Mkt 4443 Test 3

Front 1

a plan of action resulting from (word) or intended to accomplish a specific goal

Back 1

strategy

Front 2

The ultimate goal of business strategy is to create ___ (in which marketing strategy is an essential part).

Back 2

competitive advantage

Front 3

In ___ markets, business strategy means (e.g., Porter) cost leadership, differentiation, niche, etc.

Back 3

domestic

Front 4

In ___ markets, international expansion itself (or Foreign Entry) is an important means to build business strategy.
- More specifically, how to create a business model (e.g. JV or WOMS) across country borders so that it carries competitive advantages (both CSA & FSA) to local firms & other MNCs?

Back 4

global

Front 5

3 stages of how to evaluate country marketing opportunities

Back 5

1. Preliminary Analysis (Country Level)
2. In-depth Analysis (Market/Industry Level)
3. Final Selection (All Together)

Front 6

- stage of how to evaluate country country marketing opportunities
- country demographics
- political risks
- environment issues

Back 6

Stage 1 - Preliminary Analysis (Country Level)

Front 7

7 aspects of country demographics

Back 7

1. region
2. size
3. population
4. language
5. education
6. religion
7. currency

Front 8

4 factors of political risk

Back 8

Level 1: General Instability
Level 2: Expropriation
Level 3: Operations
Level 4: Finance

Front 9

4 aspects of environmental issues

Back 9

1. Physical Environment
2. Socio-cultural Environment
3. Economic Environment
4. Regulatory Environment

Front 10

- stage of how to evaluate country country marketing opportunities
- market attractiveness (market)
- competitive strength (industry)
- objectives of business (combined)
- country sales forecasting
- basic: country sales
- multiple: portfolio management

Back 10

Stage 2 - In-Depth Analysis (Market/Industry Level)

Front 11

___ is the foundation of business opportunity.

Back 11

Demand

Front 12

2 market fundamentals when it comes to the market analysis of market attractiveness

Back 12

1. market size (both # of consumers & their purchasing power)
2. market growth

Front 13

a direct measure of this can be computed from local production minus expors plus imports

Back 13

market size

Front 14

estimates of this can be obtained by getting the market size measures for different years & computing the growth rates

Back 14

market growth

Front 15

3 aspects of strategic fit when it comes to the market analysis of market attractiveness

Back 15

1. segmentation
2. targeting
3. positioning

Front 16

can be measured by the number of competitors in the market & the relative size distribution of market shares

Back 16

competitive intensity

Front 17

These, such as tariffs, taxes, duties, & transportation costs can be ascertained from official government publications

Back 17

trade barriers

Front 18

forecasted country sales = ?

Back 18

forecasted industry sales x forecasted market share

Front 19

to develop an estimate of this, determinants such as economic growth, disposable incomes, social & political development, & dynamics of the product life cycle need to be incorporated

Back 19

industry sales

Front 20

this prediction relates directly to factors such as competitive situation & marketing efforts

Back 20

market share

Front 21

2 aspects of industry sales

Back 21

1. market potential (ceiling)
2. product life cycle (stage)

Front 22

- aspect of industry sales
- what could potentially be achieved under "ideal" conditions?

Back 22

market potential (ceiling)

Front 23

- aspect of industry sales
- what stage is the concerned product in?

Back 23

product life cycle (stage)

Front 24

the forecasting technique used depends on the stage of the ___ in the country market

Back 24

Product Life Cycle (PLC)

Front 25

if the product is in the ___ stage of the PLC, the lack of data means that forecasting becomes more subjective & more challenging

Back 25

early

Front 26

If the product is in the ___ stage of the PLC, with data available, quantitative forecasts are feasible

Back 26

later

Front 27

3 forecasting methods used in the early stages of the PLC

Back 27

1. "Build-up" Method
2. Judgmental Methods
3. Forecasting by Analogy

Front 28

- forecasting technique used in the early stages of the PLC
- derived from market sales estimated on the basis of separate estimates from individuals knowledgeable about certain market segments

