Chapter 1: Global Environmental Drivers Flashcards
International Marketing
Consists of the activity, institutions, and processes across national borders that creates, communicates, delivers, and exchanges offerings that have value for stakeholders and society.
According to the international marketing definition, international marketing has to be from _______, and not from __________.
Institutions and not from individual people.
According to the international marketing definition, what are “offerings”?
Offerings can be goods, services, information, places, ideas, etc.
What is the common characteristic of offerings?
That they are used to satisfy customer needs.
What is the formula for value?
Value = Benefit - Costs
In the definition of international marketing, what are stakeholders?
Stakeholders can be employees, management, neighbourhoods, governments, distributors, shareholders, etc.
What is the only difference between domestic and international marketing definitions?
The only difference is “across national borders”
What is AMA?
American Marketing Association
Forms of international marketing
- Export–import trade
- Licensing
- Joint ventures
- Wholly owned subsidiaries
- Turnkey operations
- Management contracts (an alternative to FDI)
What is licensing?
We allow another institution to use our IPR (Intellectual property rights).
What is joint venture?
Company A owns 50% of company C, and company B owns the other 50% of company C. Both companies are in different countries.
What are wholly owned subsidiaries?
Company A does not cooperate with Company B in the other county. An advantage is that you have complete control. But a disadvantage is that you have to make a huge investment initially.
What are turnkey operations?
A type of project that is constructed so that it can be sold to any buyer as a completed product. For instance, the forthcoming Jewar Airport. Zurich Airport International, a Swiss corporation, is creating it. The airport will be turn over to the local government for operation after it has been fully construct.
What questions need to be addressed in international making decisions?
- Where are my current and potential customers?
- Does my need-to-have market have borders?
- Does international activity increase risk?
- What marketing adjustments are or will be necessary?
- What threats from global competition should I expect?
- How do innovation and entrepreneurship change the global marketplace?
- What are my strategic global alternatives?
What is the difference between current and potential customers?
Current customers are within our country, and within the markets we have been in. The potential customers are in the market you are planning to enter.
What is one way that global competition comes from?
Companies from other foreign markets in the same market.
Within the last decade, world trade represents a growth of….
140% for trade in both merchandise and services.
What are two things that have made production efficient?
International specialization and cross-sourcing.
What is specialization?
Theory of absolute advantage from Adam Smith.
For example, Africa is good at making coffee, but Japan is good at manufacturing technology, so Japan should not be focusing on growing coffee.
What is cross-sourcing?
A manufacturer uses a single supplier for one part or service, and another supplier with the same basic capabilities for a different part or service. The idea behind cross sourcing is that each supplier can act as a backup for the other supplier in the event of a disruption.
How have new emerging economies liberalized their economic systems?
- Bringing billions of new consumers into the global economic system
- Offering a vast array of new marketing opportunities
- Redefining the way business is done through revolutionary technologies
What is BRICS?
Brazil, Russia, India, China, South Africa. These are the emerging markets/economies.
What are trading blocs?
- Encourage trade relations among member countries
- Regulate the trade and investment flows of nonmember countries
- E.g., European Union in Europe, NAFTA in North America
What is REI?
Regional economic integration
What are 4 types of REI?
- free trade areas
- customs unions
- common markets (also called single markets)
- economic unions.
How has world trade forged a network of global linkages?
Binding countries, institutions, and individuals closely.
How have global linkages become more intense on an individual level?
Communication has built new international bridges.
How can you bind a country?
You are a manufacturer in Canada and now you have a local distributor in Mexico.
How can you bind individuals closely?
By having 4 people from 4 different countries and they all buy the same iPhone.
What is GCCP and LCCP?
GCCP: Global consumer culture positioning.
LCCP: Local consumer culture positioning.
What is an example that describes the difference between GCCP and LCCP?
GCCP: We are all consumers of iPhones.
LCCP: In a farmers market all the vegetables that are sold today are grown locally.
How does Global technological innovation in marketing directly affect the efficiency and effectiveness of business activities
- Products are produced more quickly
- Obtained less expensively from sources around the world
- Distributed at lower cost
- Customized to meet diverse clients’ needs
- Enable firms to separate their activities by content and context
The level of global investment has:
- Resulted in the buildup of international debt by governments
- Affected the international value of currencies
- Triggered major foreign direct-investment activities
Policymakers find it difficult to…
isolate domestic economic activity from international market events.
How are regulations imposed?
- Trade barriers
- Tariffs
- Quotas
- Import regulations
Trade barriers, tariffs, quotas, and import regulations have been controlled by…
International agreements that regulate trade restrictions. Particularly through the World Trade Organization (WTO).
What is GATT?
General agreement of trade and tariffs
What is GATS?
General agreement on trade of service.
