International Marketing Final Exam Review

internal factors for internationalization

excess capacity, exploit resources, management experitse, learning, diversification

external factors for internationalization

respond to random requests, difficult home market, economic opportunities abroad, foreign government incentives

challenges for internationalization

liability of newness, liability of foreignness, liability of outsidership

liability of newness

related to age, size, and experience of the firm

liability of foreigness

related to firms foreign status and lack of local knowledge

liability of outsidership

related to lack of connections in networks required for growth

4 ps

product, price, place, promotion

global marketing

views the whole world as one

international marketing

suggest that business operate in multiple nations and make decisions in individual countries

Uppsala School Theory (stage theory)

firms expand to markets that are culturally close with low psychic distance, reducing liability of foreigness

psychic distance

sum of factors preventing flow of information from and to the market, like difference in language, education, buiness practices, culture

International product life cycle

new product stage, maturing product stage, standardized product stage

new product stage

exporting, low production

maturing product

exporting and FDI, foreign production in other industrialized countries

standardized product

FDI, competition lowers profit, move production to developing countries

Controllable elements in the domestic environment

price, product, promotion, place

Domestic environment uncontrollables

political and legal forces, economic climate, competitive forces, cultural forces

Assertiveness

degree to which individuals in socities are assertive and aggressive in relationships; value dominance

Hofstede’s cultural dimensions

Individualism/collectivism, power distance, uncertainty avoidance, masculinity/femininity, long-term/short-term orientation, indulgence/restraint

Individualism

loose ties between people, greater importance on personal goalsco

collectivism

people build strong in-groups, greater importance on attaining group goals

high power distance

belief in authority & hierarchy; emphasis on social status

lower power distance

belief that power should be distributed equally

high uncertainty avoidance

importance of predictability, structure, order; low employee turnover

Low uncertainty avoidance

high tolerance for uncertainty and risk; open to change

High masculinity culture

emphasize assertiveness, wealth, entrepreneurship

High femininity culture

value relaxed lifestyles and concern for others rather than material gain

Long-term orientation

delay short-term gratification for future benefits

Short-term orientation

value individual stability and reputation fulfill social obligations, immediate gratification

Indulgent society

freely satisfy human needs related to enjoying life and having fun

Restrained society

use of social norms to supress free satisfaction of freely enjoying life; work and morals

high context society

implicit; close connections among group members, use more symbols/nonverbal cues

low context

explicit; logical, linear, action-oriented, information is explicit

3rd slideshow….

Cost-plus pricing

the cost of producing goods plus standard markup

Full-cost pricing

no unit of a similar product is different in cost from others; each must bear share of fixed and variable costs

variable-cost pricing

only concerned with the incremental variable cost of producing goods to be sold in overseas markets

components of a variable-cost price

production costs, market costs, packaging costs, profit margin

components of a full-cost price

production costs, marketing costs, allocated other production costs, other overheads, profit margin

market-based method

affordable unit price- margin = target cost

value-based method

focuses on consumer’s perceived values of the product/servince rather than product costs

tiered pricing

pricing different levels of products/services; attract customer segment with different purchasing power

price skimming

charge the highest initial price customers will pay and lower it over time

penetration pricing

offering products a low prices for a new produc to enter a foreign market

what is the problem with penetration pricing

may be subject to anti-dumping regulations if below “normal value”

psychological pricing

left-digit effect, prices that appear lower than they are

decoy effect

phenomenon in which consumers show different preferences for existing choice alternatives when a decoy option is added to their choice set

implications of undervalued/weak currency

makes exports cheaper, more foreign demand, makes imports more expensive, more domestic demand

implications of overvalued/strong currency

makes exports more expensive, less foreign demand, makes imports cheaper, less domestic demand

export price escalation

pricing disparity in which goods are priced higher in a foreign market than in the home market; caused by exporting costs

inflation

causes higher cost of product and replacement, raised price of good

types of export price escalations

exchange rate fluctuation, varying currency values, inflation, tax/tariff/administrative costs, intermediary and transportation costs

arrangements for foreign commerical payments

cash in advance, letters of credit, bills of exchange, open accounts

cash in advance

importer pays an exporter for merchandise before it is shipped

letters of credit

export/import financing in which the importer’s bank issues a document stating that the bank will pay the exporter when the exporter fulfills terms

bills of exchange

a written order binding an importer to pay an exporter a specified sum of money at a specified time; seller assumes all risk

open accounts

goods are shipped and delivered before payment is due at a future date; used with customers with good credit

provenance paradox

a product’s country of origin establushes its authenticity

five steps for overcoming provenance paradox

stick to colonial history, build brand for long haul, flaunt country of origin, downplay country of origin, hide behind front country

nonmarket strategy

recognizes that businesses are social and political beings, not just economic agents

