Exam 1 Flashcards
Advantages of International Marketing for consumers
- Increases the standard of living
- Access to more goods and innovations
- more needs/wants satisfied
Disadvantages of International Marketing for consumers
- Impact on local culture
- Quality
- Difficult to enforce laws
(example: Chinese companies putting harmful chemicals in products)
Advantages of International Marketing for producers
- Expand into new markets
- Reduce risk through diversification
- Brand reputation: companies selling in multiple markets are perceived to sell higher quality goods
- Can achieve economies of scale (production and distribution)
Disadvantages of International Marketing for producers
- Uncertainty
- Different customer wants/needs/product usage
- Differences in consumer response to elements of marketing mix
- Sometimes difficult to adapt to language/cultural differences
Factors Contributing to the success of American companies during the 1950s
- US dominance after WWII (Market share and production increased as other countries recovered)
- Marshall Plan
- Rise of Europe
Rise of Europe
Rome Treaty/Agreement:
-Established the European Union
Stages of International Marketing Involvement
- No direct foreign marketing
- Infrequent foreign marketing
- Regular foreign Marketing
- International Marketing
- Global Marketing
Controllable elements
can be altered in the long run and usually in the short run to adjust to the changing market conditions, consumer tastes, or corporate objectives
Marketing Mix
Product, Price, Place, Promotion
Uncontrollable elements
uncertainties created by the domestic and foreign environments.
Uncontrollable variables in international marketing
Political stability, Economic climate, Class structure, Dramatic cultural change
How does self-reference criterion and ethnocentrism affect international marketing?
The key to successful international marketing is adaptation to the environmental differences from one market to another
Primary obstacles to success in international marketing
Self-reference criterion and associated ethnocentrism
Different methods of entering foreign markets
Exporting, licensing, joint venture, direct investment
Global Awareness
being objective and tolerant of cultural differences, and to be knowledgeable of cultures, history, world market potentials, & global economic, social, and political trends
Licensing
A contractual means by which a company grants patent rights, trademark rights, and the rights to use technology to another company, often in a foreign market
Franchising
a form of licensing in which a company (the franchiser) provides a standard package of products, systems, and management services to the franchisee, which in foreign markets has market knowledge. Permits flexibility in dealing with local market conditions while providing the parent firm with some degree of control.
Turnkey operations
A situation in which a firm’s high-level management plans and executes all business strategies to ensure that individuals can buy a franchise or business and only “turn the key” to begin operations.
co-production agreements
Different firms (often located in different countries) product different parts of the same end product
joint ventures
a partnership of two or more participating companies that join forces to create a separate legal entity
Outsourcing
the contracting out of a business process to a third-party, often to cheaper foreign markets
Marshall plan
The American initiative to aid Europe, in which the United States gave $17 billion in economic support to help rebuild European economies after the end of World War II in order to prevent the spread of Soviet Communism.
Method-of-Entry factors to consider
- risk factor
- resource availability
- control issues
- product characteristics
- economic & political factors
Impact of the Oil crisis of the 1970s
Bad relationship between Saudis/US lead to high oil prices
high price of oil=negative impact on macro-economy and market
Protests against global institutions, anti-capitalism, high oil prices for the US
Protectionism around the world
Protectionism
nations utilize legal barriers, exchange barriers, and psychological barriers to restrain the entry of unwanted goods
Reasons for Protectionism
domestic employment, national security, infant industry argument, power of special interest groups, tax revenue (revenue tariffs), trade deficits
Tariff barriers
- Specific: fixed amount of money that does not vary with the price of the good
- Ad valorem: percentage of the product being sold
Nontariff barriers
encourage development of domestic industry and protect existing industry, barriers to trade such as quotas, boycotts, monetary barriers, and market barriers are put into place
Types of nontariff barriers
- Limitations on trade
- Customs & administrative entry procedures
- Standards
- Governmental participation in trade
- Charges on imports
- Monetary barriers
Types of monetary barriers
- blocked currency
- differential exchange rates
- government approval
Monetary barrier: blocked currency
refusing to allow importers to exchange its national currency for the sellers’ currency
Monetary barrier: differential exchange rates
encourages the importation of goods the government deems desirable and discourages importation of goods the government does not want by adjusting the exchange rate
Monetary barrier: government approval
In countries where there is a severe shortage of foreign exchange, an exchange permit to import foreign goods is required from the govt
GATT
General agreement on tarriffs and trade:
- 22 countries signed after WWII
- Provided a process to reduce tariffs & created watchdog agency
3 elements of GATT
1) Trade shall be conducted on a nondiscriminatory basis
2) Protection shall be afforded domestic industries through custom tariffs, not through such commercial measures as import quotas
3) Consultation shall be the primary method used to solve global trade problems