International Marketing Final

Front 1

market entry strategy

Back 1

the manner in which company management decides to pursue market opportunities outside the home country

Front 2

licensing

Back 2

a contractual arrangement whereby one company (licensor) makes a legally protected asset available to another company (licensee) in exchange for royalties, license fees, or some other form of compensation

Front 3

What are assets that can be licensed?

Back 3

- brand names
- company names
- patents
- trade secrets
- product formulations

Front 4

Pros and cons of licensing

Back 4

Pros:
- provides additionally profitability with little initial investment
- provides method of circumventing tariffs, quotas, or similar export barriers
-attractive ROI
- low costs to implement
- licensees are granted considerably autonomy and are free to adapt the licensed goods to local tastes
- can create export market opportunities, find low-risk manufacturing relationships, and speed diffusion of new products/technologies

Cons:
- offer limited market control; potential returns from marketing can be lost
- limited participation
- licensee may become competitor
- licensee may exploit company resources
To prevent this, use cross licensing (i.e. the licensee shares its developments with the licensor).

Front 5

Special licensing arrangements include ___ _____ and ____.

Back 5

Contract manufacturing and Franchising

Front 6

____ ____ is a licensing arrangement in which a global company provides technical specifications to a subcontractor or local manufacturer, who then oversees production

Back 6

Contract manufacturing

Allows licensing firm to specialize in product design and marketing, while transferring ownership of manufacturing facilities

Front 7

Pros and cons of contract manufacturing

Back 7

Pros:
- limited commitment of financial and managerial resources
- quick entry into target countries, especially when target mkt is too small to justify significant investment

Cons:
- may open company to public scrutiny and criticism if workers in factories are poorly paid or labor in inhumane circumstances

Front 8

What is franchising?

Back 8

-a contract between a parent company-franchiser and a franchisee that allows the franchisee to operate a business developed by the franchiser in return for a fee and adherence to franchise-wide policies and practices
-favored by specialty retailing and fast food industry
-executed with less localization than licensing

Front 9

___ ____ ____ is the market entry strategy in which companies invest in or acquire plants, equipment, or other assets outside the home country

Back 9

Foreign direct investment (FDI)

-allows companies to produce, sell and compete locally in key markets
-forms include JV, minority or majority equity stakes, and outright acquisition

Front 10

Joint Venture

Back 10

an entry strategy for a single target country in which the partners share ownership of a newly created business entity

Front 11

Pros and Cons of JV

Back 11

Pros:
-sharing risk
-learn about a new market environment
-allow partners to achieve synergy by combining different value chain strengths
-may be the only way to enter a country or region if gov't bid award practices routinely favor local companies, if import tariffs are high, or laws prohibit foreign control but permit joint ventures

Cons:
- must share rewards
- control and coordination issues
- potential conflict between partners (possibly due to cultural differences)
- dynamic JV partner can evolve into a stronger competitor

Front 12

Equity stake

Back 12

- simply an investment; if the investor owns fewer than 50 percent of the shares, it is a minority stake; ownership of more than half of the shares makes it a majority

Front 13

Full ownership

Back 13

- the investor has 100% control
- can be achieved by a start-up of new operations (greenfield investment) or a merger or acquisition of an existing expertise

Front 14

Pros and cons about ownership

Back 14

Pros:
- can avoid communication and conflict of interest problems
- do not need to share reward

Cons:
- expensive
- cannot collaborate or share risks with anyone

Front 15

strategic alliance

Back 15

a partnership among two or more firms created to minimize risk while maximizing leverage in the market place

Front 16

A ___ ____ ____ is a sophisticated market entry strategy via an alliance with one or more business partners for the purpose of serving the global market

Back 16

global strategic partnership (GSP)

Front 17

Strategic alliances exhibit 3 characteristics. The participants:

Back 17

1. remain independent
2. share the benefits and control
3. make ongoing contributions

Front 18

Pros and Cons of GSP

Back 18

Pros:
- high product dev. costs in the face of resource constraints may force a company to seek one or more partners
- technology reqs. of many contemporary products mean that an individual company may lack the skills, capital, or know-how to go it alone
-partnerships may be the best means of securing access to national and regional markets
- partnerships provide important learning opportunities

Cons:
- partners share control over assigned tasks, a situation that creates management challenges
-Potential risks of strengthening a competitor from another country

Front 19

GSP is distinguished by JVs by five different attributes:

Back 19

1. Two or more companies develop a joint long-term strategy aimed at achieving WORLD LEADERSHIP by pursuing cost leadership, differentiation, or a combination of the two
2. Relationship is RECIPROCAL; each partner possesses specific strengths that it shares with the other; learning must take place on both sides
3. The partners' vision and efforts are truly GLOBAL, extending beyond home countries and the home regions to the rest of the world
4. The relationship is organized along HORIZONTAL, not vertical, lines. Continual transfer of resources laterally between partners is required, with technology sharing and resource pooling representing norms.
5. When competing in markets excluded from the partnership, the participants retain their national and ideological IDENTITIES

Front 20

Six factors that have a significant impact on the success of GSPs:

Back 20

mission, strategy, governance, culture, organization, and management

Front 21

keiretsu

Back 21

interbusiness alliance or enterprise group that "resembles a fighting clan in which business families join together to vie for market share"

Front 22

chaebol

Back 22

composed of dozens of companies, centered around a central bank or holding company, and dominated by a founding family

Front 23

relationship enterprise

Back 23

groupings of firms in different industries and countries will be held together by common goals that encourage them to act as a single firm

Front 24

virtual corporation

Back 24

single entity with vast capabilities but will really be the result of numerous

Front 25

market expansion strategy options

Back 25

1. country and market concentration
2. country concentration and market diversification
3. country diversification and market concentration
4. country and market diversification

Front 26

country and market concentration

Back 26

-Narrow focus; targeting a limited number of customer segments in a few countries
- usually starting point for most countries
- matches company resources and market investment needs (i.e. not large not many resources)

Front 27

country concentration and market diversification

Back 27

-country focus; many markets in few countries

Front 28

country diversification and market concentration

Back 28

-country diversification; seeking out the world market for a product
- company can achieve greater accumulated volume and lower costs than any competitor and have an unassailable competitive advantage
- well-managed business that serves a distinct need and customer category

Front 29

country and market diversification

Back 29

- global diversification; corporate strategy of a global, multi-business company serving multiple segments
- at the operating business level , however, managers must focus on the needs of the world consumer in their particular global market (CD&MC)
- success in overseas markets can boost a company's total volume and lower its cost position

Front 30

law of one price

Back 30

-all customers in the market could get the best product available for the best price
-consider price floors, price ceilings, and optimum prices

Front 31

market skimming pricing strategy

Back 31

designed to reach a market segment that is willing to pay a premium price for a particular brand or for a specialized or unique product (i.e. louis vuitton)

Front 32

market penetration pricing strategy

Back 32

setting price levels that are low enough to quickly build market share (i.e. nintendo wii)

Front 33

export price escalation

Back 33

the increase in the final selling price of goods traded across borders that reflects these factors

Front 34

cost-based pricing

Back 34

-based on analysis of internal and external costs
-full absorption cost method: defines per-unit product cost as the sum of all past or current direct and indirect manufacturing and overhead costs
- rigid cost-plus pricing: no adjustments to reflect market conditions outside the home country
- flexible cost-plus pricing: ensure that prices are competitive in the context of the particular market environment
- estimated future cost method: self-explanatory

Front 35

The internationally accepted terms of trade are known as ___ ___ ___.

Back 35

International Commercial Terms (Incoterms)

Front 36

Incoterms are classified into four categories:

Back 36

-E-terms or origin terms
-D-terms or post-main-carriage or arrival terms
-F-terms or pre-main-carriage terms
-C-terms or main-carriage terms

Front 37

piggyback marketing

Back 37

–One manufacturer distributes product by utilizing another company’s distribution channel
–Requires that the combined product lines be complementary and appeal to the same customer

Front 38

global retailing strategies

Back 38

A. chain acquisition: culturally close, difficult to enter
B. Joint venture, licensing: culturally distant, difficult to enter
C. Franchise: culturally distant, easy to enter
D. Organic: culturally close, easy to enter

Front 39

Ex-Works (EXW)

Back 39

-E-term or origin
-refers to a transaction in which the buyer takes delivery at the premises of the seller; the buyer bears all risks and expenses from that point on

Front 40

Delivered duty paid (DDP)

Back 40

-D-term or post-main-carriage or arrival
-the seller has agreed to deliver the goods to the buyer at the place he or she names in the country of import, with all costs, including duties, paid
-seller is also responsible for obtaining the import license if one is required

