4.1 Global Businesses 🚻 Flashcards
What are the two types of global marketing strategies?
Global marketing - planning, producing, placing and promoting a business’s product or service to the global market
versus Glocalisation - aim to reach customers globally and also take into consideration the needs of the local market
What do businesses not have to do on global marketing?
Don’t have to differentiate, but can change price or promotion to suit the market
How do global brands view the world?
As a worldwide market place suit worldwide audience
What is the benefits of having a global marketing decisions?
What is the only difference?
Professional messages will be the same
reducing average marketing costs
leading to promotion economy is a scale
Sales incentives may vary
What are the 6 positives and 3 negatives of global marketing?
Positives
The economy of scale in production and distribution low as average marketing costs
power in market as brand is known - strengthens
consistency in brand image - good for globalisation gain competitive advantage
ability to leverage good ideas 💡
Good if you want to spread risks and grow
Negatives
different consumer needs and wants
Different consumer responses to mocking mixed elements
Different legal environment may have conflicts with those within the market
What made business be able to do if they meet local needs through glocalisation ?
Successfully penetrate into local markets
How may we adapt the marketing mix to global markets? (Place)
Place - identify the best distribution channel
- convenience
available technology as many transactions take place via e-commerce
How can we adapt the marketing mix’s product to global markets?
how much they should modify or adapt their products to meet new markets
They need to consider if they will take an ethnocentric, polycentric or geocentric approach
How can we adapt the marketing mix’s price to global markets?
Take into account customer incomes and cost of production and taxes
State of the economy - impact pricing strategy
and the product life-cycle of the product
How can we adapt the marketing mix’s promotion to global markets?
adapted to meet language and cultural differences
This is need to find the most effective method of promotion
Why would the Ansoff’s matrix be a good strategic planning for businesses going global?
Globalisation generates risk so we need to have the right growth strategy
Allows them penetrate global markets and achieve long-term success
what strategy should do if they go into existing global markets?
What may businesses have to do ?
Market penetration
- selling existing products to existing markets - Carries the least risk - business already operates in a market - customers are already familiar with the business
product development -
selling existing products to new markets
may have to adapt the product to meet the needs of customers in global markets - have different preferences
What are the two strategies under an of matrix that business should do when going into new global markets?
What kind of strategy is this And why?
What does this require?
Diversification
new products for new markets
A high risk strategy - limited knowledge about the market
requires a deep understanding of local market conditions and consumer behaviour to
Market development- new products into existing markets and identify needs and preferences
may have to adapt the marketing mix for local consumers
What are the three different marketing approaches?
Ethnocentric - the belief that the company’s home country culture and marketing practices are superior to those of other countries
There will be no changes to the products for overseas customers and marketing of the product will be the same
Polycentric- adapt their marketing strategy by tailoring their products to the local market
geocentric- a mix of the polycentric and ethnocentric approach
This approach utilises the benefits of standardised products - tailors products to meet the needs of local markets overseas
What does the geocentric marketing approach maintain?
maintaining a consistent brand image across markets
What are the positives and negatives of the
Ethocentric marketing approach?
Positives
economies of scale as the product is standardised and produced on a large scale
Costs are also lower as there is no investment into product development
Negatives
The business could potentially lose sales as the product - not tailored to the needs and wants of markets overseas
This approach can lead to cultural insensitivity may not resonate with local customers in other countries
What are the positives and negatives of the polycentric marketing approach?
Positives
Sales are likely to increase as the product is tailored to meet the needs of customers
This helps to develop brand loyalty in overseas markets
Negatives
Product development to adapt the product may increase average unit costs
There will also be additional costs in market research to find out about the market
What are the positives and negatives of geocentric marketing approach?
Positives
Sales are likely to increase as the product is tailored to meet the needs of customers
This helps to develop brand loyalty in overseas markets
Negatives
There will be costs associated with the product development and menu changes
What is a global merger?
A permanent agreement between two businesses from two different countries to join together
What is a joint venture? For how long?
When two businesses joined together to share knowledge resources and skills - to form a separate legal entity for some time
What are the five reasons for merges or joint merger ?
Risk spreading
entering Newmarket and trade blocks
Acquiring national and International brand names and patents
Securing resources and suppliers
Maintaining/increasing global effectiveness
What risk spreading under the reasons for global mergers and joint ventures?
