ISM REVISION


Exam Format

  • Duration: 60 minutes, closed book

  • Structure:

    • 15 Multiple Choice Questions (MCQs) on general topics

    • 5 MCQs based on a case study (provided during the exam)

    • 2 open-ended questions drawn from cases/articles

Service Concepts and Definitions

Goods and Services

  • Goods: Tangible products, capable of being stored (e.g., UCKS Coffee).

  • Services: Intangible offerings, characterized as follows:

    • Stable vs. Variable: Services can vary based on the context or delivery method.

    • Inseparable Production and Consumption: Services are produced and consumed simultaneously.

    • Storable vs. Perishable: Goods can be stored, while services cannot; they are perishable.

The Experience Economy

Introduction

  • Developed by Pine and Gilmore (1999), emphasizing experiential value in business.

  • Consists of four realms of experiential value:

    • Educational Experiences: Learning through participation.

    • Esthetic Experiences: Engaging with an appealing environment.

    • Escapist Experiences: Immersion into a different persona or setting.

    • Entertainment Experiences: Passive enjoyment of an experience.

Concepts of Participation, Absorption, and Immersion

  • Participation: Level of customer involvement in the experience.

  • Absorption: Engaging the mind during experiences.

  • Immersion: Physical or virtual engagement into a setting.

Service-Dominant Logic

Overview

  • Represents a paradigm shift from an industrial economy to a service-oriented economy.

  • S-D Logic Characteristics:

    • Focus on operant resources (dynamic resources: knowledge and capabilities) over operand resources (tangible, inert).

    • Transition towards service-dominant economies exemplified by countries like Singapore and Switzerland.

Global Trade Frameworks

GATT (General Agreement on Tariffs and Trade)

  • Objective: Promoting free trade by reducing barriers.

  • Established a discussion platform for agreement on tariffs and trade restrictions.

Transition to WTO (World Trade Organization)

  • Emerged from GATT's final round (1986-1994).

  • WTO Characteristics:

    • Permanent institution with a legal authority to resolve trade disputes.

    • Currently comprises 164 member countries.

Trade Barriers and Impacts

Types of Trade Barriers

  • Tariffs: Taxes on imports impacting pricing and market access (e.g., U.S. tariffs on steel and aluminum).

  • Non-Tariff Barriers: Include quotas and regulatory standards (e.g., safety standards in the EU).

Economic and Political Impacts

  • Economic: Increases in business and consumer costs, possible trade wars (e.g., U.S.-China tariffs).

  • Political: Trade barriers can arise from political reasons, straining diplomatic relations.

  • Strategic Adjustments: Companies may change supply chains or market sources to circumvent barriers.

Free Trade Agreements (FTAs)

Purpose

  • To reduce tariffs and trade barriers among member countries to encourage investment and growth.

Key Agreements

  • NAFTA (revised as USMCA): Facilitated North American trade integration.

  • European Union Single Market: Free movement of goods, services, capital, and people.

  • ASEAN Free Trade Area: Promotes regional trade and investment in Southeast Asia.

Benefits and Challenges of FTAs

  • Benefits: Lower consumer cost, increased market access, economic cooperation.

  • Challenges: Regulatory alignment, job displacement in certain sectors, unequal benefits.

Macro vs Micro Environment Analysis

Macro Environment

  • Definition: General environment affecting all business enterprises.

  • Elements (PESTLE): Political, Economic, Social, Technological, Legal, Environmental.

Micro Environment

  • Definition: Closely surrounding factors affecting the firm's operations.

  • Elements (COSMIC): Competitors, Organization, Suppliers, Market, Intermediaries, Customers.

Comparison of Environments

  • Controllability: Macro factors are generally uncontrollable. Micro factors can be directly managed.

Competitive Advantage Models

Resource-Based View (RBV)

  • Focus on internal capabilities and historical resources to achieve high performance.

  • Assessment Components:

    • Tangible and intangible resources.

    • Core competencies and competitive advantages.

Market Orientation View (MOV)

  • Centers on identifying and exploiting customer needs.

  • Benefits: Enhances customer satisfaction, loyalty, repeat business; requires internal coordination and risk tolerance.

International Marketing Strategies

Types of Marketing Strategies

  • Domestic Marketing: Focus on home markets.

  • Export Marketing: Focus on modifying product offerings for exports.

  • International Marketing: Target audiences across different countries.

  • Multinational Marketing: Tailoring strategies for specific countries.

  • Global Marketing: Synchronizing marketing strategies on a worldwide scale.

Strategic Orientation Choices

Types of Strategic Orientation

  • Ethnocentric: Centralized and standardized approach, suited for luxury brands like Louis Vuitton.

