MBA Distance education learning / International Marketing Management

Evolution to glocal marketing

Management tutorialQ 1. a) Discuss the process of evolution of marketing across national boundaries right up to the stage of GLOCAL.

Ans: Evolution to glocal marketing

Global marketing is not a revolutionary shift, it is an evolutionary process. While the following does not apply to all companies, it does apply to most companies that begin as domestic-only companies.

Domestic marketing

A marketing restricted to the political boundaries of a country, is called "Domestic Marketing". A company marketing only within its national boundaries only has to consider domestic competition. Even if that competition includes companies from foreign markets, it still only has to focus on the competition that exists in its home market. Products and services are developed for customers in the home market without thought of how the product or service could be used in other markets. All marketing decisions are made at headquarters.

Export marketing

Generally, companies began exporting, reluctantly, to the occasional foreign customer who sought them out. At the beginning of this stage, filling these orders was considered a burden, not an opportunity.

International marketing

If the exporting departments are becoming successful but the costs of doing business from headquarters plus time differences, language barriers, and cultural ignorance are hindering the company’s competitiveness in the foreign market, then offices could be built in the foreign countries. Sometimes companies buy firms in the foreign countries to take advantage of relationships, storefronts, factories, and personnel already in place. These offices still report to headquarters in the home market but most of the marketing mix decisions are made in the individual countries since that staff is the most knowledgeable about the target markets. Local product development is based on the needs of local customers

Multinational marketing

At the multi-national stage, the company is marketing its products and services in many countries around the world and wants to benefit from economies of scale. Consolidation of research, development, production, and marketing on a regional level is the next step. An example of a region is Western Europe with the US. But, at the multi-national stage, consolidation, and thus product planning, does not take place across regions; a regiocentric approach.

Global marketing

When a company becomes a global marketer, it views the world as one market and creates products that will only require weeks to fit into any regional marketplace. Marketing decisions are made by consulting with marketers in all the countries that will be affected. The goal is to sell the same thing the same way everywhere.

Global marketing

It is a synergy of Global and local competency of marketing activities.

Management tutorialQ 1. b) Describe with the help of examples how Indian companies have successfully pursued internationalization of their marketing activities.

Ans: In the last decade some Indian pharmaceutical firms have successfully internationalised their operations and emerged as a major producers and suppliers of generic drugs all over the world. This paper presents a study of internationalisation motives and strategies adopted by Indian pharmaceutical firms.

Although India currently represents just US $6 billion of the $550 billion global

pharmaceutical industry, its share is increasing at 10 % a year. The organised sector of

India’s pharmaceutical industry consists of 250 to 300 companies, which accounts for 70 % of the market, with the top ten companies representing 30%.

The Indian pharmaceutical industry has developed wide ranging capabilities in the

complex field of drug process development and production technology. It is well ahead

of other developing countries in process R&D capabilities and the range of

technologically complex medicines manufactured.

The Indian government adopted a new Patents Act in 1970, which laid the foundations

of the modern Indian pharmaceutical industry. It removed product patents for

pharmaceuticals, food and agro-chemicals, allowing patents only for production

processes. The statutory term for production processes was shortened to five years from grant or seven years from application. The 1970 Patent Act greatly weakened intellectual property protection in India, particularly for pharmaceutical innovations. It started the era of reverse engineering where firms developed new products by changing their production processes. Trained manpower, comparative ease of imitation and a strong chemistry base among Indian research institutes supported manufacturers and gave the Indian pharmaceutical industry its current profile.

There are 3 developments which are pushing expansion of the Indian pharmaceutical

industry into overseas markets;

a. Opportunities opened in the US generic market due to the Hatch-Waxman Act,

b. Increasing outsourcing by MNC pharmaceutical firms and

c. strengthening of patent laws in the domestic market. These three developments are

creating new challenges and opportunities for Indian industry and internationalization is one of route adopted by Indian to succeed in this new environment.

Liberalisation facilitated the ability of Indian firms to exploit this opportunity to market generics drugs to the US and other Western economies. Indian firms are preparing themselves to take a share of this increasing global market. Indian drug manufacturers currently export their products to more than 65 countries worldwide; the US being the largest customer. However Indian firms face some difficult challenges such as non tariff barriers, decreasing profits in the generics market, competitive threats from big pharma MNCs and reputation in western markets. For example, US regulation disqualifies Indian firms from bidding for government contracts and Indian firms have to submit separate applications for each state even when firms have FDA approved products and facilities.

Furthermore, stronger patent protection under the new patent law of 1999 has shut

down the avenues for exploitation of generics opportunity in domestic market, but

promised large rewards to Indian firms that could leverage their reverse engineering

capabilities in advanced markets. The stronger patent law restrict reverse engineering of newly patented molecule, thus affecting an important source of growth for Indian firms.

Also MNC pharmaceutical firms have entered India after 2005 and using the same

resource base as Indian firms to compete in the Indian domestic market further

increasing pressure on profit margins of Indian firms.

The contract research and manufacturing services (CRAM) market has emerged as huge opportunity for the Indian pharmaceutical industry. According to Frost and Sullivan (2005), the global outsourcing market is worth $37 billion and growing at almost 11%; 50% of the contract manufacturing market is in North America, 40% in Europe and just 10% in Asia and the rest of the world. Indian firms possess requisite capabilities to cater for the requirements of outsourcing markets, still India accounts for barely 1.5% of the global CRAM industry. Due to untested patent protection law and lack of data protection MNC firms are reluctant to outsource early stage R&D work to Indian firms.

Therefore Indian firms are trying to increase their share in the outsourcing market by

moving closer to the market.

Geographically the overseas acquisition by Indian pharmaceutical firms continues to be directed at developed countries specifically the US and Europe .

Indian companies have already established manufacturing plants in the US, Europe, Brazil, Russia and China.

The major Indian companies such as Ranbaxy, Dr. Reddy’s Laboratories, Wockhardt and others have established their own brand image in the international market and are taking steps to consolidate their activities. Indian firms are compensating for the spiralling cost of selling and marketing in advance countries by setting wholly owned subsidiaries or acquiring local firm. Thus reinforcing the argument that Indian firms internationalization through acquisition is directed towards acquiring new knowledge in different areas such as R&D capabilities, regulatory skills and distribution networks.

Management tutorial **Q 2. Answer the following questions giving suitable examples.*a) How do political and economic stabilities affect marketing?***

Ans: Political and economic risk is always a factor in international marketing due to the unavoidable differences between the laws, customs and policies of foreign governments. As foreigners entering new markets, we often lack the local market knowledge and culture.

To understand these differences and must depend on outside sources for information and forecasts.

In most Westernized nations, a vast library of economic statistics and political analysis is publicly available for review. These countries tend to have well-developed and predictable economies and relatively stable governments. Developing countries offer less transparency and access to accurate economic or industry statistics may not exist at all.

By understanding the elements of political and economic risk, it is easier to define a model for risk management and decision-making and to collect appropriate data for analysis and marketing strategy. This article will review the various components of economic and political risk and offer a method used for quantifying and comparing the "riskiness" of doing business in different countries.

Political Risk

Political risk is the risk that a government will unexpectedly change the roles of the game under which businesses in that country operate. Political risk is often characterized by the stability (or instability) of the government and the presence, or lack thereof, of an independent judiciary and legal system. The relationship with other countries is also very important in determining the level of political risk involved in entering a new market. Political differences between countries can create significant and unexpected business challenges, including international or home-country sanctions, consumer boycotts or even violent attacks against the country or firms that trade there.

b) Self-reference criterion is a big stumbling block for global marketer. Explain.

Ans: Self Reference Criterion

Having sold a product successfully in the domestic market a firm may assume that the product will, without adaptation, also be successful in foreign markets. Frequently this assumption leads to failure. The SRC refers to the assumption that what is suitable for the home market will be suitable for the foreign market and therefore there is no need to test whether or not the product should be altered. That’s why Self-reference criterion is a big stumbling block for global marketer

Management tutorial Q 3.

Differentiate between.

A) National brands and global brands

Ans: Global products is a commercial product which is marketed worldwide with a single brand name is called global product. Like Coca Cola.

National products are the products marketed in a national territory. Like TATA salt.

B) High context culture and low context culture

Ans: The general terms "high context" and "low context" (popularized by Edward Hall) are used to describe broad-brush cultural differences between societies.

High context refers to societies or groups where people have close connections over a long period of time. Many aspects of cultural behavior are not made explicit because most members know what to do and what to think from years of interaction with each other. Your family is probably an example of a high context environment.

Low context refers to societies where people tend to have many connections but of shorter duration or for some specific reason. In these societies, cultural behavior and beliefs may need to be spelled out explicitly so that those coming into the cultural environment know how to behave.

High Context

Less verbally explicit communication, less written/formal information

More internalized understandings of what is communicated

Multiple cross-cutting ties and intersections with others

Long term relationships

Strong boundaries- who is accepted as belonging vs who is considered an "outsider"

Knowledge is situational, relational.

Decisions and activities focus around personal face-to-face relationships, often around a central person who has authority.

Examples:

Small religious congregations, a party with friends, family gatherings, expensive gourmet restaurants and neighborhood restaurants with a regular clientele, undergraduate on-campus friendships, regular pick-up games, hosting a friend in your home overnight.

Low Context

Rule oriented, people play by external rules

More knowledge is codified, public, external, and accessible.

Sequencing, separation--of time, of space, of activities, of relationships

More interpersonal connections of shorter duration

Knowledge is more often transferable

Task-centered. Decisions and activities focus around what needs to be done, division of responsibilities

c) Command allocation and market allocation

Ans: Market allocation or market division schemes are agreements in which competitors divide markets among themselves. In such schemes, competing firms allocate specific customers or types of customers, products, or territories among themselves. For example, one competitor will be allowed to sell to, or bid on contracts let by, certain customers or types of customers. In return, he or she will not sell to, or bid on contracts let by, customers allocated to the other competitors. In other schemes, competitors agree to sell only to customers in certain geographic areas and refuse to sell to, or quote intentionally high prices to, customers in geographic areas allocated to conspirator companies.

The method for allocation of resources in which the main commanding economy determines the allocation of existing resources for the other economies like Soviet Union.

d) International companies and transnational companies

Ans: A MNC (Multinational Company) is one that has the ability to control their operations in more than one country, even if it doesn't own the operations directly. A TNC (Transnational Company) on the other hand is one that has outlets/opeations in more than one country.

Trans-National Corporations (TNCs) sometimes referred to as multinational companies, are enterprises that control economic assets in other countries — generally this means controlling at least a 10% share of such an asset¹. These companies command enormous financial resources, possess vast technical resources and have extensive global reach.

Despite their impact in developing economies, however, TNCs are not development agencies. They are profit-seeking organizations. These dual roles of funding source and profit seeker — unrelated roles that are neither conflicting nor complementary — have made TNCs object of great controversy. Do they help or hinder? Do they give or take? Are their benign or malign? Are they stakeholders or exploiters? Can they be persuaded to be good world citizens or are they indifferent to their impact?

Management tutorial Q 4.

Q 4. a) Elaborate the benefits that accrue to partners of regional agreement s and treaties.

Ans: Does Business Benefit from the Proliferation of Regional Trade Agreements?

November 2005 In the wake of slow-paced and limited WTO negotiations, Canada is negotiating an increasing number of investment treaties. The relative immediacy of deeper tariff cuts and investment protections seems like an obvious justification to this activity. But this growing array of agreements may cost businesses more than the purported liberalization is worth.

Regional trade agreements (RTAs) are an essential element in the landscape of international trade, and their significance is only increasing. Recent years have seen a proliferation of RTAs around the world, with new agreements being negotiated at an accelerated pace. As of January 2005, 312 RTAs have been notified to GATT/WTO, of which approximately 170 are currently in force. In the last 10 years alone, 196 new RTAs have been notified, and it is estimated that a further 65 RTAs are currently in force but have not yet been notified. But are so many RTAs a good thing?

The Canadian Perspective
As an industrialized country with a medium-sized economy, Canada has historically depended on trade for much of its economic prosperity. As a result, Canada has actively entered into, and conducted negotiations on, a wide variety of RTAs. Canada is a Party to seven RTAs, 22 bilateral investment treaties, and is currently negotiating six RTAs.

