Marketing Chapter 19 (test 3)

global firm
operates in more than one country
gains marketing, production, r&d, and financial advantages not available to purely domestic competitors
sees the world as one market
six major decisions in international marketing
looking at the global marketing environment
deciding whether to go global
deciding which markets to enter
deciding how to enter the market
deciding on the global marketing program
deciding on the global marketing organization
tariffs
taxes imposed on certain imported products as they enter a country designed to raise revenue or to protect domestic firms
quotas
limits on the amount of foreign imports a country will accept in certain product categories to conserve on foreign exchange and protect domestic industry and employment
exchange controls
a limit on the amount of foreign exchange and the exchange rate against other currencies
nontariff trade barriers
include biases against bids or restrictive product standards that go against American product features
general agreement on tariffs and trade (GATT)
designed to promote world trade, it reduces tariffs and other international trade barriers
world trade organization
replaces GATT in 1995, enforces GATT rules, mediates disputes, and imposes trade sanctions
free trade zones/economic communities
groups of nations organized to work toward common goals in the regulation of international trade. ex: EU
industrial structure
shapes its product and service needs, income levels, and employment levels.
-subsistence economies (most people engage in simple agriculture, few market opportunities, ex: african countries)
-raw material exporting economies (many natural resources, most revenue comes from exporting them)
-emerging economies (fast growth in manufacturing results in rapid overall economic growth)
-industrial economies (major exporters of manufactured goods, services, and investment funds)
income distribution
low income households
middle income households
high income households
political-legal environment
need to consider:
-country’s attitude toward international buying
-government bureaucracy
-political stability
-monetary regulations
factors to consider when deciding to go global
can the company understand the consumers? can the company offer competitively attractive products? will the company be able to adapt to local culture? can the company deal with foreign nationals?
how to decide which markets to enter
need to consider:
-define international marketing objectives and policies
-foreign sales volume
-how many countries to enter
-types of countries to enter based on:
–geography
–income and population
–political climate
rank political global markets based on:
market size
market growth
cost of doing business
competitive advantage
risk level
three key approaches to entering international markets
exporting, joint venturing, and direct investment. exporting has the least amount of commitment, risk, control, and profit potential, and direct investment has the most
exporting
when the company produces its goods in the home country and sells them in a foreign market. the simplest way to enter a foreign marketing involving the least change in the company’s product lines, organization, investments, or mission. two types: indirect and direct
indirect exporting
working through independent international marketing intermediaries. involves less investment and risk because the firm does not require an overseas marketing organization or network
direct exporting
sellers handle their own exports. the investment and risk are somewhat greater in this strategy, but so is the potential return
joint venturing
when a firm joins with foreign companies to produce or market products or services. ex: licensing, contract manufacturing, management contracting, and joint ownership. differs from exporting in that the company joins with a host country partner to sell or market abroad.
licensing
when a firm enters into an agreement with a licensee in a foreign market. for a fee or royalty, the licensee buys the right to use the company’s process, trademark, patent, trade secret, or other item of value. has little risk and the company does not have to build its brand from scratch
contract manufacturing
when a firm contracts with manufacturers in the foreign market to produce its product or provide its service. benefits include faster startup, less risk, and the opportunity to form a partnership or to buy out the local manufacturer
management contracting
when the domestic firm supplies management skill to a foreign company that supplies capital. the domestic firm is exporting management services rather than products
joint ownership
when one company joins forces with foreign investors to create a local business in which they share joint ownership and control. this is sometimes required for economic or political reasons
direct investment
the development of foreign-based assembly or manufacturing facilities. it offers a number of advantages, including:
-labor
-logistics
-control
-government incentives
-lower costs
-raw materials
main disadvantage – the firm faces many risks, like restricted or devalued currencies, failing markets, and government changes
standardized marketing mix
selling the same products and using the same marketing approaches worldwide
adapted marketing mix
adjusting the marketing mix elements in each target market, bearing more costs but hoping for a larger market share and ROI
straight product extension
marketing a foreign product in a foreign market without any change
product adaptation
changing the product to meet local conditions or wants
product invention
creating something new for a specific country market. can do by maintaining or reintroducing earlier products, or by creating new products
uniform pricing
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
standard markup pricing
a price based on a percentage of cost but can cause problems in countries with high costs
seller’s headquarters organization
supervises the channel and is also a part of the channel
channels between nations
move the products to the borders of the foreign nations
channels within nations
move the products from their foreign point of entry to the final customers
management of international marketing activities includes:
-establishing an EXPORTING DEPARTMENT with a sales manager and staff
-creating an INTERNATIONAL DIVISION organized by geography, products, or operating units
-becoming a complete GLOBAL ORGANIZATION