Business 4 Flashcards

Question

Different marketing approach

Answer 1

Domestic/ ethnocentric This approach is based on 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 • E.g. Apple sells standardised products across their global markets e.g. iPhone, Advantages - can benefit EOS as the product is standardized and produced on a large scale - cost also lower as there’s no investment in product development to adapt products into new markets. Also not required for market research - brand consistency Disadvantage -potentially lose sales as the product not tailored to needs and wants of market overseas - approach can lead to cultural insensitivity and may not resonate with local customers in other countries Geocentric/. Mixed approach This approach utilises the benefits of standardised products but also tailors products to meet the needs of local markets overseas while maintaining a consistent brand image across markets Advantages -. Sales likely to increase as it’s tailored to meet the needs of customers - help develop brand loyalty in overseas markets Disadvantage- Cost associated with product developments Requires detailed market research Expensive to implement due to increased training and relocation costs Polycentric -The business adapts their marketing strategy to the local market, providing products tailored for that market. Advantages - By tailoring products and strategies to local needs, increase in sales and local brand loyalty due to the market orientation of the product Better cultural understanding: Companies adopting a polycentric approach tend to have a deeper understanding of local cultures . Disadvantages-Difficult to compete with established local brands b. Lack of global consistency- won’t gain EOS A drawback is that average product costs will increase due to new product development

Answer 2

Place-. Business have to identify the best channel for distribution or get the p/s to the customer in a particular market Also need to consider the available tech as many transaction take place via e commerce Product- business need to consider how much they should modify or adapt their products to meet new market overseas-consider on ethnocentric or geocentric Price- should consider consumer incomes, cost of production and taxes - also consider the product life cycle the product is at within that stage - also the state of the economy(. Recession or boom) Promotion- needs to be adapted to meet to language and cultural differences. Maybe social media is an effective method

Answer 3

Ansoff's Matrix is a strategic planning tool that helps businesses identify potential growth opportunities by analysing their product and market strategies • The matrix consists of four growth strategies - market penetration, market development, product development, and diversification • Expanding outside of domestic markets generates risks for the business, so they need to ensure that they adopt the right strategy • By doing so, businesses can effectively penetrate global markets and achieve long-term success Market penetration Carries the least risk - if a business already operates in a market and launches another product, customers are already familiar with the business Market development • Businesses may have to adapt the product to meet the needs of customers in global markets who have different preferences o This strategy carries more risk as customers may not understand the product Diversification • This strategy involves businesses developing new products for new markets • A high risk strategy as the business may have limited knowledge about the market • This strategy requires a deep understanding of local market conditions and consumer behaviour to ensure that the new product and market are a good fit for the business Product Development • A growth strategy where a business aims to introduce new products into existing markets • This requires market research to identify the target market's needs and preferences, developing products that meet those needs, and adapting the marketing mix to ensure that the products resonate with local consumers

Answer 4

Cultural diversity recognises the ideas, customs and social behaviour of a particular people or society in different global markets • Businesses need to take into account the different groups of people have different interest and values 0 E.g. In India, beef and pork are not consumed for religious reasons. Fast food outlets have adapted their menu to take this into consideration

Answer 5

- global niche market are a small segment of the global market that are characterized y unique and specific needs and preferences Features - excellent customer service = due to customers usually paying higher prices for the p/s Innovation- ensures that the product are highly differentiated and maintain USP that meets the needs of the target market Prioritize profit over market share = so they can re invest into improving the product/ service Emphasis on quality= need to ensure its exceptional as they are targeting wealthier customers who pay for high value products Understanding needs/ wants of customers

Answer 6

- price- involves offering a pricing strategy that is attractive to the target audience -A business that produces organic products can offer competitive prices similar to mainstream products to attract consumers who are looking for healthy and sustainable options. Alternatively, a business that produces sustainable fashion can offer a premium price that reflects the exclusive and high-quality nature of the product Promotion Adapting the promotion to suit a global niche market involves using marketing communication strategies that resonate with the target audience E.g. Abusiness that produces luxury products can use influencer marketing to communicate the exclusivity of the product to wealthy customers • Place Adapting the place to suit a global niche market involves choosing a distribution strategy that is convenient for the target audience E.g. A business that produces gluten-free products can distribute them through local specialty stores and online platforms to reach customers

Answer 7

• Businesses need to understand cultural differences in areas such as values, beliefs, customs, and traditions, and adapt their marketing strategies accordingly • Tastes and preferences vary greatly between cultures and regions • Businesses must ensure that their products/services are adapted to meet local preferences Businesses must ensure that their marketing messages are translated accurately and appropriately= otherwise can damage the brand and reputation and loss of credibility . So business should consult local experts Unintended meanings can arise when businesses use images, symbols, or language that have different connotations in different cultures • E.g. The colour white symbolises purity andi innocence in Western cultures, but it represents death and mouming in some Asian cultures Shouldn’t be offensive

Answer 8

- multinational company (MNC) is a business that has operations in more than one country. Such as Starbucks Factors such as globalization have control growth in MnCs Key Reasons for the Growth of MNCs Gaining access to lower costs of production Many MNCs have taken advantage of lower production costs from operating in developing economies. In some cases this can be achieved by outsourcing and offshoring production to suppliers based in those economies Avoiding Protectionism

