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191 Cards in this Set
- Front
- Back
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The economic costs of WWI weakened the ability of the world to respond to ___.
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economic crisis
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- the need to balance imports & exports between countries
- an economical weapon for other purposes |
protectionism
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Every country seems to take advantage of the open U.S. market while putting ___ in the way of U.S. exports.
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barriers
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___, both tariff & nontariff, are one of the major issues confronting international marketers.
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Barriers to trade
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2 impacts of trade barriers
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1. retaliation
2. crisis & conflict |
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raised U.S. tariffs on over 20,000 imported goods because other countries (e.g. Canada, European countries) did so
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Tariff Act of 1930
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the ratio that measures the value of one currency in terms of another currency
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exchange rate
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exchange rate is determined by the currency market forces of supply & demand
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freely floating
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currencies that cannot be freely converted
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soft currency
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currencies that can be freely converted
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hard currency
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- a fixed rate between 2 currencies
- ex: Hong Kong Dollars (pegged to U.S. dollars) - ex: Chinese Yuan or RMB (pegged to a basket of currencies) |
pegged currency
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According to "The Interwar Currency Experience," in the 1930s, there was a disastrous experience with the ___.
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floating rate
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"The absence of a high degree of economic collaboration among the leading nations will... inevitably result in ___ that will be but the prelude & instigator of ___ on an even vaster scale."
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economic warfare; military warfare
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The World Trade Organization (WTO) & General Agreement on Tariffs & Trade (GATT) handle conflict management in regards to ___.
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trade issues
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The International Monetary Fund (IMF) & Bretton Woods Agreement handle conflict management in regards to ___.
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currency issues
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- est'd. in 1947
- paved the way for the 1st effective worldwide tariff agreement - basic element: - trade shall be conducted on a nondiscriminatory basis |
GATT
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- est'd. in 1995
- an institution, not an agreement - sets many rules governing trade between its 148 members - provides a panel of experts to hear & rule on trade disputes between members - issues binding decisions - all member countries have equal representation - for the 1st time, member countries will undertake obligations to open their markets & to be bound by the rules of the multilateral trading system |
WTO
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- est'd. in 1944
- the event: 730 delegates from 44 nations met for 3 weeks in July that year at a hotel resort (Mount Washington Hotel) in Bretton Woods, N.H. |
Bretton Woods Agreement
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- created to assist nations in becoming & remaining economically viable
- objectives: - stabilization of foreign exchange rates - establishment of freely convertible currencies to facilitate the expansion & balanced growth of international trade - Special Drawing Rights (SDRs) - in Global Financial Crisis of 1998, coordinated major central banks in the world to cut interest rates |
IMF
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handles conflict management in regards to issues on the imbalance between rich & poor
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World Bank
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drop trade barriers among themselves but to allow each member country to maintain independent trade relations with nonmember countries (ex: NAFTA)
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free trade areas
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drop trade barriers among themselves & to establish common external barriers between members & nonmember countries (ex: Southern African Customer Union)
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customs unions
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a customs union in which the free flow of resources, such as labor & capital, is encouraged among member nations (ex: MERCOSUR, EU)
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common markets
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a common market in which member countries no longer regulate their own currencies (ex: EU)
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monetary unions
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3 signs of global prosperity in the 2nd half of the last century
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1. Cold War
2. Marshal Plan 3. Globalization Acceleration |
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a socialist Marxist approach (ex: USSR, China) vs. a democratic capitalist approach (ex: USA, Japan)
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Cold War
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prosperity in capitalist camp
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Marshal Plan
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- prosperity in Marxist camp
- fall of Berlin Wall - economic reform in Russia & China |
globalization acceleration
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In the 1950s, many U.S. companies that had never before marketed outisde the U.S. began to ___, & others made significant investments in ___ overseas.
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export; marketing & production facilities
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2 fronts that U.S. multinational corporations (MNCs) were facing major challenges on in the 1960s-1970s
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1. resistance to direct investment
2. increasing competition in export markets |
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In the 1980s-1990s, American MNCs were confronted by a resurgence of competition from all over the world. ___ was developed & ___ were established.
