Chapter 15: The Global Marketplace

Question 1

A global firm

Answer 1

is one that, by operating in more than one country, gains marketing, production, research and development (R&D), and financial advantages that are not available to purely domestic competitors.

Question 2

A company faces six major decisions in international marketing

Answer 2

1) Looking at the global marketing environment
2) Deciding whether to go global
3) Deciding which markets to enter
4) Deciding how to enter the market
5) Deciding on the global marketing program
6) Deciding on the global marketing organization

Question 3

The International Trade System

Answer 3

Canadian companies looking abroad must start by understanding the international trade system. When selling to another country, a firm may face restrictions on trade between nations. Governments may charge tariffs or duties, taxes on certain imported products designed to raise revenue or protect domestic firms

Question 4

free trade zones or economic communities

Answer 4

These are groups of nations organized to work toward common goals in the regulation of international trade. One such community is the European Union (EU)

Question 5

In 1994, the North American Free Trade Agreement (NAFTA)

Answer 5

established a free trade zone among the United States, Mexico, and Canada.

Question 6

Two economic factors reflect the country’s attractiveness as a market:

Answer 6

its industrial structure and its income distribution.

Question 7

In considering whether to do business in a given country, a company should consider factors such as

Answer 7

the country’s attitudes toward international buying, government bureaucracy, political stability, and monetary regulations.

Question 8

Barter

Answer 8

involves the direct exchange of goods or services

Question 9

Cultural Environment

Answer 9

Each country has its own folkways, norms, and taboos. When designing global marketing strategies, companies must understand how culture affects consumer reactions in each of its world markets

Question 10

Once a company has decided to sell in a foreign country, it must determine the best mode of entry.

Answer 10

Its choices are exporting, joint venturing, and direct investment

Question 11

Exporting

Answer 11

Entering foreign markets by selling goods produced in the company’s home country, often with little modification

Question 12

Companies typically start with indirect exporting

Answer 12

working through independent international marketing intermediaries

Question 13

Sellers may eventually move into direct exporting

Answer 13

whereby they handle their own exports. The investment and risk are somewhat greater in this strategy, but so is the potential return.

Question 14

Joint Venturing

Answer 14

joining with foreign companies to produce or market products or services

Joint venturing differs from exporting in that the company joins with a host country partner to sell or market abroad.

Question 15

There are four types of joint ventures:

Answer 15

licensing, contract manufacturing, management contracting, and joint ownership.

Question 16

Licensing

Answer 16

The company enters into an agreement with a licensee in the foreign market. For a fee or royalty payments, the licensee buys the right to use the company’s manufacturing process, trademark, patent, trade secret, or other item of value.

Question 17

Contract Manufacturing

Answer 17

in which the company makes agreements with manufacturers in the foreign market to produce its product or provide its service

Question 18

Management Contracting

Answer 18

the domestic firm provides the management know-how to a foreign company that supplies the capital. In other words, the domestic firm exports management services rather than products.

Question 19

Joint Ownership

Answer 19

ventures consist of one company joining forces with foreign investors to create a local business in which they share possession and control. A company may buy an interest in a local firm, or the two parties may form a new business venture.

Question 20

Direct Investment

Answer 20

The biggest involvement in a foreign market

the development of foreign-based assembly or manufacturing facilities

Question 21

Standardized global marketing

Answer 21

essentially using the same marketing strategy approaches and marketing mix worldwide

Question 22

adapted global marketing

Answer 22

the producer adjusts the marketing strategy and mix elements to each target market, resulting in more costs but hopefully producing a larger market share and return.

Question 23

Five strategies are used for adapting product and marketing communication strategies to a global market

Answer 23

three product strategies and then turn to the two communication strategies.

Question 24

Five Global Product and Communications Strategies

Answer 24

1) Straight product extension
2) Product adaptation
3) Product invention
4) communication adaptation
5) Dual Adpation

Question 25

1) Straight product extension

Answer 25

means marketing a product in a foreign market without making significant changes to the product

Question 26

2) Product adaptation

Answer 26

Involves changing the product to meet local requirements, conditions, or wants.

Question 27

3) Product invention

Answer 27

consists of creating something new to meet the needs of consumers in a given country.

Question 28

4) communication adaptation

Answer 28

adapting their advertising messages to local markets

Question 29

whole-channel view

Answer 29

The first link, channels between nations, moves company products from points of production to the borders of countries within which they are sold. The second link, channels within nations, moves products from their market entry points to the final consumers.

The whole-channel view takes into account the entire global supply chain and marketing channel.

Question 30

Companies manage their international marketing activities in at least three different ways:

Answer 30

Most companies first organize an export department, then create an international division, and finally become a global organization.

Question 31

An international division’s corporate staff consists of

Answer 31

marketing, manufacturing, research, finance, planning, and personnel specialists.

Question 32

It plans for and provides services to various operating units, which can be organized in one of three ways

Answer 32

geographical organizations, with country managers who are responsible for salespeople, sales branches, distributors, and licensees in their respective countries.

world product groups, each responsible for worldwide sales of different product groups

Finally, operating units can be international subsidiaries, each responsible for their own sales and profits.