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Tapping into Global Markets

LEARNING OBJECTIVES
After reading this chapter, students should:
28) Know what factors a company should review before deciding to go abroad
29) Know how companies can evaluate and select specific foreign markets to enter
30) Know what are the major ways of entering a foreign market
31) Know to what extent the company must adapt its products and marketing program to each foreign country
32) Know how the company should manage and organize its international activities

DETAILED CHAPTER OUTLINE
With faster communication, transportation, and financial flows, the world is rapidly shirking. Products and services developed in one country are finding enthusiastic acceptance in others. More and more countries are becoming increasingly multicultural. Companies need to be able to cross boundaries within and outside their country.
Although opportunities to enter and compete in international markets are significant, the risks can also be high. Companies selling in global industries, however, have no choice but to internationalize their operations.
COMPETING ON A GLOBAL BASIS
Two hundred giant corporations together have sales that exceed ¼ of the world’s total economic activity.
24) Many companies have conducted international marketing for decades.
25) Domestic companies who never thought about foreign competitors suddenly find them in their backyards.
26) The better way to compete is to continuously improve products at home and expand into foreign markets.
27) A global industry is an industry in which the strategic positions of competitors in major geographic or national markets are fundamentally affected by their overall global positions.
28) A global firm is a firm that operates in more than one country and captures R&D, production, logistical, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors.
29) Global firms plan, operate, and coordinate their activities on a worldwide basis
30) A company doesn’t need to be large to sell globally.
31) Small and medium-sized firms can practice global nichemanship.
32) For a company of any size to go global it must make a series of decisions.

DECIDING WHETHER TO GO ABROAD

Most companies would prefer to remain domestic if their domestic market were large enough.

Several factors are drawing more and more companies into the international arena:

Some international markets present higher profit opportunities than the domestic market.
The company needs a larger customer base to achieve economies of scale.
The company wants to reduce its dependence on any one market.
Global firms offering better products or lower prices can attack the company’s domestic market. The company may want to counterattack these competitors in their home markets.
The company’s customers are going abroad and require international servicing.
Before making a decision to go abroad the company must weigh several risks:
T) The company might not understand foreign customer preferences and fail to offer a competitively attractive product.
U) The company might not understand the foreign country’s business culture or know how to deal effectively with foreign nationals.
V) The company might underestimate foreign regulations and incur unexpected costs.
W) The company might realize that it lacks managers with international experience.
X) The foreign country might change its commercial laws, devalue its currency, or undergo a political revolution and expropriate foreign property.
Because of the competing advantages and risks, companies often do not act until some event thrusts them into the international arena.
The internationalization process typically has four stages:
19) No regular export activities
20) Export via independent representatives (agents).
21) Establishment of one or more sales subsidiaries
22) Establishment of production facilities aboard


The first task is to get companies to move from stage 1 to stage 2
This move is helped by studying how firms make their first export decisions (hire agents).
A company then engages further agents to enter additional countries.
Later it establishes an export department to manage its agent relationships.
Still later, the company replaces its agents with its own sales subsidiaries in its larger export markets.
L) To manage these subsidiaries the company replaces the export department with an international department.
M) If certain markets continue to be larger and stable, the company takes the next step in locating production facilities in those markets.
(xviii) DECIDING WHICH MARKETS TO ENTER
(xix)
In deciding to go abroad, the company needs to define its marketing objectives and policies.
(xx)
(xxi) How Many Markets to Enter
(xxii)
The company must decide how many countries to enter and how fast to expand.

A) Companies entry strategy typically follows one of two possible approaches:
O) A waterfall approach—countries are gradually entered sequentially.
P) A sprinkler approach— many countries are entered simultaneously within a limited period of time
B) Increasingly companies are born global and market to the entire world right from the outset.
C) When first mover advantage is crucial and a high degree of competitive intensity prevails, the sprinkler approach is preferred.
1) The main risk is the substantial resources involved and the difficulty of planning entry strategies in so many potentially diverse markets.
D) The company must also decide on the types of countries to consider.
Developed Versus Developing Markets

The developed nations and the prosperous parts of developing nations account for less than 15 percent of the world’s population. Is there a way for marketers to serve the other 85 percent?

