Chapter 5: Developing a Global Vision

These question-and-answer flashcards cover major concepts, definitions, and frameworks from Chapter 5, providing a comprehensive review for exam preparation.

What is global marketing?

Marketing that targets markets on a worldwide scale rather than domestically only.

What is meant by a firm having a “global vision”?

Recognizing and reacting to international marketing opportunities, using effective global strategies, and being aware of foreign competitors in all markets.

What is an absolute advantage?

A situation in which a country can produce a product at a lower cost than any other nation or is the only nation able to produce it at all.

Explain the principle of comparative advantage.

Each country should specialize in the products it can produce most efficiently and trade for the rest, creating mutual gains.

Define free trade.

A policy allowing individuals and businesses to buy and sell across borders without government-imposed restrictions such as tariffs or quotas.

Define protectionism.

A policy in which a nation protects home industries from foreign competition by imposing barriers like tariffs, quotas, or regulations.

What does GDP stand for and measure?

Gross Domestic Product; the total market value of all final goods and services produced within a country during a given period.

What is outsourcing?

Sending domestic jobs abroad so that work is performed in another country.

What is inshoring?

Bringing previously outsourced production or jobs back to the domestic country.

Give three typical benefits globalization can bring to less-developed countries.

Access to foreign capital, entry to global export markets, exposure to new cultures and advanced technology, plus breaking monopolies of inefficient local producers.

Define a multinational corporation (MNC).

A company heavily engaged in international trade that moves resources, goods, services, and skills across borders beyond simple exporting and importing.

List the four stages through which firms often become multinationals.

1) Operate in one country and sell into others; 2) Set up foreign subsidiaries for sales; 3) Operate an entire line of business abroad; 4) Conduct global business via the internet.

What does capital intensive mean?

Using more capital (equipment, technology) than labor in the production process.

What is global marketing standardization?

Producing uniform products that are sold and marketed the same way worldwide.

What is a multidomestic strategy?

When multinational firms allow individual subsidiaries to compete independently in domestic markets, tailoring strategies locally.

Name the six key external environmental factors global marketers must monitor.

Culture, economic development, the global economy, political structure/actions, demographic makeup, and natural resources.

Why is cultural awareness critical in global marketing?

Misunderstanding language, values, or norms can lead to product or promotion failure; aligning with culture is essential for acceptance and success.

Define balance of trade.

The difference between the value of a country’s exports and its imports over a given period.

Define balance of payments.

The difference between a nation’s total payments to other countries and the total receipts it receives from them.

Who are the BRICS nations and why are they watched?

Brazil, Russia, India, China, South Africa; large emerging economies expected to drive future global growth.

Name five common government trade barriers.

Tariff, quota, boycott, exchange control, market grouping, plus trade agreements that may either restrict or liberalize trade.

What is MERCOSUR?

The largest Latin American trade agreement; full members include Argentina, Brazil, Paraguay, and Uruguay (with several associate members).

What is the USMCA and which agreement did it replace?

The United States–Mexico–Canada Agreement, a free-trade pact that replaced NAFTA.

What is the World Trade Organization (WTO)?

A 164-nation body established in 1995 to promote free trade and settle trade disputes, replacing GATT.

What was the Uruguay Round?

An international negotiation that dramatically lowered trade barriers and created the WTO, introducing the 'most-favored-nation' principle.

What does CPTPP stand for?

Comprehensive and Progressive Agreement for Trans-Pacific Partnership, covering Canada and 10 Asia-Pacific nations.

What is the RCEP?

Regional Comprehensive Economic Partnership, a 15-nation Asia-Pacific trade agreement begun in 2022.

What is the European Union (EU)?

A free-trade and political union of 27 European countries with a single market.

What is the World Bank’s mission?

To provide low-interest loans, advice, and information to developing nations for economic development.

What does the International Monetary Fund (IMF) do?

Acts as lender of last resort to nations and promotes international monetary cooperation and trade stability.

What is the G20 and its purpose?

A forum of 19 countries plus the EU that discusses global economic issues to enhance stability and growth.

Identify the two primary determinants of any consumer market.

Wealth (income) and population size/composition.

How can disparities in natural resources influence global relations?

They create dependencies, shift wealth, influence inflation/recession, generate export opportunities, and may spur military intervention.

List the six main methods of entering the global marketplace.

Exporting, licensing & franchising, contract manufacturing, joint venture, strategic alliances, and direct investment (FDI).

Rank these entry methods from least to most risky: Exporting, Licensing/Franchising, Contract Manufacturing, Joint Venture, Direct Investment.

Least risk: Exporting → Licensing/Franchising → Contract Manufacturing → Joint Venture → Direct Investment (most risk).

What is exporting?

Selling domestically produced goods to buyers in other countries; typically the simplest and least risky entry mode.

Describe licensing in international business.

A legal arrangement where a firm (licensor) permits another (licensee) to use its intellectual property or production processes for a fee or royalty.

Define contract manufacturing.

Private-label production of goods by a foreign company to a domestic firm’s specifications and brand.

What is a joint venture?

A partnership in which a domestic firm and a foreign firm create a new, jointly owned business entity.

Explain foreign direct investment (FDI).

Active ownership of foreign facilities or assets, such as establishing or acquiring businesses abroad.

What is an exchange rate?

The price of one nation’s currency expressed in terms of another nation’s currency.

Describe dumping in international trade.

Selling an exported product abroad at a price lower than the home-market price, often considered unfair competition.

What is countertrade?

International trade in which all or part of payment is made in goods or services rather than cash; includes barter.

Define a floating exchange-rate system.

Currency values fluctuate based on market supply and demand without fixed government pegs.

How has the internet affected global marketing, especially for services?

It instantly places firms in global markets, removes geographic barriers, and allows real-time delivery of services like entertainment, training, and consulting worldwide.

What four elements make up the global marketing mix that may need adaptation?

Product, Promotion, Place (distribution), and Price.

What is promotion adaptation?

Keeping a core product the same while changing advertising or promotional strategy to fit local language and culture.