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Chapter 1 – Discussion Questions 1.1 Why has there been such an increase in interest by business firms in international and export marketing? Will this interest continue to increase? Why, or why not? · International sales provide additional profits. In some instances these additional profits are all that enable some companies to entail any profits at all. In addition to: domestic economics have become somewhat dependent upon international sales as a channel of foreign exchange needed for the import of goods and services to our own domestic economy. · Yes, this trend will continue to increase. Due to the fact that world trade has continued to increase at a more rapid pace than the world gross product, which only further solidifies the importance of international markets. 1.2 What is meant by internationalization and how does this relate to the global marketer? · Internationalization may be thought of as a process, a way of thinking, or an end result. For the global marketer, internationalization is most effective when developed as a carefully planned process for increasing business within the international market. There are several ways that a company may choose to market its products within the international market. However, in the approach that they choose to, they must heavily weigh all of the advantages and disadvantages of the option that they choose to implement in order to become a volatile player within the market. In addition to a company entering the global market must understand the culture and the preferences of the culture in which they are entering the market. 1.3 Is taking a global view limited to companies that view themselves as global companies? Explain. · No, while a global marketing approach could be an attractive option for some companies, most have somewhat small levels of international activities. Internationalization is by no means limited to larger “global” companies. Smaller and medium sized companies dabble in the international markets as well. Only they often do so on a smaller scale. Such as integrating into only a few international companies and often doing so in such countries that have a less extensive barrier to entry. 1.4 Is it meaningful to attempt to measure the degree (or amount) of internationalization of a firm? Explain. · Yes, measuring the degree of internationalization of a firm can be useful in the fact that it allows for management to determine how international the company is now, how international the firm can be, and how international the firm can be. 1.5 What does it mean for a firm to be “market driven?” Is this really important in today’s environment or can a company be successful without being so driven? Explain. · A market driven company must be formulated with the needs of its consumers in mind. It must be structured in such a way as to integrate the customer into the company and to maintaining a solid relationship between the consumer and company. It is geared more at creating a market as opposed to controlling any particular market. · While it is not completely necessary for a company to be “market driven” in order to prove successful, it is however very beneficial. In order for a company to be successful in this type of market, market demand has to be than is market supply. However, in most instances the company must be capable of producing products that are wanted by consumers. Which in most instances calls for a plan that allows for products as well as marketing schemes to change with the changes in business. 1.6Explain the meaning of the following statement: “If a company is to be successful in foreign markets its management must have a good understanding of all aspects of the environment within which it will be operating.” · The company must understand that they are not doing business on their “home turf” and that with different cultures and world locations, come different preferences, different tastes, and different needs. All of which must be satisfied to ensure that the consumer is satisfied. 1.7 Give two or more examples of how external factors (exogenous variables) in the international environment make export marketing more complex than domestic marketing. · Strategic decisions such as which countries to target · Tactical decisions such as product positioning. 1.8 What is inward internationalization? Explain the nature of the relationship between inward and outward internationalization from an individual company’s perspective. · Inward internationalization is simply put, foreign sourcing activity. · Inward internationalization may precede and influence the development of outward internationalization in such a way that the effectiveness of inward activities could determine the success of outward activities. · Inward/Outward relationships can be classified as either having a direct relationship with one another or an indirect relationship. In a direct relationship the outward actions are heavily dependent upon the outcome of the inwards actions. Where as in an indirect relationship the two of them are not so dependent upon one another. 1.9 What are the three distinct component s of export planning and strategy development and how are they related? · Goal, Program, and Organization · The three components are interrelated, without one of them it would be nearly impossible to achieve the others. For example, it would be very difficult to decide upon a product mix, without first setting out a list goals that sets out what the company wants to do. 1.10 Identify the potential barrier (or obstacles) that face companies considering – or expanding – international marketing operations. Which are most important and which are less important? Explain. · Communicating with foreign unit, lack of export training, lack of market information, controlling international activities, documentation requirements, foreign government and public attitudes, trade barriers, arranging transportation, packaging, etc., providing services, higher than domestic risk, financing sales, no assistance form home government. · As far as determining which of these factors is the “most and least important,” that is hard to say, b/c it is dependent upon the needs of each individual entity. For one company it could be that a lack of export training could be the most important barrier to entry, while at the same time that could be the least important barrier for another company. 