S) Successfully entering developing markets requires a special set of skills and plans.
T) These marketers are able to capitalize on the potential of developing markets by changing their conventional marketing practices to sell their products and services more effectively.
U) Smaller packaging and lower sales prices are often critical in markets where incomes are limited.
V) The challenge is to think creatively about how marketing can fulfill the dreams of most of the world’s population for a better standard of living.
Regional Free Trade Zones

Regional economic integration-trading agreements between blocs of countries has intensified in recent years. This development means that companies are more likely to enter entire regions at the same time.

)A Certain countries have formed free trade zones or economic communities—groups of nations organized to work toward common goals in the regulation of international trade.

The European Union

The European Union (EU) set out to create a single European market by reducing barriers to the free flow of products, services, finances, and labor among member countries.
18) It has a common currency, the euro monetary system.
19) European unification offers tremendous trade opportunities for non-European firms.
20) It also poses threats:
1) European companies will grow bigger and more competitive.
2) Low barriers inside Europe will only create thicker outside walls.
21) Companies that plan to create “pan-European” marketing campaigns directed to a unified Europe, should proceed with caution.
1) Creating an economic community will not create a homogeneous market.
NAFTA

The North American Free Trade Agreement (NAFTA) established a free trade zone among the United States, Mexico, and Canada.

)A As it is implemented over 15 years, NAFTA will eliminate all trade barriers and investment restrictions among these three countries.

MERCOSUL

MERCOSUL links Brazil, Argentina, Paraguay, and Uruguay.
a. It is likely that NAFTA will eventually merge with this and form an all-Americas free trade zone.





APEC

Twenty-one Pacific Rim countries, including the NAFTA member states, Japan and China, are working to create a pan-Pacific free trade area under the auspices of the Asian Pacific Economic Cooperation forum (APEC.)

ASEAN

Ten countries make up the Association of Southeast Asian Nations. The region is an attractive market of over 550 million people.

Evaluating Potential Markets

Although the world is becoming flatter, there is still some “roundness”. However, many nations and regions integrate their trading policies and standards; each nation still has unique features.

23) A nation’s readiness for different products and services and its attractiveness as a market to foreign firms depend upon certain environments:
U) Economic
V) Political-legal
W) Cultural
24) Many companies choose to sell to neighboring countries because they understand these countries better and can control their costs more effectively.
25) At other times, psychic proximity determines choices:
1) Companies should be careful in choosing markets according to cultural distance.
26) In general, a company prefers to enter countries:
P) That rank high on market attractiveness.
Q) That are low in market risk.
R) In which it possesses a competitive advantage.

