Marketing 470 Chapter 1 – Flashcards

"Global Business Intelligence"- Simply described, high GBIQ means individually exhibiting an interactively high level of intelligence within a cross-cultural, technologically rich globalized organizational environment.

Global Commerce Promotes Peace? This is Debatable... What do you think? Global commerce during peace time Commercial aircraft and space vehicle industries Mobile phone industry Individuals and small companies U.S. China relations. U.S./Middle East Relations? U.S. Russia Relations? International markets are ultimately unpredictable Was the recent financial debacle in 2008 really unpredictable? Flexibility means survival

The rapid growth of the World Trade Organization (WTO) and regional free trade areas The trend toward the acceptance of the free market system among developing countries in Latin America, Asia, and Eastern Europe The burgeoning impact of the technology such as the internet, mobile phones, and other global media on the dissolution of national borders The mandate to properly manage the resources and global environment for the generations to come

Increasing globalization of markets Supra-National organizations Examples?? DAVOS? What is this? Increasing number of U.S. companies are foreign controlled (Foreign Direct Investment, FDI) $16.3 trillion in foreign investment in the U.S. - $2.6 trillion more than American overseas investment Increasing number of foreign companies building and buying manufacturing plants in the U.S. Increasing difficulty for domestic markets to sustain customary rates of growth. Domestic Policy repurcussions....

Domestic Policy Repercussions... Example: Interest Rates... Lowering of interest rates, happy U.S. customers but what about impact of countries offering higher interest rate? What about raising interest rates. What generally happens? Agricultural and farm polices. Currency flows. Exchange rates. Market Regulation... Is this good or bad? Who is the current head of the U.S. Federal Reserve? Dr. Ben Bernanke Dr. Janet Yellen ( as of Feb 1. 2014)

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

Multi-Cultural Complexity, Economic Complexity, Political Complexity, Legal Complexity

Environmental Adaptation - the ability to effectively interpret the influence and impact of the culture in which you hope to do business 1.Requires cultural adjustments 2.Must establish a frame of reference Avoiding the assessment of markets against the fixed values and assumptions of your own culture

The key to successful international marketing is adaptation to the environmental differences from one market to another Primary obstacles to success in international marketing Self Reference Criterion (SRC) and Associated ethnocentrism

-Self Reference Criterion- an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions Dangers of SRC -Failing to recognize the need to take action -Discounting the cultural differences that exist among countries -Reacting to a situation in an offensive to your hosts -Ethnocentrism Notion that one's own culture or company knows best

Ethnocentrism and the SRC can influence an evaluation of the appropriateness of a locally designed marketing mix for a foreign market The most effective way to control the influence of ethnocentrism and the SRC is to recognize their effects on our individual or organizational behavior.

1.Define the business problem or goal Home-country vs. foreign-country cultural traits, habits, or norms Consultation with natives of the target country 2.Make no value judgments 3.Isolate the SRC influence Examine it carefully to see how it complicates the problem 4.Redefine the problem Without SRC influence Solve for the optimum business goal situation

Tolerance of cultural differences: Understanding cultural differences and accepting and working with others whose behavior may be different from yours Knowledge of cultures, history, world market potential, and global economic, social, and political trends CRITICAL: In this class, we will focus A LOT on the process of "acculturation", not just theory

Select individual managers specifically for their demonstrated global awareness and cultural adaptibilty. Development and maintenance of personal relationships in other countries Have a culturally diverse senior executive staff or board of directors

1.No direct foreign marketing 2.Infrequent foreign marketing 3.Regular foreign marketing 4.International marketing 5.Global marketing

Products reach foreign markets indirectly (indirect exporting) 1.Trading companies 2.Foreign customers who contact firm 3.Wholesalers 4.Distributors 5.Web sites Foreign orders pique a company's interest to seek additional international sales

Caused by temporary surpluses Variations in production levels Increases in demand Firm has little or no intention of maintaining continuous market representation Foreign sales decline when demand or surplus decreases May withdraw from international markets Little or no change in company organization or product lines

Firm has production capacity devoted to foreign markets Firm employs domestic or foreign intermediaries Uses its own sales force Sales subsidiaries in important markets Products allocated or adapted to foreign markets as demand grows Firm depends on profits from foreign markets

A Global Company : 1.Treats world, including home market as one market 2.Market segmentation decisions no longer focused on national borders 1.Defined by income levels, usage patterns, or other factors 3.More than half of revenues come from abroad 4.Organization takes on global perspective

Ways that companies strategically organize for international business. 1.Domestic market extension orientation 2.Multi-domestic market orientation 3.Global market orientation

Domestic Orientation International operations are viewed as secondary Prime motive is to market excess domestic production Firm's orientation remains basically domestic Minimal efforts are made to adapt product or marketing mix to foreign markets Firms with this approach are classified as ethnocentric

Multidomestic Orientation Companies have a strong sense that foreign country markets are vastly different. Market success requires an almost independent program for each country Separate marketing strategies Subsidiaries operate independently of one another in establishing marketing objectives and plans Products are adapted for each market Control is decentralized

Global Orientation Marketing activity is global Market coverage is the world Firm usually develops a standardized marketing mix applicable across national boundaries Markets are still segmented Each country or region is considered side by side with a variety of other segmentation variables Also fits the regio-centric or geocentric classifications

An environmental/cultural approach to international strategic marketing. Building GBIQ! Intended to demonstrate the unique problems and opportunities of international marketing Discussion of international marketing has wide range of topics beyond selling an individual product: The marketing and business practices of small exporters to the practices of global companies. Geopolitical and legal events. Global economic and financial events and alliances. Cultural conflict and cultural psychology. Religion, social ethics and morality.