2 - international environment

Question 1

5 stage decision model in global marketing

Answer 1

1. the decision whether to internationalise
2. deciding which markets to enter
3. market entry strategies
4. designing the global marketing programme
5. implementing and coordinating the global marketing programme

Question 2

External analysis: market, customers, competitors, suppliers

Answer 2

1. MARKET
   - market segment: geographic, demographic, psychographic, behavioural
   - market needs
   - market trends: any macro, micro changes
   - market growth
2. CUSTOMERS: customer needs & wants
3. COMPETITORS: direct and indirect competitors; strengths and weaknesses of competitors
4. SUPPLIERS:

Question 3

Porter’s diamond

Answer 3

1. FACTOR CONDITIONS:
   - basic factors: natural resources
   - advanced resources: human resources & research capabilities
2. DEMAND CONDITIONS - presence of early home demand, market size, rate of growth of market
3. RELATED AND SUPPORTING INDUSTRIES
4. FIRM STRATEGY, STRUCTURE & RIVALRY - the way in which companies are organised and managed, their objectives and the nature of domestic rivalry

Question 4

Situation analysis tools

Answer 4

1. SWOT analysis

2. Porter’s 5 forces

Question 5

Porter’s 5 forces analysis

Answer 5

1. Competition in the industry
2. Threat of new entrants into the industry
3. Power of suppliers
4. Power of customers
5. Threat of substitute products

Question 6

Changes in the international environment PESTEL

Answer 6

Political 
Economic
Sociological
Technological
Ecological
Legal

Question 7

The political/legal environment

comprises primarily two dimensions:

Answer 7

● the home country environment

● the host country environment.

Question 8

Host country political environment

Answer 8

● Political risks

   1. Import restrictions 
   2. Local-content laws
   3. Exchange controls
   4. Market control 
   5. Price controls
   6. Tax controls 
   7. Labour restrictions 
   8. Nationalization
   9. Change of government party 
   10. Domestication

Question 9

Home country political environment - factors that can influence it

Answer 9

● bribery & corruption
● political pressure
● threats in third markets

Question 10

There are two main reasons why countries levy tariffs:

Answer 10

1. To protect domestic producers

2. To generate revenue

Question 11

How exchange rates influence business activities

Answer 11

Movement in a currency’s exchange rate affects the activities of both domestic & international companies.

When a country’s currency is weak, the price of its exports on world markets declines and the price of imports increases. Lower prices make the country’s exports more appealing on world markets.

Furthermore, a company selling in a country with a strong currency while paying workers in a country with a weak currency improves its profits.

Question 12

Devaluation lowers the

Answer 12

price of a country’s exports on world markets and increases the price of imports because the country’s currency is now worth less on world markets. Revaluation has the opposite effect: it increases the price of exports and reduces the price of imports.

Question 13

Law of one price

Answer 13

stipulates that an identical product must have an identical price in all countries when price is expressed in a common-denominator currency.

Question 14

Limitations of SWOT analysis

Answer 14

1. Inadequate definition of factors

2. Lack of prioritisation of factors

Question 15

Need to adapt to changes in the international environment

Answer 15

1. changes are inevitable especially due to globalisation/modernisation
2. what to do: accept, communicate (tell the team how we are going to change the mindset and do things differently) and plan accordingly

Question 16

Phases of change

Answer 16

1. denial
2. bargaining & negotiation: which are the negative aspects of the change & try to negotiate them
3. frustration
4. acceptance

Question 17

Tips on adapting to changes in the international environment:

Answer 17

1. becoming aware of the situation
2. understanding change
3. building skills and knowledge
4. agility and speed of response
5. challenge and response time
6. change psychology: convince the others about the change

Question 18

Disposition of resources and capacities for international expansion

Answer 18

RESOURCES: What are the main firm resources? How would you identify them? Which are the resources the company has and which are most important to make the company competitive?

TANGIBLE: financial or physical; we need to understand how important some tangible resources are in the given context (having a building in Spain when you want to invest in China)
INTANGIBLE: technological, innovation, human resources; they can be as important as the tangibles are to create competitive advantage

CAPABILITIES

• How capable are we with marketing related issues?
• Our capabilities regarding R&D, management, marketing
• Analyse the company you are analysing and saying if the resources and capabilities it has are enough to bring the firm to a specific country