DECIDING HOW TO ENTER THE MARKET

Once a company decides to target a particular country, it has to determine the best mode of entry. Its broad choices are indirect exporting, direct exporting, licensing, joint ventures, and direct investment. Each succeeding strategy involves more commitment, risk, control, and profit potential.
P)
Q) Indirect and Direct Export
R)
The normal way to get involved in an international market is through export.
19) Occasional exporting is a passive level of involvement in which the company exports from time to time, either on its own initiative or in response to unsolicited orders from abroad.
20) Active exporting takes place when the company makes a commitment to expand into a particular market.
21) In either case, the company produces its goods in the home country and might or might not adapt them to the international market.
22) Companies typically start with indirect exporting—working through independent intermediaries.
w. Domestic-based export merchants buy the manufacturer’s products and then sell them abroad.
24) Domestic-based export agents seek and negotiate foreign purchases and are paid a commission (including trading companies).
25) Cooperative organizations carry on exporting activities on behalf of several producers.
26) Export-management companies agree to manage a company’s export activities for a fee.
27)
28) LEARNING OBJECTIVES
29) After reading this chapter, students should:
30) Know what factors a company should review before deciding to go abroad
31) Know how companies can evaluate and select specific foreign markets to enter
32) Know what are the major ways of entering a foreign market
33) Know to what extent the company must adapt its products and marketing program to each foreign country
34) Know how the company should manage and organize its international activities
35)
36) DETAILED CHAPTER OUTLINE
37) With faster communication, transportation, and financial flows, the world is rapidly shirking. Products and services developed in one country are finding enthusiastic acceptance in others. More and more countries are becoming increasingly multicultural. Companies need to be able to cross boundaries within and outside their country.
38) Although opportunities to enter and compete in international markets are significant, the risks can also be high. Companies selling in global industries, however, have no choice but to internationalize their operations.
39) COMPETING ON A GLOBAL BASIS
40) Two hundred giant corporations together have sales that exceed ¼ of the world’s total economic activity.
41) Many companies have conducted international marketing for decades.
42) Domestic companies who never thought about foreign competitors suddenly find them in their backyards.
43) The better way to compete is to continuously improve products at home and expand into foreign markets.
44) A global industry is an industry in which the strategic positions of competitors in major geographic or national markets are fundamentally affected by their overall global positions.
45) A global firm is a firm that operates in more than one country and captures R&D, production, logistical, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors.
46) Global firms plan, operate, and coordinate their activities on a worldwide basis
47) A company doesn’t need to be large to sell globally.
48) Small and medium-sized firms can practice global nichemanship.
49) For a company of any size to go global it must make a series of decisions.
50)
51) DECIDING WHETHER TO GO ABROAD
52)
53) Most companies would prefer to remain domestic if their domestic market were large enough.
54)
55) Several factors are drawing more and more companies into the international arena:
56)
57) Some international markets present higher profit opportunities than the domestic market.
58) The company needs a larger customer base to achieve economies of scale.
59) The company wants to reduce its dependence on any one market.
60) Global firms offering better products or lower prices can attack the company’s domestic market. The company may want to counterattack these competitors in their home markets.
61) The company’s customers are going abroad and require international servicing.
62) Before making a decision to go abroad the company must weigh several risks:
63) The company might not understand foreign customer preferences and fail to offer a competitively attractive product.
64) The company might not understand the foreign country’s business culture or know how to deal effectively with foreign nationals.
65) The company might underestimate foreign regulations and incur unexpected costs.
66) The company might realize that it lacks managers with international experience.
67) The foreign country might change its commercial laws, devalue its currency, or undergo a political revolution and expropriate foreign property.
68) Because of the competing advantages and risks, companies often do not act until some event thrusts them into the international arena.
69) The internationalization process typically has four stages:
70) No regular export activities
71) Export via independent representatives (agents).
72) Establishment of one or more sales subsidiaries
73) Establishment of production facilities aboard
74)
75)
76) The first task is to get companies to move from stage 1 to stage 2
77) This move is helped by studying how firms make their first export decisions (hire agents).
78) A company then engages further agents to enter additional countries.
79) Later it establishes an export department to manage its agent relationships.
80) Still later, the company replaces its agents with its own sales subsidiaries in its larger export markets.
81) L) To manage these subsidiaries the company replaces the export department with an international department.
82) M) If certain markets continue to be larger and stable, the company takes the next step in locating production facilities in those markets.
83) DECIDING WHICH MARKETS TO ENTER
84)
85) In deciding to go abroad, the company needs to define its marketing objectives and policies.
86)
87) How Many Markets to Enter
88)
89) The company must decide how many countries to enter and how fast to expand.
90)
91) A) Companies entry strategy typically follows one of two possible approaches:
92) A waterfall approach—countries are gradually entered sequentially.
