INTERNATIONAL final Flashcards
What is Globalization
The process by which businesses, cultures, and economies become interconnected worldwide. It involves international trade, investment, and the exchange of ideas.
What is Regionalization?
A focus on trade and collaboration within specific regions, such as the EU, NAFTA (now USMCA), or ASEAN, rather than a global approach.
What are the key differences between Globalization and Regionalization?
SCOPE:
G: worldwide
R: specific regions
ECONOMIC FEATURES:
G: International trade & intergradation
R: Regional trade agreements and partnerships
CULTURAL IMPACT:
G: Homogenization of culture and practices
R: Preservation of regional identity
TRADE:
G: Reduction of global trade barriers
R: Trade agreements with specific regions
What are the drivers of Globalization?
Technological Advancements:
Faster communication (internet, mobile), logistics (shipping, air transport).
Lower Trade Barriers:
Agreements like WTO, NAFTA, and free trade zones.
Multinational Corporations (MNCs):
Large companies expanding to new markets.
Financial Market Integration :
Cross-border investments and capital flows.
Consumer Demand:
Growing middle class worldwide driving demand for international brands.
Government Policies:
Economic liberalization, privatization, and deregulation.
What are IM Issues (International Marketing Issues)?
Legal & Regulatory Differences: Varying laws on advertising, product safety, data privacy.
Cultural Sensitivity:
Adapting messages to different cultural values.
Language Barriers:
Translation errors and misinterpretations.
Pricing Strategies:
Adapting prices based on local income levels.
Distribution Challenges:
Finding the right partners and supply chains.
Definition of Culture
Culture is the shared set of beliefs, values, behaviors, and artifacts that a group of people use to interact with each other and their environment. It is learned, transmitted across generations, and affects business practices.
Five Main Features of Cultural Values
Symbols: Language, gestures, objects that carry meaning.
Heroes: People admired in a culture (e.g., sports figures, historical leaders).
Rituals: Social customs and traditions.
Values: Deeply held beliefs about what is right and wrong.
Norms: Accepted behavior within society.
Hofstede’s Five Cultural Dimensions
POWER DISTANCE INDEX (PDI):
How much inequality in power is accepted.
High PDI: Hierarchical societies (e.g., China, Mexico).
Low PDI: More equality (e.g., Denmark, USA).
INDIVIDUALISM VS. COLLECTIVISM(IDV):
Focus on self vs. group.
High IDV: USA, UK (individual-focused).
Low IDV: Japan, China (group-focused).
MASCULINITY VS. FEMININITY (MAS):
Competition vs. cooperation.
High MAS: Japan (competitive).
Low MAS: Sweden (cooperative).
UNCERTAINTY AVOIDANCE(UAI) :
Comfort with ambiguity and risk.
High UAI: Greece (strict rules, low risk).
Low UAI: Singapore (flexibility, high risk).
LONG TERM VS SHORT TERM ORIENETATION (LTO)
Long-Term vs. Short-Term Orientation (LTO) – Future planning vs. tradition.
Long-Term: China, Japan (saving, patience).
Short-Term: USA, UK (instant results, traditions).
Erin Meyer’s Culture Map
A framework designed to help businesses navigate cultural differences across countries. It consists of eight dimensions, each representing a key aspect of workplace and communication styles across different cultures.
Erin Meyer’s Culture Map- Communicating: Low-Context vs. High-Context Communication
This dimension deals with how explicit or implicit communication tends to be in different cultures
Low-Context Cultures
Direct, Clear, and Explicit)
People say exactly what they mean.
Words are taken at face value; there’s little need to “read between the lines.”
ex: Germany, USA, Netherlands, Australia, Canada
High-Context Cultures
(Implicit, Indirect, and Nuanced
Meaning is often derived from context (tone, body language, shared knowledge).
Indirect speech is used to avoid confrontation or embarrassment.
People rely on relationships and shared history for understanding.
Examples: Japan, China, Korea, India, Saudi Arabia
Erin Meyer’s Culture Map- Evaluating: Direct vs. Indirect Negative Feedback
This dimension focuses on how feedback and criticism are given and received across cultures
Direct Negative Feedback
Blunt, honest, and constructive criticism is expected.
Criticism is often delivered in public without softening.
Examples: Germany, Netherlands, Denmark, Israel, Russia
Indirect Negative Feedback
Criticism is softened with positive comments.
It may be delivered privately and subtly.
Avoids embarrassing or offending the recipient.
Examples: Japan, China, Indonesia, Saudi Arabia, Mexico
Erin Meyer’s Culture Map-Leading: Egalitarian vs. Hierarchical Leadership
This dimension examines how leadership and power are perceived within organizations.
Egalitarian Cultures
(Flat Hierarchies, Informal Leadership)
Leaders are seen as facilitators rather than authority figures.
