International Marketing Exam 2

Sovereignty

Supreme powers exercised by a state over its own territory and members

Political Stability and Risk

Ideal climate: Stable and friendly government for multinational firms. Causes of instability: Inherent political shifts, nationalism, animosity toward specific countries, trade disputes

Forms of Government

Monarchy/dictatorship (rule by one), aristocracy/oligarchy (rule by few), democracy (rule by many)

Nationalism

General intense feeling of national pride directed toward all foreign countries

Targeted Animosity

Specific hostility directed toward particular countries

Political Risks

Economic risks: Currency fluctuations, economic sanctions, changes in fiscal/monetary policy. Political sanctions: Complete trade boycotts or specific product sanctions. Violence and terrorism: Attacks on multinational corporations to embarrass governments, generate funds, or inflict terror

Political Vulnerability Assessment

Vulnerable companies: Subject to political attention, face unpredictable restrictions. Less vulnerable companies: In high-priority industries, often exempt from taxes and controls. Politically sensitive products: Affect environment, exchange rates, national security, public welfare, highly visible

Risk Reduction Strategies

Joint ventures, expanding investment base, licensing/franchising, planned domestication, political bargaining, corporate philanthropy and community involvement

Common Law

Based on tradition, precedent, and court interpretations (English origin)

Civil/Code Law

Based on comprehensive written rules and codes (Roman origin)

Islamic Law

Based on Quran interpretation, emphasizes social justice

Marxist-Socialist Law

Law subordinate to economic conditions

Common vs. Code Law - Intellectual Property

Common law based on use; Code law based on registration

Common vs. Code Law - Agreements

Common law requires proof; Code law requires notarization/registration

Common vs. Code Law - Comprehensiveness

Common law not all-inclusive; Code law has catchall provisions

Conciliation

Third-party mediation, confidential, not legally binding

Arbitration

Binding referee decision, standardized procedures, legally enforceable

Litigation

Formal court proceedings, expensive, time-consuming, public

Jurisdiction Determination

Jurisdictional clauses in contracts, location where contract was entered, or where provisions were performed

Intellectual Property Protection

Counterfeiting and piracy cost billions in lost revenue. Inadequate protection leads to loss of legal rights. Different systems: Prior use (common law) vs. Registration (code law)

IP Protection Strategies

International conventions, local registration and representation, alternative dispute resolution, government and WTO complaints

Cyberlaw Issues

Unresolved issues include domain names and cybersquatting, tax collection across borders, jurisdiction for disputes, validity of electronic contracts

Foreign Corrupt Practices Act (FCPA)

Prohibits bribery of foreign officials. Applies to U.S. companies and subsidiaries worldwide. Stiff penalties despite being common practice elsewhere

Export Controls

Administered by Bureau of Industry and Security (BIS). Two license types: General (routine exports) and Validated (restricted items). National security considerations post-9/11

Three Basic Research Needs

1. General country/market information 2. Forecasting future requirements 3. Specific marketing plan development

Unique International Research Challenges

Information must cross cultural boundaries. Broader scope necessary for foreign market analysis. Cultural factors affect data collection and interpretation

Research Process

Six Steps: 1. Define problem and establish objectives 2. Determine information sources 3. Consider costs and benefits 4. Gather relevant data 5. Analyze and interpret results 6. Communicate results to decision makers

Foreign Market Considerations

Unfamiliar environment clouds problem definition. Must account for self-reference criterion (SRC). Need broader range of factors than domestic research

U.S. vs. International Data Quality

U.S. data unmatched in quality and quantity. Foreign data often faces availability, reliability, and comparability issues

Secondary Data Validation

Who collected the data and why? What was the collection methodology? Is the data internally consistent? Are there reasons for misrepresentation?

Quantitative Research

Large number of structured responses. Precise estimations with statistical analysis. Behavior, intentions, attitudes, demographics

Qualitative Research

Interprets what people are like. Open-ended, unstructured responses. Direct observation methods. Reveals sociocultural impact on behavior

Primary Data Challenges

Communication barriers: Product understanding, cultural communication styles. Willingness to respond: Cultural factors, leadership restrictions. Sampling difficulties: Lack of demographic data in some countries. Language issues: Translation problems, literacy concerns

Multicultural Research

Growing Importance: Companies seeking global standardization. Need to compare across cultures. Determine appropriate marketing mix adaptation. May require different methods in different cultures

Expert Opinion Method

Consult experts about market size and growth. Use triangulation (multiple expert opinions)

Analogy Method

Assumes similar demand patterns across countries. Based on economic indicators like GDP. Caution: correlation doesn't equal causation

Decentralization Trend

Foreign-based entities conduct local research. Advantages: Cultural knowledge, speed, accuracy. Disadvantages: Communication gaps, potential bias toward large markets