93) A sprinkler approach— many countries are entered simultaneously within a limited period of time
94) B) Increasingly companies are born global and market to the entire world right from the outset.
95) C) When first mover advantage is crucial and a high degree of competitive intensity prevails, the sprinkler approach is preferred.
96) 1) The main risk is the substantial resources involved and the difficulty of planning entry strategies in so many potentially diverse markets.
97) D) The company must also decide on the types of countries to consider.
98) Developed Versus Developing Markets
99)
100) The developed nations and the prosperous parts of developing nations account for less than 15 percent of the world’s population. Is there a way for marketers to serve the other 85 percent?
101)
102) Successfully entering developing markets requires a special set of skills and plans.
103) These marketers are able to capitalize on the potential of developing markets by changing their conventional marketing practices to sell their products and services more effectively.
104) Smaller packaging and lower sales prices are often critical in markets where incomes are limited.
105) The challenge is to think creatively about how marketing can fulfill the dreams of most of the world’s population for a better standard of living.
106) Regional Free Trade Zones
107)
108) Regional economic integration-trading agreements between blocs of countries has intensified in recent years. This development means that companies are more likely to enter entire regions at the same time.
109)
fffff. Certain countries have formed free trade zones or economic communities—groups of nations organized to work toward common goals in the regulation of international trade.
111)
112) The European Union
113)
114) The European Union (EU) set out to create a single European market by reducing barriers to the free flow of products, services, finances, and labor among member countries.
115) It has a common currency, the euro monetary system.
116) European unification offers tremendous trade opportunities for non-European firms.
117) It also poses threats:
118) 1) European companies will grow bigger and more competitive.
119) 2) Low barriers inside Europe will only create thicker outside walls.
120) Companies that plan to create “pan-European” marketing campaigns directed to a unified Europe, should proceed with caution.
121) 1) Creating an economic community will not create a homogeneous market.
122) NAFTA
123)
124) The North American Free Trade Agreement (NAFTA) established a free trade zone among the United States, Mexico, and Canada.
125)
vvvvv. As it is implemented over 15 years, NAFTA will eliminate all trade barriers and investment restrictions among these three countries.
127)
128) MERCOSUL
129)
130) MERCOSUL links Brazil, Argentina, Paraguay, and Uruguay.
aaaaaa. It is likely that NAFTA will eventually merge with this and form an all-Americas free trade zone.
132)
133)
134)
135)
136)
137) APEC
138)
139) Twenty-one Pacific Rim countries, including the NAFTA member states, Japan and China, are working to create a pan-Pacific free trade area under the auspices of the Asian Pacific Economic Cooperation forum (APEC.)
140)
141) ASEAN
142)
143) Ten countries make up the Association of Southeast Asian Nations. The region is an attractive market of over 550 million people.
144)
145) Evaluating Potential Markets
146)
147) Although the world is becoming flatter, there is still some “roundness”. However, many nations and regions integrate their trading policies and standards; each nation still has unique features.
148)
149) A nation’s readiness for different products and services and its attractiveness as a market to foreign firms depend upon certain environments:
150) Economic
151) Political-legal
152) Cultural
153) Many companies choose to sell to neighboring countries because they understand these countries better and can control their costs more effectively.
154) At other times, psychic proximity determines choices:
155) 1) Companies should be careful in choosing markets according to cultural distance.
156) In general, a company prefers to enter countries:
157) That rank high on market attractiveness.
158) That are low in market risk.
159) In which it possesses a competitive advantage.
160)
161) DECIDING HOW TO ENTER THE MARKET
162)
163) Once a company decides to target a particular country, it has to determine the best mode of entry. Its broad choices are indirect exporting, direct exporting, licensing, joint ventures, and direct investment. Each succeeding strategy involves more commitment, risk, control, and profit potential.
164)
165) Indirect and Direct Export
166)
167) The normal way to get involved in an international market is through export.
168) Occasional exporting is a passive level of involvement in which the company exports from time to time, either on its own initiative or in response to unsolicited orders from abroad.
169) Active exporting takes place when the company makes a commitment to expand into a particular market.
170) In either case, the company produces its goods in the home country and might or might not adapt them to the international market.
171) Companies typically start with indirect exporting—working through independent intermediaries.
ppppppp. Domestic-based export merchants buy the manufacturer’s products and then sell them abroad.
173) Domestic-based export agents seek and negotiate foreign purchases and are paid a commission (including trading companies).
174) Cooperative organizations carry on exporting activities on behalf of several producers.
175) Export-management companies agree to manage a company’s export activities for a fee.
176) Indirect export has two advantages.
21) It involves less investment.
22) It involves less risks
177) Companies eventually may decide to handle their own exports, the investment and risk are greater, but so is the potential return.
178) A company can carry on direct exporting in several ways:
U) Domestic-based export department or division
V) Overseas sales branch or subsidiary
W) Traveling export sales representatives
X) Foreign-based distributors or agents
179) Whether companies decided to export indirectly or directly, many companies use exporting as a way to “test the waters” before further investments.

