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MKTG 351 > Exam 2 chap 5 > Flashcards

Exam 2 chap 5 Flashcards

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1
Q

What is a multinational corporation?

A

A company that is heavily engaged in international trade, beyond exporting an importing.

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2
Q

What does a multinational corporation moves?

A

resources, goods, services, and skills

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3
Q

Where does a multinational corporation moves?

A
  • across national boundaries

- don’t care which country the headquarters is located in

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4
Q

Multinational develop their global business in stages? True or False

A

True

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5
Q

What are the stages of the multinational?

A
  1. companies operate in one country and sell in others
  2. multinationals set up foreign subsidiaries to handle sales in one country
  3. Multinationals operate an entire line of business in another country
  4. Engage in a virtual operation
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6
Q

Stage 4 of multinational has evolved primarily due to what?

A

the internet and involved mostly high-tech companies.

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7
Q

US-based multinationals earn what abroad?

A

a large percentage of their total revenue.

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8
Q

Current global innovation leaders are?

A
  • Apple
  • Alphabet
  • Amazon
  • Gilead
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9
Q

What is subject to controversy? (under multinational)

A

The role of multinational corporations in developing nations

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10
Q

The ability of multinational to do what can benefit any country?

A
  • to tap financial, physical and human resources from all over the world
  • and combine them economically and profitability
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11
Q

What is capital intensive?

A
  • Using more capital than labor in the production process

- does not substantially increase employment

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12
Q

What causes multinational to bring production back to the USA (home)?

A

political pressure

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13
Q

what technology is transferred to developing nations?

A

capital intensive

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14
Q

Does supply chain create more problems than advantages for multinationals firms? true or False

A

True.

Problems:

  • partners stealing
  • copying the firm’s technology
  • complex government regulations
  • harassment from officials
  • lower global profits
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15
Q

Define global marketing?

A

Marketing that targets markets throughout the world.

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16
Q

How do small firms invest in global marketing?

A

via internet

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17
Q

US toughest competition comes from where?

A

foreign companies

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18
Q

What is global vision?

A

recognizing and reacting to international marketing opportunities, using effective global marketing strategies, and being aware of threats from foreign competitors in all markets.

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19
Q

What is the foundation of a successful global vision?

A

a corporate structure that provides a continual flow of fresh ideas
ex: Otis company

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20
Q

Over the past 2 decades, world trade has climbed from ________

A

$200 billion a year to more than $18 trillion in merchandise exports

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21
Q

Otis company

A
  • the largest manufacturer of people moving products
  • include elevators, escalators…
  • employ more than 64,000 people around the world
  • product offer in more than 200 countries
  • world leader
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22
Q

Global marketing is a one-way street? True or False

A

False.

Global marketing is NOT a one-way street, foreign competitors (almost every industry) compete in the USA as well.

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23
Q

What is GDP

A

Gross domestic product

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24
Q

Define Gross domestic product?

A

is the total market value of all final goods and services produced in a country for a given period ( a year or quarter of a year)

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25
Q

what does the world final refer to?

A

refers to final product that are sold

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26
Q

Does GDP count ONLY final goods and services in its valuation of a country’s production? True or False

A

True

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27
Q

Traditionally what type of companies as attempted to compete worldwide?

A

Large companies

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28
Q

Have small and medium companies started pursuing international markets?

A
  • yes.

- some are even started to play a critical role in driving export growth

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29
Q

what is SBA?

A

Small business administration

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30
Q

What does small business administration provide?

A
  • support for small business that export or desire to start exporting.
  • provide a 90% guarantee to a leader.
  • replay with a loan.
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31
Q

What is outsourcing?

A

sending US job abroad.

- controversial subject over the years

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32
Q

What is a key driver in outsourcing?

A

companies see cost saving.

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33
Q

According to executives what does outsourcing lead to?

A

corporate growth, efficiency, productivity, and revenue growth

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34
Q

what is the negative side of outsourcing?

A

factories closed as work is outsourced

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35
Q

What are the 4 industries affected by outsourcing?

A
  • technology
  • call centers
  • human resources
  • manufacturing
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36
Q

what is inshoring?

A

returning production jobs to the USA

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37
Q

What else has contributed to inshoring?

A

shrinking development and manufacturing timelines

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38
Q

what has rapid consumer product innovation forced?

A

the need to keep production designers, marketing researchers, logistics experts, and manufacturers in close proximity.
- goal work quickly as a team.

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39
Q

What is the traditional economic theory of globalization?

