Market Types etc.?

Question 1

What happens in local markets?

Answer 1

Concerned with customers clustered tightly around the marketer
Can learn a great deal about the customer and make necessary changes quickly
Potential market is limited-can be susceptible to local competitors

Question 2

What happens in national markets?

Answer 2

They distribute their product throughout a country-may involve multiple manufacturing plants, a distribution system including warehouses…
Offers tremendous profit potential-exposes marketer to new, aggressive competitors

Question 3

What happens in international markets?

Answer 3

They operate in more than one country
Adjustments are normally made in the marketing mix in various countries
If national markets became more saturated the continued expansion into foreign markets will be inevitable

Question 4

What are 4 reasons for growth in multinationals?

Answer 4

Emerging economies
Economies of scale
Protectionism(taxing imports to protect domestic markets)
External growth through takeovers+mergers

Question 5

What are some benefits of multinationals(in the host country)?

Answer 5

Significant employment and training to the labour force
Adds to the host country’s GDP
Increased competition+consumer choice
Increased tax revenues to the host country

Question 6

What are some drawbacks of multinationals?

Answer 6

Domestic business may not be able to compete
Tax avoidance
Could damage domestic business
May not feel as socially responsible as domestic businesses
Imposes culture on the host nation

Question 7

What makes a business classified as ‘small’?

Answer 7

50 or less employees

Question 8

What makes a business classified as ‘large’?

Answer 8

250 or more employees

Question 9

What factors affect the size of a business?

Answer 9

Market size
Nature of the product
Personal preference
Ability to access resources for expansion

Question 10

Why might a business want to grow?

Answer 10

Entrepreneur wants a greater challenge
Owners want a higher return on investments
Growth into new markets can spread risks
A bigger business is better placed to fight external threats
Opportunity to gain unit cost reduction through economies of scale

Question 11

What are the strategic options for growth with the methods involved?

Answer 11

Innovation+Diversification-organic growth
Internal Expansion-takeovers/mergers
Cost Leadership+Product Development-joint ventures/strategic alliances

Question 12

Define organic growth-give examples

Answer 12

Growth from within the business

Eg.launching new products, franchising, exporting…

Question 13

Define external growth-give examples

Answer 13

Growth from outside the business

Eg.takeovers, mergers, joint ventures…

Question 14

What is organic growth seen to be?

Answer 14

Lower risk
Slower
Building on existing activities 
Good for high growth markets 
Rewards innovation+brand building

Question 15

What is external growth seen to be?

Answer 15

Higher risk 
Faster 
Transformational 
Popular in mature or declining markets 
Can acquire missing technology/brands

Question 16

What are the different types of integration-usually takeovers?

Answer 16

Backward vertical-business behind in supply chain
Forward vertical-further up in the supply chain
Horizontal-same stage in supply chain
Conglomerate-no clear connection(diversification)

Question 17

What’s the difference between a merger and a takeover

Answer 17

Merger=a new business created

Takeover=one business takes control of another business

Question 18

What are some common features of a merger?

Answer 18

Both businesses broadly equals in size, value...
Usually operate in the same industry 
Potential for growth 
Usual risks there
Shares increase

Question 19

What are some advantages of organic growth?

Answer 19

Can be financed internally-retained profits…
Builds on businesses strengths
Allows growth at a sensible rate

Question 20

Define a joint venture-what are some reasons behind forming one?

Answer 20

Involves 2+ businesses pooling their resources and expertise to achieve a particular goal(risks+rewards shared)
Expansion
Newly developed products
Moving to a new market-especially overseas

Question 21

What some benefits to a joint venture?

Answer 21

Shared expertise
Each partner may have the options to acquire the JV business in the future based on agreed terms
Reduced risk of a growth strategy

Question 22

What some drawbacks to a joint venture?

Answer 22

Risk of clashing management styles
Conflict of interest
Imbalance of expertise/investment/assets from partners

Question 23

What is the difference between international companies and multinationals?

Answer 23

International=importers/exports in their home country

Multinational=investors in other countries

Question 24

Define strategic alliance

Answer 24

An arrangement between 2 companies that have decided to share resources to undertake a mutually beneficial project
(Less involved and less permanent than JV)

Question 25

What’s the difference between strategic alliances and JV?

Answer 25

Strategic alliance=2+ companies remaining separate entities

JV=new entity formed

Question 26

What are some problems with strategic alliances?

Answer 26

No better at the end of it
Legal disputes over who owns what
Expensive
Difficult to coordinate