Using a Global Web Strategy

One of the best ways to initiate or extend export activities used to be to exhibit at an overseas trade show. With the Web, it is not even necessary to attend trade shows to show one’s wares. Electronic communication via the Internet is extending the reach of companies large and small to worldwide markets.

A) Major marketers doing global e-commerce are using the Web to reach new customers:
W) Outside their home countries
X) To support existing customers who live abroad
Y) To source from international suppliers
Z) To build global brand awareness
B) These companies adapt their Web sites to provide country-specific content and services to their best potential international markets
C) The Internet has become an effective means:
Gaining free exporting information and guidelines
Conducting market research
Offering customers a secure process for ordering and paying for products
D) “Going aboard” on the Internet does pose special challenges
1) The global marketer may run up against governmental or cultural restrictions.
Licensing

Licensing is a simple way to engage in international marketing.

15) The licensor licenses a foreign company to use a manufacturing process, trademark, patent, trade secret, or other item of value for a fee or royalty.
16) The licensor gains entry at little risk.
17) The licensee gains production expertise or a well-known product or brand name.
18) Licensing has potential disadvantages:
a. The licensor has less control over the licensee than it does over its own production and sales facilities.
b. If the licensee is very successful, the firm has given up profits.
c. If and when the contract ends the company might find that it has created a competitor.
d. To avoid this, the licensor usually supplies some proprietary ingredients or components needed in the product.
E) The best strategy is for the licensor to lead in innovation so that the licensee will continue to depend on the licensor.
F) There are several variations on the licensing arrangement:
N) Management contracts- sold to owners to manage these businesses for a fee
O) Contract manufacturing- the company hires local manufacturers to produce the product.
P) Franchising-a more complete form of licensing.
Joint Ventures

Foreign investors may join with local investors to create a joint venture company in which they share ownership and control.
A) A joint venture may be necessary or desirable for economic or political reasons
B) The foreign firm might lack the:
Financial
Physical
Managerial resources needed to undertake the venture alone.
Foreign governments might require joint ownership for entry.
C) Joint ownership has certain drawbacks:
The partners might disagree over investment
Over marketing
Over other policies
Can also prevent a multinational company from carrying out specific manufacturing and marketing policies on a worldwide basis.
Direct Investment

The ultimate form of foreign involvement is direct ownership of foreign-based assembly or manufacturing facilities.

A) The foreign company can buy part or full interest in a local company or build its own facilities.
B) If the market appears large enough, foreign production facilities offer distinct advantages:
P) The firm secures cost economies in the form of cheaper labor or raw materials; foreign-government investment incentives and/or freight savings.
Q) The firm strengthens its image in the host country because it creates jobs.
R) The firm develops a deeper relationship with government, customers, local suppliers, and distributors.
S) The firm retains full control over its investment.
5) The firm assures itself access to the market.
C) The main disadvantage of direct investment is that the firm:
33) Exposes a large investment to risks such as blocked or devalued currencies
34) Worsening markets
35) Expropriation




DECIDING ON THE MARKETING PROGRAM

International companies must decide how much to adapt their marketing strategy to local conditions.