Back 28

"Build-up" Method

Front 29

- forecasting method used in the early stages of the PLC
- generally attempt to introduce a certain amount of rigor and reliability into otherwise quite arbitrary guesses

Back 29

Judgmental Methods

Front 30

- forecasting method used in the early stages of the PLC
- based on the premise that sales of the product in one "lagging" country will show similarities to sales in another "leading" country, e.g., Bass Model

Back 30

Forecasting by Analogy

Front 31

3 factors across countries that affect the rate of diffusion

Back 31

1. culture characteristics
2. economical characteristics
3. lagged timing

Front 32

3 aspects of the later stage of the PLC

Back 32

1. time series extrapolation
2. regression models
3. chain ratio methods

Front 33

- occurs in the mature stage of the PLC
- occurs without explanatory variables
- refers to the method by which a time series of (sales) data observed over some periods in the past is extended into the future
- the primary requirements are:
- the data that area available
- the past events will continue into the future

Back 33

time series extrapolation

Front 34

- used in the later stage of the PLC, with explanatory variables
- required prior knowledge to develop a forecast
- 1st, the relevant dependent variable of interest needs to be determined - e.g., sales per customer or total sales?
- 2nd, the forecaster must try to identify what factors will affect the dependent variable selected

Back 34

regression models

Front 35

In competitive strength analysis, forecasting ___ involves predicting competition.

Back 35

market share

Front 36

2 ways to predict competition when forecasting market share in competitive strength analysis

Back 36

1. identifying competitors
2. classifying competitors

Front 37

drawing on informal in-house knowledge and on selected contracts in the market country, a list is compiled

Back 37

identifying competitors

Front 38

2 classifications of competitors when forecasting market share in competitive strength analysis

Back 38

1. domestic competitors
2. foreign competitors

Front 39

When classifying ___ competitors, for forecasting purposes, the critical figure is the proportion of the market available to foreign competitors.

Back 39

domestic

Front 40

When classifying ___ competitors, if appropriate, this last step can be broken down into evaluating them first, then firms from the entrant's own home country.

Back 40

foreign

Front 41

When researching competitors in competitive strength analysis, it is possible to get a sense of ___ of the competition from annual reports, 10K or corresponding stock exchange filings.

Back 41

financial capability

Front 42

When researching competitors in competitive strength analysis, understanding the ___ of the competitors helps gauge their local strengths.

Back 42

organizational structure

Front 43

When researching competitors in cometitive strength analysis, the local marketer must read ___ to judge the competitors' future actions.

Back 43

competitive signals

Front 44

New 7 Sisters in the petroleum industry (accounts for 33% of both world production & world reserve)

Back 44

1. Saudi's Aramco
2. Russia's Gazprom
3. China's CNPC
4. Iran's NIOC
5. Venezuela's PDVSA
6. Brazil's Petrobas
7. Malaysia's Petronas

Front 45

When forecasting market share within the ___ market, domestic competitors should be excluded.

Back 45

import

Front 46

When forecasting market share within ___ markets, domestic competitors should be included.

Back 46

country

Front 47

4 key variables when forecasting market share

Back 47

1. marketing activities
2. customer satisfaction
3. country of origin
4. regulations

Front 48

4 challenges in country sales forecasting

Back 48

1. robustness
2. shorter PLC
3. technology substitution
4. fast changing market/industry conditions

Front 49

5 criteria to consider when weighing on multiple criteria in stage III (final selection) of country sales forecasting

Back 49

1. demographical
2. political risk
3. environmental
4. industrial
5. sales potential

Front 50

2 objectives of selection in stage III (final selection) of country sales forecasting

Back 50

1. champions
2. portfolio management

Front 51

___ is(are) an important part of finalizing the objective in stage III (final selection) of country sales forecasting

Back 51

Personal visits

Front 52

3 stages of the data sources & evaluation stage

Back 52

1. preliminary screening
2. in-depth screening
3. final selection

Front 53

- stage of data sources & evaluation stage
- start with the U.N. annual compilation of world economic & social data
- syndicated reports from Business International, Dun & Bradstreet, & The Conference Board should be considered

Back 53

preliminary screening stage

Front 54

- stage of the data sources & evaluation stage
- trade associations are usually the place to start, followed by government agencies. Market research reports may also be needed.

