International Marketing Exam 1-
Questions and Answers Graded A+
4 major events/trends shaping international business - ANSWER-1) growth of World Trade Organization and new free trade agreements
2) trend toward accepting free market system in developing countries
3) growing impact of Internet, mobile phones, and other global media
4) obligation to manage global environment and its resources properly
internationalization of US businesses - ANSWER-- many US companies are now under foreign control
- many US firms generate large portion of revenue internationally
- to survive, firms must commit to foreign markets
international marketing - ANSWER-performance of business activities designed to plan, promote, and direct flow of a company's goods/services to consumers/users in more than one nation for a profit
international marketer's main concern - ANSWER-difficulties created by different environments that they cannot control but must adjust or adapt to in a manner consistent with a successful outcome
2 primary obstacles to international marketing - ANSWER-1) *self-reference criterion (SRC):* unconscious reference to one's own cultural values, knowledge, experience
2) *ethnocentrism:* notion that people in one's own company, culture, or country know best how to do things
global awareness - ANSWER-1) tolerance of cultural differences
2) knowledge of cultures, history, world market potential, and global, economic, social, and political trends
factors favoring faster internationalization - ANSWER-- high-tech and/or marketing-
based resources more so than traditional manufacturing companies
- smaller home markets and larger production capacities
- firms with key managers well networked internationally
stages of international marketing involvement - ANSWER-1) no direct foreign marketing:
firm does not actively encourage foreign customers to buy products & products do not reach foreign market
2) infrequent foreign marketing: sales to foreign markets are made as goods become available. little or no intention of maintaining continuous market representation
3) regular foreign marketing: primary focus is to serve domestic market needs but as overseas demand grows, production is allocated for foreign markets 4) international marketing: companies fully committed to and involved in international marketing
5) global marketing: firm treats the world (including home market) as one market. market segmentations not focused on national borders. > 1/2 of firm's sales revenues come from abroad. Ex. Coca-Cola
ethnocentric orientation - ANSWER-underlines host country's superiority. orientation is directed first to home country management, while overseas operations are considered only as an extension of the local market
do not adapt their goods/services to the needs and wants of other countries where the firm operates
polycentric orientation - ANSWER-gives equal importance to every country's domestic market because of belief that there is uniqueness of every market and its need to be addressed in an individual way
regiocentric orientation - ANSWER-segmentation of markets is fulfilled on basis of similarities in terms of regions. firm finds economic, cultural or political similarities among regions to cover similar needs of potential consumers
geocentric orientation - ANSWER-favors neither home country nor foreign countries where the firm operations. main idea is to target "global consumers" who have similar tastes
drivers of internationalization - ANSWER-- competition
- regional economic and political integration
- transition to a market economy
- technology
- improvements in transportation and telecommunication
- economic growth --- growth of substantial middle class
- converging consumer needs
firm drivers of international expansion - ANSWER-- product life cycle
- high new product development costs
- standardization
- economies of scale
- cheap labor
- experience transfers
obstacles to internationalization - ANSWER-- self-reference criterion (SRC)
- environmental barriers
- government
- economic - labor
- consumer ethnocentrism
- competition: blocked channels of distribution and retailer agreement, price cutting, advertising blitzes
protectionism - ANSWER-nations utilize legal barriers, exchange barriers, and psychological barriers to restrain entry of unwanted goods
*valid arguments under WTO:*
- protection of markets with excess productive capacity
- employment protection and protection of markets with excess labor
- infant industry argument
- natural resource conservation and environmental protection
- consumer protection
- national defense
*other arguments:*
- increase of business size
- retaliation and bargaining
- need to keep money at home
- encouragement of capital accumulation
balance of payments - ANSWER-system of accounts that records a nation's international financial transactions. includes 3 accounts: current account, capital account, reserves account
current account - ANSWER-record of all merchandise exports, imports, and services plus unilateral transfers of funds
trade barriers - ANSWER-tariff and non-tariff barriers (quotas, boycotts, monetary barriers, market barriers)
tools of government protectionism - ANSWER-- tariff barriers (taxes): discourage imports of particular goods, penalize countries, generate revenues. US tariffs < 10%