What is TRIPS?
Trade Related Aspects of Intellectual Property Right
The growth of global business activities offers increased opportunities, but these opportunities require careful exploration:
- An awareness of global developments
- An understanding of their meaning
- A development of capabilities to adjust to change
How do you explore the international opportunities?
Through information collection.
What do we talk about when we talk about information collection?
We talk about the 3 Cs resources: Company, competitors, customers
What is MIS?
Marketing intelligence system
How can we find information on competitors?
- Customers. They buy our products and the competitor’s products.
- Distributors
- Suppliers
- Consultants. They might not know about our own company but they know about the industry.
How can we know customers’ information?
- MR (Marketing research). You don’t do the information collection within your country but you do it globally.
How do you understand information?
You do a situation analysis. In a situation analysis, you analyze your information in macro and micro.
What is STP?
Segmentation targeting positioning.
What does the international marketing definition indicate?
- It indicates that international marketing very much retains the basic marketing tents of value and exchange.
- There is also the focus on stakeholders and society whose present positions are to be improved.
What is the international marketer subject to?
- New set of macroenvironmental factors
- different constraints
- frequent conflicts resulting from different laws, cultures, and societies.
In the areas of social responsibility and ethics, what is the international marketer faced with?
a multicultural environment of differing expectations and often inconsistent legal systems when it comes to monitoring environmental pollution, maintaining safe working conditions, copying technology or trademarks, or paying
bribes.
What has to be done with long-term repercussions of marketing?
the long-term repercussions of marketing actions need to be understood and evaluated in terms of their societal impact, using not just today’s criteria but considering also the long-term perspective of future affected parties.
Global growth has typically outperformed…
the growth of domestic econimies
How has new technologies changed the way we do business?
By allowing us to both supply and receive products from across the world by using the Internet.
What are examples of trading blocs?
- The European Union in Europe
- NAFTA in North America
- MERCOSUR in Latin America
- ASEAN in Asia
What do trade blocs do?
They encourage trade relations among their members, but, through their rules and standards, they also affect the trade and investment flows of nonmember countries.
How can advances in technology allow firms separate their activities by content and context? What does this mean?
Firms can operate in a “market space” rather than a marketplace by keeping the content while changing the context of a transaction. For example, a newspaper can be distributed online globally rather than house-to-house on paper, thereby allowing outreach to entirely new customer groups.
Why must any policy considerations be seen in light of international repercussions?
Due to influences from global trade and investment.
How has the relationship between trade flows, currency flows, and exchange rates changed?
Trade flows traditionally have been used to determine currency flows and therefore the level of the exchange rate. In the more recent past, currency flows took on a life of their own. Independent of trade, they set exchange rates, which are the values of currencies relative to each other. These exchange rates in turn have now begun to determine the level of trade.
By how much do currency flows outnumber trade flows?
Currency flows outnumber trade flows by 100 to 1.
What are risks that interdependence brings?
- Dislocations of people and economic resources
- A decrease in a nation’s capability to do things its own way.
How can a country remain a player in the world economy?
Governments, firms, and individuals need to respond aggressively with
- innovation
- process improvements
- creativity.
How can international activities be crucial to a firm’s survival and growth?
- By transferring knowledge around the globe, an international firm can build and
strengthen its competitive position. - Firms that heavily depend on long production runs can expand their activities far beyond their domestic markets and benefit from reaching many more customers.
- Market saturation can be avoided by lengthening or rejuvenating product life cycles in other countries.
- Production sites once were inflexible, but now plants can be shifted from one country to another and suppliers can be found on every continent.
- Cooperative agreements can be formed that enable all parties to bring their major strengths to the table and emerge with better products, services, and ideas than they could produce on their own.
- Multinational corporations face a lower risk of insolvency and pay higher wages than do domestic companies. For example, in the United States, jobs supported by goods exports pay 13 to 16 percent above the average wage.
- At the same time, international marketing enables consumers all over the world to find greater varieties of products at lower prices and to improve their lifestyles and comfort.
One key facet of the marketing concept is…
adaptation to the environment, particularly the market.
What happens to executives that believe their international customers are just like the ones the firm deals with at home?
This mistake leads to:
- Inefficiency
- lack of consumer acceptance
- sometimes even corporate failure.
Firms increasingly understand that many of the key difficulties encountered in doing business internationally are…
marketing problems.
How are firms and individuals greatly affected by international trade?
Whether willing or not, they are participating in global business affairs.
- Some individuals have lost their workplaces and experienced reduced salaries.
- At the same time, global business changes have increased the opportunities available. Firms can now reach many more customers, product life cycles have been lengthened, sourcing policies have become variable, new jobs have been created, and consumers all over the world can find greater varieties of products at lower prices.