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Global perspective; global firms
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2 signs that American MNCs were becoming further integrated into the globalized economy in the 2000s
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1. the challenge of new econoimc powers like China & India
2. the market opportunities of emerging markets |
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- foreign markets could be penetrated easily
- since production was often localized, products could be adapted to local markets |
the multinational phase (localization)
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- the appearance of strong foreign competitors in the U.S. was a major force behind the emergence of the global perspective
- Japanese companies had entered the U.S. market witih spectacular success in markets such as autos & consumer electronics |
the global phase (standardization)
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- est'd. in 1944
- institution that has as its goal the reduction of poverty & the improvement of living standards by promoting sustainable growth & investment in people - has 5 institutions, each of which perform the following services: - lending money to the governments of developing countries - providing assistance to governments for developmental projects to the poorest developing countries - lending directly to the private sector - providing investors with investment guarantees against "noncommercial risk" |
World Bank Group
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2 globalization phases
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1. multinational phase (localization)
2. global phase (standardization) |
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- forces promoting this gained steam throughout the year 2000
- questioning of the economic & social benefits of globalization continued - arguments involve a mix of economic, political, & social issues - one main complaint is that globalization has failed to lift the standard of living of many 3rd-world countries while multinational companies have profited significantly |
antiglobalization phase
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4 concerns of globalization in developed countries
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1. no space
2. no choice 3. no jobs 4. no logo |
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4 concerns of globalization in developing countries
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1. inequality
2. poverty 3. exploitation 4. no local control |
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mutual dependences within DM markets
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Globalization 1.0 (Intra)
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- mutual dependences between DM & EM
- truly globalization because the huge EM will become an active force in the new model (G20 Summit at Pittsburgh in 2009 claims that it will replace G8 as the only global platform) |
Globalization 2.0 (Inter)
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According to Economy.com in November 2009, "for the 1st time, the emergence from the global recession is being driven by ___ rather than the ___..."
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emerging markets; U.S. consumers
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According to the WTO, if the benefits of the social, political, & economic changes now taking place are to be fully realized, ___ must prevail throughout the global marketplace.
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free trade
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- developed by Leavitt in 1983
- technology innovation - improved communication - info & taste homogenization - product standardization - superior quality/price ratio |
demand side of microeconomic view of what drives globalization
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- preferential treatments/government involvement
- highly educated/skillful labor pool - country/firm competitive advantage |
supply side of microeconomic view of what drives globalization
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2 types of firm competitive advantages
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1. knowledge assets
2. learning organizations |
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- basically intangible assets
- ex: brand equity, goodwill, patents, technical & managerial know-how - in today's globally competitive environment, they can be more powerful competitive advantages than access to land, buildings, & machinery |
knowledge assets
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- organizations whose competitive advantage is in the ability of the organization
- to innovate, create new products, to develop new markets, to adopt new distribution channels, to find new advertising media, & to discard outdated products & tired sales routines |
learning organizations
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has played a fundamental role in driving a smoother globalized economy by setting up more transferable standards across country borders
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government
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an international quality standard developed by the International Organization for Standardization (IOS), a worldwide federation of national standards bodies representing some 130 countries
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ISO 9001
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8 quality management principles in ISO 9001 which are incorporated within the requirements of the standard, & can be applied to improve organizational performance
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1. customer focus
2. leadership 3. involvement of people 4. process approach 5. system approach to management 6. continual improvement 7. factual approach to decision making 8. mutually beneficial supplier relationships |
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5 drivers of globalization potential
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1. market drivers
2. competitive drivers 3. cost drivers 4. government drivers 5. technological drivers |
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4 market drivers of globalization potential
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1. common customer needs
2. global customers 3. global channels 4. transferable marketing |
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3 cost drivers of globalization potential
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1. economies of scale
2. economies of scope 3. sourcing advantages |
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3 government drivers of globalization potential
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1. free trade
2. global standards (ex: ISO 9001) 3. regulations |
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2 competitive drivers of globalization potential
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1. global competition
2. global distribution |
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3 technological drivers of globalization potential
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1. production technology
2. telecommunications 3. Internet |
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4 globalization obstacles in the micro-economic view of globalization
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1. negative industry drivers
2. lack of resources 3. localized mix requirements 4. antiglobalization threats |
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not all industries have the right characteristics for a ___
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global strategy
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not all companies have the required ___ (managerial, financial) to implement global marketing
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resources
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not all ___ lend themselves to a global treatment
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marketing mix elements
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close coordination of strategies across countries can make the firm vulnerable to ___ actions.