- non-tariff barriers: quotas, orderly marketing arrangements, non-automatic import licenses
- voluntary import expansion: governments agree to allow imports as a result of pressure
- voluntary export restraints: self-imposed export quotas
- antidumping and countervailing duty actions
- standards
- percentage requirements
- paratariff measures - additional charges
currency controls: monetary barriers - ANSWER-- blocked currency: refusing to allow importer to exchange its national currency for sellers' currency - differential exchange rates
- government approval: importers who want to buy a foreign good must apply for exchange permit
facilitators to international trade - ANSWER-- international trade and economic development organizations
- other institutions and procedures facilitating international trade
World Trade Organization (WTO) - ANSWER-- institution that sets many rules governing trade: provides assistance to developing and transition economies, offers help for export promotion, promotes regional trade agreements and economic cooperation, reviews members' trade policies
General Agreement on Tariffs and Trade (GATT) - ANSWER-- created out of determination to avoid economic disaster following WWI
- forum for member countries to negotiate reduction of tariffs and other trade barriers
- became part of WTO in 1997
General Agreement on Trade in Services (GATS) - ANSWER-- treaty of WTO that entered into force as a result of Uruguay Round negotations
Trade-Related Aspects of Intellectual Property Rights (TRIPS) - ANSWER-- administered by WTO
- sets down minimum standards for many forms of intellectual property
International Monetary Fund (IMF) - ANSWER-objectives: stabilization of foreign exchange rates and establishment of freely convertible currencies
World Bank Group - ANSWER-objectives: reduce poverty and improvement of living standards by promoting sustainable growth and investment in people
G7 - ANSWER-- members from most industrialized countries: Canada, France, Germany, Italy, Japan, UK, US. Russia was informal group member (G8) until Ukraine aggression
- yearly meeting involve heads of state, government ministers, directors of central banks
- addresses biotechnology, food safety, economic development, disarmament, arms control, organized crime, drug trafficking, terrorism, environmental issues, trade
United Nations (UN) - ANSWER-- promote economic and financial welfare in low and medium income countries
- focus on developing infrastructures or developing countries: industrial, communication,
agriculture, transportation
- 16 different UN organizations
Questions and Answers Graded A+
4 major events/trends shaping international business - ANSWER-1) growth of World Trade Organization and new free trade agreements
2) trend toward accepting free market system in developing countries
3) growing impact of Internet, mobile phones, and other global media
4) obligation to manage global environment and its resources properly
internationalization of US businesses - ANSWER-- many US companies are now under foreign control
- many US firms generate large portion of revenue internationally
- to survive, firms must commit to foreign markets
international marketing - ANSWER-performance of business activities designed to plan, promote, and direct flow of a company's goods/services to consumers/users in more than one nation for a profit
international marketer's main concern - ANSWER-difficulties created by different environments that they cannot control but must adjust or adapt to in a manner consistent with a successful outcome
2 primary obstacles to international marketing - ANSWER-1) *self-reference criterion (SRC):* unconscious reference to one's own cultural values, knowledge, experience
2) *ethnocentrism:* notion that people in one's own company, culture, or country know best how to do things
global awareness - ANSWER-1) tolerance of cultural differences
2) knowledge of cultures, history, world market potential, and global, economic, social, and political trends
factors favoring faster internationalization - ANSWER-- high-tech and/or marketing-
based resources more so than traditional manufacturing companies
- smaller home markets and larger production capacities
- firms with key managers well networked internationally
stages of international marketing involvement - ANSWER-1) no direct foreign marketing:
firm does not actively encourage foreign customers to buy products & products do not reach foreign market
2) infrequent foreign marketing: sales to foreign markets are made as goods become available. little or no intention of maintaining continuous market representation
3) regular foreign marketing: primary focus is to serve domestic market needs but as overseas demand grows, production is allocated for foreign markets 4) international marketing: companies fully committed to and involved in international marketing
5) global marketing: firm treats the world (including home market) as one market. market segmentations not focused on national borders. > 1/2 of firm's sales revenues come from abroad. Ex. Coca-Cola
ethnocentric orientation - ANSWER-underlines host country's superiority. orientation is directed first to home country management, while overseas operations are considered only as an extension of the local market