Employees challenge decisions and contribute openly.
First-name basis is common, even with senior managers.
Examples: Denmark, Netherlands, Sweden, Australia, Canada
Hierarchical Cultures
(Respect for Authority, Formal Leadership)
Clear distinctions between levels of authority.
Subordinates follow orders without challenging them.
Formal titles and respectful speech are expected.
Examples: Japan, China, South Korea, India, Saudi Arabia, France
Erin Meyer’s Culture Map- Deciding: Consensus-Based vs. Top-Down Decision Making
This examines how decisions are made—either collectively or by senior leadership
Consensus-Based
(Slow but Inclusive Decision Making)
Teams discuss and deliberate extensively before reaching a decision.
Once a decision is made, execution is swift.
Examples: Japan, Sweden, Netherlands, Germany
Top-Down
(Quick Decisions by Leaders, Less Debate)
Leaders make final decisions with little input from subordinates.
Decisions may change frequently as new information arises.
Examples: China, India, Russia, France, Mexico
Erin Meyer’s Culture Map- Trusting: Task-Based vs. Relationship-Based Trust
This dimension describes how trust is built in different cultures
Task-Based Trust
(Work First, Relationship Second)
Trust is built through professional competence and results.
Business relationships don’t require deep personal connections.
Examples: USA, Germany, UK, Netherlands, Australia
Relationship-Based Trust
(Personal Connection Before Business)
Trust is built through personal relationships and long-term interactions.
Business deals often require socializing and informal meetings.
Examples: China, Brazil, Saudi Arabia, Mexico, India
Erin Meyer’s Culture Map- Disagreeing: Confrontational vs. Avoiding Conflict
This examines how cultures handle disagreement and conflict.
Confrontational Cultures
(Open Disagreement is Normal and Encouraged)
Conflict is seen as a necessary part of decision-making.
People challenge ideas directly without harming relationships.
Examples: Israel, France, Germany, USA, Netherlands
Avoiding Conflict
(Disagreements are Handled Indirectly)
Open conflict is seen as damaging to relationships and harmony.
Disagreements are handled subtly or behind the scenes.
Examples: Japan, China, Indonesia, Thailand, Saudi Arabia
Erin Meyer’s Culture Map- Scheduling: Linear-Time vs. Flexible-Time Cultures
This dimension describes how people perceive and manage time
Linear-Time Cultures
(Strict Punctuality and Planning)
Tasks are completed sequentially and on schedule.
Being late is seen as unprofessional.
Examples: Germany, Switzerland, USA, Japan, UK
Flexible-Time Cultures
(Fluid Deadlines and Multitasking)
Plans and schedules are adaptable based on circumstances.
Arriving late may not be considered rude.
Examples: India, Brazil, Middle East, Mexico, Nigeria
Erin Meyer’s Culture Map- Persuading: Principles-First vs. Applications-First Reasoning
This examines how arguments are structured and how people are convinced.
Principles-First Cultures
(Theoretical Before Practical)
Logic starts with theory and deep explanations.
Decisions are based on broad principles.
Examples: France, Germany, Russia
Applications-First Cultures
(Practical Before Theory)
Decisions focus on practical solutions over abstract ideas.
People value hands-on learning and case studies.
Examples: USA, Canada, Australia
What is the cage model?
developed by Pankaj Ghemawat, is a tool for analyzing and understanding the differences (or “distances”) between countries when expanding into new markets. It helps businesses assess challenges and opportunities in international expansion by looking at four key factors
CULTURAL DISTANCE
What it means: Differences in language, customs, beliefs, and social norms between countries.
Why it matters: Cultural differences impact communication, consumer behavior, marketing, and workplace interactions.
ADMINISTRATIVE (POLITICAL & LEGAL)
What it means: Differences in government policies, regulations, legal systems, and trade relations.
Why it matters: Certain regulations and policies make it easier (or harder) to do business in a foreign country.
GEOGRAPHIC DISTANCE
What it means: The physical distance between two countries and how it affects trade and investment.
Why it matters: Distance impacts transportation costs, delivery times, and supply chain efficiency.
ECONOMIC DISTANCE
What it means: Differences in income levels, cost of living, and economic development between countries.
Why it matters: Determines purchasing power, pricing strategies, and business model viability.
What is Ethnocentric Approach (Home-Country Orientation)
Ethnocentric strategy,
a company believes that its home country’s culture, business practices, and leadership style are superior and should be implemented in all foreign subsidiaries.
Decision-making is centralized at headquarters in the home country.
Home-country nationals (expats) hold key management positions in foreign markets rather than hiring local managers.
Often used by companies in the early stages of international expansion.
What is Polycentric Approach (Host-Country Orientation)
A polycentric approach gives subsidiaries autonomy to make business decisions based on their local market conditions.
Local managers (host-country nationals) run operations rather than sending expats from the home country.