Benefits Arising From Regional Trade Agreements
RTAs quickly and efficiently reduce tariff and non-tariff barriers to the movement of goods and services in a way and at a pace not currently possible solely from the multilateral system.

RTAs permit flexibility not available in multilateral agreements. Canada and Chile have agreed not to impose anti-dumping duties on products riginating in either country. This is the only free trade agreement in the Americas that has taken this innovative step.

RTAs, like NAFTA, protect Canadian investments abroad by requiring the Parties to afford to investors of the other Parties non-discriminatory treatment and most favoured nation treatment with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.

NAFTA also allows investors to submit complaints of Chapter 11 violations to binding arbitration.

RTAs also allow for more focused and specialized negotiations involving certain industries or issues that are important to each country involved. For instance, the automobile industry is crucial to the Canadian economy. Article 403 of NAFTA therefore contains specific provisions dealing with automobiles.

Reduce tariffs and restrictions on trade between two or more nations within a certain region.

An FTA is a group of two or more customs territories which has eliminated tariffs and other trade restrictions on substantially all trade.

A Customs Unions is two or more customs territories which have an FTA and which also apply a common external tariff on goods from non-members.

A regional economic integration agreement is the next step: it can include the free movement of capital as

Q 4. b) Write short notes on

1) ASEAN

Ans: ASEAN

The Association of Southeast Asian Nationscommonly abbreviated ASEAN is a geo-political and economic organization of 10 countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand Since then, membership has expanded to include Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam.

The members of the summit are all 10 members of ASEAN together with China, Japan, South Korea, India, Australia and New Zealand who combined represent almost half of the world's population.

Its aims include the acceleration of

1. Economic growth,

2. Social progress,

3. Cultural development among its members,

4. The protection of the peace and stability of the region, and

5. To provide opportunities for member countries to discuss differences peacefully.

Objectives of ASEAN

1. To promote networking amongst relevant law enforcement authorities in ASEAN Countries to curb illegal trade in wild fauna and flora.

2. To promote research, monitoring and information exchange on CITES-related issues.

3. To encourage industry groups, trade associations/ traders and local communities to comply with legality and sustainability requirements of national regulations.

4. To encourage greater regional cooperation on specific issues by:

5. To seek sufficient technical and financial assistance through collaborative initiatives by:

2) Andean Group

Ans: Andean Group A regional economic grouping comprising Colombia, Peru (suspended from 1992 to 1993), Bolivia, Chile (from 1969 to 1977), Venezuela, and Ecuador. Formally established by the Cartagena Agreement of 1969 – hence its official name, Acuerdo de Cartagena – it was an attempt to enhance the competitive edge of the member states in their economic relations with the more developed economies of the Latin American region.

3) NAFTA

Ans: Implementation of the North American Free Trade Agreement (NAFTA) began on January 1, 1994. This agreement will remove most barriers to trade and investment among the United States, Canada, and Mexico.

Under the NAFTA, all non-tariff barriers to agricultural trade between the United States and Mexico were eliminated. In addition, many tariffs were eliminated immediately, with others being phased out over periods of 5 to 15 years. This allowed for an orderly adjustment to free trade with Mexico, with full implementation beginning January 1, 2008.

The agricultural provisions of the U.S.-Canada Free Trade Agreement, in effect since 1989, were incorporated into the NAFTA. Under these provisions, all tariffs affecting agricultural trade between the United States and Canada, with a few exceptions for items covered by tariff-rate quotas, were removed by January 1, 1998.

Mexico and Canada reached a separate bilateral NAFTA agreement on market access for agricultural products. The Mexican-Canadian agreement eliminated most tariffs either immediately or over 5, 10, or 15 years. Tariffs between the two countries affecting trade in dairy, poultry, eggs, and sugar are maintained

Management Tutorial Q 5. a) Discuss the various sources of market information used by global marketers.

Ans: There are a number of such sources available to the global marketer, and the following list is by no means conclusive:

Trade associations

National and local press Industry magazines

National/international governments

Websites

Informal contacts

Trade directories

Published company accounts

Business libraries

Professional institutes and organizations

Omnibus surveys

Previously gathered marketing research

Census data

Public records

Q 5. Discuss the problems faces by global market researchers?

Ans:A much practiced international marketing research is Desk research is a euphemism for collecting secondary data.

International Marketing Research follows the same path as domestic research, but there are a few more problems that may arise. Customers in international markets may have very different customs, cultures, and expectations from the same company. In this case, secondary information must be collected from each separate country and then combined, or compared. This is time consuming and can be confusing. International Marketing Research relies more on primary data rather than secondary information. Gathering the primary data can be hindered by language, literacy and access to technology.

the role of secondary research or desk research, in identifying suitable overseas markets as well as products

Market research enable businesses to analyse potential targets according to a number of key factors and issues.

Market characteristics

These may include factors such as size/growth and segmentation of markets, customer concentration, import sensitivity & growth, seasonal/cyclical trends, and quality issues.

Competitive conditions

This will cover factors such as the degree and concentration of competitors (domestic and foreign), the complexity of distribution systems, the availability of substitutes and barriers to new entrants to markets.

Financial & economic conditions

This will include basic issues such as the cost of doing business in a particular market but also will require analysis of pricing practices/payment terms, tariffs and other barriers to trade, foreign exchange, currency stability and the provision of concessional finance.

Cultural, political & legal factors

Cultural issues (including language), political stability and legal systems are vital factors in market identification. More specific but no less significant are foreign investment and consumer/environmental legislation, registration & licensing procedures, labour laws and intellectual property protection.

Market prioritisation

Analysis of the factors listed above, should help firms to rank potential markets in priority order.

Above all, businesses should focus on the influences on demand for products/services, on the acceptance of products/services, on government regulation and the major sources of competition.

So it may be untargeted, and difficult to use to make comparisons (e.g. financial data gather on Australian pensions will be different to data on Italian pensions).

Management Tutorial Q 6. a) Differentiate between Joint ventures and Global strategic partnerships.

Ans: Why Joint Ventures?

As there are good business and accounting reasons to create a joint venture (JV) with a company that has complementary capabilities and resources, such as distribution channels, technology, or finance, joint ventures are becoming an increasingly common way for companies to form strategic alliances. In a joint venture, two or more "parent" companies agree to share capital, technology, human resources, risks and rewards in a formation of a new entity under shared control.

Important Factors to be Considered Before a Joint Venture is Formed

screening of prospective partners
joint development of a detailed business plan and shortlisting a set of prospective partners based on their contribution to developing a business plan
due diligence - checking but it's good business practice to verify the facts through interviews with third parties)
development of an exit strategy and terms of dissolution of the joint venture
most appropriate structure (e.g. most joint ventures involving fast growing companies are structured as strategic corporate partnerships)
availability of appreciated or depreciated property being contributed to the joint venture; by misunderstanding the significance of appreciated property, companies can fundamentally weaken the economics of the deal for themselves and their partners.
special allocations of income, gain, loss or deduction to be made among the partners
compensation to the members that provide services the credentials of the other party ("trust and verify" - trust the information you receive from from the prospective partner.

Global strategic partnerships

a type of contractual alliance between two commercial enterprises that is not a formal legal partnership

A strategic partnership often puts together public and private entities for commercial purposes.

Q 6. b) Discuss in detail, trade fair route to enter new markets.

Ans: Participation in international trade fairs provides exporters with an excellent opportunity to promote their products and to establish ontacts with potential business relations. The training “Effective Trade Fair Participation” offers Small Medium Enterprises and BSO staff the opportunity to become familiar with the necessary knowledge, tools and skills to prepare, execute and give follow-up, to international trade fairs in

At the end of the training the participant:

has gained improved knowledge of tools to communicate with an European export market;

is able to prepare and manage an individual trade fair participation in Europe;

has improved his/her skills in identifying suitable exhibitions, selecting the right exhibitors and in dealing with trade fair organizations, stand constructors, customs etc.

has gained improved knowledge on issues like project management, budgeting, stand layout and design, visitor’s promotion and PR, stand behaviour, evaluation and follow-up;

has collected information on new concepts on how exhibitions are being organised

is familiar with CBI’s mission and website.

Target audience
The training is meant for exporters who are active in a variety of sectors among which the garment sector and which task it is to manage the exports to European markets. Focus is on the people within the exporting company who are responsible for the organisation of participations in international trade fairs. Experience in this field is necessary in order to fully participate in the workshop. Additionally the participants should have some experience in exports and international business and are conversant with the English language

Q 6. c) What impact does currency fluctuation has on pricing of products on international markets?

Ans: the financial risk of reduced profitability due to strong rupee can be seen in two ways.

The first one is it will bring down margins of local companies. Most Indian IT companies have a natural hedge, given that 60 to 70 per cent of the expenses are not rupee-denominated. Our analysis reveals that every one per cent appreciation of rupee against the US dollar reduces our margins by 30 bps.”

“The second impact is on the translation of foreign assets like receivables and cash and bank balances. An appreciation in rupee results in translation losses. To a large extent, companies can protect against this loss by taking forward cover,” added Mr Srinivas.

It was pointed out that if the rupee continues to strengthen against the dollar, the way it has done in the last two years, profitability of the IT sector will be affected. However, the behaviour of the rupee has to be seen against the basket of currencies and not in isolation to the dollar. For example, while the rupee has appreciated against the dollar, it has depreciated against the euro and the pound, which to a small extent, has helped cut losses. Indian companies will have to focus on growing revenue.

If the rupee has appreciated vis-a-vis the dollar, it as depreciated vis-a-vis other currencies. One balances out the other.

Management Tutorial Q 7. a) Describe briefly Duty entitlement passbook Scheme and export promotion capital goods schemes available to exporters under foreign trade policy 2004-09.

Ans: A Duty Remission Scheme enables post export replenishment/ remission of duty on inputs used in the export product. Duty remission schemes consist of

(a) DFRC (Duty Free Replenishment Certificate) and

(b) DEPB ( Duty Entitlement Passbook Scheme).

The objective of DEPB is to neutralise the incidence of Customs duty on the import content of the export product. The neutralisation shall be provided by way of grant of duty credit against the export product.

The DEPB scheme will continue to be operative until it is replaced by a new scheme which will be drawn up in consultation with exporters .

EPCG: EXPORT PROMOTION CAPITAL GOODS

An advantageous scheme for procurement of Capital Goods

The EPCG scheme allows import of capital goods (including CKD/SKD thereof as well as computer software systems and spares, jigs, fixtures, dies and moulds) at 3.09% Customs duty as against the normal total of 21.523%, thus providing a duty saved value of more than 20% of the import value. This is subject to an Export Obligation (EO) equivalent to 8 times of duty saved, to be fulfilled over a period of 8 years reckoned from the date of issuance of license. For large projects, SSI etc. there are more relaxed norms of EO.
The scheme covers manufacturer exporters with or without supporting manufacturer(s) / vendor(s), merchant exporters tied to supporting manufacturer(s) and Service Providers.
Actual user conditions: Import of capital goods are subject to Actual User condition till the export obligation is completed.
Export obligation: The export obligation needs to be fulfilled by the export of goods capable of being manufactured or produced by the use of the capital goods imported under the scheme. In addition upto 50% of the EO can also be fulfilled by any alternate product of the company or even group company. Deemed Exports like supplies to Power Projects, Projects funded by WB/ADB/JBIC etc, EOUs etc. can also be utilized to fulfill the EO
Indigenous Sourcing: A person holding an EPCG license may source the capital goods from a domestic manufacturer instead of importing them. The domestic manufacturer supplying capital goods to EPCG license holders shall be eligible for refund of Excise Duty paid by him. In addition the indigenous supplier can import his own raw material duty free and other benefits which can be discussed.

Q 7. b) Consider yourself to be a fabricator of ladies garments aspiring to export to USA and Europe. Which of the following option would you exercise and why?

1) Direct exporting

2) Indirect exporting

Ans: Direct exporting is Direct exporting

With direct exporting the exporter handles every aspect of the exporting process.
- Market research
- Foreign distribution
- Collections
Direct methods of exporting give your firm:
- More control over the export process
- Potentially higher profits
- A closer relationship to the overseas market
Direct methods of exporting require a significant commitment.
- They are not cheap and require substatial resources.
- Reorganizing the company to support the export effort may be necessary.
Methods of direct exporting include going through:
- Sales Representatives
- Distributors
- A Foreign Retailer
- Direct sales to the End User

Indirect exporting

Indirect methods of exporting requires less marketing investment, but you lose substantial control over the marketing process.
Methods of indrect exporting include:
- Filling orders from domestic buyers who then export the product.
- Seeking out domestic buyers who represent foreign customers.
- Exporting through an Export Management Company (EMC)
- Exporting through an Export Trading Company (ETC)
- Franchising
- Licensing
- Contract manufacturing
- Piggyback marketing
- Remarketer

International Management marketing

Management Tutorial Q8) Comment on statement. “ Entering international market is a compulsion to marketer”.