1.11 When considering the ethical and moral issues underlying of an international marketer, should the manager follow the utilitarian, the rights, or the justice principle? Defend your answer. · I personally would have to choose the “Utilitarian.” Not necessarily of what it is defined as, but perhaps due to the other alternatives. In the case of the Principle of Rights, I feel as though we should try to improve and satisfy society as a whole as opposed to the “individual.” In the instance of the Principle of Justice, I have a very hard time agreeing with “Compensatory Justice.” It is my opinion that it is a huge “injustice” to society as a whole to “make up for past injustices.” What has been in the past, should remain just there, in the past. I mean honestly? I cannot even fathom the fact that one day my grandchildren may have a more difficult time getting into the university of their choice due to the fact that minorities were treated less than equal a half of a century ago. 1.12 Is the role of the international marketer only to attempt to increase sales? Explain. · No, while increasing sales does play an o the integral role in the job of an international marketer, it is by no means the only role that he or she must assume. There are several other things that an international marketer must concern him or herself with. Such as concerns over the environment, satisfying the needs of the society in which they have chosen to due business, adhering to the “laws and ways” of the land, and etc. 1.13 Is the use of the World Wide Web appropriate only for large companies? Explain. · While it is not necessarily inappropriate for medium and smaller sized companies to use the World Wide Web, it is however, more difficult for them to become noticed. Even a very well designed web page will prove useless if the company is relatively small and unknown. B/C, if there is nobody looking at these “well designed web pages,” there cannot possibly be any business done on the web. 1.14 What is e-business? · Sale, purchase, or exchange of goods, services, or information over the Internet or other telecommunication networks. 1.15 Are online marketplaces useful only to businesses? Explain. · No, while online marketplaces have proven to be the most beneficial for large businesses and corporations, they are also useful to smaller organizations and individuals. Thus, restricting online marketplaces to only large businesses is not necessary. 1.16 Does e-business present a threat or an opportunity to traditional stores and wholesalers? Explain. · For the most part e-business can prove to be beneficial for “traditional” type businesses. While some companies opt to do all business online. Most have found that the greatest benefit comes from combining a mixture of “traditional” business practices with the emerging rise of e-commerce. Chapter 2 - Discussion Questions 2.1 What are the benefits to consumers arising from international trade? Are they the same for industrial goods as for consumer goods? What costs to consumers arise from international trade? · Active trade relations among countries create employment opportunities, and consumers gain as employment is their source of purchasing power for domestic and foreign goods and services. · The nature of potential benefits of importing consumer goods are obvious – namely, lower price, an increase in supply and variety of goods from which consumers can choose, an being able to access the results of technological developments and advancements. While not quite so obvious, the effect of importing goods is the same. However, it is not a direct benefit, but depends on the impact that such imports have on domestic production sector of the economy. · Consumers have a stake in the exports of domestic firms to the extent that high volume creates economies in the production process which are then passed on. That is, selling abroad helps to gain economy in production at home, which means lower prices to consumers of domestic products. At the same time, in order to pay for imports, there must be a capital outflow. Not only does this have a negative effect upon the country’s balance of payments, but there could be a lessening of much needed foreign currency. Increased competition to locally produced goods may exist, and labor could be affected if this competition led to lost sales and profits redundancy in employment. 2.2 Discuss how exports and imports help to increase productivity and efficiency. · Trade is a way to increase, and perhaps even maximize, productivity. Marketing and production methods are continuously changing. While old methods evolve into new, the new techniques tend to migrate from country to country. · Another type of response to the competition from imports that leads to increases in productivity is that of cost reduction. Cost reduction is accomplished through ways of automation, economizing in personnel, elimination of parts, and product simplifications. 2.3 The productivities of factor inputs with respect to different products are determined by a combination of natural and acquired advantages. Is the productivity of the Japanese due primarily to natural or acquired advantages? How about the French, or Chinese? Explain. · An example of how Japan’s acquired advantages were more beneficial for productivity in the instance of the silk market that they had. For example, nylon practically ruined the silk industry of Japan, while the development of synthetic materials, such as synthetic rubber, has limited the expansion of their natural counterparts and may, in some cases, entirely replace them. 2.4 (a) Briefly explain the different types of economic advantage for two countries, A and B, each able to produce two products, X and Y, and discuss the conditions for trade to be advantageous (assuming no transaction costs). · Absolute Advantage The case where one country or firm has a cost advantage in one product and another country has a cost advantage in another product. In a two-country tow-product world, international trade an specialization will be beneficial to each country when the country is absolutely more efficient than its trading partner. · Comparative Advantage – The case where one country has an absolute advantage in the production of all products and services compared to another country, but has a greater cost advantage in some products than in other ones. When this condition exists a country benefits by specializing in and exporting the product in which it has the greatest advantage, and importing the products in which advantage is less. · Unequal Advantage – A situation where one country has a relative cost advantage over another country in all products. In this case neither country has any type of advantage in trading. 