Test 1

International marketing is 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.

Four Trends Affecting Global Business

1. Growth of the WTO and open trade agreements

2. Developing countries moving toward free trade

3. The Internet, cellular, and networked communication

4. A mandate to manage the global environment for the future

Uncontrollable uncertainty is Created by uncontrollable elements in business environments.

Domestic environment uncontrollable is home-country elements that can have a direct effect on the success of a foreign venture: political and legal forces, economic climate, and competition.

Foreign environment uncontrollable is business operating in a number of foreign countries might find polar extremes in political stability, class structure, and economic climate—critical elements in business decisions.

Duties of international marketers

Interpret influence of each uncontrollable element on market.

Adjust marketing efforts to cultures in which they are not attuned.

Be aware of own frame of reference when evaluating markets. 

Global awareness also involves knowledge of world market potentials and global economic, social, and political trends.

Main characteristics of companies that internationalize quickly:

• High-technology and/or marketing-based resources.

• Smaller home markets and larger production capacities.

• Managers who are well-networked internationally.

Balance-of-payments statement is a record of all financial transactions with other countries

GATT is a forum for member countries to negotiate a reduction of tariffs and other barriers to trade

Current account: a record of all merchandise exports, imports, and services plus unilateral transfers of funds.

Capital account: a record of direct investment, portfolio investment, and short-term capital movements to and from countries.

Reserves account: a record of exports and imports of gold, increases or decreases in foreign exchange, and increases or decreases in liabilities to foreign central banks.

A tariff is a tax imposed by a government on goods entering at its borders.

Tariff barriers tend to increase:

• Inflationary pressures.

• Special interests’ privileges.

• Government control and political considerations in economic affairs.

• The number of tariffs resulting from countries impacted by your country’s tariffs (reciprocity).

Tariff barriers tend to weaken:

• Balance-of-payments positions.

• Supply-and-demand patterns.

• International relations (trade wars).

Tariff barriers tend to restrict:

• Manufacturers’ supply sources.

• Choices available to consumers.

• Competition.

A quota is a specific unit or dollar limit applied to a particular type of good.

Voluntary export restraints (VERs) or orderly market agreements (OMAs) is an agreement between the importing country and the exporting country for a restriction on the volume of exports. Common in textiles, clothing, steel, agriculture, and automobiles.

Boycott is an absolute restriction against the purchase and importation of certain goods and/or services from other countries. This restriction even can include travel bans.

Embargo is a refusal to sell to a specific country. A public boycott can be either formal or informal and may be government sponsored or sponsored by an industry.

The Omnibus Trade and Competitiveness Act of 1988 addressed the trade fairness issue and focused on ways to improve U.S. competitiveness.

General Agreement on Trade in Services (GATS) - the first multilateral, legally enforceable agreement covering trade and investment in the services sector. It provides a legal basis for future negotiations aimed at eliminating barriers that discriminate against foreign services and deny them market access.

Trade-Related Investment Measures (TRIMs) - established the basic principle that investment restrictions can be major trade barriers and therefore are included, for the first time, under GATT procedures.

Trade-Related Aspects of Intellectual Property Rights (TRIPs) - establishes substantially higher standards of protection for a full range of intellectual property rights (patents, copyrights, trademarks, trade secrets, industrial designs, and semiconductor chip mask works) than are embodied in current international agreements, and it provides for the effective enforcement of those standards both internally and at the border.

Special drawing rights (SDRs) - The SDR is in effect “paper gold” and represents an average base of value derived from the value of a group of major currencies. Rather than being denominated in the currency of any given country, trade contracts are frequently written in SDRs because they are much less susceptible to exchange-rate fluctuations.

Culture is the sum of values, rituals, symbols, beliefs, and thought processes that are learned and shared by a group of people, then transmitted from generation to generation.

Confucian philosophy – The 2,500-year-old teachings of Chinese philosopher Confucius still strongly influence cultures in East Asia today. Primary among his teachings were a deep respect for elders, rulers, and husbands.

Hofstede’s four dimensions.

• Individualism/Collectivism Index (IDV); focus on self-orientation.

• Power Distance Index (PDI); focus on authority orientation.

• Uncertainty Avoidance Index (UAI); focus on risk orientation.

• Masculinity/Femininity Index (MAS); focus on assertiveness and achievement. 

Expropriation – The seizure of an investment by a government in which some reimbursement is made to the investment owner; often the seized investment becomes nationalized.

Geography is the study of Earth’s surface, climate, continents, countries, peoples, industries, and resources.

Greenhouse gas emissions – Gases resulting primarily from the use of fossil fuels that tend to trap heat in the earth’s atmosphere and are causal factors in global climate change.

Sustainable development – Approach toward economic growth described as a cooperative effort among businesses, environmentalists, and others to seek growth with “wise resource management, equitable distribution of benefits, and reduction of negative efforts on people and the environment from the process of economic growth.”

Rituals is the patterns of behavior and interaction that are learned and repeated.

Linguistic distance determines differences in values across countries and the amount of trade between countries and demonstrates a direct influence of language on cultural values, expectations, and even conceptions of time.

Bilingualism: Customers process advertisements differently if heard in their native versus second language.

Biculturalism: Customers can switch identities and perception frames.

Aesthetics: Philosophically, the creation and appreciation of beauty; collectively, the arts including folklore, music, drama, and dance.

Cultural sensitivity: An awareness of the nuances of culture so that a culture can be viewed objectively, evaluated, and appreciated; an important part of foreign marketing.