A) At one extreme are companies that use a globally standardized marketing mix worldwide.
1) Standardization of the product, communications, and distribution channels promises the lowest costs.
B) At the other extreme is an adapted marketing mix where the producer adjusts the marketing program to each target market.
C) Between the two extremes many possibilities exist.
D) Most brands are adapted to some extent to reflect significant differences in:
Consumer behavior
Brand development
Competitive forces
Legal and political environment
E) Satisfying different consumer needs and wants can require different marketing programs.
F) Cultural differences can often be pronounced across countries.
G) Hofstede identifies four cultural dimensions that can differentiate countries:
P) Individualism versus collectivism
Q) High versus low power distance
R) Masculine versus feminine
S) Weak versus strong uncertainty avoidance
Product

Some types of products travel better across borders than others. Warren Keegan has distinguished five adaptation strategies of product and communications to a foreign market. The product adaptation strategies are:

A) Straight extension means introducing the product in the foreign market without any change.
B) Product adaptation involves altering the product to meet local conditions or preferences.
19) A company can produce a regional version of its product.
20) A company can produce a country version of its product.
21) A company can produce a city version of its product.
22) A company can produce different retailer versions of its product.
C) Product invention consists of creating something new
Backward invention is reintroducing earlier product forms that are well adapted to a foreign country’s needs.
Forward invention is creating a new product to meet a need in another country.
D) Product invention is a costly strategy, but the payoffs can be great, particularly if a company can parlay a product innovation into other countries.
E) In launching products and services globally, certain brand elements may have to be changed.
Communications

Companies can run the same marketing communications programs as used in the home market or change them for each local market, a process called communication adaptation.

R) If it adapts both the product and the communication, the company engages in dual adaptation.
S) The company can use one message everywhere, varying only the language, name, and colors.
T) The second possibility is to use the same theme globally but adapt the copy to each local market.
1) The positioning stays the same, but the creative execution reflects local sensibilities.
U) The third approach consists of developing a global pool of ads from which each country selects the most appropriate ones.
V) Finally, some companies allow their country managers to create country-specific ads.
W) The use of media also requires international adaptation because media availability varies from country to country.
X) Marketers must also adapt sales-promotion techniques to different markets.
Y) Personal selling tactics may have to change too.
Price

Multinationals face several pricing problems when selling abroad. They must deal with:

23. Price escalation
24. Transfer prices
25. Dumping charges
26. Gray markets.



When companies sell their goods abroad, they face a price escalation problem.
S) Depending on the added costs of transportation, tariffs, importer margins, and currency fluctuations, the product might have to sell for two to five times as much in another country to make the same profit for the manufacturer.
T) Because cost escalation varies from country to country, companies have three choices:
3) Set a uniform price everywhere.
2) Set a market-based price in each country.
3) Set a cost-based price in each country.
C) Another problem arises when a company sets a transfer price (the price it charges another unit in the company) for goods that it ships to its foreign subsidiaries.
U) If the company charges too high a prices—it may end up paying higher tariff duties.
V) If it charges too low a price—it can be charged with dumping.
D) Dumping occurs when a company charges either less than its costs or less than it charges in its home market, in order to win a market.
E) Various government agencies force companies to charge the arm’s-length price that is the price charged by other competitors for the same or similar product.
11) Multinational are plagued by the gray-market problem.
1) The gray market consists of branded products diverted from normal or authorized distribution channels in the country of product origin or across international borders
Distribution Channels

Too many U.S. manufacturers think their job is done once the product leaves the factory. They should pay attention to how the product moves within the foreign country. They should take a whole-channel view of the problem of distributing products to the final users.
20) In the first link, seller’s international marketing headquarters, the export department, or international division makes decisions on channels and other marketing-mix elements.
21) In the second link, channels between nations, gets the products to the borders of the foreign nations. The decisions made in this link include:
S) Types of intermediaries (agents, trading companies)
T) Type of transportation
U) Financing and risk arrangements
22) The third link, channels within foreign nations, gets the products from their entry point to the final buyers and users.
23) Distribution channels within countries vary considerably.
24) Another difference lies in the size and character of retail units abroad
1) Larger-scale retail chains dominate the United States but much foreign retailing is in the hands of small, independent retailers.
26) Breaking bulk remains an important function of intermediaries and helps perpetuate the long channels of distribution that are a major obstacle to the expansion of large-scale retailing in developing countries.
25) When multinationals first enter a country they prefer to work with local distributors who have good local knowledge, but friction often arises later.
1) The multinational must choose the right distributors, invest in them, and set up performance goals to which they can agree.
26) Some companies choose to invest in infrastructure to ensure they benefit from the right channels.
27) Some of the world’s most successful retailers have had mixed success meeting the challenges of going aboard.
COUNTRY-OF-ORIGIN EFFECTS
In an increasingly connected, highly competitive global marketplace, government officials and marketers are concerned with how attitudes and beliefs about their country affect consumer and business decision-making.
Q) Country-of-origin perceptions are the mental associations and beliefs triggered by a country.
R) Government officials want to strengthen their country’s image to help domestic marketers who export and to attract foreign firms and investors.
S) Marketers want to use country-of-origin perceptions in the most advantageous way possible to sell their products and services.
Building Country Images