Back 54

in-depth screening stage

Front 55

- stage of the data sources & evaluation stage
- subjective judgments & experiences during the visits to the prospective country play a bigger role than secondary information at this stage

Back 55

final selection

Front 56

2 types of business strategies of foreign entry

Back 56

1. first cut
2. in-depth

Front 57

- type of business strategy for foreign entry
- entry mode itself

Back 57

first cut

Front 58

- type of business strategy for foreign entry
- the interply of entry mode & other factors (e.g., country, culture, timing, situation, etc.)

Back 58

in-depth

Front 59

4 aspects that should be considered when forming a sound in-depth business entry strategy

Back 59

1. entry barriers
2. culture distance & learning
3. strategic posture (FSA) & market situation
4. entry timing & order

Front 60

any obstacle making it more difficult for a firm to enter a product/service market

Back 60

entry barriers

Front 61

2 types of entry barriers

Back 61

1. tariff vs. non-tariff
2. artificial vs. natural

Front 62

- type of entry barrier
- customs duties enforced on imported products (final products or intermediate products)
- different rates for different countries & different products
- may be adjusted by political influence from trade associations

Back 62

tariff barriers

Front 63

- type of entry barrier
- include all other entry barriers
- e.g. transportation costs, slow customs procedures, etc.

Back 63

non-tariff barriers

Front 64

- type of entry barrier
- limited distribution access
- beaurocratic inertia
- government regulations
- limited access to technology
- local monopolies

Back 64

artificial entry barriers

Front 65

- type of entry barrier
- intense competition among several differentiated brands
- strong brand names charging a premium price over generic competitors
- pro-domestic sentiment favoring local brands

Back 65

natural entry barriers

Front 66

One of the implications of entry strategy is that there is pressure on ___ to reduce the entry barriers.

Back 66

government

Front 67

3 ways to avoid high entry barriers when forming an entry strategy

Back 67

1. screw driver assembly plants
2. adding "local" component (help build a local component if none exists)
3. take advantage of regional trade agreements

Front 68

- firms tend to enter countries close to home culturally & geographically
- create very natural "biases," which are not necessarily counterproductive

Back 68

"cultural distance" effect

Front 69

as firms enter markets further away culturally, managers learn more about how to do business internationally.
- one rationale for choosing countries to enter

Back 69

international learning curve

Front 70

___ context cultures feature direct exporting.

Back 70

Low

Front 71

___ context cultures feature indirect exporting via EMC.

Back 71

High

Front 72

___ strategic posture features both an established FSA & market knowledge

Back 72

Control

Front 73

___ strategic posture features an established FSA & a limited market knowledge.

Back 73

Protected

Front 74

___ strategic posture features both a limited FSA & market knowledge.

Back 74

Incremental

Front 75

___ strategic posture:
- indirect exports in emerging & high-growth markets
- direct exports in mature markets
- licensing/alliances in services markets

Back 75

Incremental

Front 76

___ strategic posture:
- joint venture in emerging markets
- indirect exports in high-growth markets
- alliances/licensing in mature markets
- licensing in services markets

Back 76

Protected

Front 77

___ strategic posture:
- wholly owned subsidiary in emerging & mature markets
- acquisition/alliance in high-growth markets
- franchising/alliances/exporting in services markets

