Unit 1 Flashcards
Growth in interconnectedness can be attributed to developments such as
- the creation of economic and monetary unions,
- decreasing trade tariffs and establishing free trade zones,
- companies becoming increasingly mobile, and
- barrier-free communication across national borders emerging as a result of technological advances and widespread use of the Internet.
International marketing refers to the process of?
expanding into and operating within global markets using specific marketing mix tools. It is characterised by cross-border activities that involve adopting both country-specific and transnational approaches.
What are the distinct issues that arise as a result of crossing national borders?
information demand, business risk, complexity, and uncertainty
Three main types of information direct the scope of national marketing activities
- Supplier Feedback
- Consumer feedback
- competitor feedback
What is Supplier Feedback?
Company goals that are specific to foreign markets and the configuration of international activities.
include financial goals (e.g. liquidity, capital structure, etc.), social goals (e.g. security, job satisfaction, company culture), and/or prestige goals (e.g. image)
What is Economies of scales
additional sales volume results in greater distribution of fixed costs; higher additional sales volumes result in wider allocation of
fixed costs and thus lower costs per unit produced. This greater distribution of fixed costs is referred to as “economies of scale.”
Realizing the potential for economies of scale (which leads to reduced production costs and sustained competitiveness) is among
the most important motives for a company seeking to internationalize its activities (Meffert & Bolz, 1998).
What is consumer feedback?
consumer preference and their buying behavior
What is arbitrage?
Arbitrage occurs when country-specific differences in prices and quality are known and the costs related to procurement (e.g. import taxes, delivery charges, etc.) do not outweigh the relative benefits of purchasing from a foreign market
Arbitrage places pressure on differentiated pricing
What is competitor feedback?
Competitor feedback refers to the information about the strategy and operations of companies providing similar products.
Key information about competitor feedback
Relative competitive positions and the extent of a company’s own internationalization as well as the internationalization level of competitors are one of the main causes for the interdependence of national markets. In the case study above, competitor feedback resulted in an integration into competing networks in order to remain competitive on a global scale. Changes in the behavior or number of competitors entering a single market may force a company to adjust not only their international marketing policy towards a particular national market but also toward other markets in which they are active
we define the tasks of international marketing as
accessing or managing relevant feedback (supplier, consumer, and competitor feedback) at the business segment level,
coordinating national marketing activities (when entering new markets and operating within multiple markets), and
optimizing profits across all national markets.
Interactive Quiz - Score
The market environment of international business is characterized by
technological, political-legal, and socio-cultural factors
Technological factors (explanation)
Advances in both communication and transport technology (sometimes referred to as freight) have led to the distribution of labor, management, and production, and reduced costs associated with sourcing materials, producing goods and services, and selling them in multiple locations. However, available technology varies across and even within national markets, affecting the decision-making of suppliers, consumers, and competitors.
Political and Legal (explanation)
Political-legal factors refer to the political situation and stability of a country as well as the development and implementation of their legal systems (which includes both domestic and international legal structures). For companies considering entry into different national markets, it is important to assess the political-legal situation of each country, using either qualitative or quantitative tools
Qualitative : certain risk factors (such as currency risks or security risks)
WHAT IS THE BERI INDEX?
country risk indexes such as the Business Environment Risk Index (BERI) evaluate risks for each country, using qualitative data from interviews with managers and/or researchers and quantify the data in order to develop country rankings.
Socio-cultural factors: explanation
Cultural differences between individual countries are an essential factor to consider when designing international marketing policies. Five dimensions outlined originally by Geert Hofstede can be used for characterizing the culture of a country
Hofstede 5 dimensions
Power distance: When there is a high power distance in a society, less powerful members accept and thus expect a comparatively uneven distribution of power. Societies with a low power distance are characterized by egalitarianism.
Individualism: In an individualized society, the bonds between members are comparatively loose whereas the integration of members into social groups is great in societies that are characterized by collectivism.
Masculinity: People tend to take a firm line with one another and act competitively in societies characterized by strong masculinity. Values such as modesty and care tend to prevail in countries with weaker masculinity.
Uncertainty avoidance: In countries in which this dimension is strong, people tend to feel threatened by certain or unknown situations and strive to ensure a great extent of security. People in cultures where this dimension is weaker are more willing to take risks.
Long-term orientation: Where long-term orientation prevails, people largely focus on the future and attach importance to values such as endurance and thriftiness. Where short-term orientation is stronger, people focus on values oriented towards the past or the present, e.g. respecting and continuing traditions.
individual buying behavior
Differences in individual buying behavior are often the result of differences in socio-economic structures and values. One measure used to classify individuals and their buying behavior is the so-called Sinus-Milieus, a social and target group model developed by the Sinus
Levitt (1983) postulates that there is an increasing homogenization of markets as well as the development of cross-culture and cross-national target groups with converging needs. Levitt lists the following reasons for the convergence of consumer needs:
similar sociodemographic developments in many industrial nations (e.g. a trend towards smaller families, increasing life expectancy, etc.)
societies increasingly experiencing and integrating foreign cultures (e.g. in educational institutions)
improvements in transport (e.g. quicker and less expensive flights, proliferation of tourism) and communications technology (e.g. Internet and wireless technology)
The increasing interconnectedness of national economies can be attributed to which developments?
decreased tariffs and the establishement of free trade zone
creation of economic and monetary unions
barrier free communication across national markets due to the advent of the internet
