chapter 7 world market Flashcards
Countertrade
the practice using barter trade rather than paying for traded goods.
Trade Feedback Effect
refers to imports impacting exports and vice versa
Balance of Trade
the difference between the value of exports and imports
What variables influence why some companies and industries in a country succeed globally while others lose ground or fail?
Answer:
According to Michael Porter, they include:
• Factor conditions, such as natural resources
• Demand conditions
• Related and supporting industries
• Company strategy, structure and rivalry
Four Trends in the past decade have had significant impact on global marketing
- Decline of Economic Protectionism
- The Rise of Economic Integration
- A New Reality: Global Competition among Global Companies for Global Customers
- Emergence of Networked Global Marketplace
WTO
world trade organization:
an institution that sets rules governing trade between its members through a panel of experts who (a) decide on trade disputes between members and (b) issue binding decisions.
1995, Jan 1
it accounted for 90% world trade in 1995, CA is a member
Protectionism
shielding one or more industries from foreign competition through the use of quota and tariffs
Tariffs
An entry tax on goods and services serving to raise prices of imported goods and services
Quota
A restriction placed on the amount of products allowed to enter a country
three examples of economic integration
the European Union (or simply, EU), the North American Free Trade Agreement (NAFTA), and Asian free trade areas
other examples: ASEAN
APEC
MERCOSUR
Golf Cooperation Treaty
Strategic alliances
agreements amongst two or more firms to cooperate for the purpose of achieving common goals such as competitive advantage or customer valve creation
In Global Companies marketing competition takes the forms of (2)
- Multi-domestic Strategy
- Global marketing strategy
Global marketing strategy
the practice of standardizing marketing activities when there are cultural similarities and adapting when they are dissimilar.
Multi-domestic Strategy
firm’s marketing strategy adapted for each country-market
Once a company has decided to enter the global marketplace, it must select a means of market entry. Four options exist
: (1) exporting, (2) licensing, (3) joint venture, and (4) direct investment.
indirect exporting
no overseas contacts but wants to market abroad (very quick, low profit, low info).
what is joint venture
an arrangement
a foreign company and a local firm invest jointly together to create a local business
sharing ownership, control, and profits of the new company
what is direct investment
A domestic firm invests and owns a foreign subsidiary or division in a another country
Global Brand
a brand marketed under the same name in multiple country-markets
with similar and centrally coordinated marketing program
Global Consumers
to groups of consumers living
in different markets
with similar needs
wants and seeking similar benefits
Among which countries was the North American Free Trade Agreement was designed to promote free trade?
effective since 1994, lifted many trade barriers between Canada, the United States, and Mexico.
When foreign currencies can buy more Canadian dollars, are Canadian products more or less expensive for a foreign consumer?
Canadian products are less expensive for a foreign consumer when foreign currencies can buy more Canadian dollars.
What mode of entry could a company follow if it has no previous experience in global marketing?
Indirect exporting is ideal for the company that has no overseas contacts but wants to market abroad.
3 Product and Promotion Strategies for global market
- product extension (the same product in other countries)
- product adaptation ( changing the product in some ways to make them more appropriate to the other country- market)
- product invention: design a new product to satisfy the unmet common customer needs or needs of speical groups
- dual adaptation
5 communication adaptation (adapt promotion only)
Communication requires 6 steps (elements)
a source, a message, a channel of communication, a receiver, and the processes of encoding and decoding.
Examining only three Product Characteristics for Global Expansion Strategies
- needs
- condition of use
- buying ability
2 Pricing Strategy in global market
- Dumping: when a firm sells a product in a foreign country below its domestic price or below it actual cost
- Grey market: called parallel importing, is when price disparities lead to unauthorized channels of distribution imports
distribution strategy often determined by ?
a country’s stage of economic development
Distribution include
availability and quality of retailers and wholesalers as well as transportation, communication, and warehousing
Products may be sold globally in three ways
Product extension,
Product adaptation, and
Product invention.
