International Marketing-Exam Two

Chapters 6-8 and 12

sovereignty

both the powers exercised by a state in relation to other countries and the supreme powers exercised over its own members

sovereign state

is independent and free from all external control; enjoys full legal equality with other states; governs its own territory

5 main causes of political causes of instability in international marketing

1.some forms of government that seem to be inherently unstable

2. changes in political parties during elections that can have major effects on trade conditions

3. nationalism

4. animosity targeted toward specific countries

5. trade disputes themselves

Nationalism

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

Confiscation

the seizing of a company’s assets without payment

expropriation

where the gov. seizes an investment but makes some reimbursement for the assets

Domestication

which occurs when host countries gradually cease the transfer of foreign investments to national control and ownership through a series of government decrees that mandate local ownership and greater national involvement in a company’s management

exchange controls

stem from shortages of foreign exchange held by a country

local-content laws

(economic risks), countries often require a portion of any portion of any product sold within the country to have local content

Import restrictions

selective restrictions on the import of consumer products, raw materials, machines, and spare parts are fairly common strategies to force foreign industry to purchase more supplies within the host country and thereby create markets for local industry

tax controls

can be raised without a warning and in violation of formal governments

price controls

essential often are subject to price controls (food, gas, cars, etc.)

labor problems

in many countries, labor unions have strong government support that they use effectively in obtaining special concessions from businesses

political and social activists (PSAs)

individuals who participate in efforts to change the practices and behaviors of corporations and governments, with tactics that can range from peaceful protest to terrorism

nongovernment organizations (NGOs)

large advocacy orgs. usually not-for-profit, often multinational, and run by citizens rather than companies or governments. (red cross)

political risk assessment

depends on our product/business/industry and our country of origin

How do we reduce risk?

1. joint ventures

2. bring in local investors

3. licensing/franchising

4. planned domestication

5. lobbying or bargaining

6. payoffs

Risks of instability

1. confiscation/expropration/ domestication

2. political sanctions

3. violence, terrorism, or war

4. economic risks

   1. exchange controls, local content laws, import restrictions, tax controls, price controls, labor problems

5. political/ social activism

6. cybercrime

Arbritation

a procedure, used as an alternative to litigation, 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 judgment that both parties agree to honor

Code law

a legal system based on an all-inclusive system of written rules, or codes of law: generally divided into three separate codes: commercial, civil, and criminal (Louisiana)

common law

the body of law based on tradition, past practices, and legal precedents set by courts through interpretation of statutes, legal legislation, and past rulings. (used in all states beside Louisiana)

conciliation

a nonbonding agreement between parties to resolve disputes by asking a third party to mediate differences. also known as mediation

Cybersquatters (CSQs)

persons or businesses that buy, usually for a nominal fee, and register as website names descriptive nouns, celebrity names, variations on company trademarks, geographic and ethnic group names and pharmaceutical and other descriptors and then hold the until they can be sold at an inflated price

Islamic law

the shari’ah; the legal system based on an interpretation of the Quran. Islamic law encompasses religious duties and obligations as well a the secular aspect of law regulation human acts. Among its provisions is a prohibition of the payment of interest

Litigation

the process in which a dispute between parties is contested in a formal judicial setting; commonly instigated by a lawsuit asserting one party’s version of the facts

Marxist-socialist tenets

the set of views in which law is subordinate to prevailing economic conditions.

Prior use

the principal, as observed in the US and other common-law nations, that ownership of IP rights usually goes to whoever can establish first use

registration

filling appropriate legal documents with the appropriate IP agencies, international or domestic

foreign corrupt practices act (USA)

prohibits bribery from foreign officials

some say it limits U.S. companies competitiveness

Intellectual property

• prior use vs. registration

• patents, trademarks, copy right

• recognition is increasing

cyber law

wild, Wild West

Marketing law

all laws vary

antitrust (monopoly)

• growing in popularity over the last 50-75 years

• application is different everywhere

areas of law

• export restrictions (USA)

  • licensing depends on product

  • national security

bases for legal systems of the world

1. common law, derived from English law and found in England

2. civil or code law, derived from Roman law and found in Germany, Japan, France, and non-Islamic and non-Marxist countries

3. Islamic law,

4. marxist…..