What are they associated with?
What if there is this in one in one market?
Fluctuating economical conditions -
economic downturn in one market,
- may still gain sales in another market that is less affected
How is entering a market are reason for growth merger and joint venture?
What is it a quicker method of?
What made the government insist?
Entering a market using a merger/joint venture is a quicker method than using organic growth
Can operate as joint ventures as they can benefit domestic businesses
What does entering a new market and trade bloc as reasons for global merges and business ventures?
Allows us to gain knowledge and business for the local market
What is a patent? Under reasons for global merges and joint ventures?
Legal right the government to businesses and individuals to make use or sell an invention or exclude others from doing so.
What kind of process is acquiring national brands under reasons why we have global mergers and joint ventures?
What is it a good access to?
Long and expensive
access to intellectual property or a business with a strong reputation
How may a global merger or joint venture help secure suppliers?
What does this allow?
Two businesses constantly merge and get access to resources -
gain access to resources quickly helps to speed up the production process
What do businesses have to be aware of when doing a global murder or joint venture for access to suppliers?
ethical issues concerning the resources - can damage the reputation of the business
What can businesses benefit from when becoming a merger and joint venture?
Benefit from economies of scale - decrease costs - can lead to increases sale and market share
What are the positives and negatives of global mergers and joint ventures? (6)
Positives
Economies of scale - costs spread over larger output - lead to increased profit margins
Diversifying risk - can still generate revenue from other products
Opportunity to enter new markets- may be closed to the business
Negatives
The initial costs of merging - be significantly high
No guarantee may not be successful
Diseconomies of scale - lack of communication issues
culture clash - leading to poor sales
What are the five things we need to consider with diversification?
Potential market growth
infrastructure,
political stability,
ethical considerations
Nature of your product and service
What is not the best when you’re trying to do market penetration under ansoffs matrix?
Saturated market
What is cultural diversity?
Recognition that different groups around globe have different interests and values
Why is international business communication important for cultural diversity?
Cutest move International business greeting rituals are important - settle negotiation
What is the global niche market?
Smaller parts of the global market - customers are more than one country - specific needs that remain unfulfilled by global market
What is the global niche market made up of?
Several small markets
Why have global niche markets been able to grow? (2)
Globalisation
influence of social media platforms - help promote niche to wider audiences
What are the positives and negatives of being in a global niche market?
Positives
Limited level of competition
Products price inelastic - can charge a higher price
Spread risks across market
Negatives
Decrease in sales volume- less opportunities to achieve economies of scale
High profit risk additional competition
Each niche is slightly different - adds to cost
What is cultural diversity?
Recognition of people different interests and values across the world
What business is aware of under cultural differences?
aware of how businesses and customers interact in new global markets
What are the six cultural and social factors businesses need to take within a global market?
Cultural differences
Different taste
language
Unintended meanings
Inappropriate translations
inappropriate branding
What do businesses need to understand under cultural differences under cultural and social factors in global markets?
cultural differences - beliefs - adapt their marketing strategies accordingly
What do tastes and preferences do under global cultural factors?
Vary from region to region
What do businesses have to ensure under test and preferences?
ensure that their products and services are adapted to meet local preferences
What do businesses have to ensure on the language?
That product names are translated properly and accurately
- understanding idioms
How may unintended meanings arise under cultural factors ?
Things may have different connotations in different cultures
What kind of use inappropriate translations lead to under cultural factors?
lead to serious consequences for businesses,
loss of credibility + reputation
What my business is due to avoid the inappropriate translation under cultural factors?
Can consult in local experts
When can inappropriate branding occur?
When symbols are wording can be offensive or inappropriate
How do we adapt The marketing mix to suit global niches?
price - find a pricing that will be attractive - competitive
towards the audience set high prices - premium
place - find distribution strategy that would be best suited - target market - exclusive
product - modify the product to meet specific needs of the global niche market
promotion- marketing communication strategies that resonate with the target audience -
exclusive magazine - target audience
What happens if a niche product is successful in one country on global market?
Does not guarantee it will successful in other countries
- may have additional costs
What are high context cultures?
Communicating in ways that are implicit and rely heavily on context
What are low contact cultures?
Communication is explicit and precise ways
What are the seven impacts of MNCs on the local economy?