A

relies on competition to drive down prices and increase product and service quality.

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40
Q

what type of countries does business goes to produce what they need?

A

countries that operate most efficiently, have lower labor cost, and/or have the technology to produce what is needed.

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41
Q

benefits of globalization?

A
  • expands economic freedom
  • spurs competition
  • raises a nation’s productivity and living standards if it opens itself to the global market
  • offers access to foreign capital, global export markets, and advanced technology
  • promotes higher labor and environmental standards
  • acts as a check on government power
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42
Q

benefits of globalization for developed countries?

A
  • offers access to foreign capital, global export markets, and advanced technology
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43
Q

check on governmental power means___

A

it is more difficult for governments to abuse the freedom and property of their citizen

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44
Q

what should globalization be credited for?

A

helping millions out of poverty and for improving standard of living of low-wage families

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45
Q

A key tenet of globalization is ____

A

Free trade

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46
Q

Free trade is ___

A

trade among nations without barriers or restrictions

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47
Q

Countries restrict trade and create barriers to boost exports and limits imports? True or False

A

True

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48
Q

How can less competition for local business happen?

A

if a country can boost export and limit imports

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49
Q

What is trade adjustment assistance?

A

Payment made to workers who have lost their jobs to foreign competition

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50
Q

Does globalization lead to people being laid off from their jobs?

A

yes.

- workers do not always find jobs in other industries.

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51
Q

Should a company consider entering the global market place?

A

yes.

- only after its management has a solid grasp of the global environment

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52
Q

What are the reasons why a firm GO GLOBAL?

A
  • earn additional profits (most important)
  • offer a unique product or technological advantage no available to international competitiors
  • excess capacity
  • saturated domestic market
  • potential for economies of scales
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53
Q

What are strategic alliances?

A

multinational firms that form a partnership. helps them penetrate global markets

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54
Q

The 5 methods of entering the global markets are

A
  • in order of risk from least to most:
    1. exporting
    2. licensing and franchising
    3. contract manufacturing
    4. joint venture
    5. direct investment
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55
Q

What is exporting?

A

selling domestically produced products to buyers in other countries
- least risky alternative and least complicated

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56
Q

What is Buyer for export?

A

an intermediary in the global market that assumes all ownership risk and sells globally for its own account.

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57
Q

What is an export broker?

A

a traditional broker who brings buyer and seller together

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58
Q

what is an export agent?

A

foreign sale agent/distributors who live in a foreign country and perform the same functions as domestics manufacturer’s agent, helping with international financing, shipping and …

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59
Q

instead of selling directly to foreign buyers, who can a company sell to?

A

they can sell to intermediaries located in its domestic market.

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60
Q

What is the most common intermediary?

A

export merchant.

AKA: buyer for export.

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61
Q

How is a buyer for export treated___

A

like a domestic customer by the domestic manufacturer.

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62
Q

What are the 3 types of intermediaries?

A
  • buyer for export
  • export broker
  • export agent
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63
Q

who assumer all the risk in export brokers/

A

manufacturer

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64
Q

Who retains the title for export brokers?

A

manufacturer

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65
Q

Export Broker operate primarily in ____

A

agricultural product and raw materials

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66
Q

What is licensing?

A

the legal process whereby a licensor allows another firm to use its manufacturing process, trademarks, patents, trade secrets, or other proprietary knowledge

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67
Q

how much risk with licensing?

A

little risk

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68
Q

A licensor should make sure of what?

A

They, maintain sufficient control over the licensee’s activities to ensure proper quality, pricing, distribution and …

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69
Q

Franchising is a form of ___

A

licensing

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70
Q

What should a franchisee do?

A

Pay a one-time fee and a percentage of sales to the franchisor for the opportunity to sell the company’s goods or services.

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71
Q

Some franchises have to adapt to local cultures? True or False/

A

true.

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72
Q

2 common ways of maintaining effective control over licensees are:

A
  • shipping one or more critical component from the USA
  • locally registering patents and trademarks to the USA firms

** not to the licensee.

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73
Q

Firms that do not want to engage in licensing or global marketing can engage in?

A

contract manufacturing

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74
Q

contract manufacturing is___

A

private-label manufacturing by a foreign company.

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75
Q

under contract manufacturing, a foreign company produced what?

A

a certain volume of product to specification, with domestic firms’ brand name on the good.

76
Q

Joint venture

A

when a domestic firm buy parts of a foreign company or joints with a foreign company to create a new entity

77
Q

What industry uses a lot of contract manufacturing?

