international marketing quiz 1

united states

number one recipient of foreign direct investment since 2006

internal factors for internationalization

excess capacity, exploit the firm’s resources better, build resources, management expertise/vision and growth aspirations, and diversification

external factors to internationalization

respond to random requests, difficult home market conditions, economic opportunities abroad, and 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

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

views the whole world as one market, promotes products that fit all nations

international vs global marketing

international suggests businesses operate in multiple nations and make decisions in individual countries

uppsala school theory

firms in introductory stages of internalization go for a cautious approach, expand to markets that are culturally close with low psychic distance; reducing the liability of foreignness

psychic distance

the sum of factors preventing the flow of information from and to the market, like the differences in language; education, business practices….

international product life cycle

a company will begin by exporting its product and later undertake foreign direct investment as a product moves through its life cycle

stage 1: new product - exporting

sales are driven by the high purchasing power and demand of buyers in industrialized countries, uncertainty = low production value

stage 2: maturing product - exporting and FDI

global consumers are aware of the new product and its benefits, foreign production in other industrialized countries

stage 3: Standardized Product - FDI

Competition lowers the price, move production to developing countries

international marketer’s task

created by at least 2 uncontrollable elements in business environments where each market has its own factors

controllable elements in the domestic environment

Price, promotion, product, place (distribution)

Domestic environment uncontrollable

Political and legal forces, economic client, competitive forces

foreign environment uncontrollable

political and legal forces, economic forces, competitive forces, level of tech, structure of distribution, geography and infrastructure, and cultural forces

assertiveness

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

people in assertive societies tend to…..

dominate and actively control their environment, they respect strength and stress competition, and value dominant, tough, and straightforward behavior

number one principal in global business

no culture is better than another: we may not agree with how others do things but it’s important to know the differences and show respect

avoid ethnocentricity

the belief that one’s own or another ethnic group is superior to others

culture

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

culture iceberg

tip: norms, behaviors, and artifacts that are visible

below water: personal values and attitudes that are less visible

deep: cultural values and assumptions that are not visible

individualism vs collectivism

a belief in the importance of the goals of the individual versus the goals of the group

individualism

loose ties between individuals, responsible to look after him or herself and their immediate family, great importance placed on attaining personal goals

collectivism

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 society expect and accept that power is distributed unequally

high power distance

a belief in authority and hierarchy, and emphasis on social status symbols

lower 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 situations

high uncertainty avoidance

the importance of predictability, structure, and order to people who value security, systems of rules and procedures, and typically have low employee turnover

high masculinity cultures

emphasize assertiveness, the accumulation of wealth, and an entrepreneurial drive

low masculinity cultures

value relaxed lifestyles and are more concerned for others than they are with material gain

low uncertainty avoidant country

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

long-term orientation

delay short-term gratification for future benefits, being prepared for the future is always necessary

short-term orientation

value individual stability and reputation, fulfill social obligations, and protect one’s face, pursuit of immediate gratitude

indulgent society

allows people to rather freely satisfy human needs related to enjoying life and having fun, feel healthier and happier, leisure ethics, and less moral disciplines

restrained society

uses varying degrees of social norms to suppress the free satisfaction of such needs, people feel less healthy and ahppy, work ethics, and more moral disciplines

communication

system of conveying thoughts, feelings, knowledge, and information through speech, writing, and actions

high context society

close connections among group members, use more symbols and nonverbal cues to communicate, meanings embedded in the situational context

low context society

logical, linear, action-oriented, mass of information is explicit and formalized, communication takes place in a rational, verbal way, transparent

high context communication

space must be left for interpretation, meaning depends on how it’s said, difficult to receive firm “yes or no”s

low context communication

everything must be clear, meaning depends on what’s being said, say “no” directly

primary reason behind walmart’s failure in germany

cultural distance, locations were far from public transport, did not account for german customs such as not smiling at strangers

country portfolio analysis

focus on national GDP, consumer wealth, and propensity to consume and places all emphasis on potential sales

CAGE framework

CPA approach, but accounts for cultural, administrative, geographic, and economical distance

cultural distance

different languages, ethnicities, religions, and social norms

administrative distance

absence of colonial ties, shared currency/politics associated along with political hostility, government policies, and institutional weakness

geographic distance

physical remoteness, lack of common border, lack of sea or river access, size of country, weak transportation or communication links, and differences in climates

economic distance

differences in consumer incomes, differences in costs and quality of natural resources, financial resources, human resources, infrastructure, intermediate inputs, information, or knowledge