Local labour and job creation
Wages and working conditions
Local businesses
Local community and the environment
Improvement of infrastructure
Contribution to local government taxes
helping local communities
What is a multinational corporation ?
A business registered in one country but has manufacturing operations/outlets in different countries
What are the positives and negatives of MNC’s towards local labour and job creation?
Positives
job creation
competitive wages
better working conditions than local businesses
Negatives
Exploit local workers
establish production facilities where labour costs are lower and pay relatively low wages
May not create jobs may just relocate from own countries
What are the positives and negatives of having an MNC for local businesses?
Positives
to boost the local economy creating opportunities for local businesses
population is benefiting from higher wages- spend more on local business products
MNCs may utilise the services of local
businesses
be potential opportunities for joint ventures and partnerships with MNCs who seek to gain knowledge of the local market
Local firms may learn new skills and production methods that allow them to become more efficient
Negatives -
MNCs reduce the supply of workers available to local businesses if they offer better pay and working conditions
able to produce at a lower cost and compete with local businesses, they may lose local customers
If local businesses lose customers, this may also cause unemployment for workers of local businesses
What are the advantages and disadvantages of MNCs towards the local community and the environment?
Positive
locals benefit from job opportunities
MNCs create better infrastructure
May have charitable incentives
increase the amount of coperate tax charged
negatives
cause damage to local environment
Extract natural resources
What are the 6 impacts MNC’s have on the national economy?
FDI flows
Balance of payments
Technology and skill transfer
Consumer
business culture
tax revenue and transfer pricing
What is reverse engineering?
Analysing products designed by taking it apart
What is Transfer pricing?
A technique MNCs use to avoid relatively high tax rates to prices which one subsidiary charges another for components and finish goods
What is FDI ?
Amount of money they spend on establishing the facility within a foreign country
What are the four things MNCs do with FDI flows towards the national economy?
Increase an income- if flows lead to higher GDP
increase in tax revenue
More employment
reduction national debt - due to the government receiving more tax from MNCs country reduce that are more financially stable
What is a balance of payments?
What do MNC’s do?
A document that shows the financial transactions between the country and the rest of the world
MNCs can help to improve the balance of payment of a country as the FDI flows into the country will help improve their balance of payments
Exports will generate further in flows
How can MNCs negatively impact balance of payments?
If they send profits back to their country - be represented as a outflow of payments
What are the positives and negatives of FDI?
Positives
initial lump sum of money that enters the country to pay for the investment
This money enriches local firms or citizens who now have more money available to spend in the economy
If this money is reinvested back into the local economy, it may help to generate new jobs and boost economic growth
Cons
Assets from the home country are now owned (or partly owned) by foreign businesses
may not reinvest the money into the local economy but may move it abroad/offshore
How do MNCs on a national economy impact consumers? However?
More choice
high-quality - use of good tech
lower prices- France will be made more cheaper more effective because of technology and production
better living standards- because of high employment people have more disposable income
However, this may force domestic businesses out of the market
How do MNCs impact on national economy technology and skill transfer?
MNCs can bring new technologies and skills to local businesses
help to improve efficiency and productivity,
helping domestic businesses to become more competitive in the national and international market
Horizontal transfers are when knowledge is transferred across the same industry
Vertical transfers may be forward or backwards
What can businesses do to rival products
under technology and skill transfer as an impact of MNCs on the national economy?
Reverse engineering - they can take apart rival products to analyse its design
How do MNCs have an impact on the business culture? Negatives ?
Domestic businesses may be influenced by the business culture of MNCs
Workplace - become more open- using Kaizen
Entrepreneurship is encouraged
Negatives
they can encourage unethical behaviour
- company culture of exploitation
What is transfer pricing?
How do MNC’s impact the national economy through tax revenue and transfer pricing?
method used by MNCs to shift profits from where they are generated to countries with lower tax rates - more venues made, but there’s less tax than made by the government in the host country
What is a joint venture? What is this usually ?
A separate business entity created by two or more parties involved shared ownership returns and risks
50/50
What are the three positives and four negatives of a joint venture?
Gain knowledge and expertise
Acquire opinions and that may be good for the future
reduce risk of growth strategy - market diversification
Negatives
clash of cultures, objectives clash
imbalance of levels of experts and investments
What if it fails who has responsibility?
What is licensing?
Process that allows business to sell a product
