International Marketing

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MKT6230 International Marketing– Chapters 7-11

  1. What are the four forms of law and what are the heritages linked to these forms of law?

Four heritages form the bases for the majority of the legal systems of the world: (1) common law, derived from English law and found in England, the United States, Canada, and other countries once under English influence; (2) civil or code law, derived from Roman law and found in Germany, Japan, France, and non-Islamic and non-Marxist countries; (3) Islamic law, derived from the interpretation of the Koran and found in Pakistan, Iran, Saudi Arabia, and other Islamic states; and (4) a commercial legal system in the Marxist-socialist economies of Russia and the republics of the former Soviet Union, Eastern Europe, China, and other Marxist-socialist states whose legal system centered on the economic, political, and social policies of the state.

 

  1. Will leaving the country make an American businessman immune to U.S. laws? Provide an example from current events to support your answer.

Leaving the political boundaries of a home country does not exempt a business from home-country laws. Regardless of the nation where business is done, a U.S. citizen is subject to certain laws of the United States. What is illegal for an American business at home can also be illegal by U.S. law in foreign jurisdictions for the firm, its subsidiaries, and licensees of U.S. technology. Laws that prohibit taking a bribe, trading with the enemy, participating in a commercial venture that negatively affects the U.S. economy, participating in an unauthorized boycott such as the Arab boycott, or any other activity deemed to be against the best interests of the United States apply to U.S. businesses and their subsidiaries and licensees regardless of where they operate. Thus, at any given time a U.S. citizen in a foreign country must look not only at the laws of the host country but at home law as well. The question of jurisdiction of U.S. law over acts committed outside the territorial limits of the country has been settled by the courts through application of a longestablished principle of international law, the “objective theory of jurisdiction.” This concept holds that even if an act is committed outside the territorial jurisdiction of U.S. courts, those courts can nevertheless have jurisdiction if the act produces effects within the home country. The only possible exception may be when the violation is the result of enforced compliance with local law.

 

  1. International marketers often need to collect certain types of information not normally collected by domestic marketing researchers. Unisys Corporation gives some guidance about the kind of information that organizations need to collect in the international environment. List and briefly discuss each of the five types of information suggested by the Unisys Corporation model.

Economic and demographic: General data on growth in the economy, inflation, business cycle trends, and the like; profitability analysis for the division’s products; specific industry economic studies; analysis of overseas economies; and key economic indicators for the United States and major foreign countries, as well as population trends, such as migration, immigration, and aging. Cultural, sociological, and political climate: A general noneconomic review of conditions affecting the division’s business. In addition to the more obvious subjects, it covers ecology, safety, and leisure time and their potential impacts on the division’s business. Overview of market conditions: A detailed analysis of market conditions that the division faces, by market segment, including international. Summary of the technological environment: A summary of the state-of-the-art technology as it relates to the division’s business, carefully broken down by product segments. Competitive situation: A review of competitors’ sales revenues, methods of market segmentation, products, and apparent strategies on an international scope.

 

  1. With references to international marketing research, discuss the various problems related to the availability and use of secondary data.
  2. The data can be obsolete. It could be data which no longer holds significance in the present-day scenario.
  3. Purchase of secondary data could be expensive for the firm which may add to cost.
  4. The data is the only reference point that the company could rely on, and it may have various bias involved.
  5. The secondary data may have a selection bias and not a true representation of the population.
  6. What are the various advantages and disadvantages of the decentralization of the international marketing research function?

There are various advantages and disadvantages of decentralization of international marketing research functions, those are as stated below:

Advantages:

  • With the help of decentralization of international marketing research functions, we can achieve economic of scales in operational activities and distribution systems,
  • The decentralization of international marketing research functions will also help organization to reduce the costs of marketing effectively
  • Organization can improve the brand value or image, they can escalate various Ideas and reach to the correct audiences easily within stipulated time,
  • With such practices of decentralization of international marketing research functions, organization can bring consistency and uniformity in their marketing operations
  • Organizational strength and freedom get increased as they get area to perform, further, they can eliminate various barriers like social barrier, Political barrier, etc.
  • Here, Organization will leverage their e- marketing practices and they will build their capacity to meet the needs of global customers,

Disadvantages:

  • Organization will face various issues with such practices of decentralization of international marketing research functions, they will find differences in the needs and expectations of customers, there will be different Interest of their products and services due to changing locations and culture.
  • They will also see the differences in feedback and responses from customer end to their marketing practices.
  • Further, Organization will face various competitive environments across the globe, and they need to set different strategies for their product and service penetration.
  • They will also face different legal and regulatory challenges along with various cultural and weather-related challenges; all such are common with global marketing practices implementation and decentralization of International Marketing research functions.
  • Organization may also face other differences like product penetration, administrative practices
  1. Describe the political and economic changes affecting global marketing. Provide an example from current events to support your answer.

The ‘structural way’ and the ‘populist way’ are the two most common ways that politics influences business and marketing operations. Structural forces are influenced by factors that are already in effect and are predictable, such as active legislation, taxes, trade laws, international treaties and agreements, the ruling party or government in power until the end of the mandate, and so on. Populist factors are public identities and sensitivities linked to people’s political identities, and they can be related to ideology, history, nationalism, or even mythology; any element that is constitutive of people’s political identity has the potential to cause backlash if people do not agree with it.