Answer 9

Advantages - lead to job creation for the local community - mnc may offer more competitive wage than local business -may offer better condition working than local business Disadvantage - may exploit workers if employment regulation weak or not enforced - tend to establish production facilities in regions where labour cost lower = pay relatively low wages - may not create jobs for local workers as they may relocate worker from their own country to work abroad Advantages for local business - help boost the local economy creating opportunity for local business -if population beneftting from higher wages= may spend more on local business products Potential opportunities for joint ventures and partnerships with MNC who seek to gain knowledge of the local market = may learn new skills and production method that allow them to become more efficient Disadvantage - MNCs ‘at reduce the supply of workers available to local business if they offer better pay and working conditions - MNC able to produce at lower cost = compete with local business= may lose local customers - If local business lose customers = may cause unemployment for workers of local business Advantages for local community and environment Local residents benefits form job opportunities Mnc often invest to improve infrastructure = better roads, transportation, access to water and electricity =help local community in addition to helping the MNC operate more efficiently - mnc may have to pay taxes to local authorities = these funds can be reinvested back into local community Disadvantage - may cause damage to local environment during the production process

Answer 10

— there will be an inflow of money into the country if MNCs decides to invest into a country through FDI Advantages - initial large sum of money that enter the country to pay for the investment =this money enriched local firm or citizens who now have more money available to spend in the economy - if this money is reinvested back into local community = generate new jobs, boost economic growth Disadvantages • Assets from the home country are now owned (or partly owned) by foreign businesses • The local firms or individuals who have sold the asset, may not reinvest the money into the local economy but may move it abroad/offshore —MNC can help improve the balance of payment of a country as the FDI flows into the country. Any goods and services exported for sale by the MNC will generate further inflows to the country s balande of payments Negative impact: If the MNC buys raw materials or equipment abroad (imports), there is a flow of money out of the country • If the MNC send profits back to their home country, it will also represent a flow of money out of the country — mnc can bring new tech and skills to local business = improve efficient and productivity = helping domestic business becoming more competitive in the national and international markets —consumers have wider choice of g/s Lower price of MNC pass their cost advantages in form of lower price Better quality Improved living at = due to higher income and job creation Negative impact: However in the long run, MNCs can push domestic businesses out of the market leaving customers with less choice • This may lead to MNCs exploiting customers with higher prices and low quality products as they have limited choice — can impact business culture = as it can encourage entrepreneurship However MNC may demonstrate unethical behavior and have a company culture of exploitation — potential to get tax revenue=improve public service and infrastructure However, MNCs seek to maximise profits and will try to reduce their tax liabilities • Transfer pricing is a method used by MNCs ty shift profits from where they are generated to countries with lower tax rates

Answer 11

Business ethics refers to the principles and norms that govern business behaviour Unethical actions can damage the brand and result in a loss of profitability • Unethical actions are usually pursued as they result in higher levels of profit for the business (or its owners) • Customers around the world are putting more and more pressure on brands to behave ethically

Answer 12

- a stakeholder is an individual or group that has an interest or can be affected by a business Different stakeholder have different level of power and different priorities= create the potential for conflict Management v workers Management may be more focussed on output or reducing costs, than on worker safety or creating a positive working environment— want to be safe and have a comfortable environment in which to work Owner vs management • The owners (shareholders) want management to maximise the business profits and, for example, be less interested in the mental well-being of the employees • The management work daily with the employees and will often sacrifice some profit in the interest of looking after their workers health and mental well-being Company profit vs resource depletion The owners (shareholders) aim to maximise output so as to generate increasing levels of profit • Higher output requires more rapid usage of natural resources and generates more environmental damage

Answer 13

• MNCs may demonstrate unethical behaviour by exploiting workers in LEDCs by paying them lower wages Also behave unethically by providing poor working conditions in order to cut cost Another issue is child labour where school aged children are working extremely long hours

Answer 14

Waste management Many developed countries have regulations about how businesses should dispose of their waste Developing countries -There is usually poor waste management infrastructure • MNCs can also dispose of waste in LEDCs at a cheaper cost which allows them to maintain their high profits Emissions- often released from factories or from the products made by MNCs

Answer 15

• The supply chain consists of all the suppliers involved in the manufacturing of product/service • Many MNCs have suppliers in different countries and increasingly they are held accountable for the working conditions of these suppliers • Many MNCs are now taking action to reduce unethical labour practices as part o their Corporate Social Responsibility (CSR) Some MNC have manufacturing facilities in counties where child labour is common= using child labour in their supply chain = face backlash which can damage their brand and affect sales Also exploitation of labour= low wage and poor working conditions MNCs are under increasing pressure from governments, customers and institutions such as the International Labour Organisation to take action to ensure their product/services do not involve exploited labour

Answer 16

—misleading labeling Labelling must comply with the regulation of the country • The information must be correct and not include any false information aimed at generating higher sales • Examples of misleading information include false information about Size, feature, functionality — promotional activities should not be offensive or illegal

Answer 17

-Political influence enforce laws and regulations which businesses need to adhere to • When MNCs establish themselves in a new country, they must work within the institutional framework of that country • MNCs in developed countries are often able to exert pressure on national governments through lobbying to create favourable conditions for their business MNCs in developing countries can influence governments as they may establish deals which are beneficial to politicians like bribe Legal control Governments can enforce legislation and regulation to control the operations of MNCs E.g protecting producers and consumers from anti-competitive or unfair practices = can boost economy Pressure groups Pressure groups are organisations that operate to influence company and public policy in the interest of a particular cause - do lobbying by taking issue directly to gov, protest, strikes Social media -involves the interaction of people via electronic devices using social media platforms • MNCs can use social media to their advantage to spread awareness and prom their business on a global scale • However social media also enables stakeholders to freely share information about the unethical behaviour of MNCs • MNCs are forced to address the issues raised on social media as there is a hi level of public exposure and information can spread rapidly • MNC influence on social media may be limited in some countries as they have regulations in place to manage social media power • E.g. The Chinese and Russian governments closely monitor social media to regulate information being spread