Ans: The practice of doing business in another country is directly related to the theory of globalization, which brings benefits for the parent company as well as the foreign country in which the business is operating.  Nevertheless the extent of drawbacks is not any less either specifically when it comes to the companies of developed countries doing business in developing countries.  It is the developing country that suffers specifically in the context of its local businesses and organizations.

As for the factors that encourage companies to do business in another country are three in number, if one considers the most important factors.  The first factor that catalyzes the decision of starting the business or introducing the brand in another country is the possibility of a saturation point that a brand tends to have reached in the present environment after which there is no scope of growth.

Another factor responsible for a country to decide to do business in another country is the potential that is yet not explored in other regions of the world and the company has the ability to utilize those untapped opportunities.  These opportunities are determined by research and development activities.  The third factor that enables a company to expand its operations geographically is the prospect of forming a merger or acquiring another foreign company that becomes the source of expanding its reach in a foreign country.

Marketing concept is essential for the following reasons.
1. To know the needs and wants of the customers.
2. To know the market trend and adjust to it.
3. To promote your product and make your potential customer aware of its benefits.
4. To make sure that your company reaches to the customer in the most effective and efficient manner.
5. To bring innovation in the market.
6. To survive in the cut throat competition.

International Management marketing Management Tutorial Q 9

What is self reference criterion? Explain in detail giving suitable examples how SRGs become obstacles to success in International Marketing?

Ans: Self Reference Criterion

Having sold a product successfully in the domestic market a firm may assume that the product will, without adaptation, also be successful in foreign markets. Frequently this assumption leads to failure. The src refers to the assumption that what is suitable for the home market will be suitable for the foreign market and therefore there is no need to test whether or not the product should be altered.

Q 2a High context culture and low context culture by giving example?

Ans: The general terms "high context" and "low context" (popularized by Edward Hall) are used to describe broad-brush cultural differences between societies.

High Context

Less verbally explicit communication, less written/formal information

More internalized understandings of what is communicated

Multiple cross-cutting ties and intersections with others

Long term relationships

Strong boundaries- who is accepted as belonging vs who is considered an "outsider"

Knowledge is situational, relational.

Decisions and activities focus around personal face-to-face relationships, often around a central person who has authority.

Examples:

Low Context

Rule oriented, people play by external rules

More knowledge is codified, public, external, and accessible.

Sequencing, separation--of time, of space, of activities, of relationships

More interpersonal connections of shorter duration

Knowledge is more often transferable

Task-centered. Decisions and activities focus around what needs to be done, division of responsibilities.

Examples:

large US airports, a chain supermarket, a cafeteria, a convenience store, sports where rules are clearly laid out, a motel.

While these terms are sometimes useful in describing some aspects of a culture, one can never say a culture is "high" or "low" because societies all contain both modes. "High" and "low" are therefore less relevant as a description of a whole people, and more useful to describe and understand particular situations and environments

High context culture is Confucius ( China, Japan, Korea) and Latin America.

Low context culture examples are Australia and Germany.

Q 2 b) Describe the importance of understanding if culture of various countries to international marketers.

Ans: Every Culture contains some variables important to consider while conducting marketing research.

1. Individualism

a. Supplier’s motivation to get the product finished correctly

Supplier’s understanding of your research need

2. Collectivism

Communication with supplier

Developing representative samples

Abilities of moderators or interviewers

Interpretation of results

Translation of research instruments

Governmental regulation

3. Power Distance

Language/translation

Unfamiliarity with research techniques

Unwillingness to respond

Giving the expected response

Understanding the rating scales

Functional equivalence

Conceptual equivalence

Taboos against discussion of certain subjects

4. Masculinity

Adapted techniques for maximum respondent comfort in research technique (RT).

Adapted techniques for maximum respondent comfort in respondent-related problems (RRP).

5. Femininity

Lengthened scheduled in RT.

Developed personal relationships in RT.

Lengthened schedule in RRT.

Developed personal relationships in RRT.

6. Uncertainty Avoidance

More selective recruiting of respondents: RT.

Reworded discussion guides for questionnaires: RT

Listened more carefully to in-country suppliers of consultants: RT

Counteracted research bias through training: RT.

More selective recruiting of respondents: RRP.

Reworded discussions guides to in-country suppliers of consultants: RRP.

Listened more carefully to in-country suppliers of consultants:

International Management marketing Management Tutorial Q 10

: Write short notes on:

A) World Bank

Ans: The World Bank is an international financial institution that provides leveraged loans to poorer countries for capital programs with a goal of reducing poverty.

The World Bank differs from the World Bank Group, in that the World Bank comprises only two institutions:

International Bank for Reconstruction and Development (IBRD)
International Development Association (IDA)

Whereas the latter incorporates these two in addition to three more:

International Finance Corporation (IFC)
Multilateral Investment Guarantee Agency (MIGA)
International Centre for Settlement of Investment Disputes (ICSID)

The World Bank, or International Bank for Reconstruction and Development (IBRD) deals with international capital. It provides long term capital to aid economic development.

The World Bank classification

The World Bank has drawn up a classification of economies based on GNP per capita.

i) Low income economies, China and India, other low-income-GNP per capita income of between US$ 675 or less, 41 nations including Tanzania, Kenya, Zambia and Malawi.

ii) Middle income economies, lower middle income, GNP per capita of between US$ 676 and US$ 2,695, 40 nations including Zimbabwe, Mexico and Thailand.

iii) Upper middle income, GNP per capita of between US$ 2,676 and US$ 8,355, 17 nations including Brazil, Portugal and Greece.

iv) High income economies, OECD members and others, GNP per capita of between US$ 8,356 or more, 24 nations including UK and the USA.

v) Other economies - communist bloc.

Mozambique and Switzerland are the two extreme ends of the spectrum with US$ 80 per capita and US$ 29,880 per capita respectively.

b) OECD

Ans: The Organisation for Economic Co-operation and Development (OECD) (in is an international organization of 30 countries that accept the principles of representative democracy and free-market economy. Most OECD members are high-income economies with a high HDI and are regarded as developed countries.

It originated in 1948 as the Organisation for European Economic Co-operation (OEEC), led by Robert Marjolin of France, to help administer the Marshall Plan for the reconstruction of Europe after World War II. Later, its membership was extended to non-European states. In 1961, it was reformed into the Organisation for Economic Co-operation and Development by the Convention on the Organisation for Economic Co-operation and Development.

c) Barriers to trade

Ans: A trade barrier is a general term that describes any government policy or regulation that restricts international trade. The barriers can take many forms, including the following terms that include many restrictions in international trade within multiple countries that import and export any items of trade.

Import duty
Import licenses
Export licenses
Import quotas
Tariffs
Subsidies
Non-tariff barriers to trade
Voluntary Export Restraints
Local Content Requirements
Embargo

Most trade barriers work on the same principle: the imposition of some sort of cost on trade that raises the price of the traded products. If two or more nations repeatedly use trade barriers against each other, then a trade war results.

Economists generally agree that trade barriers are detrimental and decrease overall economic efficiency, this can be explained by the theory of comparative advantage. In theory, free trade involves the removal of all such barriers, except perhaps those considered necessary for health or national security. In practice, however, even those countries promoting free trade heavily subsidize certain industries, such as agriculture and steel.

International Management marketing Management Tutorial Q11

Describe various incentives offered under Foreign Trade Policy to Indian exporters.

Ans: With India’s key export destinations the US and Europe yet to recover from recession, the government on Thursday announced special incentives to

encourage exporters to diversify and develop new markets for their products in Latin America and Asia-Oceania region. Trade experts said the move would help exporters expand but yield results only in the long-term, as these are very small markets at present.

“We have taken a conscious view to expand and diversify our export markets, especially in the emerging markets of Africa, Latin America, Oceania and CIS countries,” commerce and industry minister Anand Sharma said.

The US and Europe account for a large part of India’s goods exports, worth $169 billion in 2008-09. As per April-December 2008 data, the US had a 12.8% share in India’s exports while the 27-member EU countries had 22%. Exports to both the markets have declined substantially after the financial crisis broke out in October 2008.

The trade policy has increased incentives available under the scheme to promote exports in new markets—Focus Markets Scheme—and also added 26 new countries in the Latin America and Asia-Oceania region to the scheme. Presently, the scheme covers 83 countries in Africa, Central America, CIS and Eastern Europe.

The incentive, which is in the form of duty-free scrips, has been raised from 2.5% to 3% of the value of exports. These scrips can be used to import goods free of duty or can be sold in the market in case the exporter does not need imported inputs. This allows exporters to partially offset the costs, such as credit risks and higher trade costs, they face in these unexplored markets.

Allocation for existing schemes that provide assistance to exporters to explore new markets—Markets Development Assistance and Market Access Initiative—has also been increased. Exporters can seek financial assistance under these schemes to hold buyer-seller meets, trade fairs, market studies, and brand promotion to develop new markets.

Trade experts said encouragement for development of new markets is the need of the hour. “Our exports in the traditional sectors have been impacted due to demand contraction in the US and Europe. New measures would allow exporters to provide exposure to Indian goods in these markets,” said Ajay Sahai, director general, Federation of Indian Export Organisations. Though, the process may be slow, it was necessary and would help in the long run, he added.

The government also wants exporters to use enhanced market access available to Indian products under the new free-trade agreements and preferential trade agreements. India has just concluded negotiations on a free-trade agreement with South Korea and Asean, while it is in talks with many other regional blocks and countries for such pacts. “Trade pacts provide industry an opportunity to scale up and expand operations,” said Ram Upendra Das, senior fellow, RIS, an economic think-tank on trade issues.

Q 4 b) List out various pre-shipment and post shipment documents and describe “Bill of Leading”

Ans: Export from India required special document depending upon the type of product and destination to be exported. Export Documents not only gives detail about the product and its destination port but are also used for the purpose of taxation and quality control inspection certification.

Shipping Bill/ Bill of Export

Shipping Bill/ Bill of Export is the main document required by the Customs Authority for allowing shipment. A shipping bill is issued by the shipping agent and represents some kind of certificate for all parties, included ship's owner, seller, buyer and some other parties. For each one represents a kind of certificate document.

Export Documents for Post Parcel

In case of Post Parcel, no Shipping Bill is required. The relevant documents are mentioned below:

Customs Declaration Form - It is prescribed by the Universal Postal Union (UPU) and international apex body coordinating activities of national postal administration. It is known by the code number CP2/ CP3 and to be prepared in quadruplicate, signed by the sender.

Dispatch Note - It is filled by the exporter to specify the action to be taken by the postal department at the destination in case the address is non-traceable or the parcel is refused to be accepted.

Commercial invoice - Issued by the exporter for the full realizable amount of goods as per trade term.

Consular Invoice - Mainly needed for the countries like Kenya, Uganda, Tanzania, Mauritius, New Zealand, Burma, Iraq, Australia, Fiji, Cyprus, Nigeria, Ghana, Zanzibar etc. It is prepared in the prescribed format and is signed/ certified by the counsel of the importing country located in the country of export.

Customs Invoice - Mainly needed for the countries like USA, Canada, etc. It is prepared on a special form being presented by the Customs authorities of the importing country. It facilitates entry of goods in the importing country at preferential tariff rate.

Legalized / Visaed Invoice - This shows the seller's genuineness before the appropriate consulate or chamber or commerce/ embassy.

Certified Invoice - It is required when the exporter needs to certify on the invoice that the goods are of a particular origin or manufactured/ packed at a particular place and in accordance with specific contract. Sight Draft and Usance Draft are available for this. Sight Draft is required when the exporter expects immediate payment and Usance Draft is required for credit delivery.

Packing List - It shows the details of goods contained in each parcel / shipment.

Certificate of Inspection – It is a type of document describing the condition of goods and confirming that they have been inspected.