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antiglobalization
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- product markets in which local consumers have preferences & functional requirements widely different from one another's & others' elsewhere
- typical market categories include products & services such as foods, drinks, clothing, & entertainment |
multidomestic markets
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- markets in which buyer preferences are similar across countries
- within each country, several segments with differing preferences may exist, but the country borders are not important segment limits |
global markets
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5 key differences between multidomestic & global markets
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1. market boundaries
2. customers 3. competition 4. interdependence 5. strategies |
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- in multidomestic markets, markets are defined within ___
- in global markets, markets ___ |
- country borders
- transcend country borders |
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- in multidomestic markets, significant ___ exist(s) among customers from different countries
- in global markets, significant ___ exist(s) among customers from different countries |
- differences
- similarities |
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- in multidomestic markets, competition takes place among primarily ___
- in global markets, competitors are few and present in ___ |
- local firms
- every major market |
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- in multidomestic markets, each local market operates in ___ from the rest
- in global markets, local markets operate ___ |
- isolation
- interdependently |
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- in multidomestic markets, strategies are ___ based
- in global markets, strategies are ___ or ___ in scope |
- locally
- regional; global |
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- many global companies have banned the use of the term ___ in their communication
- idea: treat foreign country differently from own country |
"foreign"
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- an older term encompassing all marketing efforts in foreign countries, whether coordinated or not, involving recognition of environmental differences & foreign trade analysis
- idea: treat each country differently, emphasizing on locality |
international marketing
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- refers to marketing activities coordinated & integrated across multiple country markets
- the integration can involve standardized products, uniform packaging, identical brand names, synchronized product introductions, similar advertising messages, or coordinated sales campaigns across markets in several countries - idea: manage different countries with the same principle by taking locality into consideration, focusing on standardization & synergy |
global marketing
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The typical marketing objective is to exploit ___ & ___.
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market potential; growth
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___ & ___ increase productivity.
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Longer production series; capital investment
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- profits may not be made in very competitive markets
- but information about new technology & about competition can be gained |
learning from a leading market
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increasing the ___ in a competitor's stronghold market might help divert the competitor's attention from other markets
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competitive pressure
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by adding new countries & markets to the company portfolio the firm's dependence on any one market will be ___
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lessened
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___ is an important spillover effect from marketing in a foreign country.
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Learning how to do business abroad
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A global marketing strategy that totally globalizes all marketing activities is not always ___ or even ___.
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achievable; desirable
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- a more common approach to developing localized global marketing is for a company to globalize its ___
- by marketing the same product lines, product designs, & brand names everywhere but to localize distribution & marketing communications |
product strategy
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- characterized by strong & demanding customers
- free from government regulation measures - products & services incorporate the latest technology - companies are strong at the high end of the product line - not necessarily the largest markets, although they often are |
marketing role of leading markets
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the key to successful global marketing is ___ to the ___ from one market to another (Competition on Marketing Knowlege)
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adaptation; environmental differences
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2 primary obstacles to success in global marketing
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1. self-reference criterion (SRC)
2. associated ethnocentrism |
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the notion that one's own culture or company knows best how to do things
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ethnocentrism
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an unconscious references to one's own cultural values, experiences, & knowledge as a basis for decisions
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self-reference criterion (SRC)
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3 dangers of the SRC
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1. failing to recognize the need to take action
2. dicounting the cultural differences that exist among countries 3. reacting to a situation in a way offensive to your hosts |
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Ethnocentrism & the SRC can influence an evaluation of the ___ of a domestically designed marketing mix of a foreign market
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appropriateness
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What is the most effective way to control the influence of ethnocentrism & the SRC?
