Marketing Exam 2

Chapter 5, 6, 7, 9

Europe authority

power given to few who “rule” in the best interest of the group

individualism is associated with…

milton friedman

collectivism is associated with…

karl marx

Middle east authority

Deal with the “top man” of the group

Japan authority

never directly deal with authority figure (elderly male); committee decision making; salaryman

Monochronic Countries

germany, canada, the US, Australia

Polychronic countries

Saudi Arabia, France, Greece, Mexico

Characteristics of Monochronic cultures

doing one thing at a time, deadlines + schedules, adhering to plans religiously, promptness, accustomed to short term relationships

Characteristic of Polychronic Time

doing many things at once, highly distractable, deadlines and schedules are secondary, changing plans often and easily, preferring long-term relationships

Western time orientation

Linear

Oriental time orientation

cyclical, subjective, and relational

Artist

Yang Liu

Business customs

Korean business drinking, Chinese Quanxi

what is quanxi

network of personal, social, and business relationships built on trust, reciprocity, and mutual obligation

Business customs japan

conservative dress, don’t say no, be on time

what is meishi?

traditional japanese business card

what is honne in japanese business customs?

a person's true feelings, inner thoughts, and real desires

what is tatemae in japanese business customs?

Japanese social concept that refers to the public behavior, opinions, or statements a person presents to society, coworkers, or strangers

what is keiyuka in japanese business customs?

Faith

Cultural imperative

an obligatory custom, behavior, or value that an individual must follow to gain acceptance within a specific society

cultural exclusive

a behavior, custom, or practice that is strictly reserved for members of a specific culture or local community

cultural adiaphora

practices, customs, or behaviors within a religious or moral framework that are considered "matters of indifference" (neither commanded nor forbidden)

Keiretsu

• Set of Japanese companies that we would consider to be a monopoly

• Member companies own small portions of shares in each others’ companies, centered on a core bank

Keiretsu relationships

• Debt and equity

• Reciprocity

• Amae: need to be in good favor with, and be able to depend on, the people around you

• Personnel sharing

• No “confidential” information

Chaebol

South Korean family controlled conglomerates of 6 major companies

economic risks of global markets

1. exchange controls

2. local-content laws

3. import restrictions

4. tax controls

5. tariffs

collectivism

need of society to supersede individual goals

communists

violent revolution and totalitarian dictatorship

social democrats

seek ∆ through democratic means such as voting, legislative processes, and peaceful reforms rather than violent revolution.

individualism

individual ownership is desirable and productive

tenets of individualism

1. Freedom of self-expression

2. Private property

3. Individual economic self-interest

4. Belief that society benefits from individuals pursuing their own interests

only ___ % of the world lives in a full democracy

6%

full democracy countries

spain, UK, germany, Japan, Canada

democracy principles

freedom of expression, citizen elections with choice, independent courts, access to state information, non-political police force and military

totalitarianism

A political system in which the government exercises extensive control over society and political life

kleptocracy

a government/state in which those in power exploit natural resources and steal; rule by a thief or thieves

plutocracy

society rules by small minority of wealthiest citizens

democracy malfunctions

paul collier

• money trapped in hand of those who need it for maintaining power through patronage can’t be openly invested because it has to be hidden

• survival of the fattest

political risks of global markets

1. confiscation

2. expropriation

3. domestication

confiscation

seizing a company’s assets without payment

expropriation

The government seizes a foreign investment but provides some reimbursement for the assets.

domestication

A host country gradually transfers foreign investments into national control and ownership through government requirements.

lessening political vulnerability

1. joint ventures

2. expanding investment base

3. licensing

4. planned domestication

5. political bargaining

6. political payoffs

how many people have paid a bribe this year?

1 in 4 people, < 1trillion

corruption definition

the dishonest, fraudulent, or criminal abuse of entrusted power for private or personal gain

corruption cost

$5+ trillion/year, about 5-6% of Global GDP, often in poorest areas

causes of corruption

1. clear opportunity

2. little chance of getting caught

3. bad incentives

4. attitudes/circumstances that make average people disregard the law

T/F: Corruption is not just about ethics, it is also about how the govt is set up and managed

True

mediation

non-binding agreement between 2 parties to resolve disputes by asking a third party to mediate differences

arbitration

A neutral, informed third party evaluates the case and makes a decision the parties agree to honor. Generally binding under the parties' agreement.

disadvantages of lawsuits

1. fear of creating a bad reputation

2. fear of unfair treatment in a foreign court

3. difficulty in collecting judgement

4. high cost and time

5. loss of confidentiality

global cost of counterfeit items

$2+ trillion

industrial property

inventions (patents), trademarks, industrial designs, and geographic indications of source

why do we need international IP protection?

incentive to produce; protects creator from theft, gives them control, and makes disputes easier to sort out; documents creation

market factors influencing IPR violations

lack of appropriate legislation, lax enforcement, unavailability/high price of authentic products

cultural factors influencing IPR violations

values that perceive imitation as flattery, distrust/feeling of not getting a fair deal, conspicuous consumption, belief that tech = common domain

top 3 counterfeited items

1. apparel/accessories

2. watches/jewelry

3. shoes

emerging markets

nations with social or business activity in the process of rapid growth + industrialization. results in a marked rise in GDP and disposable income. allows international companies to tap into new large customer bases.

two largest emerging markets

china and india

Characteristics of Emerging Markets

1. GNP/capita less than $2,000

2. Unequal distribution of income

3. Technological dualism

4. Majority earn income from agriculture

5. Unproductive agriculture

6. Disguised unemployment or underemployment

7. Health problems and malnutrition

8. High illiteracy

9. High population growth

10. Reliance on few products for export

11. Low savings rate

12. Political instability

stages of economic development

1. traditional → Agrarian

2. precondition

3. Take-off stage

4. drive to maturity

5. mass consumption

who created the stages of economic development

walter rostow

Engel’s Law

Ernst Engel; As a family’s income rises…

1. The percentage spent on food declines

2. The percentage spent on household activities stays the same

3. The percentage spent on other (education, transportation, clothes, rec) increases

Gross national product (GNP)

sum of the value of finished goods and services produced by a society during a given year. Excludes intermediate goods. Counts only income earned by citizens of the country including wages and prodfits earned by them outside the country

GDP

counts all income produced within the borders of a country, including income earned by resident foreigners. Excludes wages and profits earned by the citizens of the country from sources abroad

Private-sector consequences of corruption

• Increases the cost of doing business.

• Creates additional management costs.

• Increases the risk of breached agreements.

• Creates unfair competition.

• Protects inefficient businesses with political connections.

Public-sector consequences of corruption

• Diverts government investment.

• Reduces the quality of public services.

• Weakens infrastructure.

• Reduces compliance with regulations.

• Increases government budget pressures.

Socialist law

Traditionally emphasizes state ownership and state control over economic activity

Patents vs trademarks

protection of inventions vs protection of brand identifiers, names, and symbols.

6 major Keiretsu companies

1. Mitsubishi

2. Mitsui

3. DKB

4. Fumo

5. Sanwa

6. Sumitomo

flawed democracy countries

U.S., India, Indonesia, Brazil

Authoritarian countries

Russia, China, Pakistan, Iran

planned domestication

a political and market-entry risk-mitigation strategy where a foreign company deliberately transfers a portion of its ownership, management, and control to local nationals or the host government before being forced to do so by hostile actions like expropriation or nationalization

patronage

when political leaders use money, jobs, government contracts, or other benefits to reward supporters and maintain loyalty.