Black List Certificate - It is required for countries which have strained political relation. It certifies that the ship or the aircraft carrying the goods has not touched those country(s).

Manufacturer's Certificate - It is required in addition to the Certificate of Origin for few countries to show that the goods shipped have actually been manufactured and is available.

Certificate of Chemical Analysis - It is required to ensure the quality and grade of certain items such as metallic ores, pigments, etc.

Certificate of Shipment - It signifies that a certain lot of goods have been shipped.

Health/ Veterinary/ Sanitary Certification - Required for export of foodstuffs, marine products, hides, livestock etc.

Certificate of Conditioning - It is issued by the competent office to certify compliance of humidity factor, dry weight, etc.

Antiquity Measurement – It is issued by Archaeological Survey of India in case of antiques.

Shipping Order - Issued by the Shipping (Conference) Line which intimates the exporter about the reservation of space of shipment of cargo through the specific vessel from a specified port and on a specified date.

Cart/ Lorry Ticket - It is prepared for admittance of the cargo through the port gate and includes the shipper's name, cart/ lorry No., marks on packages, quantity, etc.

Shut Out Advice - It is a statement of packages which are shut out by a ship and is prepared by the concerned shed and is sent to the exporter.

Short Shipment Form - It is an application to the customs authorities at port which advises short shipment of goods and required for claiming the return.

A Bill of Lading is a document indicating where the product was picked up from (company/location), a very basic description of the product (i.e. 4 pallets of text books. Weight 500 lbs) and where the product is to be delivered. The receiving person signs this document indicating that it was received and if it was in good condition (i.e. one box crushed). Everyone ends up with a copy of it (sender, shipper/transport co, receiver). Its proof of delivery and the transport company bills their portion based on this as it shows distance and weight and level of expediency.

A manifest is a detailed list like an invoice. (i.e. 12 red shirts, 15 pants, etc.) For instance a ship/plane will have a manifest of all the passengers

International Management marketing Management Tutorial Q12

Q 5. a) Describe the various risks factors that an exporter of goods from India has to deal with.

Ans: Risks Involved in International marketing

Traditionally, international trade has always been considered "low risk", and this is attributed to the four "S's". Compared with other forms of bank lending, financing trade transactions is popular because these deals are:

Short term
Self liquidating (e.g., banks finance the import of goods which are then resold to repay the bank)
Secured (by the underlying goods)
Speedily completed (e.g., within
the short life of a documentary credit, there may be several transactions which are completed quickly, at "high velocity")

Nevertheless, there are three main areas of risk. This article will focus on these risk factors and suggest ways to counteract them.

The three main areas are micro risks, macro risks, and product risks.

Micro risks are encountered at the individual customer level and are confined to the financial (credit) and operational risks associated with their business.

Macro risks can be defined as those external factors which have a tendency to impact adversely on a customer's international trade business. Some of the more frequent problems in trade financing are caused by a lack of appreciation of country risk, foreign exchange risk, industry risk, bank risk and fraud.

Let's examine some of these macro risk areas in more detail.

Country Risk

The factors usually associated with this type of risk are the political and economic stability of a country, exchange controls, if any, and the country's penchant for protectionism of domestic industry at short notice. All these factors will determine whether the country can and will honor their payment commitments-in time. For example, from many a first world country point of view, Sri Lanka is seen as a reasonable short term risk, (i.e., an export exposure up to two years is considered in order, provided the Sri Lankan importer can produce a documentary credit, preferably confirmed by a "first class" bank.).

Foreign Exchange Risk

Payments and receipts in foreign currency are an everyday occurrence in international trade and the trader is always at the mercy of exchange rate fluctuations due to various economic, politicaland even purely speculative reasons. The astronomical volume of the global foreign exchange market leaves the importer/exporter with no control and an adverse movement in the transaction currency vis-a-vis the local currency can wipe out the entire profit and more of the deal.

Bank Risk

We do not need a rocket scientist to tell us that the world is full of banks of varying degrees of stability and strength and indeed the business pages of major magazines and newspapers are filled with articles on bank performance and bank collapse. When financing an importer or exporter, a bank often looks to the security of a backing document issued by another bank, be it a guarantee or a documentary credit. It is important to realize that the documentary credit issued by Bank A may not be as secure as that issued by Bank B, due to Bank A.

having a history or delaying or actually reneging on payment.
having a habit of rejecting documents iting tribial discrepancies;
being domiciled in a country notorious for foreign exchange restrictions and mortoriums; and
being domiciled in a country classified as high risk.

Dealing with bank risk is quite complicated and can be a sesitive issue most of the time, even more than country risk. Again, many banks leave this problem to a specialized unit and seek their guidance from time to time. In fact, many international banks produce and distribute instructions for their branches, setting limits for the various institutions they traditionally deal with. Anything outside such parameters has to be referred to this specialized unit for clearance.

A contribution to the business decision is also required from the management of the branch and if they feel that the branch can maintain recourse to a valued customer, then there is some flexibility to deal with the higher risk bank.

Fraud

To cover the various aspects of maritime and indeed any other type of trade fraud requires volumes of paper. There are various types of fraud like documentary fraud, counterpart fraud, insurance scams, cargo theft, scuttling and piracy. Unfortunately, there are some countries which are renouwned for harbouring fraudsters. The golden rule is "if the deal looks too good to be true, it probably is" and one should be cautious when dealing with transactions which are much larger in value than the norm. Forged documentary credits are always in circulation and fortunately, an experienced trade services officer can detect a dud credit more often than not.

Documentary Credits

Here we will consider the bank in two roles: (1) as the institution financing the importer, and (2) as the exporter's bank.

1. Imports Under Documentary Credit (DC)

Before undertaking to establish a DC for an importer, the bank should consider:

The financial standing of the importer. The bank has to look to the importer to pay the import bill drawn under the DC and therefore should be sure that the latter has or will have the funds to pay.

The goods. Trade finance is supposed to be self-liquidating and the goods must be readily saleable. Consideration should also be given to the risks associated with perishability of the goods, possible obsolescence, import regulations, packing and storage, etc.

One must also consider the various macro risks and it is imperative that the goods are suitably insured by & reputable insurance company. The bank should endeavor to retain control over the goods until release to the importer and this can usually be achieved with a suitable transport document like the Bill of Lading or the Air Waybill.

2. Exports Under DC

One of the greatest services a bank can do for its exporter in advising the DC it receives from an overseas bank is to check carefully whether it is workable and that the exporter will be able to comply with its terms and conditions. This is called checking the workability of a DC and very often one encounters exporters finding that they cannot produce a compliant set of documents under the DC. Payment is thus delayed due to discrepancies between the documents and the DC or, worse still, not forthcoming at all.

Q 5. b) How can an exporting company overcome the financial risk of reduced profitability due to strong rupee?

Ans: the financial risk of reduced profitability due to strong rupee can be seen in two ways.

If the rupee has appreciated vis-a-vis the dollar, it as depreciated vis-a-vis other currencies. One balances out the other.

International Management marketing Management Tutorial Q 13

Q 7: Describe the various factors which influence the pricing of products for international markets.

Ans: Price is the amount of money the buyer gives to the seller in return of a particular product or service. A number of factors contribute towards formulation of an effective pricing strategy. When operating in a global environment, pricing becomes even more important. Some of the international market pricing strategies include dumping, gray marketing and export pricing. The paper examines issues involved in global pricing strategies and discusses international market strategy.

Generally the pricing objectives are: survival, profit, return on investment, market share, status quo, and product quality. International pricing strategies can be classified into three forms: market skimming, market penetration, and market holding. Pricing decisions are influenced by different factors such as inflation, nature of product or industry and competitive behavior, devaluation and revaluation, market demand, and transfer pricing.

International Management marketing Management Tutorial Q14

. a) Describe various degree of economic cooperation and integration.

Ans: various degree of economic cooperation and integration in international trade are:

1. Free trade area

Free trade area is a type of trade bloc, a designated group of countries that have agreed to eliminate tariffs, quotas and preferences on most (if not all) goods and services traded between them. It can be considered the second stage of economic integration. Countries choose this kind of economic integration form if their economical structures are complementary. If they are competitive, they will choose customs union

2. Customs Unions

A customs union is a is a type of trade bloc which is composed of a free trade area with a common external tariff. The participant countries set up common external trade policy, but in some cases they use different import quotas. Common competition policy is also helpful to avoid competition deficiency.

Purposes for establishing a customs union normally include increasing economic efficiency and establishing closer political and cultural ties between the member countries.

It is the third stage of economic integration.

Customs union is established through trade pact

3. Common Markets

Group formed by countries within a geographical area to promote duty free trade and free movement of labor and capital among its members. European community (as a legal entity within the framework of European Union) is the best known example. Common markets impose common external tariff (CET) on imports from non-member countries.

4. Economic Unions

5. Political Unions

A political union is a type of state which is composed of or created out of smaller states. Unlike a personal union, the individual states share a common government and the union is recognized internationally as a single political entity. A political union may also be called a legislative union or state union.

A union may be effected in a number of forms, broadly categorized as:

incorporating union

incorporating annexation

federal (or confederal) union

federative annexation

mixed unions.

Examples of incorporating union

The United Kingdom - the united Kingdom of Great Britain (Treaty of Union 1707), and the United Kingdom of Great Britain and Ireland

South Africa

Spain (process from 1037 to 1479)

Yemen (1990)

b) Write in brief about

1) Srilanka free trade agreement

Indo SriLanka Free Trade Agreement “ISFTA”

The Government of the Republic of India and the Government of the Democratic Socialist Republic of Sri Lanka, (hereinafter referred to as the “Contracting Parties”),

CONSIDERING that the expansion of their domestic markets, through economic Integration, Is a vital prerequisite for accelerating their processes of economic development.

BEARING in mind the desire to promote mutually beneficial bilateral trade.

CONVINCED of the need to establish and promote free trade arrangements for strengthening Intra-regional economic cooperation and the development of national economies.

FURTHER RECOGNISING that progressive reductions and elimination of obstacles to bilateral trade through a bilateral free trade agreement (hereinafter referred to as “The Agreement) would contribute to the expansion of world trade.

2) European Union

The European Union (EU) is an economic and political union of 27 member states, located primarily in Europe Committed to regional integration, the EU was established by the Treaty of Maastricht on 1 November 1993 upon the foundations of the pre-existing European Economic Community. With almost 500 million citizens, the EU combined generates an estimated 30% share (US$18.4 trillion in 2008) of the nominal gross world product.

The member countries are:

Bulgarie ,Czech ,Dens ,Dutch ,Ingles, Estonie, Finnish ,French, German, Greek, Hungarian, Italian ,Erse ,Latvie ,Lithuanie ,Maltese ,Polish ,Portuguese ,Romaine ,Slovak ,Slovenie ,Spainyie ,Swadish

The EU has developed a single market through a standardised system of laws which apply in all member states, ensuring the freedom of movement of people, goods, services, and capital.

It maintains common policies on trade, agriculture, fisheries and regional development.

A common currency, the euro, has been adopted by sixteen member states that are thus known as the Eurozone.

The EU has developed a limited role in foreign policy, having representation at the WTO, G8 and G20 summits, and at the UN. It enacts legislation in justice and home affairs, including the abolition of passport controls between many member states which form part of the Schengen Area

International Management marketing Management Tutorial Q15

a) Describe in detail about low context and high context cultures giving suitable examples.

Ans: The general terms "high context" and "low context" (popularized by Edward Hall) are used to describe broad-brush cultural differences between societies.

High Context

Less verbally explicit communication, less written/formal information

More internalized understandings of what is communicated

Multiple cross-cutting ties and intersections with others

Long term relationships

Strong boundaries- who is accepted as belonging vs who is considered an "outsider"

Knowledge is situational, relational.

Decisions and activities focus around personal face-to-face relationships, often around a central person who has authority.

Examples:

Low Context

Rule oriented, people play by external rules

More knowledge is codified, public, external, and accessible.

Sequencing, separation--of time, of space, of activities, of relationships

More interpersonal connections of shorter duration

Knowledge is more often transferable

Task-centered. Decisions and activities focus around what needs to be done, division of responsibilities.

Examples:

large US airports, a chain supermarket, a cafeteria, a convenience store, sports where rules are clearly laid out, a motel.

High context culture is Confucius ( China, Japan, Korea) and Latin America.

