Lecture 20 The Global Marketplace Flashcards
What is an advantage of being a global firm?
Can gain marketing, production, R&D and financial advantages not available to purely domestic competitors
How do global firms see the world?
As one market
What are tariffs?
Taxes on certain imported products designed to raise revenue or to protect domestic firms
What are quotas?
Limits on the amount of foreign imports a country will accept in certain product categories to conserve on foreign exchange and to protect domestic industry and employment
What are exchange controls?
A limit on the amount of foreign exchange and the exchange rate against other countries
What are nontariff trade barriers?
Biases against bids or restrictive product standards that go against American product features
What does GATT stand for?
General Agreement on Tariffs and Trade
How old is GATT?
61 years
What is the aim of GATT?
To promote world trade
How does GATT work?
It reduces tariffs and other international trade barriers
What does WTO stand for?
World Trade Organisation
What does WTO do?
Enforces GATT rules
Mediates disputes
Imposes trade sanctions
What are regional free-trade zones?
These are economic communities formed by certain countries
Give 4 examples of regional free-trade zones
EU
NATFA
CAFTA
UNASUR
What does CAFTA stand for?
Central American Free Trade Agreement
What does UNASUR stand for?
Union of South American Nations
What two economic affect a country’s attractiveness as a market?
Industrial structure
Income distribution
What are the different types of industrial structure?
Subsistence economies
Raw material exporting economies
Emerging economies
Industrial economies
What are the different types of income distribution?
Low-income households
Middle-income households
High-income households
What does the political-legal environment look at?
The country’s attitude toward international buying
Government bureaucracy
Political stability
Monetary regulationss
What are the impacts associated with the cultural environment?
Impact of culture on marketing strategy
Impact of marketing strategy on cultures
How should which countries to enter be decided?
Define international marketing objectives and policies
Foreign sales volume
How many countries to enter
Types of countries to enter
What can the type of country to enter be based on?
Geography
Income and population
Political climate
What are the demographic characteristics?
Education
Population size and growth
Population age composition
What are the geographic characteristics?
Climate Country size Population density Urban or rural Transportation structure and market accessibility
What are the 5 economic factors?
GDP size and growth Income distribution Industrial infrastructure National resources Financial and human resources
What are the sociocultural factors?
Consumer lifestyles, beliefs, and values
Business norms and approaches
Cultural and social norms
Languages
What are the political and legal factors?
National priorities Political stability Government attitudes toward global trade Government bureaucracy Monetary and trade regulations
What are the three ways of entering a global market?
Exporting
Joint venturing
Direct investment
What are the two ways of exporting?
This can be indirect or direct
How does joint venturing work?
By licensing, contract manufacturing, management contracting or joint ownership
How does direct investment work?
Assembly facilities
Manufacturing facilities
What is exporting?
This is when the company produces its goods in its home country and then sells them in a foreign market. It is the simplest means involving the least change in the company’s product lines, organisation, investment, or mission
What is joint venturing?
This is when a firm joins with foreign companies to produce or market products or services
How does joint venturing differ from exporting?
The company joins with a host country partner to sell or market abroad
What is licensing?
When a firm enters into an agreement with a license in a foreign market. For a fee or royalty, the licencee buys the right to use the company’s process, trademark, patent, trade secret or other item of value
What is contract manufacturing?
This is when a firm contracts with manufacturers to produce its product or provide its service. Benefits include faster start-up, less risk and the opportunity to form a partnership or to buy out the local manufacturer
What is management contracting?
When the domestic firm supplies management skills to a foreign company that supplies capital. The domestic firm is exporting management services rather than products
What is joint ownership?
When one company joins forces with foreign investors to create a local business in which they share joint ownership and control. Joint ownership is sometimes required for economic or political reasons
What is direct investment?
The development of foreign-based assembly or manufacturing facilities
What are the advantages of direct investment?
Labour Logistics Control Government incentives Lower costs Raw materials
What are the 3 approaches to global marketing strategy?
Entrepreneurial marketing
Formulated marketing
Intrapreneurial marketing
What is entrepreneurial marketing?
This involves visualising an opportunity and constructing and implementing flexible strategies
What is formulated marketing?
This involves developing formal marketing strategies and following them closely
What is intrapreneurial marketing?
This involves attempting to re-establish an internal entrepreneurial spirit and refresh marketing strategies and approaches
What does that standardised marketing mix involve?
Selling the same products and using the same marketing approaches worldwide
What does the adapted marketing mix involve?
Adjusting the marketing mix elements in each target market, bearing more costs but hoping for a larger market share and ROI
What is a straight extension?
Product and communications do not change
What is a communication adaptation?
Product does not change but communications do
What is a product adaptation?
The product changes but communications do not
What is a dual adaptation?
Both the product and communications change
What is a product invention?
Development of a new product
What does straight product extension mean?
Marketing a product in a foreign market without any change
What does product adaptation mean?
This involves changing the product to meet local conditions or wants
What does product invention consist of?
This consists of creating something new for a specific country or market
What are the two ways in which product invention can be done?
Maintain or reintroduce earlier products
Create new products
What might be changed in standardised communications campaigns?
Adjustments may be required for language or cultural differences
What is uniform pricing?
This charges the same price in all markets but does not consider income or wealth where the price may be too high in some or not high enough in other markets
What is standard mark-up pricing?
This is a price based on a percentage of cost but can cause problems in countries with high costs
What are the three types of distribution channel?
Seller’s headquarters organisation
Channels between nations
Channels within nations
How does the seller’s headquarters organisation work?
This supervises the channel and is also part of the channel
How do channels between nations work?
They move the products to the borders of the foreign nations
How do channels within nations work?
They move the products from their foreign point of entry to the final customers
What three typical international marketing activities are done?
Establishing an exporting department with a sales manager and staff
Creating an international division organised by geography, products or operating units
Becoming a complete global organisation