2.5 Find an example of a country that is exporting a product for which it has an absolute disadvantage with a trading partner but where there is a comparative advantage. Explain the nature of this trading relationship. · If one country has an absolute advantage over another country in the production of all products, trade will be beneficial if the domestic exchange ratios in each country are dissimilar; in other words, if the country with the absolute advantage has a greater advantage in producing another. This situation is known as “the principle of comparative advantage.” · When this condition exists a country benefits by specializing in and exporting the product in which it has the greatest advantage, or a superior advantage, and importing the product in which its advantage is less, or in which it has an inferior advantage. Thus, the other country, even though it is at a disadvantage in producing all products, can benefit by specializing in and exporting the product in which its disadvantage is least. 2.6 Explain the product life-cycle concept as it relates to international trade and investment. What does the concept mean to the individual firm? · The product life-cycle theory of international trade has been found to be a useful model for explaining not only trade patterns of manufacturers but also multinational expansions of sales and production subsidiaries, that is, it has been useful explaining certain types of foreign direct investment. · During the process, which can be described in various stages, the innovator country of a new product is initially an exporter, then loses its competitive advantage in trading partners, and may eventually become and importer of the product some years later. The introduction stage of the trade cycle begins when the innovator company establishes a technological breakthrough in the production of manufactured item. · During the trade cycle’s next stage, the innovator manufacturer begins to export profit to foreign markets, which are likely to be countries with similar tastes, income levels, and demand structures, i.e., other countries. · As time passes, the manufacturer realizes that to protect its foreign sales and export profits it must locate production operations closer to the foreign markets. The domestic industry enters its mature stage as innovating firms establish subsidiaries abroad, usually in advanced countries first. · Although an innovating country’s monopoly position may be prolonged by legal rights it often breaks down over time. Once the innovative technology becomes fairly commonplace, foreign producers begin to imitate the production process. The trade cycle is complete when the production process becomes so standardized that it can be easily utilized by all nations, including lesser-developed countries. · At the individual company level, a situation that leads to the breakdown of monopoly positions based on patents and intellectual property rights is counterfeiting and piracy. 2.7 Export motives can be classified as internal or external and as reactive or proactive. What is meant by these terms with respect to export marketing? Give examples of each of the combinations of export motives. · Reactive - A company responds to internal and external pressures and acts passively. · Proactive – Aggressive behavior based on a company’s interest in exploiting unique competence or market possibilities. · Examples of internal proactive measures: Managerial urge, marketing advantages, economies of scale, unique product/technology competence · Examples of proactive external measures: Foreign market opportunities, change agents · Examples of reactive internal measures: Risk diversification, extend sales of a seasonal product, excess capacity of resources · Examples of external reactive measures: Unsolicited orders, small home market, stagnant or declining home market 2.8 Why might some companies be willing to undertake new or additional international/export marketing even though it apparently offers only similar (or even lower) levels of profitability? · Some countries, for example, may be able to produce domestically most kinds of products more cheaply than can be produced in foreign countries. In such circumstances, these countries will gain by importing those goods in which it has a relative disadvantage in production, and thus gain the opportunity to export goods for disadvantage in production and thus gain the opportunity to export goods for which each has a relative advantage, by reason of superior natural resources, labor, and management skills, capital resources, manufacturing processes, or technology. 2.9 What is meant by a “change agent” in export marketing? Give examples of activities of each type of change agent. · Change Agent – A government or private organization that promotes export activities of business firms. · Government agencies, industrial trade associations, banks, chambers of commerce, port authorities, and other organizations may be major promoters of export activities. Major export promotion activities include giving and guaranteeing loans, providing credit facilities and insurance, publishing basic market data on foreign markets, exhibiting at trade fairs and exhibitions, sponsoring and participating in trade missions, providing trade leads and reports on individual companies, and being party to trade agreement and conventions. 2.10 How can a company determine how internationalized it is? Explain. · In general, the degree has been measured by quantitative indicators, such as the number of countries in which the firm is doing business, characteristics such as foreign earnings, sales, turnover, assets, the number of employees engaged in foreign activities, and so on. These quantitative indicators maybe measured absolutely or relatively. The absolute component gives an indication of the amount of resources that a firm commits to foreign operations. The relative measure shows that a firm is strongly dependent on its foreign activities if it has committed a significant portion of its financial, technological, and human resources to foreign market activities. · The firm’s degree of internationalization can also be described by qualitative measures. Behavioral characteristics such as top management “international orientation”, the degree of foreign experience, and so on, are very appealing, but the use of such indicators involves many measurement problems and they are difficult to operationalize. 