Chapter 16 Flashcards
Why is corruption an increasing problem?
Official in several countries often award business not to the best bidder but to the highest briber
What is it important for Canadian companies to understand the international trade system?
When selling to another country, a firm may face restrictions between nations
What are quotas?
Limits on the amount of foreign imports they will accept in certain product categories
What is the purpose of a quota?
To conserve on foreign exchange and protect local industry and employment
What are exchange controls?
Limit the amount of foreign exchange and exchange rate against other currencies
What are examples of non tariff trade barriers?
Biases against a companies bids, restrictive product standards, or excessive host-country regulations or enforcement
What is the General Agreement on Tariffs and Trade (GATT)?
Established in 1947 and designed to promote world trade by reducing tariffs and other international trade barriers
What is the World Trade Organization?
WTO replaced GATT in 1995 and imposes international trade sanctions and mediates global trade disputes
What are free trade zones and economic communities?
Groups of nations organized to work toward common goals in regulation of international trade
What is the European Union (EU)?
Formed in 1957 and set out to create a single European market by reducing barriers to free flows of products, services, finances, and labour among member countries and developing policies on trade with non-member nations
What is the North American Free Trade Agreement (NAFTA)?
Established a free trade zone among Canada, US, and Mexico. And it has eliminated trade barriers and investment among these three countries.
What are the two economic factors that reflect a country’s attractiveness as a market?
- Its industrial structure
2. Its income distribution
What does a country’s industrial structure mean?
It shapes its products and service needs, income levels, and employment levels
What are the four types of industrial structure?
- Subsistence economies
- A vast majority of people engage in simple agriculture - Raw material exporting economies
- Rich in one or more natural resources but poor in other ways - Emerging economies
- Fast growth in manufacturing results in rapid overall economic growth - Industrial economies
- Major exporters of manufactured goods, services, and investment funds
What is income distribution?
Industrialized nations may have low, medium, and high-income households. Companies in a wide range of industries are increasingly targeting even low and middle income consumers in emerging economies
What should companies consider when deciding to do business in another country?
A country’s attitudes toward international buying, government bureaucracy, political stability, & monetary regulations
Why should a company consider a country’s monetary regulations?
Sellers want to take profits in a currency of value to them
True or false: most international trade involves cash transactions
TRUE. Many nations have to little hard currency to pay for purchases from other countries
Why do some marketers worry about the impact of marketing strategies on global cultures?
Social critics claim that large American multinationals, such as McDonald’s aren’t just globalizing brands; they are Americanizing the world’s cultures
Why is exporting the simplest way to enter a foreign market?
A company may passively export surpluses from time to time, or may make an active commitment to expand exports to a particular market
What is indirect exporting?
Companies work through independent marketing intermediaries. Involves less investment because a firm does not require an overseas marketing organization or network
What is joint venturing?
Joining with foreign companies to produce or market products or services. A company joins with a host country partner to sell or market abroad
What are the four types of joint ventures?
- Licensing
- Simple way for a manufacturer to enter international marketing. A company enters into agreement with a licensee in a foreign market - Contract manufacturing
- A company makes agreements with manufacturers in a foreign market to produce its product or provide service - Management contracting
- A domestic firm exports management service rather than products - Joint ownership
- Consists of one company joining forces with foreign investors to create local business in which they share possession and control
What is direct investment?
The development of foreign-based assembly or manufacturing facilities
What is the main disadvantage of direct investment?
A firm faces many risks, such as restricted or devalued currencies, falling markets, or government changes
What is standardized global marketing?
Using the same marketing strategy approaches and marketing mix world-wide
What is adapted global marketing?
A producer adjusts a marketing strategy and mix elements to each target market, resulting in more costs but hopefully producing a larger market share and return
What is straight product extension?
Marketing a product in a foreign market without making any changes to the product
What is product adaptation?
Involves changing a product to meet local requirements, conditions, or wants
What is product invention?
Consists of creating something new to meet the needs of consumers in a given country
What is communication adaption?
Companies fully adapting their advertising messages to local markets
How do companies overcome price escalation when selling to less-affluent consumers in developing countries?
Many companies make simpler or smaller versions of their products that can be sold at lower prices
What are the two major links between a seller and final buyer?
- Channels between nations
- Moves company products from points of production to borders of countries within which they are sold - Channels within nations
- Moves products from their market entry points to final consumers
How do companies manage international marketing activities?
- Most companies first organize an export department
- Then they create an international division
- And they finally become a global organization