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To recognize their effects on our behavior
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The fundamental aim of business strategy is to ___ & ___ competitive advantage.
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create; sustain
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When doing competitive advantage in the global context it is important to identify whether a company's strength is ___ or ___.
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firm-specific; country-specific
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less sustainable form of competitive advantage
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country-specific advantage (CSA)
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more sustainable form of competitive advantage
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firm-specific advantage (FSA)
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3 characteristics of CSA
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1. change over time
2. change across product categories 3. change across markets |
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the advantage that a country can produce more of any good per unit of labor than another country
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absolute advantage
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the advantage that a country has a lower opportunity cost for a particular good or service
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comparative advantage
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2 theories that describe how CSA works
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1. Vernon's International Product Cycle
2. Porter's National Advantage |
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- developed in 1966
- coincide's with Smith's 1776 & Ricardo's 1817 natural endowment view - descriptive theory of global trade |
Vernon's International Product Cycle
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- developed in 1990
- coincides with Krugman's labor skill view - normative theory of global trade |
Porter's National Advantage
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4 aspects of Porter's National Diamond
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1. Firm strategy, structure & rivalry
2. Demand conditions 3. Related & supporting industries 4. Factor conditions |
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- refers to the impact on customers of a product's "made-in" label or the home country of a brand
- products or services from countries with a positive (or negative) image tend to be favorably (or unfavorably) evaluated by customers |
country-of-origin effects to customers
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refer to those competitive advantages which are controlled by the individual firm alone
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firm-specific advantages (FSAs)
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knowledge is today recognized as one of the key resources of the firm
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knowledge-based FSAs
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For global marketers, it is important to recognize that the source of a firm-specific advantage can depend on ___.
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specific marketing know-how
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In services, a major difficulty in transferring marketing skills abroad is that service skills often represent ___, not skills "embodied" in the product itself (as technology typically is).
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intangibles
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2 other factors that can make the application of marketing FSAs difficult in other countries
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1. limits on TV advertising & in-store promotions
2. limits on what distribution channels are available |
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A company that ___ its FSA decides to exploit the advantages under its own control
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"internalizes"
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2 things that "internalizing" FSAs typically means
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1. exporting of the finished product
2. wholly owned subsidiary abroad (FDI) |
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A company that ___ its FSAs is when an independent contractor in the foreign country agrees to carry out some of the value added activities
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"externalizes"
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2 activities that take place when a company "externalizes" its FSAs
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1. licensing
2. alliances |
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In internalizing, there is a risk of "dissipation" of the FSAs during ___.
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reverse-engineering
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In externalizing, there is a risk of "dissipation" of the FSAs since the foreign firm needs to be shown a blueprint of how to ___.
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perform the activities
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5 components of Porter's "5 Forces" Model
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1. potential entrants
2. suppliers 3. industry competitors 4. buyers 5. substitutes |
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- one of Porter's "5 Forces"
- threat of new entrants |
potential entrants
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- one of Porter's "5 Forces"
- bargaining power of buyers |
buyers
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- one of Porter's "5 Forces"
- threat of substitute products/services |
substitutes
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- one of Porter's "5 Forces"
- rivalry among existing firms |
industry competitors
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- one of Porter's "5 Forces"
- bargaining power of suppliers |
suppliers
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A clear understanding of the CSA & particularly FSAs is a key to the formulation of a ___ in a country
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successful marketing strategy
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A firm's activities in transforming raw materials & other inputs to final goods can be viewed as a collection of ___ & ___ tasks each adding value to the product.
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complementary; sequential
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Can all FSAs be transferred to foreign markets?
