globalisation

Question 1

what is a niche market?

Answer 1

• A small subsegment of a market, with a very distinct subculture
• A subculture consists of a group of people who have interests and values in common

Question 2

what is a global niche market? give an example

Answer 2

• luxury goods: the demand is international and the same trends and subcultures for these goods exist throughout the world➡️consumers have shared values and perceptions
• Global niche markets are smaller, highly specialised part of a global market, where customers in more than one country have particular needs that are not fully met by the global mass market
• The product/service is highly differentiated
• they have a competitive advantage in the form of quality, innovation, and reputation
• The product so at a high price with a lower volume of sales, but a high profit margin
• they are price inelastic

Question 3

what are some advantages of mergers?

Answer 3

+ gain an established: distribution and supply network, brand, customers, production units, staff, reputation

+ less risky and faster than expanding organically

+ boosts global market share

+ risk bearing and production economies of scale

+ vertical: control over buyers and suppliers

+ synergy: 2+2 = 5… Combined companies are greater force in the market

Question 4

what are some potential problems of mergers?

Answer 4

• diseconomies of scale
• Clash of corporate culture
• conglomerate merger: the company becomes too diverse
• Communication barriers
• different business cultures
• currency problems

Question 5

what is inorganic growth and describe three methods of growing inorganically

Answer 5

integration through a merger or take over

• conglomerate:
• two different/ unrelated products
• good to spread risk
• vertical:
• same industry, but they joined forces with the firm at a different stage in the production process: backwards (supplier) or forwards (buyer/ customer)
• horizontal:
• same industry, same stage of production
• The industries are not identical, but they’re related

Question 6

what is organic growth?

Answer 6

expansion of the company itself… New unit set up abroad

Question 7

what is standardisation and what are its benefits?

Answer 7

when a company offers a product which is undifferentiated between any of the markets to which it offered

• by standardising as much as possible, the firm can benefit from economies of scale
• a lower average cost over a large output➡️⬆️profitability

Question 8

what are the four barriers to standardisation that exist in most markets?

Answer 8

• product: differing tastes and habits
• Price: consumers have different incomes
• place: systems of distribution vary widely
• promotion: consumer’s media habits vary, as do language skills, and literacy levels

Question 9

what is local marketing and when would it be used/ successful?

Answer 9

• local marketing maybe more successful than global marketing where:
• market needs vary from market to market
• frequency of purchase varies from market to market
• developed importance of various forms of advertising vary from market to market
• homogeneous products don’t always sell well➡️ likely to lead to a local brand bbeing unsuccessful
• food is an example of a product that is less likely to be global: tastes vary from culture to culture
• Company should not assume that a strategy that works in one market will always work everywhere