do not adapt their goods/services to the needs and wants of other countries where the firm operates
polycentric orientation - ANSWER-gives equal importance to every country's domestic market because of belief that there is uniqueness of every market and its need to be addressed in an individual way
regiocentric orientation - ANSWER-segmentation of markets is fulfilled on basis of similarities in terms of regions. firm finds economic, cultural or political similarities among regions to cover similar needs of potential consumers
geocentric orientation - ANSWER-favors neither home country nor foreign countries where the firm operations. main idea is to target "global consumers" who have similar tastes
drivers of internationalization - ANSWER-- competition
- regional economic and political integration
- transition to a market economy
- technology
- improvements in transportation and telecommunication
- economic growth --- growth of substantial middle class
- converging consumer needs
firm drivers of international expansion - ANSWER-- product life cycle
- high new product development costs
- standardization
- economies of scale
- cheap labor
- experience transfers
obstacles to internationalization - ANSWER-- self-reference criterion (SRC)
- environmental barriers
- government
- economic - labor
- consumer ethnocentrism
- competition: blocked channels of distribution and retailer agreement, price cutting, advertising blitzes
protectionism - ANSWER-nations utilize legal barriers, exchange barriers, and psychological barriers to restrain entry of unwanted goods
*valid arguments under WTO:*
- protection of markets with excess productive capacity
- employment protection and protection of markets with excess labor
- infant industry argument
- natural resource conservation and environmental protection
- consumer protection
- national defense
*other arguments:*
- increase of business size
- retaliation and bargaining
- need to keep money at home
- encouragement of capital accumulation
balance of payments - ANSWER-system of accounts that records a nation's international financial transactions. includes 3 accounts: current account, capital account, reserves account
current account - ANSWER-record of all merchandise exports, imports, and services plus unilateral transfers of funds
trade barriers - ANSWER-tariff and non-tariff barriers (quotas, boycotts, monetary barriers, market barriers)
tools of government protectionism - ANSWER-- tariff barriers (taxes): discourage imports of particular goods, penalize countries, generate revenues. US tariffs < 10%
- non-tariff barriers: quotas, orderly marketing arrangements, non-automatic import licenses
- voluntary import expansion: governments agree to allow imports as a result of pressure
- voluntary export restraints: self-imposed export quotas
- antidumping and countervailing duty actions
- standards
- percentage requirements
- paratariff measures - additional charges
currency controls: monetary barriers - ANSWER-- blocked currency: refusing to allow importer to exchange its national currency for sellers' currency - differential exchange rates
- government approval: importers who want to buy a foreign good must apply for exchange permit
facilitators to international trade - ANSWER-- international trade and economic development organizations
- other institutions and procedures facilitating international trade
World Trade Organization (WTO) - ANSWER-- institution that sets many rules governing trade: provides assistance to developing and transition economies, offers help for export promotion, promotes regional trade agreements and economic cooperation, reviews members' trade policies
General Agreement on Tariffs and Trade (GATT) - ANSWER-- created out of determination to avoid economic disaster following WWI
- forum for member countries to negotiate reduction of tariffs and other trade barriers
- became part of WTO in 1997
General Agreement on Trade in Services (GATS) - ANSWER-- treaty of WTO that entered into force as a result of Uruguay Round negotations
Trade-Related Aspects of Intellectual Property Rights (TRIPS) - ANSWER-- administered by WTO
- sets down minimum standards for many forms of intellectual property
International Monetary Fund (IMF) - ANSWER-objectives: stabilization of foreign exchange rates and establishment of freely convertible currencies
World Bank Group - ANSWER-objectives: reduce poverty and improvement of living standards by promoting sustainable growth and investment in people
G7 - ANSWER-- members from most industrialized countries: Canada, France, Germany, Italy, Japan, UK, US. Russia was informal group member (G8) until Ukraine aggression
- yearly meeting involve heads of state, government ministers, directors of central banks
- addresses biotechnology, food safety, economic development, disarmament, arms control, organized crime, drug trafficking, terrorism, environmental issues, trade
United Nations (UN) - ANSWER-- promote economic and financial welfare in low and medium income countries
- focus on developing infrastructures or developing countries: industrial, communication,
agriculture, transportation
- 16 different UN organizations