What does CPA stand for

Corporate poltiical activityW

What does CSR stand for

corporate social responsibility

(IA)³ framework

structured tool for managing a company’s nonmarket environment

(IA)³ framework components

issues, actors, interests, arenas, information, and assets

ABCS for corporate leaders

access, basic needs, crisis response, disability and veteran community, economic status

reccommendations for corporate leaders

create, prioritize, frame inclusivity, speak

Internal Reasons for Firms to Internationalize

Excess Capacity, Exploit the firms resources better, Build resources (learning), Management expertise and vision and growth aspirations, diversification (spreading risk)

External Reasons for Firms to Internationalize

Respond to random requests, difficult conditions in the home market (market saturation), economic opportunities abroad (consumer demand), foreign government incentives

Internationalization

The propensity of a firm to move beyond domestic markets and tap international markets

Liability of Newness

Related to age, size, and experience of the firm

Liability of Foreignness

Related to firms foreign status and lack of local knowledge

Liability of Outsidership

Related to lack of connections in networks required for growth

Marketing

the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large

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.

Global Marketing

Promotes products that fit all nations, while international marketing may require localization to fit a specific country's need

International Product Life Cycle: Stage 1

New Product -> Exporting: Sales are driven by the high purchasing power and demand of buyers in industrialized countries

International Product Life Cycle: Stage 2

Maturing Product -> Exporting & FDI: Global consumers are aware of the new product and its benefits

International Product Life Cycle: Stage 3

Standardized Product -> FDI: Competition lowers the profits, move production to developing countries

The international marketer's task

is more complicated than that of the domestic marketer because the international marketer must deal with at least two levels of uncontrollable uncertainty instead of one.

Controllable elements in the domestic environment

•Blend all elements to capitalize on anticipated demand

•Can alter elements if needed

•Changing market conditions, consumer tastes, and corporate objectives

Domestic Environment Uncontrollables

Political and legal forces, economic climate, competitive forces

Foreign Environment Uncontrollables

Political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, cultural forces

Assertiveness

The degree to which individuals in societies are assertive, confrontational, and aggressive in relationships

Assertiveness Traits

People in assertive societies tend to dominate and actively control their environment, they respect strength and stress competition, value dominant tough and straightforward behavior

Ethnocentricity

The belief that one's own ethic group or culture is superior to that of others

Culture

The sum of the values, rituals, symbols, beliefs, and thought processes that are learnt and shared by a group of people, then transmitted over time from group to group or generation to generation

Individualism vs. Collectivism

A belief in importance of the goals of the individual (individualism) versus the goals of the group (collectivism)

Individualism

Loose ties between individuals, responsible to look after himself or herself and his or her immediate family, greater importance placed on attaining personal goals

Collectivism

People from birth are integrated into strong cohesive in groups, responsible to take care of extended family, greater importance placed on attaining group goals

Power Distance

The extent to which the less powerful members of a society expect and accept that power is distributed unequally

High Power Distance

Belief in authority and hierarchy, an emphasis on social status symbols

Low Power Distance

A belief that power should be distributed, no emphasis on social status symbols

Uncertainty Avoidance

The extent to which people feel threatened by ambiguous or unknown situation

High UA country

The importance of predictability/structure/and order, value security, systems of rules and procedures, low employee turnover

Low UA country:

A high tolerance for ambiguity/uncertainty/and risk, more open to change and new ideas

Masculinity - Femininity

Whether assertiveness and personal achievement are favored (masculinity) or caring for others, adopting nurturing roles, and emphasizing quality of life (femininity)

High Masculinity

Emphasize assertiveness, the accumulation of weal, and an entrepreneurial drive