Back 77

Control

Front 78

Entry of timing & order:
- lock up access to key resources (channels, suppliers)
- set pattern of consumer preference
- exploit governmental concessions & incentives
- exploit "strategic window"
- not aware of pitfalls
- resource on market cultivation

Back 78

pioneers

Front 79

- type of entry strategy
- less demanding of resources
- slow expansion for fast moving markets
- minimizing risk

Back 79

water fall

Front 80

- type of entry strategy
- more demanding of resources
- fast expansion
- maximizing revenue

Back 80

sprinkler

Front 81

When considering entry strategy, the ___ needs to be taken into consideration. This is because as the company grows, its situation (e.g., strategic posture, learning, etc.) will change.

Back 81

future

Front 82

Dimension: ___
- setting fore pure multidomestic strategy: no particular pattern
- setting for pure global strategy: significant share in major markets

Back 82

market participation

Front 83

Dimension: ___
- setting for pure multidomestic strategy: fully customized in each country
- setting for pure global strategy: fully standardized worldwide

Back 83

product offering

Front 84

Dimension: ___
- setting for pure multidomestic strategy: all activities in each country
- setting for pure global strategy: concentrated - one activity in each (different) country

Back 84

location of value-added activities

Front 85

Dimension: ___
- setting for pure multidomestic strategy: local
- setting for pure global strategy: uniform worldwide

Back 85

marketing approach

Front 86

Dimension: ___
- setting for pure multidomestic strategy: stand-alone by country
- setting for pure global strategy: integrated across countries

Back 86

competitive moves

Front 87

the degree of whether a product or service is tradable

Back 87

tradability

Front 88

Real estate, engineering services, architectural services, etc. have ___ tradability.

Back 88

lower

Front 89

Restaurants have a ___ degree of tradability.

Back 89

medium

Front 90

Packaged products, advertising, consumer services, etc. have ___ tradability.

Back 90

higher

Front 91

2 types of exporting

Back 91

1. indirect exporting
2. direct exporting

Front 92

exporting accounts for some ___ of global activity.

Back 92

10%

Front 93

export model that uses piggybacking, consortia, export management companies, and trading companies

Back 93

indirect exporting

Front 94

export model that uses a host country agent or distributor using its own sales subsidiary including mail order and Internet

Back 94

direct exporting

Front 95

- similar to Zaibatsu, an early version of Keiretsu
- are still largely controlled by their founding families & are centralized in ownership
- are prohibited from owning private banks, partly in order to increase the government's leverage over the banks in areas such as credit allocation

Back 95

Chaebol

Front 96

are more controlled than Chaebol

Back 96

Keiretsu

Front 97

6 aspects of direct exporting

Back 97

1. product shipment
2. export pricing
3. local distribution
4. getting paid
5. legal issues
6. after-sales services

Front 98

4 steps of product shipment in direct exporting

Back 98

1. transportation
2. clearing through customs
3. warehousing
4. shipping documents

Front 99

step of product shipment in direct exporting that involves the shipment of the product to the border of the country; is usually handled by an independent freight forwarder

Back 99

transportation

Front 100

step of product shipment in direct exporting that involves unloading at the national border; the product will then go from the ship or airline to a customs-free depot before being processed through customs

Back 100

clearing through customs

Front 101

step of product shipment in direct exporting that occurs after entering the country; the goods will often require storage

Back 101

warehousing

Front 102

step of product shipment in direct exporting that involves the bill of lading

Back 102

shipping documents

Front 103

in the step of export pricing in direct exporting, prices quoted at ___ is the recommended alternative for an export marketer.

Back 103

CIF

Front 104

pricing method where the seller accepts the responsibility for product cost, insurance, and freight

Back 104

cost-insurance-freight (CIF)

Front 105

in the export pricing step of direct exporting, a high price can often be counterbalanced by beneficial ___ terms arranged by the sellers.

Back 105

trade credit

Front 106

In the export pricing step of direct exporting, due to transaction costs, tariffs and other duties, special taxes, and exchange rate fluctuations, export prices tend to ___.