Low context culture examples are Australia and Germany.

Q 2. b) What is self reference criterion? How this problem does affects international marketers? How can marketers eliminate cultural myopia?

Ans: Self Reference Criterion

International Management marketing Management Tutorial Q16

a) Explain the Porter’s theory of competitive advantage?

Ans: Competitive Advantage

Basically, strategy is about two things: deciding where you want your business to go, and deciding how to get there. A more complete definition is based on competitive advantage, the object of most corporate strategy:

Competitive advantage grows out of value a firm is able to create for its buyers that exceeds the firm's cost of creating it. Value is what buyers are willing to pay, and superior value stems from offering lower prices than competitors for equivalent benefits or providing unique benefits that more than offset a higher price. There are two basic types of competitive advantage: cost leadership and differentiation.

-- Michael Porter, Competitive Advantage,

The figure below defines the choices of "generic strategy" a firm can follow. A firm's relative position within an industry is given by its choice of competitive advantage (cost leadership vs. differentiation) and its choice of competitive scope. Competitive scope distinguishes between firms targeting broad industry segments and firms focusing on a narrow segment. Generic strategies are useful because they characterize strategic positions at the simplest and broadest level. Porter maintains that achieving competitive advantage requires a firm to make a choice about the type and scope of its competitive advantage. There are different risks inherent in each generic strategy, but being "all things to all people" is a sure recipe for mediocrity - getting "stuck in the middle".

a firm typically will choose to emphasize one of three “value disciplines”: product leadership, operational excellence, and customer intimacy.

Q 3. B) What advantage does the company derive by entering international markets?

Ans: The practice of doing business in another country is directly related to the theory of globalization, which brings benefits for the parent company as well as the foreign country in which the business is operating. Nevertheless the extent of drawbacks is not any less either specifically when it comes to the companies of developed countries doing business in developing countries. It is the developing country that suffers specifically in the context of its local businesses and organizations.

As for the factors that encourage companies to do business in another country are three in number, if one considers the most important factors. The first factor that catalyzes the decision of starting the business or introducing the brand in another country is the possibility of a saturation point that a brand tends to have reached in the present environment after which there is no scope of growth.

Another factor responsible for a country to decide to do business in another country is the potential that is yet not explored in other regions of the world and the company has the ability to utilize those untapped opportunities. These opportunities are determined by research and development activities. The third factor that enables a company to expand its operations geographically is the prospect of forming a merger or acquiring another foreign company that becomes the source of expanding its reach in a foreign country.

International Management marketing Management Tutorial Q17

a) Describe briefly key features of foreign trade policy 2007.

Ans: The Foreign Trade Policy is rooted in this belief and

built around two major objectives. These are:

(i) To double our percentage share of global merchandise trade within the next five years; and

(ii) To act as an effective instrument of economic growth by giving a thrust to employment generation.

STRATEGY

These objectives are proposed to be achieved by adopting, among others, the following strategies:

(i) Unshackling of controls and creating an atmosphere of trust and transparency to unleash the innate entrepreneurship of our businessmen, industrialists and traders.

(ii) Simplifying procedures and bringing down transaction costs.

(iii) Neutralizing incidence of all levies and duties on inputs used in export products, based on the fundamental principle that duties and levies should not be exported.

(iv) Facilitating development of India as a global hub for manufacturing, trading and services.

(v) Identifying and nurturing special focus areas which would generate additional

employment opportunities, particularly in semi-urban and rural areas, and developing a series of ‘Initiatives’ for each of these.

(vi) Facilitating technological and infrastructural upgradation of all the sectors of the Indian economy, especially through import of capital goods and equipment, thereby increasing value addition and productivity, while attaining internationally accepted standards of quality.

(vii) Avoiding inverted duty structures and ensuring that our domestic sectors are not disadvantaged in the Free Trade Agreements/Regional Trade Agreements/Preferential

Trade Agreements that we enter into in order to enhance our exports.

(viii) Upgrading our infrastructural network, both physical and virtual, related to the entire Foreign Trade chain, to international standards.

(ix) Revitalising the Board of Trade by redefining its role, giving it due recognition and inducting experts on Trade Policy.

(x) Activating our Embassies as key players in our export strategy and linking our

Commercial Wings abroad through an electronic platform for real time trade

intelligence and enquiry dissemination.

Q 4. b) Explain DEPB scheme available to the exporters.

Ans: DEPB

The objective of Duty Entitlement Pass Book (DEPB) is to neutralise the incidence of Customs duty on the import content of the export product. The neutralisation shall be provided by way of grant of duty credit against the export product. Under the DEPB, an exporter may apply for credit, as a specified percentage of FOB value of exports, made in freely convertible currency.

DEPB Scheme has been extended till May, 2009.

Duty Free Replenishment Certificate (DFRC) shall be available for exports only up to 30.04.2006. This scheme is being replaced by the Duty Free Import Authorization (DFIA) w.e.f. 01.05.2006

International Management marketing Management Tutorial Q18

Draw a systematic plan for entering international market. Support your answer with examples.

Ans: Market research is critical to the decision-making process in entering international market plan. Research reveals the market or markets that offer the best opportunities for investment. It reveals the political, legal and regulatory, financial, cultural, competitive, consumer and marketing challenges that a business may face as it considers exporting to a particular destination.

Without market research, a business is guessing at the best place to take its products or services. Careful analysis of market research leads to useful decisions regarding the nature of a market and potential customers: why would they buy this product or service? How much would they pay for it? What changes, if any, do we need to make in order to appeal to customers? What is the best marketing vehicle to reach buyers? Confident answers to these questions help form the next critical element of an international marketing plan: the market entry strategies. In short, these are the things a business does to get its product or service into the target market.

For example, research has revealed the potential opportunities and threats in the business and political environment. What strategies will maximize these opportunities while reducing or eliminating possible threats?

Research has identified the sales and distribution channels typically used by similar businesses in the target market. How can these channels be accessed and successfully incorporated into the market entry? What types of messages will speak clearly to the target audience? Which marketing techniques work, which ones do not, and why? What type of product positioning or messages about the service will establish the strongest foothold?

The final component of a great international marketing plan is the implementation. The company is ready to export - almost. In order to implement the plan, someone must be responsible for its implementation.

This individual must have decision-making authority, adequate resources to turn the plan into reality and intimate involvement in the international marketing planning process from the beginning. This person is confident that the company is committed to the export effort, that marketing support is available both at home and in the target market, key partners are in place, professionally developed promotional materials specific to the needs of the new market are ready and measures are in place to monitor and analyze the export effort.

Exporting can be a rewarding experience. It can also be risky business unless careful preparations are made. An international marketing plan can help minimize the risk, freeing up time and energy for a company to focus on the rewards. For more information, connect with Team Canada Inc, your source for export services .

International Management marketing Management Tutorial Q19

a) What are local, National , International; and Global products?

Ans: Global products is a commercial product which is marketed worldwide with a single brand name is called global product. Like Coca Cola.

International products -a commercial product which is marketed more than one countries with a single brand name is called international product.

National product are the products marketed in a national territory .

Local products are the ones which are marketed and sold in a small region of a national territory.

Q 6. b) How are new products created for Global markets?

Ans: The new products created for Global markets

New product line

Addition to product line

Repositioning to new market segments

Improvements/revisions

Cost reductions

STRATEGIC OPTIONS for new product offering are:

4. STANDARDIZATON –

Same product for all markets.

5. GLOBAL PRODUCTS -

Only some aspects of the product is standardized.

Changes made to the product, same

communications strategy across the globe.

- Product formulations are changed without consumers knowing it. E.g. detergents

- Entails research, development expenses and tooling costs.

- Do not allow for economies of scale to the extent possible
under an product extension strategy

- savings can be realized from the creation of a single
communications strategy

Dual adaptation: Changes made to the product, changes made to communications strategy

- Recognizes the socio-cultural differences from country to
country

-To make this option profitable, the foreign market or
markets need to be of sufficient volume

- Calls for extensive research and development expenses
and tooling costs.

International Management marketing Management Tutorial Q20

Write short notes on:

a) Agreement on Agriculture

Ans: The WTO’s Agriculture Agreement was negotiated in the 1986–94 Uruguay Round and is a significant first step towards fairer competition and a less distorted sector. It includes specific commitments by WTO member governments to improve market access and reduce trade-distorting subsidies in agriculture. In general, these commitments were phased in over a six year period (10 years for developing countries) that began in 1995.

Overseeing the agreement’s implementation is the

Agriculture Committee.

Meanwhile, members agreed to initiate negotiations for continuing the reform process one year before the end of the implementation period, i.e. by the end of 1999. These talks, which are separate from the committee’s regular work, began in 2000 and were incorporated into the broader negotiating agenda set at the 2001 Ministerial Conference in Doha, Qatar.

b) Polycentric Orientation

Ans: POLYCENTRIC orientation

Is a multidomestic market concept:

Focuses on importance and uniqueness

of each international market

May establish businesses in each target country

Fully decentralized, minimal coordination with headquarters

Marketing strategies = specific to each country

Result:

No economies of scale,

duplicated functions,

higher final product costs

c) Modes of Cargo Transport in International Business

Ans: Sea Transport (Ocean Transport)
Ocean freight is the most widely used mode of transportation in international trade, with advantage of easy passage, large capacity and low cost. However, it is slow, vulnerable to bad weather and less punctual if compared with road or air transport.

Container Transport
Containerization is a method of distributing merchandises in a unitized form, suitable for ocean, rail and multimodal transport .It is the most modern form of physical international distribution and overall is highly efficient in terms of reliability, cost, quality of service, advanced technology and so on.

Features of container transport can be summarized as follows:
1. It offers a door to door service under FCL/FCL (Full Container Load/Full Container Load),door to container freight station (cfs) service under FCL/LCL (Full Container Load/Less than Container Load),cfs to cfs service under LCL/LCL ,or cfs to door service under LCL/FCL conditions.
Note:
FCL: Full container Load

(at exporter's place or shipment portor at carrier's place or destination port
LCL: Less than Container Load at exporter's place or shipment port or (at carrier's place or destination port)
DOOR: CFS container freight station
2. It can be handled quickly and easily by standardized equipment and can thus save labors and loading and unloading charges
3. The low risk of cargo damage and pilferage enables more favorable cargo premiums to be obtained, compared with break-bulk cargo shipment.
4. Less packing is required for containerized consignment. In some cases, particularly with specialized ISO ( International Standards Organization) containers such as refrigerated one or tanks, no packing is required.This procures substantial cost savings in the international transit and raise the service quality.
5.Faster transits, coupled with more reliable maritime schedules, and ultimately increased service frequency, produce savings in warehouse accommodation need, lessen risks of obsolescent stock and speed up capital turnover.

*Rail Transport
Rail transport is a major mode of transport in terms of capacity, only second to ocean transport. It is capable of achieving relatively high speed and is most economical especially if it provides the complete trainload for a shipper on a regular basis. Besides, it is less prone to interruption by poor weather .

*Air Transport
Air transport is one of the youngest forms of distribution.The most obvious advantage of air freight is quick transit. Quick, reliable transit eliminates need for extensive warehouse accommodation and reduce risk of stockpiling, obsolescence, deterioration and capital tied up in warehouse and stock provision.

d) Economic Union

Ans: An economic union is a common market with provisions for the harmonization of certain economic policies, particularly macroeconomic and regulatory. The European Union is an example of an economic union.

comparative picture of the different forms

Q 1: a) Present a comparative picture of the different forms of contractual entry mode of international business.

Ans: The alternative market entry modes are;

1. Wholly owned subsidiary

2. Company acquisition

3. Assembly operations

4. Joint Venture

5. Strategic Alliance

6. Licensing

7. Contract Manufacturing

8. Direct marketing

9. Franchising

10. Distributors and agents

11. Sales force

12. Trading companies

13. Export management companies

Among these the contractual entry modes are:

Company acquisition: The mode of market entry in which the home company acquires an existing company in the host country which fives the following benefits:

a) Acquisition gives immediate access to a trained labor force,

b) Through acquisition a brand can be acquired which may not require to build.

c) The acquiring company gets the existing customer and supplier contacts.

d) The acquisition provides the channel of distribution to the acquiring company, etc.

Joint Venture: when the host company and foreign company agree to share ownership of a specified set up and get its contract is called joint venture. The automobile giant Maruti Suzuki is a joint venture.

