INTL Marketing Exam 1 – Ivey FALL 2017 – Flashcards

**Chapter 1**

-Natural disaster -Wars and national conflict -Advancement in Information Technology

The performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit. - Unfamiliar problems - Different levels of uncertainty - Molding the controllable elements of the marketplace (product, price, promotion, distribution, and research) within the framework of uncontrollable elements (competition, politics, laws, consumer behavior, level of technology, etc.) in such a way that marketing objectives are achieved.

A program designed for the optimal adjustment to the uncertainty of a business climate.

- Political and legal forces - Economic climate and competition

- Political Stability (Political/Legal forces) - Class Structure (Competitive forces, level of technology, geography, cultural forces) - Economic Climate (Structure of distribution, infrastructure)

An unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions Impedes the ability to assess a foreign market in its true light ---------------------------------- When confronted with a set of facts, we react spontaneously on the basis of knowledge assimilated over a lifetime - knowledge that is a product of the history of our culture. -These reactions are based on meanings, values, symbols, and behavior of our own culture. (Usually different from the culture we are dealing with) -These reactions prevent us from being aware of the importance of cultural differences

The notion that people in one's own company, culture, or country know best how to do things Impedes the ability to assess a foreign market in its true light

Most challenging and most important while confronting international markets. International markets must: - Adjust marketing efforts to cultures which they are not attuned to - Be aware of frames of reference they are using in making decisions or evaluating the potential of the market.

Tolerance of cultural differences and knowledge of cultures, history, world market potential, and global economic, social, and political trends

A company that doesn't actively cultivate customers outside the country. - Products may reach foreign markets via domestic wholesalers/distributers who sell abroad without the knowledge of the producer - Sales done by trading companies/ foreign customers who directly contact the firm - Products gain popularity to foreign buyers through websites

A company with temporary surpluses caused by variations in production levels or demand may send their products for marketing overseas. - Sales to foreign markets are made as goods become available - As domestic demand increases and absorbs surpluses, foreign sales are withdrawn

A firm with permanent productive capacity devoted to the production of goods and services to be marketed in foreign markets.

Firm that is fully committed to international sales

Companies that treat the world, including their home market, as one market

**Chapter 2**

- Can be tariff or non-tariff barriers. - Have been reduced considerably in recent years. - Barriers to trade are one of the major issues confronting international marketers - Still used for a variety of reasons in countries ----------------------------- Governments establish tariffs and a variety of non-tariff barriers to: - Encourage development of domestic industry - Protect existing industry - Include quotas, boycotts, monetary barriers, and market barriers - Against imports and against foreign businesses

- Costs of goods imported - Spending by U.S. tourists overseas - New overseas investments - Cost of foreign military and economic aid

- Merchandise export sales - Money spent by foreign tourists - Transportation - Payments of dividends and interest from FDI - abroad - New foreign investments in the U.S.

- The difference between receipts and payments. - Is a record of condition, not a determinant of condition. ------------------------------- - Includes 3 accounts: 1. The Current Account 2. The Capital Account 3. The Official Reserves Account **The Current Account is of primary interest to international business.**

A record of all merchandise exports, imports, and services plus unilateral transfers of funds. Primary interest to international business.

A record of direct investment, portfolio investment, and short term capital movements to and from countries.

A record of exports and imports of gold, increases or decreases in foreign exchange, and increases or decreases in liabilities to foreign central banks.

Tariffs, quotas, and non-tariff barriers designed to protect a country's markets from foreign investment. - Countries use legal barriers, exchange barriers, and psychological barriers to restrict the entry of unwanted goods

-Inflationary pressures -Special interests' privileges -Government control and political considerations in economic matters -The # of tariffs they beget via reciprocity

-Balance of payments positions -Supply and demand patterns -International relations

-Manufacturers' supply sources -Choices available to consumers -Competition

1. Specific Limitations on Trade 2. Customs and Administrative Entry Procedures 3. Standards 4. Government Participation in Trade 5. Charges on Imports 6. Others

- Quotas - Import licensing requirements - Proportion restrictions of foreign to domestic goods - Minimum import price limits - Embargos

- Valuation systems - Antidumping practices - Tariff classifications - Documentation requirements - Fees

- Standard disparities - Intergovernmental acceptances of testing methods and standards - Packaging, labeling, and marking

- Government procurement policies - Export subsidies - Countervailing duties - Domestic assistance programs

- Prior import deposit subsidies - Administrative fees - Special supplementary duties - Import credit discriminations - Variable levies - Border taxes

- Voluntary export restraints - Orderly marketing agreements

- A quota is a specific unit or dollar limit applied to a particular type of good. - Import licenses are often required by countries to regulate the flow of exchange and the quantity of a particular imported commodity. --------------------------------------- The difference between quotas and import licenses: - Quotas permit importing until the quota is filled. - Licensing limits quantities on a case-by-case basis.