Back 106

escalate

Front 107

to deal with price escalation in the export pricing phase of direct exporting, FDI can be used as a ___ to reduce tariffs

Back 107

"knockdown" plant

Front 108

to deal with price escalation in the export pricing phase of direct exporting, the export price can be lowered to the subsidiary to avoid a tariff, but it is harder to ___ funds if this is done.

Back 108

repatriate

Front 109

- selling goods in some markets below cost
- when a company has overproduced & wants to sell the product in a market where it has no brand franchise, a company will sometimes do this
- it is illegal, but common

Back 109

dumping

Front 110

refers to the practice of selling products at home at prices below cost

Back 110

reverse dumping

Front 111

- an assessment levied on the foreign producer that brings the prices back up over production costs & imposes a fine
- the usual penalty for manufacturers that are found to violate antidumping laws

Back 111

countervailing duty

Front 112

2 dumping issues

Back 112

1. burden of proof
2. countervailing duty game

Front 113

- a dumping issue
- some countries (i.e., China) are not fully market-oriented

Back 113

burden of proof (true cost?)

Front 114

- a dumping issue
- category definitions can be easily changed

Back 114

countervailing duty game

Front 115

There are new WTO trade rules regarding dumping. These are intended to support ___.

Back 115

emerging countries' exports

Front 116

4 features of the new WTO trade rules regarding dumping

Back 116

1. stricter definitions of injury
2. higher minimum dumping levels needed to trigger imposition of duties
3. more rigorous petition requirements
4. dumping duty exemptions for new shippers

Front 117

3 aspects of the local distribution phase of direct exporting

Back 117

1. using existing channels
2. developing new channels
3. flexilibity

Front 118

In the local distribution phase of direct exporting, the advantage of using existing channels is that they are ___.

Back 118

ready to use

Front 119

___ & ___ are examples of companies who developed new channels in the local distribution phase of direct exporting

Back 119

Avon; Mary Kay

Front 120

In the local distribution phase of direct exporting, ___ can be a drawback sometimes, because distribution can be replaced by a wholly-owned sales subsidiary

Back 120

distributor strength

Front 121

5 payment issues in the getting paid phase of direct exporting

Back 121

1. local currency
2. creditworthiness
3. letter of credit
4. converting funds
5. repatriation, hedging

Front 122

4 legal issues in direct exporting

Back 122

1. export license
2. transferring title
3. insurance
4. hiring an agent

Front 123

2 aspects of after-sales service in direct exporting

Back 123

1. service, parts supply, training
2. sales subsidiary

Front 124

often managed by the distributor, aided by the agent in direct exporting

Back 124

service, parts supply, training

Front 125

- in direct exporting, the decision to establish this, staffed with locals and a few top managers from headquarters is often made because after-sales service is important - & requires training
- ex: automobiles, computers, high-tech electronics

Back 125

sales subsidiary

Front 126

2 ways that exporting can be understood

Back 126

1. move the products, as in physical products
2. move the customers, as in services (e.g., tourism industry)

Front 127

___ is often marketed in other business models (modes of entry).

Back 127

Service

Front 128

4 basic modes of entry

Back 128

1. exporting
2. licensing
3. strategic alliances (SA)
4. wholly owned manufacturing subsidiary

Front 129

- a basic mode of entry
- franchising
- refers to offering a firm's know-how or other intangible asset to a foreign company for a fee, royalty, &/or other type of payment

Back 129

licensing

Front 130

- a basic mode of entry
- collaborations between companies
- joint ventures

Back 130

strategic alliances (SA)

Front 131

- a basic mode of entry
- the company commits investment capital in plant & machinery

Back 131

wholly owned manufacturing subsidiary

Front 132

2 advantages of licensing

Back 132

1. the need for local market research is reduced
2. the licensee may support the product strongly in the new market

Front 133

2 disadvantages of licensing

Back 133

1. can lose control over the core competitive advantage of the firm
2. the licensee can become a new competitor to the firm

Front 134

- type of licensing; a company enters a foreign market by selling its unbranded product or component to another company in the market country
- ex: Canon provides cartridges for Hewlett-Packard's laser printers
- ex: Samsung sells unbranded television sets, microwaves, & VCRs to resellers such as Sears, Amana, & Emerson in the U.S.