Analogy

a method of market estimation that assumes that demand for a product develops in much the same way in all countries as comparable economic development occurs in each country

Back translation

a method of translation in which a document, such as a questionnaire, is translated from one language to another, and then a second party translates it back into the original, and the two original language versions are compared

decentering

a method of translation that is successive process of translation and retranslation of a document, such as a questionnaire, each time by a different translator.

expert opinion

a method of market estimation in which experts are polled for their opinions about market size and growth rates; used particularly in foreign countries that are new to the marketer

International marketing research

the form of marketing research involving two additional considerations:

1. the need to communicate information across national boundaries

2. the challenge of applying established marketing techniques in the different environments of foreign markets, some of which may be strange or vexing milieu for the marketer

marketing research

the systematic gathering, recording, and analyzing of data to provide information useful in marketing decision making

multicultural research

inquiry, analysis, and study of more than two countries and cultures that take into account differences in language, economic structure, social structure, behavior, attitude patterns. Different methods of research may have varying reliability in different countries.

parallel translation

a method of translation in which two translators are used to make a back translation; the results are compared, differences are discussed, and the most appropriate translation is used.

primary data

data collected, as in market research, specifically for a particular research project

research processs

the process of obtaining information it should begin with a definition of the research problem and establishment of objectives, and proceed with an orderly approach to the collection and analysis of data.

secondary data

data collected by an independent agency or individual other than the firm conducting research; often useful in market search

triangulation

a term borrowed from naval charting meaning using at least three differing measures of the same concept to verify the accuracy of any one method

How do we know how to market in other countries?

Marketing research: systematic gathering, recording + analyzing of data to inform marketing decisions

International marketing research

1. crosses cultural boundaries

2. may require different tools

international marketing research topics

• general information about a country, area, or market

• information needed to forecast marketing requirements for a specific market

• specific market information to guide marketing strategy (4 P’s)

Research Process Steps

1. define research process + establish objectives

2. determine information needs + resources

3. cost-benefit analysis

4. gather data

5. analyze, interpret + summarize results

6. communicate results to decision-makers

Secondary Data

• pre-existing

• reliability questionable

• adequacy + availability vary

• validity concerns

  • who gathered + why?

  • what methodology ?

  • do they match other sources?

Primary data

• gathered for this project

• we should know reliability

• we can collect what we need

• problems: willingness to respond varies, expensive

qualitative data

• descriptions derived from focus groups, interviews or open ended questions

• content analysis/ interpretation

quantitative data

• surveys translated to numbers

• statistical analysis

corporate planning

the formulation of long-term, generalized goals for an enterprise as a whole

direct exporting

the type of exporting in which a company sells to a customer in another country

franchising

a form of licensing in which a company provides a standard package of branded products, systems, and management services to the franchisee, which in foreign markets has market knowledge

indirect exporting

the type of exporting in which a company sells to a buyers (an importer or distributor) in the home country: the buyer in turn exports the product

joint venture

a partnership of two or more participating companies that join forces to create a separate legal entity

licensing

a contractual means by which a company grants patent rights, trademark rights, and the rights to use technology to another company, often in a foreign market : a favored strategy of small and medium-sized companies seeking a foothold in foreign market w/o making large capital outlays

strategic international alliance (SIA)

a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective

strategic planning

a type of planning conducted at the highest level of management, dealing with products, capital and research and the long and short-term goals of a company

tactical planning

a type of plain that pertains to specific actions and to the allocation of resources used to implement strategic planning goals in specific markets: also known as market planning: generally conducted at a local level

why do we go international/global?

• economies of scale leading to cost advantage

• transfer of experience + know how

• access to tough customers

• diversity in operations → stability

• this does require more planning

  • {corporate planning → strategic planning → tactical planning} for these to work, we have to commit:$, personnel, effort/determination

1. analyzing + screening → 2. defining segments + adapting marketing mix → 3. marketing plan → 4. implement + control

1. institutional context, cultural context, translations costs

2. can we meet needs? can we meet corporate objectives?can we make a profit?

3. how do we do it?

4. are we on track?

marketing entry strategies

1. exporting (non-equity + less risk)

   1. indirect

   2. direct: distributor, direct sales

2. contractual agreements → licensing/franchising

3. strategic alliances

4. direct foreign investment (more equity + more risk)