  • Polycentric: Customized strategies for varying local needs

  • Regiocentric: Balances regional similarities with flexibility.

  • Geocentric: Global integration with localized adaptation (e.g., Coca-Cola).

Reasons for Internationalization

Definition

  • Internationalization: Process of expanding focus outside domestic markets.

Motivations for Internationalization

  • Market seeking, countering competitive threats, efficiency gains (offshoring, outsourcing), resource acquisition, growth expectations, risk diversification.

Challenges of Internationalization

  • Risks from unknown markets, potential dilution of focus on home market, resource needs.

Modes of International Market Entry

Exporting

  • Indirect Exporting: Utilizing intermediaries (export consortia, freight forwarders).

  • Direct Exporting: Direct sales to customers or through agents.

Wholly Owned Subsidiaries

  • Partly Owned: Parent company owns less than 100%, limited control unless majority shares owned.

  • Wholly Owned: Parent company owns 100% of shares.

  • Acquisition vs. Greenfield Investment: Decision between acquiring existing operations or building new facilities from the ground up.

Licensing and Franchising

Licensing

  • Definition: A contract allowing the licensee to use the licensor's brand, trademark, or technology in exchange for consideration.

  • Example: NestlĂ© acquisition of Starbucks brand rights for coffee.

Franchising

  • Definition: Relationship where a franchisor licenses the franchisee to operate under its brand, providing guidance in return for fees.

Pros and Cons of Different Entry Modes

Direct Export

  • Pros: Increased profits, customer engagement, full commitment, protection of intellectual property.

  • Cons: High costs, logistical challenges, local competitive disadvantages.

Indirect Export

  • Pros: Lower risk, concentrated focus on home market, local knowledge access.

  • Cons: Lower profits, less control, absence of direct customer feedback.

Licensing

  • Pros: Low risk, access to markets without heavy investment.

  • Cons: Limited control, potential for licensee competition.

Franchising

  • Pros: Similar to licensing, but with more control over operations.

  • Cons: Dependence on franchisees, potential for execution failure affecting brand image.

Joint Ventures

  • Pros: Shared knowledge and resources, reduced risks.

  • Cons: Control loss over technologies and potential conflict with local partners.

Paths to International Growth

Slow & Steady Approach

  • Develop expertise gradually, consolidate domestic market before international.

  • Build networks relevant for future international business.

Born Global Approach

  • Expedite growth in highly internationalized environments, leverage common markets for faster expansion.

Hofstede's Cultural Dimensions

  • Power Distance: Acceptance of unequal power distribution.

  • Individualism vs. Collectivism: Interdependence within societies.

  • Masculinity vs. Femininity: Preference for achievement vs. quality of life.

  • Uncertainty Avoidance: Tolerance for ambiguity.

  • Long-term vs. Short-term Orientation: Future-oriented pragmatism vs. short-term focus.

  • Indulgence vs. Restraint: Consumer freedom vs. regulation.

International Pricing Strategies

Cost Based Pricing

  • Firms must set prices high enough to recover production and marketing costs plus a profit margin.

Value Based Pricing

  • Customers will not pay more than their perceived value for a service.

    • Net Value: Gross value minus perceived costs.

Competition Based Pricing

  • Firms must monitor competitors’ prices and adjust accordingly.

    • Price competition can increase with more competitors and substitutes.

Market Entry Pricing Strategies

  • Skimming Pricing: Targeting consumers willing to pay a premium first.

  • Penetration Pricing: Lowering prices to gain market share quickly.

Other Influencing Factors on Pricing

  • Market structure, local competition, customer demand, government regulations, inflation, exchange rates, etc.

Integrated Marketing Communications (IMC)

Overview

  • Utilize multiple channels for effective communication with consumers (e.g., TV, print, online).

  • Framework: Objectives, insights, content creation, and dealing with noise.

Brand Fundamentals

Definitions

  • Brand Identity: Characteristics aimed at distinguishing the brand.

  • Brand Image: Consumer perceptions based on experiences.

  • Brand Promise: Expectations of value delivery from the brand.

  • Brand Equity: Added value from consumer perceptions and loyalty.

Branding Essentials

  • Successful branding encompasses both tangible elements (product design, retail environment) and intangible elements (brand personality, emotional connection).

Country-of-Origin Effect (CoE)

Definition

  • Influence of a product's country of manufacture on consumer perceptions.

  • Examples include stereotypes for high-quality products (e.g., Italian leather, Japanese electronics).

  • Ethnocentrism impacts attitudes toward foreign products (e.g., preference for domestic products).

Conclusion

  • Final Note: Good luck, and Dr. Natt Srinara thanks the students for their participation in the course!