The benefits of the Joint venture as entry mode are:

This help in restricting the foreign ownership on business set up.
The foreign company usually brings technology, capital, information system, marketing systems etc. to the host country.
This increases the competitive advantage through boost to global operations like R & D and production quality.

Strategic alliance: This emphasizes that licensing and joint venture are the terms of contractual arrangement which can be termed as strategic alliance.

In strategic alliance at least two companies combining value chain activities for the purpose of competitive advantage.

Usually the bases of alliances are;

Technology b) R & D exchanges c) Distribution relationships d) marketing relationship.

The driving forces for strategic alliance are as following:

Pace of innovation and market diffusion
High research and development costs.
Insufficient resources.
Foreign Market access.

Licensing: It is a form of contract in which the licenser gives the licensee the right to use one or more of the following;

Patent rights, trade marks rights, copyrights, and product or process know-how.

The benefits of licensing are:

The licensee has to pay only the percentage of the sales.
The organization remains in control of the licensee.
It does not result in physical movement of the business properties.

Q 2: “FDI is a mixed blessing”. Discuss this statement from the viewpoint of both the home country and the host country.

Ans: Foreign direct investment (FDI) is a measure of foreign ownership of productive assets, such as factories, mines and land. Increasing foreign investment can be used as one measure of growing economic globalization.

The foreign direct investor may acquire 10% or more of the voting power of an enterprise in an economy through any of the following methods:

by incorporating a wholly owned subsidiary or company
by acquiring shares in an associated enterprise
through a merger or an acquisition of an unrelated enterprise
participating in an equity joint venture with another investor or enterprise

When it comes to the export and import of capital. In the league table for direct investment, both inward and outward, Britain leads the pack.

In the past few years, there has been a remarkable swing in opinion about the merits of inward investment.. The received wisdom now is that you can't get enough of the stuff.

The FDI can cost the Home country as given in the example.

UK companies and their shareholders may gain from profits made overseas, but if the investment stayed at home, there would be more jobs and higher tax revenues. Overall the benefits of the two-way traffic in foreign direct investment (FDI) are now generally seen as greatly outweighing any costs.

The Great Britain claims "the most open economy for investment from the rest of the world, and also the economy which invests most freely overseas."

Q 3: What are the major agreements concluded at the Uruguay round, which the WTO now administers? Briefly mention the challenges that the WTO is currently facing in this regard.

Ans: Geneva, 20 Jan 2000 -- The preface of the newly launched CD-ROM "From GATT to the WTO" presents a snapshot of the secret story of the Uruguay Round - charting out the course the negotiations took and the principal positions of the key players.

The post-Uruguay Round built-in agenda

Many of the Uruguay Round agreements set timetables for future work. Part of this “built-in agenda” started almost immediately. In some areas, it included new or further negotiations. In other areas, it included assessments or reviews of the situation at specified times. Some negotiations were quickly completed, notably in basic telecommunications, financial services. (Member governments also swiftly agreed a deal for freer trade in information technology products, an issue outside the “built-in agenda”.)

1996

Maritime services: market access negotiations to end Services and environment: deadline for working party report

1997

Basic telecoms: negotiations end

Financial services: negotiations end

1998

Textiles and clothing: new phase begins 1 January services (emergency safeguards): results of negotiations on emergency safeguards to take effect Rules of origin: Work programme on harmonization of rules of origin to be completed

1999

Intellectual property: certain exceptions to patentability and protection of plant varieties: review starts

2000

Agriculture: negotiations start, now part of Doha Development Agenda

Services: new round of negotiations start, now part of Doha Development Agenda

2002

Textiles and clothing: new phase begins 1 January

2005

Textiles and clothing: full integration into GATT and agreement expires 1 January

The WTO generally face three primary challenges if they are to participate effectively in the WTO dispute settlement system. These challenges are:

A relative lack of legal expertise in WTO law and the capacity to organize information concerning trade barriers and opportunities to challenge them;
Constrained financial resources, including for the hiring of outside legal counsel to effectively use the WTO legal system, which has become increasingly costly; and
Fear of political and economic pressure from members exercising market power, and in particular the United States and EC, undermining their ability to bring WTO claims.

We can roughly categorize these challenges as constraints of legal knowledge, financial endowment, and political power, or, more simply, of law, money and politics.

Q 4: Discuss the various option for the exchange rates arrangement that were suggested by the committee of Twenty appointed by IMF after the collapse of the Bretton Woods exchange rate system . Do you agree that the floating exchange rate system is more beneficial than the system of fixed exchange rate?

Ans: Under the Bretton Woods system, central banks of countries other than the United States were given the task of maintaining fixed exchange rates between their currencies and the dollar. They did this by intervening in foreign exchange markets.

If a country's currency is too high relative to the dollar, its central bank will sell its currency in exchange for dollars, driving down the value of its currency. Conversely, if the value of a country's money is too low, the country will buy its own currency, thereby driving up the price.

Exchange rate is the rate at which one currency can be exchanged for another. In other words, it is the value of another country's currency compared to that of your own.

Fixed Exchange Rates
There are two ways the price of a currency can be determined against another. A fixed rate is a rate the government (central bank) sets and maintains as the official exchange rate.

A set price will be determined against a major world currency (usually the U.S. dollar, but also other major currencies such as the euro, the yen or a basket of currencies).

In order to maintain the local exchange rate, the central bank buys and sells its own currency on the foreign exchange market in return for the currency to which it is fixed.

Floating Exchange Rates
Unlike the fixed rate, a floating exchange rate is determined by the private market through supply and demand. A floating rate is often termed "self-correcting", as any differences in supply and demand will automatically be corrected in the market.

If demand for a currency is low, its value will decrease, thus making imported goods more expensive and stimulating demand for local goods and services. A floating exchange rate is constantly changing.

Yes. Floating exchange rate system is better than fixed rate system; the followings are the supportive reasons.

1. Floating exchange rate systems have operated flawlessly.

2. Floating rates have changed at breakneck speed leaving traders, investors and governments scrambling to adjust to the volatility.

3. Countries with fixed exchange rates have been forced to import excessive inflation from the reserve country

4. No one knows what the market equilibrium exchange rate should be and it makes some sense to let market forces (i.e., supply and demand) determine the equilibrium rate.

5. One of the key advantages of floating rates is the autonomy over monetary policy that it affords a country's central bank

Q 5: What are the different steps in the process of strategic planning? Distinguish between centralized and decentralized planning?

Ans: The different steps in strategic planning process.

Mission: A mission statement is a brief written statement of the purpose or the reason for being of a company or organization.

A mission statement guides the actions of the organization, spells out its overall goal, provides a sense of direction, and guides decision making for all levels of management

2. Objectives: Strategic objectives typically, though not always , have multi-year timeframes for their achievement and are multi-functional, i.e. they require concerted efforts by people from many different parts of your company.

Strategic objective begins with words as "to have," "to be," "to become," or "to achieve" and ends with a specific year by which the Strategic objective will be met.

Growth strategies
Achieve $1 billion in annual revenues with $60 million in profits.
Administrative strategies
Have standardized cost management and financial systems.

3. Situation analysis:

It is basically the Swot analysis and BCG matrix analysis to understand the stand of the company in relation to strategies.

Swot stands for Strengths, Weaknesses, opportunities and Threats.

Strengths and weaknesses are internal in nature.

The survival and success of a business firm depend on its strength, resources at its command, including physical resources, financial resources, human resources, skill and organisation and its adaptability to the environment and the extend to which environment is favourable to the development of the organisation. The survival and success of a fir, thus, depend on two sets of factors, viz., the internal factors the internal environment and external factors- the external environment.

Where Opportunities and threats are in external environment.

Some of the external factors have a direct intimate impact on the firm (like the suppliers and distributors) of the firm. These factors are classified as microenvironment also known as task environment and operating environment. These are other external factors which effect an industry very generally (such as industrial policy, demography factors etc.).

Strategy Formulation

The managers develop the alternate strategies while different firms have different strategies depending upon their situation, like Michael Porter has identified cost leadership, differentiation and focus as three generic strategies for a single product.

Implementation

While implementing firstly the strategies are translated into functional policies which should be practicable for the functional groups.

Specific policies should be made for:

Marketing. Finance, Human Resource, procurement, production and information system of the organization.

Control

The implementation must be followed by evaluation and measurement of result in hand. Control system is developed and implemented to facilitate this monitoring.

The centralized and decentralized planning.

Centralized Planning

A form of decision making, common in both communist states and large corporations, where a politburo or board of directors decides what all of the little people will do day by day.

Planning is localized to a single person–therefore; centralized planning techniques can be used without modification. Because planning is performed at a single processor, there is no interpersonal-communication cost to the planning process itself.

The role of planning becomes very important in strategy formulation and the involvement of the organization is another important issue.

Usually the centralized planning involves the top level managers in the strategy panning process and mot much importance is given to the lower level managers as they are not competent in developing strategies.

Decentralized Planning

In decentralized planning the whole organization is dire4ctly or indirectly involve in strategy planning as each subsystem in the organization contributes to the strategic development of the organization,

Like taking suggestion from the marketing and sales person about new product concept, potential market, potential sales and its marketing etc

Q 6: A) “Standardization and adaptation of product have their own merits”. Discuss its implications in international marketing and explain the factors behind adaptation of the product.

Ans: The merits of Standardization of products

Standardization is a good approach. For example when a consistent company or product image is needed, product uniformity is required. The worldwide success of McDonald's is based on consistent product quality and services. Hamburger meat, buns, and fruit pies must meet strict specifications.

Some products by their very nature are not or cannot be easily modified. Musical recordings and works of art are examples of products that are difficult to differentiate, as are books and motion pictures. When this is the case, the product must rise and fall according to its own merit. Whether such products will be successful in diverse markets is not easy to predict.

With regard to high-technology products, both users and manufacturers may find it desirable to reduce confusion and promote compatibility by introducing industry specifications that make standardization possible.

Merits of adaptation product

In many situations, domestic consumers may desire a particular design of a product produced for the American market. But when the product design is placed in foreign markets, foreign buyers are forced either to purchase that product from the manufacturer or not purchase anything at all. This manner of conducting business overseas is known as the "big-car" and "left-hand-drive" syndromes.

U.S. marketers assume that products designed for Americans are superior and will be preferred by foreign consumers. U.S. automakers believe (or used to believe) that the American desire for big cars means that only big cars should be exported to overseas markets.

The factors behind adaptation of the product in the international business are as follows:

1. Rigid market behavior- like American market prefers only big cars and avoids small cars in that case a company with small car has to adapt its product if it wishes to target American market.

2. Inability to find niche market in the international market. Especially for the developing countries finding niche in the developed markets is difficult in that case and hence forcing company for adaptation product etc.

Q 6: B) Discuss the six Cs that play a vital role in International Market.

Ans: the six Cs that play a vital role in International Market are:

1. Cost

2. Capital

3. Control

4. Coverage

5. Continuity

6. Character

Q 7: Write short notes on:

a) APEC

Ans: APEC is Asia-Pacific Economic Cooperation,

As the title suggest the APEC aims at developing economic coordination among the member economies.

Asia-Pacific Economic Cooperation (APEC) ministers have promised not to raise any new trade barriers until the end of next year. THE RECENT issued are like growing professionalism, and global crisis.

The 21 ministers of the Asia-Pacific Economic Cooperation forum extended their current commitment introduced last November to next November, in response to growing protectionist sentiment worldwide.

Member countries, which represent almost half of world trade, undertook not to introduce any new policy initiatives that may hinder trade and investment flows.

b) ASEAN

The Association of Southeast Asian Nationscommonly abbreviated ASEAN is a geo-political and economic organization of 10 countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand Since then, membership has expanded to include Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam.

The members of the summit are all 10 members of ASEAN together with China, Japan, South Korea, India, Australia and New Zealand who combined represent almost half of the world's population.

Its aims include the acceleration of

1. Economic growth,

2. Social progress,

3. Cultural development among its members,

4. The protection of the peace and stability of the region, and

5. To provide opportunities for member countries to discuss differences peacefully.

Objectives of ASEAN

1. To promote networking amongst relevant law enforcement authorities in ASEAN Countries to curb illegal trade in wild fauna and flora.

2. To promote research, monitoring and information exchange on CITES-related issues.

3. To encourage industry groups, trade associations/ traders and local communities to comply with legality and sustainability requirements of national regulations.