Front 41

free carrier (FCA)

Back 41

-f-term or pre-main-carriage
-transfer from seller to buyer is effected when the goods are delivered to a specified carrier at a specified destination

Front 42

free alongside ship (FAS) named port

Back 42

-the seller places the shipment alongside, or available to, the vessel upon which the goods will be transported out of the country
- seller pays all charges up to that point and legal responsibility ends once the goods have been cleared fro export; the buyer pays the cost of actually loading the shipment

Front 43

free on board (FOB) named port

Back 43

the responsibility and liability of the seller do not end until the goods have cleared the ship's rail

Front 44

cost, insurance, freight (CIF) named port

Back 44

-C-term or main-carriage term
- the risk of loss or damage to goods is transferred to the buyer once the goods have passed the ship's rail
- seller has to pay the expense of transportation for the goods up to the port of destination, including the expense of insurance

Front 45

CFR (cost and freight)

Back 45

the seller is not responsible for risk or loss at any point outside the factory

Front 46

market holding strategy

Back 46

a pricing strategy that allows management to maintain market share; prices are adjusted up or down as competitive or economic conditions change

Front 47

price transparency

Back 47

buyers will be able to comparison shop easily because goods will be priced in a common currency

Front 48

An ____ or _____ pricing policy calls for the per unit price of an item to be the same no matter where in the world the buyer is located

Back 48

extension or ethnocentric

- the importer must absorb freight and import duties
-extreme simplicity , no need for information on competitive market conditions

Front 49

____ or ____ pricing permits subsidiary or affiliate managers or independent distributors to establish whatever price they feel is most appropriate in their market environment

Back 49

adaptation or polycentric

- no requirement that prices be coordinate from one country to the next

Front 50

____ pricing neither fixes a single price worldwide, nor allows subsidiaries or local distributors to make independent pricing decisions

Back 50

geocentric

-instead, is an intermediate course of action
- price coordination needed with international accounts and national pricing experience is leveraged
-still need local say

Front 51

___ _____ ____ are trademarked products that are exported from one country to another where they are sold by unauthorized persons or organizations

Back 51

grey market goods

Front 52

Parallel importing:
- definition?
- occurs when...

Back 52

-importing goods from one country to another without authorization from trademark owner (exploit price differentials)
-companies employ a polycentric multinational pricing policy that calls for setting different prices in different country markets

Front 53

Gray markets impose several costs or consequences on global marketers (5):

Back 53

- dilution of exclusivity
- free riding
- damage to channel relationships
- undermining segmented pricing schemes
- reputation and legal liability

Front 54

Representatives of two or more countries secretly setting similar prices for their products is called ___ ____.

Back 54

price fixing

-horizontal: competitors within an industry that make and market the same product conspire to keep rices high
-vertical: manufacturer conspires along supply chain

Front 55

____ ____ refers to the pricing of goods services, and intangible property bought and sold by operating units or divisions of the same company

Back 55

transfer pricing (for intracorporate exchanges)

Front 56

Three major alternative approaches can be applied to transfer pricing:

Back 56

-market-based transfer price: derived from price required to stay competitive
-cost-based transfer price: internal cost is starting point in determining price
-negotiated transfer price: allow org's affiliates to determine price when market prices are subject to frequent changes

Front 57

In a ______ transaction, a sale results in product flowing in one direction to a buyer; a separate stream of product sand services, often flowing in the opposite direction, is also created

Back 57

countertrade

Front 58

barter

Back 58

the least complex and oldest form of bilateral, nonmonetized countertrade

Front 59

counterpurchase

Back 59

each delivery in an exchange is paid for in cash

Front 60

offset

Back 60

reciprocal arrangement whereby the government in the importing country seeks to recover large sums of hard currency spent on expensive purchases

Front 61

compensation trading

Back 61

form of countertrade that involves two separate and parallel contracts

Front 62

switch trading

Back 62

a mechanism that can be applied to barter or countertrade

Front 63

Major categories of channel utility:

Back 63

- place
- time
- form
- information

Front 64

___ ____ is any activity that crosses national boundaries

Back 64

global retailing

Front 65

Types of retail operations :

Back 65

-department stores
-specialty retailers
-supermarkets
-convenience stores
-discount retailers
-hard discounters
-hypermarkets
-supercenters
-superstores
-shopping malls
-outlet stores
-outlet malls

