?

language

Describe assessing global markets

firms must assess the viability of various potential market entries

Describe the economic analysis using metrics

the greater the wealth=the greater the opportunity

What should a firm do when evaluating the general economic environment?

use as many metrics as it can obtain

Trade deficit

when a country imports more than it exports

Trade surplus

when a country exports more than it imports

Gross Domestric Product (GDP)

most common way to gauge the size and market potential of an economy

Gross National Income (GNI)

consists of GDP plus the net income earned from investments abroad (minus any payments made to nonresidents who contribute to the domestic economy)

Purchasing Power Parity (PPP)

a theory that states that if the exchange rates of two countries are in equilibrium, a product purchased in one will cost the same in the other if expressed in the same currency.

ex. Mcdonalds Big Mac

Describe evaluating market size and population growth rate

many less developed nations by and large are experiencing rapid population growth, while many developed countries are experiencing either zero or negative population growth

What are the BRIC countries?

Brazil, Russia, India, China

What determines where and how products and services can be delivered?

if the population is located primarily in rural or urban areas (affects cost)

Bottom of the Pyramid

consumers earn very low wages

ex. India

Infrastructure

the basic facilities that are necessary for a society to function and grow such as transportation, distribution channels, communications and commerce

Governmental actions...

significantly influence firms ability to sell goods and services

Tariffs

aka duty; tax levied on a good imported into a country that artificially raise prices

Quotas

maximum of a product that may be brought into a country during a specified time period

Exchange control

regulation of a country's currency exchange rate

Exchange rate

the value of a currency in one country compared with the value in another

Trade agreement

intergovernmental agreement designed to manage and promote trade activities for specific regions.

Trading bloc

consists of those countries that have signed a particular trade agreement

Culture exists on what 2 levels?

visible artifacts; underlying values (more challenging to recognize)

What are the components of Geert Hofstede's cultural dimensions concept?

1. power distance

2. uncertainty avoidance

3. individualism

4. masculinity

5. time orientation

6. indulgence

Power distance

willingness to accept social inequality as natural

Uncertainty avoidance

the extent to which the society relies on orderliness, consistency, structure, and formalized procedure to address situations that arise in daily life

Individualism

perceived obligation to and dependence on groups

Masulinity

the extent to which dominant values are male-oriented

Lower masculinity ranking

men an women are treated equally in all aspects of society

Higher masculinity ranking

men dominate in positions of power

Time orientation

short-versus long-term orientation

What does it mean when a country has a long-term orientation?

They value long-term commitments and are willing to accept a longer time horizon for the success of a new product introduction

Indulgence

the extent to which society allows for the gratification of fun and enjoyment needs or else suppresses and regulates such pursuits

Describe the marketing appeal of Brazil

-a regional powerhouse

-9th largest economy

-expansion of literate population=economic growth

Describe the marketing appeal of Russia

-growth prospects appear promising

-aging population and low birth rates -> population decreasing by a quarter million people

-ethical dilemmas for firms

-economy is vulnerable because of their reliance on oil revenue

Describe the marketing appeal of India

-one of the world's fastest-growing markets

-lacks modern supply chain management

-potential to modernize the retail landscape

Describe the marketing appeal of China

-embraced market-oriented economic development -> rapid gains

-living standards and personal freedom increase

-retail sales same magnitude as U.S.

What should a firm do when choosing a global entry strategy?

-conduct an internal assessment of its capabilities

-begin with less risky and move to increasingly risky

What are the various market entry strategies?

exporting

franchising

strategic alliance

joint venture

direct investment

Exporting

-producing goods in one country and selling them in another

Franchising

-a contractual agreement between the franchisor and the franchisee

Strategic Alliance

-a collaborative relationship between independent firms, though the partnering firms do not create an equity partnership; that is, they do not invest in one another

Joint venture

-formed when a firm entering the markets pools its resources with those of a local firm

Direct Investment

-require a firm to maintain 100% ownership of its plants in a foreign country

Pros and Cons of Exporting

Pros:

-requires the least financial risk

-no investment in people, capital equipment, building, or infrastructure

Cons:

allows for only a limited return to the exporting firm

Pros and Cons of Franchising

Pros:

-lower risk

-less investment than opening units wholly by the firm

Cons: limited control over the market operations in the foreign country

Pros and Cons of Strategic Alliance

Pros:

-reach new customers

Pros and Cons of Joint Venture

Pros:

-ownership, control, and profits are shared

-a local partner offers the foreign entrant a greater understanding of the market and access to resources such as vendors and real estate

Cons:

-what if partners disagree or if the government places restrictions on the firms ability to move its profits

Pros and cons of Direct Investment

Pros:

-none of the potential profits must be shared with other firms

-offers firm complete control over its operations in the foreign country

Cons:

-exposes the firm to significant risks=loss of investments

Which entry strategy has the least risk?

Exporting

Which entry strategy has the most risk?

Direct Investment

Depending on the need of the target market, there are 3 potential global product or service strategies

1. sell same product

2. sell similar product

3. sell totally new product

A global marketing strategy includes what two components?

determining the target markets to pursue; developing a marketing mix that will sustain a competitive advantage over time

What can affect global pricing strategies?

-rules governing the competitive marketplace

-tariffs and quotas

-antidumping laws

-currency exchange policies

-currency fluctuations

Describe global distribution strategies

-form complex value chains

-involve wholesalers, exporters, and importers

-add cost and ultimately increase the final selling price of a product

Describe global communication strategies

-challenge is identifying the elements that need to be adapted to be effective in the global marketplace

-some countries only offer state-controlled media

-differences in language, customs, and culture also complicate things