4. To encourage greater regional cooperation on specific issues by:

5. To seek sufficient technical and financial assistance through collaborative initiatives by:

c) NAFTA

The North American Free Trade Agreement, known usually as NAFTA, is a comprehensive trade agreement linking Canada, the U.S.A., and Mexico in a free trade sphere. NAFTA went into effect on January 1, 1994.

The phasing out of tariffs and eliminated a variety of fees and other hindrances to encourage free trade between the three North American countries.

The agreement immediately ended tariffs on some goods, and on other goods tariffs were scheduled to be eliminated over a period of time. By 2008 all tariff eliminations were to be completed.

The agreement was an expansion of the earlier Canada-U.S. Free Trade Agreement of 1989. Unlike the European Union, NAFTA does not create a set of supranational governmental bodies, nor does it create a body of law which is superior to national law. NAFTA, as an international agreement, is very similar to a treaty. Under United States law it is classed as a congressional-executive agreement.

Q 1. a) Describe the various stages of market development based on GNP data.

Ans: Stages of market development

Global markets are at different stages of development which can be divided into five categories based on the criterion of gross national product per capita.

i) Pre industrial countries - incomes less than US$ 400 GNP per capita. Limited industrialization, low literacy rates, high birth rates, heavy reliance on foreign aid, political instability. Parts of Sub-Saharan Africa. Little market potential.

ii) Less developed countries - per capita between US$ 401 and US$ 1,635. Early stages of industrialization, growing domestic market, mature product markets, increasing competitive threat.

iii) Developing countries - per capita income between US$ 1,636 and US $ 5,500. Decrease in percentage of agricultural workers, industrialization, rising wages, high literacy rates, lower wage rates than developed countries, formidable competitors.

iv) Industrialized countries - per capita income between US$ 5,501 and US$ 10,000. Moving towards post industrialization, high standard of living.

v) Advanced countries - per capita income in excess of US$ 10,000. Post industrialization, information processors, knowledge based, less machine based. Product opportunities are in new products, innovations and raw materials plus fresh foods.

Q 2. a) What is the importance of understanding culture of various countries to a global marketer?

Ans: Every Culture contains some variables important to consider while conducting marketing research.

1. Individualism

Supplier’s motivation to get the product finished correctly

Supplier’s understanding of your research need

2. Collectivism

Communication with supplier

Developing representative samples

Abilities of moderators or interviewers

Interpretation of results

Translation of research instruments

Governmental regulation

3. Power Distance

Language/translation

Unfamiliarity with research techniques

Unwillingness to respond

Giving the expected response

Understanding the rating scales

Functional equivalence

Conceptual equivalence

Taboos against discussion of certain subjects

4. Masculinity

Adapted techniques for maximum respondent comfort in research technique (RT).

Adapted techniques for maximum respondent comfort in respondent-related problems (RRP).

5. Femininity

Lengthened scheduled in research technique (RT).

Developed personal relationships in research technique (RT).

Lengthened schedule in respondent-related problems (RRP)

Developed personal relationships in respondent-related problems (RRP)

6. Uncertainty Avoidance

More selective recruiting of respondents: research technique (RT).

Reworded discussion guides for questionnaires: research technique (RT).

Listened more carefully to in-country suppliers of consultants: research technique (RT).

Counteracted research bias through training: research technique (RT)..

More selective recruiting of respondents: respondent-related problems (RRP).

Reworded discussions guides to in-country suppliers of consultants:respondent-related problems (RRP).

Q 2. b) List out the differences between High context and Low context culture.

Ans: The general terms "high context" and "low context" (popularized by Edward Hall) are used to describe broad-brush cultural differences between societies.

High Context

Less verbally explicit communication, less written/formal information

More internalized understandings of what is communicated

Multiple cross-cutting ties and intersections with others

Long term relationships

Strong boundaries- who is accepted as belonging vs who is considered an "outsider"

Knowledge is situational, relational.

Decisions and activities focus around personal face-to-face relationships, often around a central person who has authority.

Examples:

Low Context

Rule oriented, people play by external rules

More knowledge is codified, public, external, and accessible.

Sequencing, separation--of time, of space, of activities, of relationships

More interpersonal connections of shorter duration

Knowledge is more often transferable

Task-centered. Decisions and activities focus around what needs to be done, division of responsibilities.

Examples:

large US airports, a chain supermarket, a cafeteria, a convenience store, sports where rules are clearly laid out, a motel.

High context culture is Confucius ( China, Japan, Korea) and Latin America.

Low context culture examples are Australia and Germany.

Q 3. a) Explain the new trade theory of International business.

Ans: New Trade Theory

New Trade theory tries to explain several facts about trade, which the two main models above have difficulty with. These include the fact that most trade is between countries with similar factor endowment and productivity levels, and the large amount of multinational production (foreign direct investment) which exists. In one example of this framework, the economy exhibits monopolistic competition and increasing returns to scale.

New Trade theorists challenge the assumption of diminishing returns to scale, and some argue that using protectionist measures to build up a huge industrial base in certain industries will then allow those sectors to dominate the world market They wondered whether free trade would have prevented the development of the Japanese auto industries in the 1950s, when quotas and regulations prevented import competition. Japanese companies were encouraged to import foreign production technology but were required to produce 90 percent of parts domestically within five years. It is said that the short-term hardship of Japanese consumers (who were unable to buy the superior vehicles produced by the world market) was more than compensated for by the long-term benefits to producers, who gained time to out-compete their international rivals.

Q 3. b) Describe ERPG framework.

Ans: ERPG framework is ETHNOCENTRIC, POLYCENTRIC, REGIOCENTRIC and GEOCENTRIC

ETHNOCENTRIC orientation

Is a domestic market extension concept: where Domestic strategies, techniques, and personnel are perceived as superior

International customers, considered secondary

International markets regarded as

outlets for surplus domestic production

International marketing plans

developed in-house by international division

POLYCENTRIC orientation

Is a multidomestic market concept:

Focuses on importance and uniqueness

of each international market

May establish businesses in each target country

Fully decentralized, minimal coordination with headquarters

Marketing strategies = specific to each country

Result:

No economies of scale,

duplicated functions,

higher final product costs

REGIOCENTRIC orientation

Is a global marketing concept:

World regions that share

economic, political, and/or cultural traits

are perceived as distinct markets

Divisions are organized based on location

Regional offices

coordinate marketing activities

GEOCENTRIC orientation

Is a global marketing concept:

world is perceived as a total market

with identifiable, homogenous segments

Targeted marketing strategies

aimed at market segments,

rather than geographic locations

Achieve position

as low-cost manufacturer & marketer of product line

Provides standardized product or service

throughout the world.

Q 4: a) Describe benefits to the exporters under the EPCG and DEPB Scheme.

Ans:

. EPCG SCHEME

The EPCG scheme allows import of capital goods for pre production, production and post production at 3% Customs duty subject to an export obligation equivalent to 8 times of duty saved on capital goods imported to be fulfilled over a period of 8 years reckoned from the date of issuance of the authorization.

The capital goods shall include spares (including refurbished/ reconditioned spares), tools, jigs, fixtures, dies and moulds. EPCG Authorization may also be issued for import of components of such capital goods required for assembly or manufacturer of capital goods by the authorization holder.

An EPCG authorization can also be issued for import of capital goods for supply to projects notified by the Central Board of Excise and Customs under wherein the basic customs duty on imports is 10% with a CVD of 14%.

Payment of Duty under EPCG Scheme, through debit of DEPB or other duty credit scrip’s would be allowed w.e.f. 01.01.2009

DEPB

DEPB Scheme has been extended till May, 2009.

Duty Free Replenishment Certificate (DFRC) shall be available for exports only up to 30.04.2006. This scheme is being replaced by the Duty Free Import Authorization (DFIA) w.e.f. 01.05.2006

Q 5: a) Why is desk research is important tool in the hands of overseas marketer? Describing various sources of secondary data.

Ans: Desk research is a euphemism for collecting secondary data.

the role of secondary research or desk research, in identifying suitable overseas markets as well as products

Market research enable businesses to analyze potential targets according to a number of key factors and issues.

Market characteristics

These may include factors such as size/growth and segmentation of markets, customer concentration, import sensitivity & growth, seasonal/cyclical trends, and quality issues.

Competitive conditions

Financial & economic conditions

Cultural, political & legal factors

Market prioritization

Analysis of the factors listed above, should help firms to rank potential markets in priority order.

Above all, businesses should focus on the influences on demand for products/services, on the acceptance of products/services, on government regulation and the major sources of competition.

: Secondary marketing research, or desk research, already exist in one form or another. It is relatively cheap, and can be conducted quite quickly .However, it tends to have been collected for reasons other than for the problem or objective at hand. So it may be un targeted, and difficult to use to make comparisons (e.g. financial data gather on Australian pensions will be different to data on Italian pensions). There are a number of such sources available to the marketer, and the following list is by no means conclusive:

Trade associations

National and local press Industry magazines

National/international governments

Websites

Informal contacts

Trade directories

Published company accounts

Business libraries

Professional institutes and organizations

Omnibus surveys

Previously gathered marketing research

Census data

Public records

We have given a general introduction to marketing research. Marketing research is a huge topic area and has many processes, procedures, and terminologies that build upon the points above.

Q 7. Write short notes on:

a) Asean

Ans: ASEAN

The Association of Southeast Asian Nationscommonly abbreviated ASEAN is a geo-political and economic organization of 10 countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand Since then, membership has expanded to include Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam.

The members of the summit are all 10 members of ASEAN together with China, Japan, South Korea, India, Australia and New Zealand who combined represent almost half of the world's population.

Its aims include the acceleration of

1. Economic growth,

2. Social progress,

3. Cultural development among its members,

4. The protection of the peace and stability of the region, and

5. To provide opportunities for member countries to discuss differences peacefully.

Objectives of ASEAN

1. To promote networking amongst relevant law enforcement authorities in ASEAN Countries to curb illegal trade in wild fauna and flora.

2. To promote research, monitoring and information exchange on CITES-related issues.

3. To encourage industry groups, trade associations/ traders and local communities to comply with legality and sustainability requirements of national regulations.

4. To encourage greater regional cooperation on specific issues by:

5. To seek sufficient technical and financial assistance through collaborative initiatives by:

b) Andean Group

Ans: Andean Group A regional economic grouping comprising Colombia, Peru (suspended from 1992 to 1993), Bolivia, Chile (from 1969 to 1977), Venezuela, and Ecuador. Formally established by the Cartagena Agreement of 1969 – hence its official name, Acuerdo de Cartagena – it was an attempt to enhance the competitive edge of the member states in their economic relations with the more developed economies of the Latin American region.

c) Trade Fair Participation

Ans: Participation in international trade fairs provides exporters with an excellent opportunity to promote their products and to establish contacts with potential business relations. The training “Effective Trade Fair Participation” offers Small Medium Enterprises and BSO staff the opportunity to become familiar with the necessary knowledge, tools and skills to prepare, execute and give follow-up, to international trade fairs in

At the end of the training the participant:

has gained improved knowledge of tools to communicate with an European export market;

is able to prepare and manage an individual trade fair participation in Europe;

has improved his/her skills in identifying suitable exhibitions, selecting the right exhibitors and in dealing with trade fair organizations, stand constructors, customs etc.

has gained improved knowledge on issues like project management, budgeting, stand layout and design, visitor’s promotion and PR, stand behaviour, evaluation and follow-up;

has collected information on new concepts on how exhibitions are being organised

is familiar with CBI’s mission and website.

Target audience
The training is meant for exporters who are active in a variety of sectors among which the garment sector and which task it is to manage the exports to European markets. Focus is on the people within the exporting company who are responsible for the organisation of participations in international trade fairs. Experience in this field is necessary in order to fully participate in the workshop. Additionally the participants should have some experience in exports and international business and are conversant with the English language

Q 6. What risks does an exporter face and how does he mitigate them? Explain in detail giving concrete actions/example.

Ans: Risks Involved in International marketing

Short term

Self liquidating (e.g., banks finance the import of goods which are then resold to repay the bank)

Secured (by the underlying goods)

Speedily completed (e.g., within

the short life of a documentary credit, there may be several transactions which are completed quickly, at "high velocity")

Nevertheless, there are three main areas of risk. This article will focus on these risk factors and suggest ways to counteract them.