Voluntary export restraints (VERs) or orderly market agreements (OMAs) are similar to quotas. A VER is called voluntary because the exporting country sets the limits; however, it is generally imposed under the threat of stiffer quotas and tariffs being set by the importing country if a VER is not established.

An absolute restriction against the purchase and importation of certain goods and/or services from other countries

A refusal to sell to a specific country

Can be either formal or informal and may be government sponsored or sponsored by an industry.

2 types of monetary barriers: 1. Blocked Currency 2. Government Approval ----------------------------- A government can with monetary barriers: - Effectively regulate its international trade position by various forms of exchange-control restrictions - Enact such restrictions to preserve its balance-of-payments position specifically for the advantage or encouragement of particular industries

Blockage is accomplished by refusing to allow importers to exchange its national currency for the sellers' currency

In countries where there is a severe shortage of foreign exchange, and exchange permit to import foreign goods is required from the government. This encourages the importation of goods the government deems desirable and discourages importation of goods the government does not want by adjusting the exchange rate

Standards are used to protect health, safety, and product quality. Sometimes used in an unduly stringent or discriminating way to restrict trade, but the sheer volume of regulations in this category is a problem in itself

Was designed to prevent foreign producers from predatory pricing. Can be viewed as an "antitrust law for international trade"

A practice whereby a foreign producer intentionally sells its products in another country for less than the cost of production to undermine the competition and take control of the market.

Covers three areas for improving U.S. trade: - Market access - Export expansion - Import relief --------------------------------------------- - Many countries are allowed to trade freely with the United States but do not grant equal access to U.S. products in their countries. - OTCA focused on correcting perceived injustices in trade practices to ease trade restrictions. - Dealt with trade deficits, protectionism, and the overall fairness of our trading partners.

A forum for member countries to negotiate a reduction of tariffs and other barriers to trade. ---------------------------------- GATT covers 3 basic areas: 1. Trade shall be conducted on a nondiscriminatory basis 2. Protection shall be afforded domestic industries through customs tariffs, not through such commercial measures as import quotas 3. Consultation shall be the primary method used to solve global trade problems

- The first multilateral, legally enforceable agreement covering trade and investment in the services sector. - Provides and legal basis for future negotiations aimed at eliminating barriers that discriminate against foreign services and deny them market access. -------------------------------------------- Other information: - Specific market-opening concessions from a wide range of individual countries were achieved, and provision was made for continued negotiations to liberalize telecommunications and financial services further.

Established the basic principle that investment restrictions can be major trade barriers and therefore and included, for the first time, under GATT procedures

Established substantially higher standards of protection for a full range of intellectual property rights than are embodied in current international agreements, and it provides for the effective enforcement of those standards both internally and at the border

- It sets many rules governing trade between its 160 members. - Provides a panel of experts to hear and rule on trade disputes between members, and, unlike GATT, issues binding decisions - WTO was established January 1, 1995 through the Uruguay round of GATT (1986-1993) - Platform for trade relations: collective debate, negotiation, and adjudication - Evolution of GATS, TRIMS, TRIPS -------------------------------------------- Other information: - It's a permanent international organization - It's a new legal and institutional foundation - It disputes settlements faster - Has statutory powers to adjudicate trade disputes - The Internet exposed protected industries to global competition

The International Monetary Fund (IMF) and the World Bank Group: - Two global institutions created to assist nations in becoming and remaining economically viable. - They help maintain stability in the financial markets and assist countries that are seeking economic development and restructuring.

Performs 5 services: 1. Lends money to developing countries governments to finance education, health, and infrastructure development projects 2. Provides assistance to poorest developing countries governments (per capita incomes of $925 or less) for developmental projects 3. Lends to developing countries to help strengthen the private sector with long-term loans, equity investments, and other financial assistance. 4. Provides investors with investment guarantees against "noncommercial risk," (such as expropriation and war) to create an environment in developing countries that will attract foreign investment. 5. Promotes increased flows of international investment by providing facilities for the conciliation and arbitration of disputes between governments and foreign investors. **Also provides advice, carries out research, and produces publications in the area of foreign investment law**

**Chapter 3**

- British traders forced a gateway into xenophobic China See Slide: "China: Vigilant of Foreign Influence"

- British and French forces destroyed the summer palace in Beijing. - Signaled more freedom for foreign traders - Allowed Christian evangelism throughout the country See Slide: "China: Vigilant of Foreign Influence"

- Loss of confidence in the Chinese government See Slide: "China: Vigilant of Foreign Influence"

Emphasizes the basic virtue of loyalty "of friend to friend, of wife to husband, of child to parent, of brother to brother, but, above all, of subject to lord," that is, to country.

