Marketing Final Test Flashcards
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What is international Business
International business focuses on any commercial activity or transactions between companies, organizations, individuals, or government entities that crosses borders into different countries and regions
Domestic vs international transaction
- A domestic transaction is the selling of items produced in the same countryEx: Buying a bag of McCain frozen fries that are made in Canada
- An international transaction is the selling of items produced in other countries. These items contribute to the global economy.Ex: Buying a leather purse that was made in Italy
5 major benefits to business
- Access to Markets
- Access to Resources
- Cheaper Labor
- Increased Quality of Goods
- Increased Quantity of Goods
Importing vs exporting
- Imports = goods and services that are brought in from another country
- Exports = Goods and services sold to other countries
Exporting is one way that businesses can rapidly expand their: potential market
Global sourcing
Global sourcing → A strategy in which a business buys goods and services from international markets
- Goal is to save money by using cheap raw materials or skilled labor from low-cost countries
Value added
Value added is the difference between how much it costs to make something and how much it’s worth when it’s finished.
Protectionism
Protectionism is when a country puts up barriers to trade with other countries to keep its own industries and jobs safe. It’s like a shield that protects the country’s economy.
Trade barriers
Trade barriers are specific restrictions or limitations placed on international trade for the benefit of a domestic economy. These barriers can take various forms, such as tariffs (taxes on imports), quotas (limits on the quantity or value of imports), and embargos (total bans on specific goods).
Trade surplus vs trade deficit
Balance of trade = difference between a country’s value of imports and value of exports
Exports - Imports = Trade Balance
Exports > Imports = Trade Surplus or positive trade balance (greater than)
Imports > Exports = Trade Deficit or negative trade balance
What is globalization?
Globalization is when different countries and economies become more connected and interdependent through trade, technology, and other means. This can lead to more sharing of ideas, products, and resources, and can help create a more global community. So, it’s like a big team working together to make the world a better place!
Advantages and disadvantages
of globalization
Advantages
*Brings more products to more places and
people
*Creates business opportunities
Disadvantages
*Can reduce jobs in certain areas of certain countries
*Unequal distribution of wealth
Interdependence
means that most countries rely on others to buy goods and services
3 marketing strategies for global markets
Standardization
- When a business uses to same marketing strategy from one country to the next
- Example:
Coca-Cola
Adaptation Strategy
- The adaptation strategy involves making changes in product and/or promotion to meet the target market’s culture, needs and wants
- Example: McDonald’s menu in India and Japan
Customized Strategy
- A customized strategy involves developing a totally new product to meet specific target market needs
- Example: A home appliance company wants to enter markets in a developing country. Your current appliances won’t work, so you will need to develop completely new appliances specifically for this market (manual)
Social costs
- Outsourcing:
Offshore outsourcing occurs when businesses decide to produce all or part of their goods in countries where labor costs are lower
Outsourcing is a business decision made to lower the costs of production or allow businesses to focus on the tasks that they do better
Effect: Loss of domestic jobs - Human rights:
Workers in many poorer countries face a wide range of abuses in the workplace
The Canadian business doing the outsourcing may not even be aware of the abuse and may have little to no control over the situation
Effects: Some workers in poor countries face labor exploitation:
Child labor
Physical abuses
Non-payment/underpayment of wages
Denial of food and health care
Excessive working hours
Unsafe working conditions - Environment Degradation:
Environmental degradation: occurs when natural resources such as trees, habitat, earth, water, air are being consumed faster than nature can replenish them
Sustainable development: process of developing land, cities, businesses, and communities that meet the needs of the present generation without compromising those of the future
Barriers + Obstacles
Tariffs:
- Tariffs are taxes on imported goods that increase their prices
- Countries use tariff barriers to protect domestic industries and raise revenue
Currency Fluctuations:
- Currency exchange rates fluctuate daily, making international purchases more or less expensive
Non-Tariff Barriers:
- Non-tariff barriers are standards set for imported goods that are too high for foreign competitors to meet
Cultural Differences:
- Cultural differences can affect international business, and failing to consider these differences can cause problems such as product non-sale, ruined negotiations, derailed marketing campaigns, and labor unrest.