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no
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2 models of competitive advantage orientation
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1. resourced based (inside-outside model)
2. market based (outside-inside model) |
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model of competitive advantage orientation that defines the firm not in terms of of the products or services in markets, or in terms of the needs it seeks to satisfy, but in terms of what it is capable of
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resource based (inside-outside model)
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model of competitive advantage orientation that focuses on competitive advantages in the marketplace, the resources perspective fosters a view of the company as a leveraging force for its resources
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market based (outside-inside model)
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- usually defined as the underlying value framework that guides an individual's behavior
- reflected in an individual's perceptions of observed events, in personal interactions, & in the selection of appropriate responses in social situations - manifests itself in learned behavior as individuals grow up & gradually come to understand what it demands of them. It creates a repertoire of behavioral skills |
culture
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2 things that culture implies
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1. difference in value framework
2. difference in behavior |
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2 fundamental notions in marketing
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1. needs
2. wants |
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For consumers, culture relevance to marketing means that ___ are the same, but ___ are different across cultures
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"needs;" "wants"
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For managers, culture relevance to marketing means they always strive to satisfy the same ___. But ___ to satisfy it is different across cultures.
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"need;" "how to do business"
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2 relevant behaviors when it comes to culture relevance to marketing
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1. economic behavior (ex: rationality)
2. psychological behavior (ex: perception) |
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3 qualitative culture models
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1. Hall's Silent Language Role
2. Gannon's Metaphors 3. Rapaille's Archetypes |
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Hofstede's 5 Cultural Dimensions is an example of a ___ culture model
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quantitative
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Hall's 5 "Silent Languages"
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1. space
2. material possessions 3. friendship patterns 4. agreements between people 5. time |
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- one of Hall's "Silent Languages"
- the comfortable distance between 2 people conversing differs across cultures |
space
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- one of Hall's "Silent Languages"
- the ___ that describe a person's station in life differ across cultures |
possessions
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- one of Hall's "Silent Languages"
- culture determines what ___ means to a person |
friendship
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- one of Hall's "Silent Languages"
- ___ are interpreted differently across cultures |
contracts
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- one of Hall's "Silent Languages"
- ___ perceptions vary considerably across cultures - "a little late" in some countries means 5 minutes, elsewhere 2 hours |
time
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- silent language role is low
- intentions are expressed verbally - a person's meaning should be explicit - not taken for granted - propositions have to be justified - & opinions defended openly - can be found in culturally diverse countries - ex: U.S., Russia, Australia, & New Zealand |
low context cultures
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- silent language role is high
- the meaning of individual behavior & speech changes depending on the situation or context - nonverbal messages are full of important & intended meanings - when words are spoken, "reading between the lines" is important" - can be found in most of the culturally homogeneous countries - European countries, some of the Latin American countries, & many Asian countries (China, Japan) |
high context cultures
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- suggested the use of descriptive metaphors for different cultures
- suggestive analogues which characterize cultures in such a way as to help managers anticipate what people's reactions might be in different situations - offers a mental anchor for the manager - who has to deal with a new culture & cannot foresee all contingencies |
Gannon's Metaphors
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4 of Gannon's Metaphors
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1. American football
2. The British house 3. The German Symphony 4. The French wine |
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- one of Gannon's Metaphors
- individualism & competitive speculation; huddling; ceremonial celebration of perfection |
American football
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- one of Gannon's Metaphors
- laying the foundations; building the brick house; living in the brick house |
The British house
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- one of Gannon's Metaphors
- orchestra; conductors; performance society; education, & politics |
The German Symphony
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- one of Gannon's Metaphors
- purity; classification; composition; compatibility; maturation |
The French wine
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- Secret 1 of Rapaille's Archetypes
- people don't buy products & services - they buy relationships |
the structure is the message
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- Secret 2 of Rapaille's Archetypes
- understanding the local culture makes a relationship successful |
culture also is unconscious
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- Secret 3 of Rapaille's Archetypes
- each culture has a DNA archetype to be decoded |
no code, no key
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- Secret 4 of Rapaille's Archetypes
- after decoding, the strategy can be encoded |
time, space, & energy are building blocks
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- Secret 5 of Rapaille's Archetypes
- decoding & encoding are necessary to succeed in global marketing |
solve the right problem
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Hofstede's 5 Cultural Dimensions
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1. Individualism vs. Collectivism
2. High vs. Low Power Distance 3. Masculine vs. Feminine 4. Uncertainty Avoidance 5. Confucianist Dynamics |