2.11 Find an example of a company that has expanded its export/international marketing activity, or started such activity, and determine the company’s objectives for doing so and the results achieved. · For the viewpoint of the individual firm, the internationalization process is defined in terms an evolutionary process of development in a firm’s international engagement. · Export development can be described as a stimulus-response process, in which experimental learning has been considered as an important determinant. Information activities, willingness to commit resources, and managerial risk-taking behavior are essential in describing the process. · Structural factors have often been regarded as critical determinants in the exporting activity of a firm, but the evidence to support the effect of size, product, and technology orientation is conflicting. · Empirical evidence indicates that as companies increase their level of international involvement there is a tendency for them to change the methods by which they serve foreign markets. · In an early stage-theory approach, Johanson and Vahlne used the market entry form as a criterion based on extensive experience with Swedish firms. The classification of firms consists of four broad stages in which the following international take place: (1) no permanent export, (2) export via agent, (3) export via a sales subsidiary, and (4 production in a foreign subsidiary. 2.12 How can a company make operational use of the network model and relationship marketing in planning and implementing international marketing programs? · Empirical research has demonstrated that firms in industrial markets establish and develop lasting business relations with other businesses. This is known as relationship marketing. In particular this is true in international markets, where a company is engaged in a network of business relationships comprising a number of different firms, export distributors, agents, foreign customers, competitors, and consultants as well as regulatory and other public agencies. Networks connect these business relationships where the parties build mutual trust and knowledge through interaction, and that interaction means strong commitment to relationships. · When the grouping a grouping is made on the basis of national borders, different national nets can be identified. Correspondingly, “production nets” refer to relationships between those companies whose activities are linked to a specific product line. · When relationships develop through interaction the people or companies in the local or international environment are tied to each other through a number of different bonds: technical, social, administrative, legal, economic, and so on. · In terms of networks, internationalization means that the firm develops business relationships in networks in other countries, that is, the network position. · A basic assumption in the network model is that the individual firm is dependent on resources controlled by other firms. The companies get access to these external resources though their network positions. Since the development of positions takes time and depends on resource accumulations, a firm must establish and develop positions in relation to counterparts in foreign networks. · In sum, the network approach offers a model of the market and the firm’s relationship to that market. The model stresses the cumulative nature of the firm’s activities in developing international market positions and seems especially important in understanding key issues involved in cooperation in industrial systems and global industry competition. 2.13 There many who believe that “whatever is legal is ethical.” Do you agree with this belief as it might apply to the international marketer? Explain your position and give examples of behavior in the global marketplace that would support your position. · Ethical behavior is at its most basic level, is what most people in a given group view as being moral, good, and right. The judgment as to whether a decision is considered ethical is “firmly anchored and steeped in a set of individual, corporate and social values, which derive from the cultural underpinnings of a society.” Stated in another way, what is considered ethical in one society may be considered unethical in another. · Three examples that illustrate these basic differences may be seen on the varying views of the paying of interest on loans, the attitudes toward women in the workforce, and the differences regarding the payment of bribes. Lending money for the payment of interest is ethical in many societies, but considered unethical in some Islamic societies. Providing equal employment opportunities for a woman is considered morally right in many countries, but is specifically prohibited by law in other countries. There are great differences in attitudes toward the payment of bribes or gratuities between countries. 2.14 Is being “right” or “wrong” about moral issues in international marketing activities an absolute or is it relative? Explain. · The international marketer needs to understand that those in the countries in which this marketing occurs may not share his or her beliefs about what is right and wrong. Knowledge of ethics, values, and customs in the overseas markets, as well as those in the home market, is necessary for successful marketing and avoiding possible problems. · It is important to understand that what is “right” and “wrong” is not always easy to determine, as there is no universally accepted code of behavior to aid decision makers. Knowledge of the home market and foreign market is essential to arriving at one’s own behavior code for each situation faced. Chapter 3 - Discussion Questions 3.1 Various classification schemes are sometimes used to give an indication of the potential of a particular foreign market/country. Explain why these schemes should or should not be used as a basis for deciding what markets to enter. · Any classification scheme assumes certain homogeneity among markets in the same category, which often is not correct. Even the more traditional countries may have groups of people who, due to their income and other sets of values, will be a market for sophisticated products and services, while some of the developed countries still have portions of their population to some extent outside of the money economy. · If complemented with the use of socio-economic, cultural, demographic, and structural data, then it becomes possible to use classifications to assess the existence of a potential market for a given product in a given country. However, the results of such an analysis may yield nothing better than the knowledge that a market exists of r the product concept without ensuring the success of any given marketing mix. At best, then, any classification schema is an indicator that further investigation is or is not warranted. 