15.1 Global Marketing Today Flashcards
What has contributed to the rapid shrinking of the world and the growth of international trade?
Faster digital communication, transportation, and financial flows have contributed to the rapid shrinking of the world and the growth of international trade.
How has the number of multinational corporations changed since 1990?
Since 1990, the number of multinational corporations has more than tripled to over 100,000.
What is the global trade of products and services valued at?
The global trade of products and services is valued at more than US$20 trillion, about 25% of GDP worldwide.
What are some examples of North American companies that have been successful at international marketing?
Coca-Cola, McDonald’s, Bombardier, Starbucks, KFC, Nike, GE, Google, Caterpillar, and Boeing are examples of North American companies that have been successful at international marketing.
Why is it important for companies to expand into international markets?
Expanding into international markets is important for companies because it allows them to tap into new growth opportunities, face global competition, and avoid being shut out of growing markets.
What are some risks associated with global expansion for companies?
Risks associated with global expansion include unstable governments and currencies, restrictive government policies and regulations, high trade barriers, a dampened global economic environment, and corruption.
What is a global firm, and what advantages does it have over purely domestic competitors?
A global firm is one that operates in more than one country, gaining marketing, production, R&D, and financial advantages that are not available to purely domestic competitors. It minimizes the importance of national boundaries and develops global brands.
What is global niching, and who can practice it?
Global niching is the practice of focusing on a specific market niche on a global scale. Smaller firms can practice global niching to compete in international markets.
What are some basic questions that companies must answer when considering globalization?
Some basic questions companies must answer include:
What market position should we try to establish in our country, in our economic region, and globally?
Who will our global competitors be and what are their strategies and resources?
Where should we produce or source our products?
What strategic alliances should we form with other firms around the world?
Figure 15.1: major Internation Marketing Decisions
What are some restrictions on trade between nations that a company may face?
Restrictions on trade between nations include tariffs, duties, quotas, exchange controls, and nontariff trade barriers such as restrictive product standards and excessive host-country regulations.
What is the purpose of quotas?
Countries may set quotas, limits on the amount of imports that they will accept in certain product categories.
The purpose of quotas is to conserve foreign exchange and protect local industries and employment.
What is GATT
The General Agreement on Tariffs and Trade (GATT), established in 1947 and modified in 1994, was designed to promote world trade by reducing tariffs and other international trade barriers. It established the World Trade Organization (WTO), which replaced GATT in 1995 and now oversees the original GATT provisions.
What is the World Trade Organization (WTO)?
The WTO is an international organization that oversees the original GATT provisions, promotes world trade by reducing tariffs and other international trade barriers, imposes international trade sanctions, and mediates global trade disputes.
What are two economic factors that reflect a country’s attractiveness as a market?
The two economic factors that reflect a country’s attractiveness as a market are its industrial structure and its income distribution.
What are emerging economies, and why are they attractive to marketers?
Emerging economies are countries experiencing rapid economic growth and industrialization, such as the BRICS countries and MENA countries. They are attractive to marketers due to their growing middle classes, increasing demand for new goods and services, and the potential for growth opportunities.
What is the “bottom of the economic pyramid”?
The “bottom of the economic pyramid” refers to the vast untapped market consisting of the world’s poorest consumers.
Why are companies increasingly targeting middle-income or low-income consumers in subsistence and emerging economies?
Companies are targeting middle-income or low-income consumers in subsistence and emerging economies because of the potential for growth opportunities, as more developed markets become stagnant and increasingly competitive.
What are free trade zones or economic communities?
Free trade zones or economic communities are groups of nations organized to work toward common goals in the regulation of international trade.
What is the European Union (EU)?
The European Union is a free trade zone or economic community formed in 1957 to create a single European market by reducing barriers to the free flow of products, services, finances, and labor among member countries and developing policies on trade with nonmember nations.
How many member countries does the EU have and what is its significance?
The EU currently has 28 member countries containing 516 million consumers and accounting for almost 20 percent of the world’s imports and exports. It represents one of the world’s largest single markets and offers tremendous trade opportunities for Canada and other non-European firms.
What is the Canada-European Union Comprehensive Economic and Trade Agreement (CETA)?
The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) is a free trade agreement between Canada and the European Union that came into effect in September of 2017. It has resulted in close to an 8 percent annual increase in trade from the pre-CETA time period.
What is the euro crisis?
The euro crisis refers to the ongoing economic struggles faced by some EU member nations, particularly those with weaker economies such as Greece, Portugal, and Cyprus. This has led to economic powers like Germany and France having to provide support to these countries. Some analysts have predicted the possible breakup of the euro zone as it is currently structured.
What is the significance of widespread adoption of the euro as a common currency for businesses operating in Europe
The adoption of the euro decreased much of the currency risk associated with doing business in Europe, making member countries with previously weak currencies more attractive markets.
Why is it unlikely that the EU will become the “United States of Europe”?
A community with more than two dozen different languages and cultures and a history of sometimes strained relationships will always have difficulty coming together and acting as a single entity.
What is Brexit?
Brexit refers to the United Kingdom’s exit from the European Union. The UK voted to leave the EU in a 2016 national referendum and was set to depart in early 2019 with a transition period to smooth the way to post-Brexit relations with the remaining EU countries. However, a proposed deal announced in October of 2019 was rejected by the UK Parliament
What is the impact of Brexit on the future of European economic and political unity?
Brexit has sent aftershocks across Europe and the world, raising concerns about the future of European economic and political unity.
What is the current state of the EU post-Brexit?
With a post-Brexit combined annual GDP of more than US$15 trillion, the EU remains a potent economic force.
What is NAFTA?
NAFTA stands for the North American Free Trade Agreement, which established a free trade zone among the United States, Mexico, and Canada in 1994.
The agreement created a single market of 487 million people who produce and consume US$23.5 trillion worth of goods and services annually.
What has been the impact of NAFTA over the past 25 years?
Over the past 25 years, NAFTA has eliminated trade barriers and investment restrictions among the three countries. Total trade among the NAFTA countries nearly tripled from US$288 billion in 1993 to more than US$1.2 trillion a year.
What is the Canada-United States-Mexico Agreement (CUSMA)?
The Canada-United States-Mexico Agreement (CUSMA) is a new free trade agreement signed by Canada, the United States, and Mexico in November 2019, replacing NAFTA.
However, the deal has yet to be ratified by either the Canadian or U.S. governments, and so NAFTA remains in place in early 2020.
What is CAFTA-DR?
CAFTA-DR stands for the Central American Free Trade Agreement, which established a free trade zone between the United States and Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua in 2005.
What is UNASUR?
UNASUR stands for the Union of South American Nations, which was formed in 2004 and formalized by a constitutional treaty in 2008. It consists of 12 countries and makes up the largest trading bloc after NAFTA and the EU, with a population of more than 420 million and a combined economy of more than US$6.5 trillion. It aims to eliminate all tariffs among its members.
What is the goal of free trade areas such as NAFTA, CAFTA-DR, and UNASUR?
The goal of free trade areas such as NAFTA, CAFTA-DR, and UNASUR is to eliminate tariffs and other trade barriers among member countries to create a single market and increase trade and economic cooperation
What is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)?
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a major world trade agreement that promises to lower trade barriers and increase economic cooperation among 11 Pacific Rim countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
What is the significance of the CPTPP?
The 11 CPTPP countries have a collective population of 500 million people, more than NAFTA, and account for 13 percent of all world trade. The agreement will have a significant and sometimes controversial economic and political impact.