Products, marketing, and management styles are adapted to fit each country’s culture.
What is Regiocentric Approach (Regional Orientation)
The regiocentric approach focuses on regions rather than individual countries.
The company centralizes operations at a regional level (e.g., managing all European markets from one headquarters).
Managers are hired from within the region, rather than globally or just from the home country.
What is Geocentric Approach (Global Orientation)
A geocentric strategy integrates the best global practices while allowing for local flexibility.
Companies hire the best talent regardless of nationality.
Global coordination and standardization are balanced with adaptation where necessary.
Often used by large multinational corporations (MNCs) with an advanced global strategy.
Five Forces Affecting Adaptation vs. Standardization in International Business
When expanding into international markets, companies must decide between two strategies:
Standardization: Using a uniform global strategy, offering the same products, branding, and marketing worldwide.
Adaptation: Customizing products, messaging, and business strategies to fit local markets.
The decision to standardize or adapt is influenced by five key forces
Cultural Differences
What it means:
Cultures have unique values, beliefs, customs, and traditions that influence consumer behavior, communication, and product preferences.
Companies must decide whether to respect cultural differences (adaptation) or promote a single global brand (standardization).
Market Characteristics & Consumer Preferences
What it means:
Differences in lifestyles, income levels, shopping habits, and customer expectations influence whether a product should be adapted or kept consistent.
Consumer needs vary between developed and emerging markets.
Government Regulations & Legal Differences
What it means:
Different countries have different laws regarding product safety, advertising, labeling, and environmental standards.
Companies must adapt products to meet regulatory requirements or face legal penalties.
Competitive Pressures
What it means:
Companies must respond to local and global competitors when entering new markets.
If local competitors dominate, a business may need to adapt products, pricing, or marketing to stay competitive.
Technological & Economic Development
What it means:
Some markets have advanced technology and high consumer incomes, while others lack infrastructure or purchasing power.
Companies must decide whether to sell high-end products (standardization) or offer lower-cost versions (adaptation).
Types of Market Entry Modes
When a company decides to expand internationally, it must choose a market entry mode—the method by which it enters and operates in a foreign country. The right entry strategy depends on cost, control, risk, and long-term goals.
Exporting (Direct & Indirect):
Selling products from the home country to a foreign market, without physical presence in that country.
Types of Exporting:
Direct Exporting → The company sells directly to foreign buyers or distributors.
Indirect Exporting → The company uses intermediaries (export agents, trading companies) to reach foreign markets.
Licensing:
A company grants rights to a foreign firm to produce and sell its products in exchange for royalties or fees.
Key Features:
Licensor (original company) provides technology, patents, or branding.
Licensee (foreign company) handles manufacturing, sales, and marketing.
Franchising:
A company (franchisor) allows a foreign entity (franchisee) to use its brand name, business model, and processes in exchange for royalties and fees.
How It Works:
Franchisee invests in and operates the business.
Franchisor provides brand guidelines, training, and support.
Joint Ventures:
A company partners with a local business in a foreign country, sharing ownership, resources, risks, and profits.
Key Features:
Shared equity & decision-making between foreign and local firms.
Often required in restricted markets where full foreign ownership isn’t allowed (e.g., China, India).
Wholly Owned Subsidiary (Foreign Direct Investment - FDI):
The company owns 100% of its operations in the foreign market.
This can be achieved by:
Setting up a new business (Greenfield investment).
Acquiring an existing foreign company.
Strategic Alliances:
A non-equity partnership where two companies collaborate without forming a separate legal entity.
How It Works:
Companies share technology, distribution, or expertise but remain independent.
Used in industries where joint innovation is crucial (e.g., tech, pharmaceuticals).
What are the three Key Considerations for Market Entry
Market Size and Growth Potential:
A business must assess whether demand exists for its product or service and whether the market has long-term growth potential.
Regulatory and Economic Stability:
Governments and economic policies determine the ease of doing business.
Regulations, taxes, and political risks can impact profitability.
Currency volatility and inflation affect pricing and profitability
Competitive Landscape:
High competition can increase costs (e.g., marketing, advertising).
If domestic competitors dominate, a company may struggle to gain market share.
The presence of local partnerships can provide an advantage.
Risk, Resilience, and Agility in Supply Chain
Risk – Managing potential disruptions.
Resilience – Ability to recover from disruptions.
Agility – Quick response to market changes.
Ansoff Matrix: Product/Market Growth Strategy
used by companies to identify growth opportunities by analyzing the relationship between products and markets. It helps businesses decide whether to focus on existing or new products, and whether to target existing or new markets.
Market Penetration (Existing Product + Existing Market):
Increasing market share by selling more of an existing product to existing customers or acquiring competitors’ customers.
Market Development (Existing Product + New Market):
Expanding into new markets (geographically or demographically) with existing products.