Front 66

Logistics

Back 66

the management process that integrates the activities of all companies to ensure an efficient flow of goods through the supply chain

Front 67

Order processing includes:

Back 67

-order entry: order is actually entered into info system
-order handling: involves locating, assembling, and moving products into distribution
-order delivery: the process by which products are made available to the customer

Front 68

____ ____ describes the integration of activities necessary to ensure the efficient flow of raw materials, in-process inventory, and finished goods from producers to customers

Back 68

logistics management

Front 69

_____ refers to the practice of loading ocean-going freight into steel boxes measuring 20-40 ft or longer

Back 69

containerization

Front 70

_____ _____ of goods involves a combination of land and water shipping from producer to customer

Back 70

intermodal transportation

Front 71

Important activities of logistics and logistics management include:

Back 71

- order processing
- warehousing
- inventory management

Front 72

A ____ __ _____ is the network of agencies and institutions that links producers with users.

Back 72

channel of distribution

Front 73

____ distribution is the movement of goods through channels.

Back 73

physical

Front 74

Match:

a. B2C
b. B2B
c. P2P

1. marketing via internet
2. uses consumer channels
3. uses industrial channels

Back 74

1. c
2. a
3. b

Front 75

IMC stands for and means what?

Back 75

Integrated Marketing Communications - an approach to the promotion element of the marketing mix that values coordination and integration of a company's marketing communication strategy

Front 76

____ is any sponsored, paid message that is communicated in a nonpersonal way. ____ _____ are messages whose art, copy, headlines photographs, taglines and other elements have been developed expressly for their worldwide sustainability

Back 76

advertising, global advertising

Front 77

Four major difficulties that can compromise attempt to communicate with customers:

Back 77

1. message may not get through to intended recipient
2. message may reach target audience but may not be understood or may be misunderstood.
3. message may reach target, may be understood, but may still not compel recipient to take action
4. effectiveness of the message can be impaired by noise

Front 78

___ advertising is a communication strategy that calls for developing a basic panregional or global concept for which copy, artwork, or other elements can be adapted as required for individual country markets.

Back 78

Pattern advertising (following a pattern)

Front 79

The starting point in ad development is the ___ _____, a statement of what the message will say.

Back 79

creative strategy

Front 80

The people who create ads often seek a __ ____ that can serve as the basis for memorable effective messages.

Back 80

big idea

Front 81

The ____ _____ is the communication approach - rational or emotional - that best relates to buyer motives. Rational appeals to the ___; emotional appeals to the ____.

Back 81

advertising appeal, mind, heart

Front 82

The ____ _____ is the promise that captures the reason for buying the product

Back 82

selling proposition

Front 83

The ____ ____ is the way an appeal or proposition is presented.

Back 83

creative execution

Front 84

The visual presentation of an advertisement - the "body language" - is a matter of ___ ____. The words that are the spoken or written communication elements in advertisements are known as ___. These two must be created with cultural considerations in mind.

Back 84

art direction, copy

Front 85

True or false: When selecting media, marketers are sometimes as constrained by laws and regulations as by literacy rates.

Back 85

True

Front 86

What does PR do?

Back 86

- foster goodwill and understanding among constituents inside and outside
- generate favorable PUBLICITY
-manage corporate communications
- uses press releases, media kits, interviews and tours
-provide accurate, timely info, especially in the event of a crisis

Front 87

corporate advertising

Back 87

not designed to directly stimulate demand for a specific product

Front 88

__ advertising enhances the public's perception of a company, creates goodwill, or announces a major change, such as a merger, acquisition, or divestiture

Back 88

image

Front 89

In ___ advertising, a company presents its point of view on a particular issue.

Back 89

advocacy

Front 90

List the following by low to high degree of involvement and cost.

1. contract manufacturing
2. equity stake or acquisition
3. licensing
4. joint venture
5. exporting

Back 90

[low involvement/low cost]
1. exporting
2. licensing
3. contract manufacturing
4. joint venture
5. equity stake or acquisition
[high involvement/high cost]

Front 91

Which entry strategy should be used depends upon:

Back 91

- vision
- attitude toward risk
- available investment capital
- how much control is desired

Front 92

What are the top target countries for U.S. Investment? What are the top foreign countries investing in the U.S.?

Back 92

1. UK, 2. Canada, 3. The Netherlands

1. UK, 2. Japan, 3. The Netherlands