Back 134

Original Equipment Manufacturing (OEM)

Front 135

- type of licensing
- OEMs with design inclusion (patented)

Back 135

Original Design Manufacturer (ODM)

Front 136

- a form of licensing where one party in a local market pays a royalty on revenues - & sometimes an initial fee - to another party who controls the business & owns the brand. It is often used when service is involved.
- the local 1st party typically invests money in the local operation & has the right to operate under the 2nd party's brand name
- the 1st party gets help setting up the operation, usually according to a well-developed blueprint. The business is typically very standardized (fast food operations is a case in point)

Back 136

franchising

Front 137

- typically a collaborative arrangement between firms, sometimes competitors, across borders
- based on sharing of vital information, assets, & technology between the partners
- have the effect of weakening the tie between potential ownership advantages & company control

Back 137

strategic alliance (SA)

Front 138

2 types of SAs

Back 138

1. non-equity SA
2. equity-based SA

Front 139

- type of SA
- contractual agreement
- w/o new entities
- the SAs are formed in a specific part of the business to take complementarities of involved parties
- shared distribution network, shared manufacturing, & shared R&D

Back 139

non-equity SA

Front 140

- AKA "piggybacking," "consortium marketing"
- ex: Chrysler & Mitsubishi Motors in auto industry
- ex: code-sharing in airline industry

Back 140

shared distribution network

Front 141

- type of SA
- equity sharing
- w/ new entities

Back 141

equity SA

Front 142

- type of equity SA
- involve the transfer of capital, manpower, & usually some technology from the foreign partner to an existing local firm
- this was the typical arrangement in past alliances - the equity investment allowed both partners to share both risks & rewards

Back 142

joint ventures

Front 143

an MNC's direct investment on physical plant/factory for manufacturing in foreign countries

Back 143

wholly owned manufacturing subsidiary (WOMS)

Front 144

5 reasons WOMS are undertaken by the international firm

Back 144

1. to be closer to suppliers & customers
2. to acquire raw materials
3. to operate at lower manufacturing costs
4. to avoid tariff barriers
5. to satisfy local content requirements

Front 145

2 WOMS approaches

Back 145

1. "greenfield" investment
2. "acquisition"

Front 146

a WOMS approach that involves acquiring an existing local company

Back 146

"acquisition"

Front 147

2 advantages of "acquisition"

Back 147

1. speed of penetration
2. quick market penetration of the company's products

Front 148

3 disadvantages of "acquisitions"

Back 148

1. existing product line & new products to be introduced might not be compatible
2. can be looked at unfavorably by the government, employees, or others
3. necessary re-education of the sales force & distribution channels

Front 149

Usually the exporter or market entrant is the ___ of a trading relationship, but importers can also do this as well. Local businesspeople are quicker to see opportunities within their country market
- ex: Nike in Asia, Volkswagen in Portugal

Back 149

initiator

Front 150

3 different perspectives of trust

Back 150

1. relationship-based perspective
2. process-based perspective
3. economic hostage-based perspective

Front 151

- perspective of trust characterized by social relations, length & intensity
- works in Japan only

Back 151

relationship-based perspective

Front 152

- perspective of trust characterized by institutional arrangements, selection process, & buyer assistance routines
- supported by the U.S., Japan, & Korea

Back 152

process-based perspective

Front 153

- perspective of trust characterized by economically credible commitments, & stock ownership
- not supported by U.S., Japan, or Korea

Back 153

economic hostage-based perspective