Product Development (New Product + Existing Market):
Developing new products to sell to existing customers.
Diversification (New Product + New Market): Entering a completely new market with a new product.
What is Porter’s Diamond Model of Competitive Advantage?
explains why some countries or regions are more competitive in certain industries than others.
Factor Conditions (Inputs & Resources): The natural, human, technological, and infrastructure resources a country possesses. These are essential for an industry’s success.
Demand Conditions (Local Market Demand): The size, sophistication, and demands of local customers shape an industry’s innovation and competitiveness.
Related & Supporting Industries (Industry Clusters): The presence of strong suppliers, related industries, and specialized service providers improves competitiveness.
Firm Strategy, Structure & Rivalry (Competitive Environment): How companies are organized, managed, and compete influences a country’s industrial success.
additional.
1. Government Role: Governments influence competitiveness through policies, incentives, and regulations.
2. Chance (Random Events): Unpredictable events, such as natural disasters, technological breakthroughs, or global crises, impact competitive advantage.
What are some market Research Difficulties Internationally?
Cultural and Language Barriers:
Different languages, dialects, and cultural norms affect how surveys, interviews, and data collection are conducted.
Certain questions or topics may be misunderstood or offensive due to cultural differences.
Words and meanings don’t always translate directly.
Lack of Reliable and Standardized Data:
Countries collect data differently, making cross-market comparisons difficult.
Government statistics may be outdated or unreliable (especially in emerging markets).
Economic & demographic data might not be publicly available in some regions.
Differences in Consumer Behavior:
Buying habits, decision-making processes, and brand perceptions vary across cultures.
Western marketing principles don’t always apply globally.
Customers value different features in different countries.
Legal and Regulatory Differences:
Different countries have strict laws governing data collection and privacy.
Some governments limit foreign companies’ access to certain data.
Advertising regulations may restrict market research tactics (e.g., online tracking, customer profiling).
High Costs of International Market Research:
Conducting primary research (surveys, interviews, focus groups) in multiple countries is expensive.
Hiring local agencies or translators adds costs.
Many markets lack centralized data sources, requiring extensive field research.
Technological & Digital Challenges:
Limited internet penetration in some regions restricts online surveys.
Mobile and e-commerce behaviors vary across countries.
Certain markets lack reliable digital payment and CRM data.
Political and Economic Instability:
Political instability, corruption, or trade restrictions affect market access.
Economic volatility (inflation, currency fluctuations) makes pricing research difficult.
War, sanctions, or sudden policy changes disrupt long-term market research projects.
Hard vs. Soft Currency
Hard – Stable, widely accepted (USD, Euro).
Soft – Volatile, limited use (Venezuelan Bolívar).
Currency Value Drivers
Inflation rates
Interest rates
Trade balances
PPP and Big Mac Index
Purchasing Power Parity (PPP) – Compares currency value based on goods.
Big Mac Index – A simple measure of PPP using McDonald’s prices.
Float vs. Fixed Currency
Floating – Market-driven exchange rate.
Fixed – Pegged to another currency (e.g., Hong Kong Dollar to USD).
Pricing Strategies & Risks in International Markets
Cost-Plus Pricing (Mark-Up Pricing):
Setting the price by adding a fixed percentage (markup) to the total cost of production and distribution.
Market-Based Pricing (Competitive Pricing): Setting prices based on competitor pricing and market conditions rather than production costs.
Value-Based Pricing:
Pricing based on customer perception of value rather than cost or competition.
Penetration Pricing:
Setting a low initial price to attract customers and gain market share quickly.
Skimming Pricing:
Setting high initial prices and gradually lowering them over time
Psychological Pricing:
Setting prices to influence consumer perception, making products seem cheaper or more attractive.
Key Risks in International Pricing
Currency Fluctuations
Problem: Exchange rates constantly change, impacting the profitability of international sales.
Impact: Sudden currency depreciation reduces revenues, while appreciation increases costs.
Inflation & Economic Instability
Problem: High inflation reduces consumers’ purchasing power.
Impact: Products become too expensive in inflation-affected markets.
government Regulations & Price Controls
Problem: Some governments regulate prices to protect consumers, limiting profit potential.
Counterfeit & Parallel Imports
Problem: Unauthorized sellers import and sell products at lower prices, disrupting official pricing strategies.
Local Consumer Perceptions & Willingness to Pay
Problem: Customers in some markets expect lower prices, while others associate high price with high quality.
Bottom-of-the-Pyramid (BoP) Markets
the largest but poorest socio-economic group in the world. This segment includes over 4 billion people living on less than $2–$5 per day, primarily in developing economies.
Why It Matters:
Despite low individual incomes, the sheer size of this group represents a massive business opportunity.
Companies that successfully adapt their products and services to BoP consumers can achieve both profitability and social impact.