A

pharmaceuticals

78
Q

Can a joint venture be lucrative?

A

yes, but it can also be risky

79
Q

is it true that joint venture partners may not agree on management strategies and policies?

A

yes. it is true

80
Q

What is the only way a government will allow a foreign company to enter its country?

A

with joint venture

81
Q

what does joint venture enable the local firms or government to acquire?

A

managerial skills and new technology

82
Q

direct investment?

A

happens when a business in one country invests in a business interest in another country

83
Q

Firm make foreign direct investment by acquiring what?

A

An interest in an existing company or by building new facilities

84
Q

What country receive the most foreign investment?

A

USA

85
Q

Dumping is____

A

The sales of an exported product at a price lower than that charged for a similar product in “home” market of the exporter.

86
Q

Dumping can be viewed as what kind of discrimination?

A

Price discrimination

87
Q

Reason why dumping happens?

A
  • trying to increase an overseas market share
  • temporarily distributing products to overseas markets to offset slack demand at home
  • lowering unit cost by exploiting large -scale production
  • attempting to maintain stable princess during periods of exchange rate fluctuations
88
Q

Economist view dumping as harmful only when?

A

It involves predatory practices ( try to eliminate competition and gain monopoly)

89
Q

Define countertrade

A

It is a form of trade in which all or part of the payment for goods or services is in the form of other goods or services.

  • form of barter (swapping goods for goods)
90
Q

Countertrade is a fast-growing way to conduct global business? True or False

A

True

91
Q

Name two common type of countertrade?

A
  • barter

- compensation agreement

92
Q

Does countertrade only involve goods or services?

A

No. It can sometime involve cash

93
Q

Explain compensation agreement

A

Company provides technology and equipment for a plant in developing nation and agree to take full or partial payment in goods produced by that plant.

** plant (factory)

94
Q

Multinational corporations operate somewhat differently in each country in what way?

A

Strategy they provide = different product features, packaging, and advertising.

95
Q

Define Ted Levitt

A
  • A Harvard professor
  • described a trend he calls “global marketing” with a different meaning.
  • for ted: communication and technology have made the world smaller
  • he sees: the emergence of global markets for standardized product on a huge scale, as opposed to segmented foreign markets with different products
96
Q

Define global marketing standardization

A

Production of uniform product that can be sold the same way all over the world
Ex: smartphones and tables are standardized product, expect the language displayed.

97
Q

Global marketing standardization enables companies to do what?

A
  • lower production and marketing cost
98
Q

What is global marketing standardization success based on?

A

Based on variation and not on offering the same product everywhere

99
Q

Name one method of variation in global marketing standardization?

A

Multi-domestic strategy

100
Q

What is multi-domestic strategy?

A

When a multinational firm enable individual subsidiaries to compete independently in domestic markets

Translation: company essentially tailors their products to each specific country with close attention to customers, religion, and more.

101
Q

Companies with separate subsidiaries in other countries can be said to operate using multi-domestic strategy? True or False

A

True

102
Q

Name the external environment faced by global marketers

A
  • culture
  • economic development
  • the global economy
  • political structure and actions
  • demographic makeup
  • natural resources
103
Q

What is culture

A

Set of values shared by the citizen of a society

- it determines what is socially acceptable

104
Q

What does culture underlines?

A
  • The family
  • the educational system
  • religion
  • the social class system
105
Q

What does cultural blunders (error) lead to?

A

Misunderstanding and perception of rudeness or even incompetence
Ex: hand shake in India is different than usa

106
Q

Is language an important aspect of culture?

A

Yes.

Even cause problems for marketers, because have to translate brand name, slogans, …

107
Q

Is it important to develop and implement marketing mixes that reflect a cultural understanding of the target market countries?

A

Yes.

Each country has its own unique customs and traditions that determine business practices and influence negotiations with foreign customers

108
Q

What type of industries are found in developed countries?

A

Complex and sophisticated industries

109
Q

What type of industries are found in less developed nations?

A

Basic industries

110
Q

How is the income level in developed countries?

A
  • higher

- large income mean greater purchasing power and demand

111
Q

What is GNI?

A

Gross national income

112
Q

What does gross national income measure?

A

The ability of a country’s citizens to buy various goods and services

113
Q

What is balance of trade?

A

The difference between the value of a country’s export and the value of its imports over a given period.