3.2 Explain the meaning of “cultural universals.” Do these provide universal guides to behavior in all societies? How can the international marketer use these universals? · Culture can be viewed as the homogeneity of characteristics that separates one human group from another. Another way to learn about cultures is to examine cultural universals, and seek generalizations that apply to all cultures. This task is made difficult by the fact that much of the routine of living is governed by cultural characteristics of which people are only dimly aware, or perhaps even unaware. · Learning about cultures is made even more difficult because societies or groups may share certain common culture traits, but there are also many possible subcultures with characteristic traits that explain variations in behavior within cultures. Major subcultures mat be based on nationality, religion, race, and geographical area. 3.3 Do you agree that the international marketer does not need to study a culture from a narrow perspective but rather needs only a broad perspective to learn about general patterns and themes? Explain your answer. · With regard to international marketing management, it seems best to study cultures not only from a broad perspective to learn about relevant patterns and themes, but also from a narrow perspective as behavior relates specifically to certain products or marketing efforts. This approach to studying culture can lead to information that will guide international marketing efforts, especially to determine when the same strategies and tactics can be employed in multiple countries and when they cannot. 3.4 Explain the meaning of the following statement: “People are what make international marketing exciting but frustrating.” · It is exciting that there are so many different types of people to market, which make it possible for the global economy that we are now living in. But, at the same time it can be prove to be difficult to adhere to all of the needs of all of the people in even our own domestic markets, much less the markets of the international world. 3.5 What is the “silent language” of international marketing and how does it relate to the concept of “culture is communication?” · Behavior itself is a form of communication. Each culture may differ in the was that it experiences and uses such things as time, space, relationships, and a host of other aspects of culture. This form of communication is known as the silent language. · More specifically, Hall (1960) has defined the major dimensions of the silent language as they operate within international marketing as being: (1) time; (2) space; (3) things; (4) friendship; (5) agreements. These five dimensions can form the basis of a real understanding of foreign cultures. The international marketer must, if there is to be a successful and mutually profitable relationship, know how the persons whom he or she will be contacting use of each of the languages. 3.6 What id the self-reference criterion and how should the international marketer apply it? Explain. · Lee (1966) coined the term “self-reference criterion” as a useful concept to avoid cultural bias. He suggested that problems should be defined first in terms of cultural traits, habits, or norms of the home society. They should be redefined without value judgments, in terms of the foreign cultural traits, habits, and norms. He indicated that the difference between these two specifications is an indication if the likely cultural bias, or SRC effect, which can be then isolated and carefully examined to see how it influences the concept or the problem. The value of this approach lies in forcing the manager posing the problem to make specific his or her assumptions about the cultural elements affecting the problem and to question whether or not they hold for another culture. 3.7 Government can play many roles in international marketing. What are these roles and how does each affect individual business firms? · As an environmental force affecting international/export marketing, government intervenes in a single country’s economy by being a participator, planner, controller, or stimulator. Such intervention activities can be categorized into the following three groups: (1) those that promote international/export marketing transactions; (2) those that impede such transactions; and (3) those that compete with or replace international/export marketing transactions by private business firms. · Sub-national government agencies tend to concentrate on promoting export-marketing activities by private business firms. There are, however, some instances where sub-national governments place restrictions that act as impediments. · At the national level, governments engage in all kinds of activities and may or may not favor one category over another. These activities bear directly on company operations and management and affect strategy formulation and implementation. · In addition to the many international constraints there are certain local governmental constraints that come from an exporter’s home country. For instance, a company may find that it cannot do business in a particular foreign market because its home government has political differences with the foreign government in question. 3.8 Why is that some exporters would support voluntary export restraints agreed to by their government? * Yet there are times when quotas can work to the advantage of the export company and the organizations selling its products overseas. An illustration is the voluntary restraint that the Japanese government, under strong pressure from the U.S. government, imposed on its own exports of automobiles to the United States beginning in 1983. When the number of automobiles that they could export to the United States was reduced below demand, the Japanese automobile companies responded by sending fully equipped automobiles at the top of their product lines.
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