Meaning that Americans were a chosen people ordained by God to create a model society. Referred to the territorial expansion of the United States from the Atlantic to the Pacific -------------------------------------------- Other information: - Justified the U.S. annexation of Texas, Oregon, New Mexico, and California, and U.S. involvement in Cuba, Alaska, Hawaii, and the Philippines

Is the cornerstone of US foreign policy proclaiming that: - No further European colonization in the New World. - Abstention of the US from European political affairs. - Nonintervention by European governments in the governments of the Western hemisphere

An extension of the Monroe doctrine that not only would the US prohibit non American intervention in Latin American affairs, but it would also police the area and guarantee that Latin American nations met their international obligations

The study of Earth's surface, climate, continents, countries, peoples, industries, and resources. (Includes an understanding of how a society's culture and economy are affected as a nation struggles to supply its people's needs within the limits imposed by its physical makeup) Involves the study of: - Resources - Climate and topography - Nature and economic growth - Social responsibility and environmental management

Something marketers need to be aware of a that could affect the uses and functions of products and equipment. ------------------------------ Factors to be aware of include: - Extremes in altitude, humidity, and temperature (could result in deterioration, or special cooling/ lubrication) - Different seasons between the northern and southern hemispheres will affect global strategies - Mountains, oceans, seas, jungles, and other geographical features can pose serious impediments to economic growth and trade

Climate and topography facing wars, poor environmental policies, and natural disasters can lead to further into economic stagnation in countries. - Without irrigation and water management, any droughts, floods, or soil erosion that arises will often lead to deserts. - Population increases leads to deforestation and overgrazing... Which then leads to intensify chances of drought. (Droughts could result in malnutrition and ill health) - Cyclones or inadequate rainfall cant be prevented, but means to control their effects are available.

- Recent estimates put world population at more than 7 billion people (but is expected to grow to about 9.5 billion by 2050) - Almost all the projected growth will occur in less developed regions. - 1.2 billion jobs must be created to accommodate new entrants through 2025

- Adequate incomes - Higher literacy levels - Education for women - Universal access to healthcare - Family planning - Improved nutrition - Basic Change in cultural beliefs — (Procreation is one of the most culturally sensitive, uncontrollable factors)

- Religion plays a major role in attitudes about family size and family planning. - Many religions discourage or ban family planning and thus serve as a deterrent to control.

Percentages of the population living in urban areas: 1800 — Approx. 3.5% 2015 — Approx. 54% Desire for greater access to sources of education, healthcare, and improved job opportunities led to majority of the population moving to urban areas. -------------------------------------------- Other information: - Tokyo has already overtaken Mexico City as the largest city on Earth, with a population of 38 million, a jump of almost 8 million since 1990 - By 2030, 61% of the world's population will live in urban areas.

**CHAPTER 4**

Birthrates in western Europe and Japan have been decreasing since the early or mid-1960s due to: - More women are choosing career over children - Couples are deciding to remain childless

- Values - Rituals - Symbols - Beliefs - Thought processes

The traditional definition is: "The sum of [the 5 culture elements] which are learned and shared by a group of people, then transmitted from generation to generation." - Culture resides in the individual's mind - Culture recognizes that large collectives of people can be like-minded.

For most of the 20th century, four approaches to governance competed for world dominance: - Colonialism — (Casualty of World War II) - Fascism — (Fell in 1945) - Communism — (Crumbled in the 1990s) - Democracy/Free Enterprise

The effect of birth control techniques: - Women have careers. - Men spend more time with kids.

-Includes family, religion, school, the media, government, and corporations **Aspects that are interpreted differently within each culture**: - The positions of men and women in society - The family - Social classes - Group behavior - Age groups - How societies define decency and civility

In Family: - Birth control tremendously affected families and reduces family sizes around the world. - Family forms and functions vary substantially around the world and country. In Religion: - Marketers with little or no understanding of a religion may readily offend deeply due to the strong influence of religion. In School: - The literacy rate of a country is a potent force in economic development. - When countries have invested in education, the economic rewards have been substantial. - Communicating with a literate market is much easier than communicating with one in which the marketer must depend on symbols and pictures. In the Media: - Media time (TV and increasingly the Internet and mobile phones) has replaced family time. - American kids: 180 days per year spent in school - Chinese/ Japanese/ German kids: 220 days per year spent in school. In Government: - Most try to influence the thinking and behaviors of adult citizens for the citizens' "own good." - In some countries, the government uses propaganda in media to form "favorable" public opinions. - Other countries prefer no separation of church and state. - Affect the ways of thinking indirectly, through their support of religious organizations and schools. - Influence thinking and behavior through the passage, promulgation, promotion, and enforcement of a variety of laws affecting consumption and marketing behaviors. In Corporations: - Innovations are introduced to societies by companies, many times by multinational companies. - Multinational companies efficiently distribute new products and services based on new ideas from around the word. (As a result: Cultures change and new ways of thinking are stimulated)