Export - Import

114
Q

What is balance of payments

A

The different between a country’s total payment to other countries tries and its total receipts from other countries.

payment - receipts

115
Q

How to know if a country has favorable balance trade?

A

Have more export than import

116
Q

How to know a country has unfavorable trade?

A

Import more than export

117
Q

How was the USA economy in the past?

A
  • large economy
118
Q

How did the USA economy in the past used to move?

A

Global market tended to move up or down depending on its health

119
Q

Is it still true today?

A

Yes. It is still true, but less than in the past

120
Q

Define BRICS

A
  • Brazil
  • russia
  • India
  • china
  • South Africa
121
Q

Who plays an important role in the development of the BRICS countries?

A

Politics

122
Q

Brazil

A

Political scandal and recession

123
Q

Russia

A

Economic sanctions and over-dependence on energy exports

124
Q

Government policies run the gamut (range) from ____

A

No private ownership and minimal individual freedom to little central government and maximum personal freedom

125
Q

Why is government-opened industries decreasing?

A

Because rights of private property are increasing.

126
Q

What permits business to grow and prosper?

A

Regulations

Ex: data reliable

127
Q

Can regulation overturn business and make it virtually impossible for them to operate?

A

Yes.

128
Q

What can affect business laws?

A

International politics

Ex: china investigated American multinational companies, trump vowed to be done with NAFTA

129
Q

Where are the least regulated and most efficient economics?

A
  • place with well-established common law traditions

Ex: Australia, canada, New Zealand, uk, usa, Hong Kong, Singapore.

130
Q

Define tariff

A

A tax levied (fee) on goods entering a country

131
Q

Define quota

A

A limit on the amount of a specific product that can enter a country

132
Q

Define boycott

A

The exclusion of all products from certain countries or companies

133
Q

Define exchange control

A

A law compelling a company earning foreign exchange from its exports to sell it to a control agency

134
Q

What are the most common legal structure affecting trade?

A
  • tariff
  • quota
  • exchange control
  • boycott
  • market grouping ( aka: common trade alliance)
  • trade agreement
135
Q

What is trade agreement

A

An agreement to stimulate international trade

136
Q

What is market grouping?

A

Happens when several countries a agree to work together to form a common trade area that enhance trade opportunities

137
Q

What is market grouping other name?

A

Common trade alliance

138
Q

What is the best market grouping?

A

EU

139
Q

What is Mercosur?

A

Largest Latin American trade agreement

140
Q

Mercosur include which countries?

A
  • Argentina
  • Bolivia
  • Brazil
  • Chile
  • Columbia
  • Ecuador
  • Paraguay
  • Peru
  • Uruguay
  • Venezuela

All the South American countries, except the Guyanas.

141
Q

What is the largest Latin American trade agreement?

A

Mercosur

142
Q

Uruguay Round?

A

A trade agreement that has dramatically lowered trade barriers worldwide.
- created the world trade organization

143
Q

When was the Uruguay round adopted

A

1994 - signed by 162 nations

144
Q

What does the Uruguay round covers?

A
  • covers services
  • intellectual property rights
  • trade related investment measures ( such as exchange controls)
145
Q

What changes did the Uruguay round made?

A
  • entertainment, pharmaceuticals, integrated circuits and software (ex: protect trademarks)
  • financial, legal, and accounting services (cam under international trading rules for the first time)
  • agriculture (EU reducing farm subsidies “paying agri people”)
  • textiles and apparel (strict quotas from developing countries)
  • a new trade organization ( world trade organization & general agreement on tariffs and trade)
146
Q

What does WTO (world trade organization) mean?

A

A trade organization that replaced the old General Agreement on tariffs and trade (GATT)

147
Q

What is GATT?

A

General agreement on tariffs and trade - a trade agreement that contained loopholes enabling countries to avoid trade-barrier reduction agreements

148
Q

Is there time limits on WTO (World trade agreements)?

A

Yes. Certain time frame to resolve a dispute

149
Q

Where did the latest round of Wold trade agreement start?

A

2009 - Doha, Qatar

150
Q

Why was the world trade agreement paralyzed?

A

Because the developing countries and the developed economies were not willing to make concessions

151
Q

What is t TFA ?

A

Trade facilitation agreement

152
Q

Define trade facilitation agreement?

A

A world trade organization agreement that aims to cut customs-related red tape and ease the flow or trade between countries

Translation: transit of goods between countries boarders to be faster

153
Q

What did the failed Doha lead to?