Governments now recognize that the image of their cities and countries affects more than tourism and has important value in commerce.

Attracting foreign business can improve the local economy, provide jobs, and improve infrastructure.
Countries all over the world are being marketed like any other brand.
1) In some cases, negative perceptions must be overcome.
Attitudes toward country-of-origin can change over time.
Consumer Perceptions of Country-of-Origin

Global marketers know that buyers hold distinct attitudes and beliefs about brands or products from different countries.

22) These country-of-origin perceptions can affect consumer decision-making directly or indirectly.
23) The perceptions may be included as an attribute in decision-making or influence other attributes in the process.
24) The mere fact that a brand is perceived as being successful on a global stage may lend credibility and respect.
25) Several studies have shown the following:
z. People are often ethnocentric and favorably predisposed to their own country’s products, unless they come from a less developed country
aa. The more favorable a country’s image, the more prominently the “Made in” label should be displayed.
bb. The impact of country of origin varies with the type of product.
cc. Certain countries enjoy a reputation for certain goods.
dd. Sometimes country-of-origin perception can encompass an entire country’s products.
E) The favorability of country-of-origin perceptions must be considered both from a domestic and foreign perspective.
In the domestic market, country-of-origin may stir up consumers’ patriotic notions or remind them of their past.
As international trade grows, consumers may view certain brands as symbolically important of their own cultural heritage and identity.
F) A company has several options when its products are competitively priced but their place of origin turns consumers off:
20) The company can consider co-production with a foreign company that has a better name.
21) The company can adopt a strategy to achieve world-class quality in the local industry.
G) Companies can target niches to establish a footing in new markets.
H) As progress is made, companies can start to build local roots to increase relevance.
DECIDING ON THE MARKETING ORGANIZATION

Companies manage their international marketing activities in three ways: through export departments, international divisions, or a global organization.

Export Department

A firm normally gets into international marketing by simply shipping out its goods.
As sales increase, the export department is expanded to include various marketing services.
If the firm moves into joint ventures or direct investment, the export department will no longer be adequate.
International Division

Many companies become involved in several international markets and ventures. The international division is headed by a division president, who sets goals and budgets and is responsible for the company’s international growth. The international division’s staff consists of functional specialists who provide services to the various operating units.

P) Operational units can be organized in several ways:
q. Geographic organizations
r. World product groups
s. International subsidiaries
Global Organization

Several firms have become truly global organizations. Their top corporate management and staff plans worldwide manufacturing, marketing policies, financial flows, and logistical systems.

The global operating units report directly to the chief executive or executive committee.
Executives are trained in worldwide operations
Management is recruited from many countries
These companies face several organizational complexities
Bartlett and Ghoshal have proposed circumstances under which different approaches work best.
)E They describe forces that favor “global integration”
17) Capital-intensive production
18) Homogeneous demand
)F Versus “national responsiveness”
.a Local standards and barriers
b. Strong local preferences
3) They distinguish three organizational strategies:
26) A global strategy treats the world as a single market
27) A multinational strategy treats the world as a portfolio of national opportunities
28) A “glocal” strategy standardizes certain core elements and localizes other elements
F) Many firms seek a blend of centralized global control from corporate headquarters with input from local and regional marketers.

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