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- one of Hofstede's Cultural Dimensions
- in a collective society the identity & worth of the individual is rooted in the social system, & less in individual achievement |
Individualism vs. Collectivism
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- one of Hofstede's Cultural Dimensions
- societies high in this tend to be less egalitarian, while democratic countries exhibit low levels of this |
High vs. Low Power Distance
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- one of Hofstede's Cultural Dimensions
- captures the degree to which culture is dominated by assertive males, rather than nurturing females & the corresponding values |
Masculine vs. Feminine
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- one of Hofstede's Cultural Dimensions
- distinguishes the long-term orientation of Asian people from the more short-term outlook of Western people |
Confucianist Dynamics
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- ___ always are viewed from one's own biases & SRC
- a crucial element in understanding any nation's business & political culture is the subjective perception of its ___. |
- historical events
- history |
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4 differences in culture when it comes to the marketing implications of culture models
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1. nonverbal message
2. language 3. geo-economics 4. history |
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4 differences in value/behavior when it comes to the marketing implications of culture models
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1. objectiveness
2. competitiveness 3. equality 4. time |
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2 differences in marketing when it comes to the marketing implications of culture models
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1. managerial skills
2. decision-making process |
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General culture defines a set of acceptable & unacceptable behaviors. Acceptable behavior in the business firm is usually a reflection of acceptable behavior in ____.
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society
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To help managers cope with or avoid cultural clashes most companies offer new expatriate managers (& their families) ___ & ___.
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predeparture workshops; briefings
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In most negotiations knowing something about the ___ is considered a must.
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cultural background of the opposite partner
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Experts caution about the possibility of discrepancies between ___ & ___.
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what the manager thinks he is communicating; what is actually received by the other party
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___ is always a mysterious ingredient in negotiations.
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Nonverbal communication
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- When negotiating, it is important to spend some time to ___ the other culture.
- & build a ___ if necessary |
- understand
- relationship |
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It is important to recognize that when a country is ready for change, a ___ can be attractive.
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different culture
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There are limits to the effectiveness of ___ as an accommodation strategy.
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cultural sensitivity
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Attempts @ ___ is prone to misinterpretation & may even create distrust.
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cultural adaptation
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___ runs the risk of the manager losing his bearings.
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Cultural adaptation
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2 aspects of cultural oversensitivity
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1. nonadaptation
2. keeping one's center |
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GDP Deflator for 2005:
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P^05 = Sum(P^05 x Q^05) / Sum(P^92 x Q^05)
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CPI for 2005:
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P^05 = Sum(P^05 x Q^92) / Sum(P^92 x Q^92)
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Production Function:
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Y = F(K, L)
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National Saving:
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S = Y - C(Y - T) - G
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Private Saving:
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S = Y - C(Y - T) - T
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Government Saving:
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T - G
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Fisher Equation:
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i = r + pi
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Money Market Equilibrium:
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M / P = L(i,Y) = L(r + pi^e)
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National Income Accounting Identity:
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Y = C + I + G + NX
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Net Capital Outflow = Trade Balance:
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S - I = CF = NX
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Nominal & real exchange rates:
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e = backwards 3 x (P* / P)
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Natural unemployment rate:
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u-sub-n = s / (s + f)
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The steady state condition in the absence of population growth & technical progress:
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delta-k = s x f(k) - lowercase delta x k = 0
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The golden rule in the absence of population growth & technical progress:
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MPK = lowercase delta x k
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Equation of Exchange:
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MxV = P x Y arrow symbol m-sub-g = pi + y-sub-g
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P = ?
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price
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Q = ?
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quantity
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Y = ?
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output
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K = ?
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capital
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L = ?
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labor
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