Any part of people’s political identity that is questioned or disrespected, or if it contradicts their belief system, has the potential to provoke a backlash. Populist factors are notoriously difficult to forecast because they are much more volatile in nature. However, in the modern era we live in, they can be far more destructive than systemic ones, since responses can be exchanged and spread digitally in seconds and regaining control can be extremely costly and difficult.

There have been many recent instances of abrupt and unanticipated shifts in the political climate that have created significant disruption in global business operations. The unprecedented election of Donald Trump in the United States, as well as the Brexit referendum in the United Kingdom, have greatly increased the risk factors for many sectors and their foreign operations. Even for companies that were not directly impacted by these changes, the rise in uncertainty and risk factors is bound to influence any international business because it affects the overall economic climate, especially the financial one, and businesses are impacted as a result.

  1. List and briefly describe the various factors that promote the economic growth of newly industrialized countries (NICs)?

Here are some of the factors that contribute towards economic growth in newly industrialized countries (NICs):

  • One of the important factors is the stability of the political situation and related policies as it directly impacts the development of the economy.
  • The economic and legal factors help to bring reforms and transformation in the NICs. Various rights and privileges related to contractual system and properties help to differentiate the growth between various economies.
  • The culture of innovation and entrepreneurship is also a major factor that contributes towards economic growth in NIC. The investment and support for research and development, building a culture of innovation and providing a healthy environment for entrepreneurs helps to contribute towards long-term growth.
  • The planning of the entire economy helps to define goals and makes them measurable. It helps to focus on a certain key aspect of policies leading to efficient resource utilization.
  • The domestic and local market having an external orientation to operations helps to bring economic development. It helps to compare with competition and makes it export friendly.
  • All the factors involved in the production process like land, raw material & resources, labor, technology, and quality of management helps to create a great environment for economic growth and sustainability.
  • Support and focused growth of the industrial sector is another important factor. Economies having specialized focus and resources for industrial sector creates opportunities and leads to optimal resource utilization.
  • Privatization and globalization confidence for state/government owner enterprises helps to bring innovation and modernization in the economies. Privatization brings new technologies and better results in terms of productivity.

 

 

  1. In the context of the North American Free Trade Agreement (NAFTA), explain the term “rules of origin.”

The North American Free Trade Agreement (NAFTA) was created to ensure that goods traded among Canada, Mexico and the United States receive preferential tariff treatment. The NAFTA grants benefits and reduces tariffs only on goods that qualify under the NAFTA Rules of Origin.

The Rules of Origin listed in Chapter 4 of the NAFTA Agreement are used to determine whether goods originate in a NAFTA territory (either the U.S., Canada or Mexico). The NAFTA Rules of Origin take into account where the goods are produced and what materials are used to produce them. Only originating goods as defined by NAFTA are entitled to receive duty-free or reduced tariff treatment. (These rules should not be confused with the country of origin used for marking, quota, anti-dumping or countervailing cases.)

The Rules of Origin are very complex, and one cannot make assumptions without a careful reading of the rules. For example, the NAFTA Rules of Origin allow goods to qualify as originating if the goods are “wholly obtained or produced entirely in the territory of one or more of the parties.”

Example of a rule of origin:

Please note that within the rules of origin chapter refers to the first two (2) digits of the HS code, heading refers to the first four (4) digits of the HS code, and subheading refers to the first (6) digits of the HS code.

Rule of Origin: “A change to heading 1902 through 1905 from any other chapter.”

Products: Breads, pastries, cakes, biscuits (HS 1905.90)

Non-NAFTA input: Flour (classified in HS chapter 11), imported from Europe.

 

  1. Successful economic union requires favorable economic, political, cultural, and geographic factors. Briefly describe these four factors.

The four factors of economic union are:

  1. a) Economic factors:

The economic union helps to extend markets where the potential members of the participating countries get some benefit from tariffs and other gets usual barrier. Due to the extended market, is becomes protected from outside and gets internal economic development. The domestic companies to get much security due to the greater economic safety.

  1. b) Political factors:

For the development of economic union, political influence is important as well as it’s agreeableness. The economic and political agreement is made based on the outside political threats. So, it is very important for the participating countries to be compatible with each other before starting the agreement.

  1. c) Cultural factors:

Two countries can merge easily when there would be a similarity in their cultures. Closely situated countries don’t face much language barrier whereas they also can understand other’s viewpoint. But still some issues regarding religion and tradition came in between the agreement sometimes.

  1. d) Geographic factors:

Union countries when become collaborative with each other, the simple functioning of the market would be easier and smooth. One of the issues of geographical factors is the time zone of different participating countries. It can be said that a well-developed trade would be settled when there would be some geographical closeness among the participating countries.

 

  1. What are BOPMs? According to C. K. Prahalad, why have they been ignored by international marketers?
  2. K. Prahalad and his associates introduced a new concept into the discussion of developing countries and markets—

bottom-of-the-pyramid markets (BOPMs) —consisting of the 4 billion people across the globe with annual incomes of less than $1,200. These markets are not necessarily defined by national borders but rather by the pockets of poverty across countries. These 4 billion consumers are, of course, concentrated in the LDCs and LLDCs, as defined in the U.N. classification scheme, particularly in South Asia and sub-Sahara Africa.

Prahalad’s basic point is that these consumers have been relatively ignored by international marketers because of misconceptions about their lack of resources (both money and technology)and the lack of appropriateness of products and services usually developed for more affluent consumers.