A

Other coalitions (alliances)

154
Q

List the other coalitions the failed Doha lead to

A
  • the transatlantic trade and investment partnership (between usa and eu)
  • trans-Pacific partnership (TPP) new trade rules for 12 participating countries
  • pacific alliance
155
Q

What countries compose to pacific alliance?

A
  • Columbia
  • Chile
  • Peru
  • Mexico
156
Q

TFA (trade facilitation agreement) reduce trade cost by____

A

11-15 %

157
Q

What does NAFTA mean?

A

Agreement between Canada, USA, and Mexico

158
Q

What is the world largest free trade zone?

A

NAFTA

159
Q

What did NAFTA resulted in?

A

Low-skilled and assembly line jobs moving from the usa to Mexico

160
Q

Define foreign direct investment

A

A business investment in a foreign country, either by establishing business operations or by acquiring business assets in that country
Ex: ford build factory in Mexico -> direct investment

161
Q

What is CAFTA-DR?

A

Dominican Republic-central America free trade agreement

162
Q

Define the Dominican Republic- Central America free trade agreement?

A

A trade agreement (2005) that includes:

  • Costa Rica
  • Dominica republic
  • El Salvador
  • Guatemala de
  • Hondura
  • Nicaragua
  • USA
163
Q

Since 2015 what happens to the goods exported to CAFTA-DR?

A

All consumer and industrial goods exported are no longer subject to tariffs

164
Q

What does Dominican Republic-central america free trade agreement covers?

A
  • Intellectual property rights
  • transparency
  • electronic commerce
  • telecommunications
165
Q

EU

A

Free trade zone encompassing 28 European countries

166
Q

EU is not only a free trade zone, it is also a _____

A

Political and economic community

167
Q

Who is after the usa as largest economy ?

A

EU

168
Q

What does EU guarantee?

A
  • freedom of movement of people, goods, services, and capital between member states
169
Q

Does EU maintain a common trade policy with outside nations and regional development policy?

A

Yes.

170
Q

What is World Bank?

A

An international bank that offers Lowe-interest loans to developing nations

171
Q

Group of twenty (G-20)

A

A forum for international economic development that promotes discussion between industrial and emerging-market countries on key issues related to global economic stability

172
Q

IMF (international monetary funds)

A

An international organization that acts as a lender of last resorts, providing loans to troubled nations, and also works to promote trade through financial cooperation

Short version: loans to members nations that are unable to meet their budgetary expenses

Last resort for boring money (ex: Greece)

173
Q

What was the original reason for world bank?

A

To help the nations build infrastructure, but now the world bank loans to help developing nations relieve their debt burdens

174
Q

Members of the G-20?

A
  • Argentina, Australia, Brazil, canada, china, EU (France, Germany, Italy) Indonesia, japan, Mexico, russia, Saudi Arabia, South Africa, Republic of Korea, turkey, UK, USA
175
Q

Will UK pay fees for existing the EU?

A

Yes. A lot of money

176
Q

What are the 3 groups that will generate about 1/2 the world’s consumption growth?

A
  • retiring and elderly in developed countries
  • china’s working age pop
  • north America’s working age pop
177
Q

Natural resources creates what?

A
  • international dependencies
  • huge shifts of wealth
  • inflations and recession
  • export opportunities if resources are abundant
  • stimulus for military intervention
178
Q

What is the first step in creating global marketing mix?

A
  • having a good understanding of global target market
179
Q

Information gathering on foreign markets with research is based on what?

A

The 4 Ps.

  • price
  • product
  • promotion
  • place (distribution)
180
Q

Product decision strategies are:

A
  • product adaption: alter the basic product to meet local conditions
  • product invention: create a new product for the market or drastically change the existing product
  • one product, one message: develop a single product for all markets ( may backfire with different cultures)
181
Q

Promotion adaption

A
  • keep the same basic product but change the promotion strategy
  • language barriers, translation problems, cultural differences
182
Q

Place (distribution)

A
  • need adequate distribution

- decision may need to be changed for each foreign market

183
Q

Pricing

A
  • unique problem
  • consider: transport cost, tax, insurance, tariffs, how much will consumer spend and make sure they pay the price
  • simplify a product to lower the price: ( don’t assume lower-income countries will accept lower quality)
184
Q

Define exchange rate

A
  • the price of one’s country currency in terms of another country’s current
  • include floating exchange market rate
185
Q

What is floating exchange market rate?

A
  • a system in which price of different currencies move up and down based on the demande for the supply of each currency

MKTG 351 (10 decks)

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