Focuses on self-orientation. The preference for behavior that promotes one's self interest: - High IDV cultures reflect an "I" mentality and tend to reward and accept individual initiative - Low IDV cultures reflect a "we" mentality and generally subjugate the individual to the group

Focuses on authority orientation. Measures the tolerance of social inequality, that is, power inequality between superiors and subordinates within a social system. - High PDI cultures tend to be hierarchical, with members citing social roles, manipulation, and inheritance as sources of power and social status. - Low PDI cultures tend to value equality and cite knowledge and achievement as sources of power.

Focuses on risk orientation. Measures the tolerance of uncertainty and ambiguity among members of a society - High UAI cultures are highly intolerant of ambiguity, experience anxiety and stress, are concerned with security and rule following, and accord a high level of authority to rules as a means of avoiding risk. - Low UAI cultures are associated with a low level of anxiety and stress, a tolerance of deviance and dissent, and a willingness to take risks.

Focuses on assertiveness and achievement.

Determines differences in values across countries and the amount of trade between countries and demonstrates a direct influence of language on cultural values, expectations, and even conceptions of time

Customers process advertisements differently if heard in their native vs. second language

Customers can switch identities and perception frames

Successful foreign markets begins with cultural sensitivity. - Being attuned to the nuances of culture. - A new culture can be viewed objectivity, evaluated, and appreciated. - Will reduce conflict and improve communications and thereby increase success in collaborative relationships

- Culture is conservative and resists change - Culture is the accumulation of a series of the best solutions to problems faced in common by members of a given society. (Societies change due to war or natural disaster)

A responsible effort to learn from others' cultural ways in the quest for better solutions to a society's particular problems - Once a particular pattern of action is judged acceptable by society, it becomes the approved way and is passed on and taught as part of the group's cultural heritage. - Culture is learned; societies pass on to succeeding generations solutions to problems, constantly building on and expanding the culture so that a wide range of behavior is possible.

Marketing products similar to ones already on the market in a manner as congruent as possible with existing cultural norms, thereby minimizing resistance

**CHAPTER 5**

Business customs and expectations that must be met, conformed to, recognized, and accommodated if relationships are to be successful

Areas of behavior or customs that cultural aliens may wish to conform to or participate in but that are not required

Customs or behavior patterns reserved exclusively for the locals and from which the foreigner is barred and must not participate

Generally found in situations in which family or close ownership gives absolute control to owners, and businesses are small enough to allow such centralized decision making.

Allows executives at different levels of management to exercise authority over their own functions.

Is done by group or consensus. Committees may operate on a centralized or decentralized basis, but the concept of committee management implies something quite different from the individualized functioning of the top management and decentralized decision-making arrangements.

- Typifies most North Americans, Swiss, Germans, and Scandinavians. - Divides time into small units and is concerned with promptness. - Is used in a linear way, and it is experienced as almost tangible, in that one saves time, wastes time, bides time, spends time, and loses time. - Most low-context cultures operate on M-time, concentrating on one thing at a time.

- Is more dominant in high-context cultures. - Is characterized by multi-tasking and by "a great involvement with people."

Bribery: - Voluntarily offered payment by someone seeking unlawful advantage. - Different levels of corruption, bribery, and fraud exist worldwide. - Bribery creates a major conflict between ethics and profitability. ------------------------------------------------- Extortion: - Payments are extracted under duress by someone in authority from a person seeking only what they are lawfully entitled to. ------------------------------------------------- Lubrication: - Involves a relatively small sum of cash, a gift, or a service given to a low-ranking official in a country where such offerings are not prohibited by law ------------------------------------------------- Subornation: - Involves giving large sums of money—frequently not properly accounted for—designed to entice an official to commit an illegal act on behalf of the one offering the bribe; involves breaking the law ------------------------------------------------- Agent Fees: - When a businessperson is uncertain of a country's rules and regulations, an agent may be hired to represent the company in that country - It's often a legal and useful procedure - If a part of that agent's fee is used to pay bribes, the intermediary's fees are being used unlawfully

1. Utilitarian ethics: - Does the action optimize the "common good" or benefits of all constituencies? - Who are the pertinent constituencies? 2. Rights of the parties: - Does the action respect the rights of the individuals involved? 3. Justice or fairness: - Does the action respect the canons of justice or fairness to all parties involved?