The three main areas are micro risks, macro risks, and product risks.

Micro risks are encountered at the individual customer level and are confined to the financial (credit) and operational risks associated with their business.

Let's examine some of these macro risk areas in more detail.

Country Risk

Foreign Exchange Risk

Bank Risk

having a history or delaying or actually reneging on payment.

having a habit of rejecting documents iting tribial discrepancies;

being domiciled in a country notorious for foreign exchange restrictions and mortoriums; and

being domiciled in a country classified as high risk.

Fraud

Documentary Credits

Here we will consider the bank in two roles: (1) as the institution financing the importer, and (2) as the exporter's bank.

1. Imports Under Documentary Credit (DC)

Before undertaking to establish a DC for an importer, the bank should consider:

The financial standing of the importer. The bank has to look to the importer to pay the import bill drawn under the DC and therefore should be sure that the latter has or will have the funds to pay.

The goods. Trade finance is supposed to be self-liquidating and the goods must be readily saleable. Consideration should also be given to the risks associated with perishability of the goods, possible obsolescence, import regulations, packing and storage, etc.

Q 1: Discuss the concept of international marketing. How does it differ from domestic marketing?

Ans: International marketing is 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. The only difference between the definitions of domestic marketing and international marketing is that in the latter case marketing activities take place in more than one country.

global marketing as “marketing on a worldwide scale reconciling or taking commercial advantage of global operational differences, similarities and opportunities in order to meet global objectives

The six Cs that play a vital role in International Market are:

1. Cost

2. Capital

3. Control

4. Coverage

5. Continuity

6. Character

Different Levels of International Marketing

Domestic marketing

Export marketing

International marketing

Multinational marketing

Domestic marketing is the marketing practices within a marketer's home country. Foreign marketing is the domestic operations within a foreign country (i.e., marketing methods used outside the home market).

International marketing studies the "how" and "why" a product succeeds or fails abroad and how marketing efforts affect the outcome. It provides a micro view of the market at the company level.

Multinational, global, and world marketing are all the same thing. Multinational marketing treats all countries as the world market without designating a particular country as domestic or foreign. As such, a company engaging in multinational marketing is a corporate citizen of the world, whereas international marketing implies the presence of a home base. However, the subtle difference between international marketing and multinational marketing is probably insignificant in terms of strategic implications

Q 2: Discuss the various international trade theories. Explain the ERPG theory in detail.

Ans: Ricardian model

The Ricardian model focuses on comparative advantage and is perhaps the most important concept in international trade theory. In a Ricardian model, countries specialize in producing what they produce best. Unlike other models, the Ricardian framework predicts that countries will fully specialize instead of producing a broad array of goods. Also, the Ricardian model does not directly consider factor endowments, such as the relative amounts of labor and capital within a country.

Assumptions of the Ricardian model

(1) Labor is the only primary input to production (labor is considered to be the ultimate source of value).

(2) Constant Marginal Product of Labor (MPL) (Labor productivity is constant, constant returns to scale, and simple technology.

(3) Limited amount of labor in the economy

(4) Labor is perfectly mobile among sectors but not internationally.

(5) Perfect competition (price-takers).

The Ricardian model measures in the short-run, therefore technology differs internationally. This supports the fact that countries follow their comparative advantage and allows for specialization.

Heckscher-Ohlin model

The Heckscher-Ohlin model was produced as an alternative to the Ricardian model of basic comparative advantage. Despite its greater complexity it did not prove much more accurate in its predictions. However from a theoretical point of view it did provide an elegant solution by incorporating the neoclassical price mechanism into international trade theory.

The theory argues that the pattern of international trade is determined by differences in factor endowments. It predicts that countries will export those goods that make intensive use of locally abundant factors and will import goods that make intensive use of factors that are locally scarce. Empirical problems with the H-O model, known as the Leontief paradox, were exposed in empirical tests by Wassily Leontief who found that the United States tended to export labor intensive goods despite having a capital abundance.

Core assumptions of the H-O model:

(1) Labor and capital flow freely between sectors

(2) The production of shoes is labor intensive and computers is capital intensive

(3) The amount of labor and capital in two countries differ (difference in endowments)

(4) Free trade

(5) Technology is the same across countries (long-term)

(6) Tastes are the same.

Specific factors model

New Trade Theory

New Trade theory tries to explain several facts about trade, which the two main models above have difficulty with. These include the fact that most trade is between countries with similar factor endowment and productivity levels, and the large amount of multinational production (foreign direct investment) which exists. In one example of this framework, the economy exhibits monopolistic competition and increasing returns to scale.

Gravity model of trade

The Gravity model of trade presents a more empirical analysis of trading patterns rather than the more theoretical models discussed above. The gravity model, in its basic form, predicts trade based on the distance between countries and the interaction of the countries' economic sizes. The model mimics the Newtonian law of gravity which also considers distance and physical size between two objects. The model has been proven to be empirically strong through econometric analysis. Other factors such as income level, diplomatic relationships between countries, and trade policies are also included in expanded versions of the model.

Regulation of international trade

Traditionally trade was regulated through bilateral treaties between two nations. For centuries under the belief in Mercantilism most nations had high tariffs and many restrictions on international trade. In the 19th century, especially in the United Kingdom, a belief in free trade became paramount This belief became the dominant thinking among western nations since then. In the years since the Second World War, controversial multilateral treaties like the General Agreement on Tariffs and Trade (GATT) and World Trade Organization have attempted to create a globally regulated trade structure. These trade agreements have often resulted in protest and discontent with claims of unfair trade that is not mutually beneficial.

Free trade is usually most strongly supported by the most economically powerful nations, though they often engage in selective protectionism for those industries which are strategically important such as the protective tariffs applied to agriculture by the United States and EuropeThe Netherlands and the United Kingdom were both strong advocates of free trade when they were economically dominant, today the United States, the United Kingdom, Australia and Japan are its greatest proponents. However, many other countries (such as India, China and Russia) are increasingly becoming advocates of free trade as they become more economically powerful themselves. As tariff levels fall there is also an increasing willingness to negotiate non tariff measures, including foreign direct investment, procurement and trade facilitation The latter looks at the transaction cost associated with meeting trade and customs procedures.

Traditionally agricultural interests are usually in favor of free trade while manufacturing sectors often support protectionism.^]This has changed somewhat in recent years, however. In fact, agricultural lobbies, particularly in the United States, Europe and Japan, are chiefly responsible for particular rules in the major international trade treaties which allow for more protectionist measures in agriculture than for most other goods and services.

During recessions there is often strong domestic pressure to increase tariffs to protect domestic industries. This occurred around the world during the Great Depression. Many economists have attempted to portray tariffs as the underlining reason behind the collapse in world trade that many believe seriously deepened the depression

Q 3: “The international marketing decisions are influenced, to a large extent, by economic environment prevailing at that point of time.” Discuss. Provide suitable examples.

Ans: The economic environment encompasses such factors as productivity, income, wealth, inflation, balance of payments, pricing, poverty, interest rates, credit, transportation, and employment;

The global economy

The development of the global economy can be traced back many hundreds of years when traders from the east and west came together to exchange goods. However, the growth of the modern global economy is marked by a number of features as follows:

Decisions in product, price, communications and merchandising can stimulate economic development. Changing from fixed price systems to market based pricing could lead to the faster achievement of development objectives (for example "higher incomes"). In current drought conditions in Africa, governments could well benefit from advertising other forms of nutritious food, for example, fish, rather than let the populace be left uninformed and disgruntled about the lack of maize.

Comparative costs - comparative advantage

As discussed in chapter one, price has been called the immediate basis for international trade - cheaper prices based on different cost structures, especially labour. Countries trade because they produce and export goods in which they enjoy a greater comparative advantage and import goods in which they have a least comparative advantage. A further refinement of this is the international product cycle discussed fully in chapter one.

Balance of payments

This is the measure of all economic transactions between one nation and another. The balance of payments is made up of the current account, showing trade in goods and services; and the capital account, which shows financial transactions. In 1989, after official transfers, the USA had a US$ 109,242 million deficit on its current account, Japan had a $ 131,400 million surplus, Tanzania a $ 778,5 million deficit and Zimbabwe a $ 2,783 million deficit.

The balance of payments account helps marketers select the location of supply for foreign markets and the selection of markets. The capital account may show the nations which have control restrictions and hence be difficult to deal with. In this regard, African nations are generally disadvantaged.

Government policy

This refers to the government measures and regulations which have a bearing on trade - tariffs, quotas, exchange controls and invisible tariffs. These can cause formidable barriers to marketers and will be dealt with at length later.

World Institutions

Institutions like GATT and the United Nations Conference on Trade and Development (UNCTAD) have been of help to countries in their development. GATT had over 120 members and associated and accounted for 80% of world trade. Its intention was to create a general system of preferences and negotiate tariffs for members' products on a nondiscriminant basis and provide a forum for consultation. The Kennedy Round of the 1960s was superseded by the Tokyo round of the 1970s and that by the current Uruguay round signed in 1994.

UNCTAD furthers the development of emerging nations. It seeks to improve the prices of primary goods exports through commodity agreements. It also established a tariff preference system favoring developing nations.

Regionalism

Regionalism is a major and important trade development. Some regional groupings have either market (EU) or command (China) or mixed economies (former communist countries and The Preferential Trade Area (PTA) and The Southern African Development Community (SADC). With these developments, free trade zones have occurred (all internal barriers abolished) economic unions (the EU), export pricing zones (Mauritius) and other schemes. The major regional economic organizations are: Acuerdo de Cartegna (Andean Group), Association of South East Nations (ASEAN), Asian Pacific Rim countries (APC), Caribbean Community and Common Market (CARICOM), Central American Common Market (Mercado Comùn Centro Americano), Council of Arab Economic Unity, Economic Community of West African States (ECOWAS), the European Union (EU), Latin American Integration Association, Organisation Commune Africane et Mauricienne, Preferential Trade Area (PTA) and the Southern African Development Conference (SADC). A principal collapse has been the Council for Economic Assistance (COMECON) with the disappearance of the communist bloc in Eastern Europe. Of these blocs, the EU (reporting 33% of world trade) and EFTA are very important. To counteract the growing power of the EU, the USA and Canada have entered into an agreement with Mexico as a willing partner and created the North American Free Trade Agreement (NAFTA).

These blocs are of various form, power, influence and success. ASEAN is a collaboration of industry and agriculture, PTA in tariffs. SADC and PTA have had historically little impact but are now beginning to grow in importance in view of the normalization of South Africa. The EU, North American Union and the Pacific Rim Union will pose the greatest power blocs in future years. Many developing countries have entered into trading blocks as a reaction against loss of developed country markets or as a base to build economic integration and markets.

The development of trading blocs can bring headaches and advantages to trade. It is worth comparing the European Union, a relatively well developed bloc, with SADC and the PTA which are well developed. SADC and PTA are described in a little detail in appendix one and two of this chapter.

The international financial system

Global financing operations based on the gold standard gave rise to instability, so Bretton Woods, post World War II, saw the nascence of the International Monetary Fund (IMF) and World Bank.

The IMF deals with the International Monetary System. Involved countries joined IMF to establish a par value for other countries in terms of the US dollar and maintain it with +/- one percent of that value. The system fell down because large corporations were holding more funds than banks and so a "float" set in. IMF began to fade somewhat. However it still lends, on a short term basis, to countries with payment problems to help them continue trading.

The World Bank, or International Bank for Reconstruction and Development (IBRD) deals with international capital. It provides long term capital to aid economic development.

Individual economies

Whilst the global factors listed above have aided the development of a world economy, marketers must consider carefully individual economies. A study of these helps answer the questions - how big is the market and what is it like? Currently there are over 200 individual countries in the world.

The nature of economy

More than money makes up an economy's economic environment. Natural resources -raw materials now and in the future are important. If synthetic gold or tobacco were developed or, in the case of the latter, became unfashionable, Zimbabwe's economy would be ruined.

Topography may produce two, three or more submarkets in a country. Zambia, for example, has "rural" and "urban" areas with different needs and wants.

Extremes of climate - like the Southern African drought in 1992 can devastate economies and derail any economic development plans and exports. Simply, products are not available to export, because they are being consumed by the domestic economy.

The nature of economic activity

Economic activity is often correlated to the type of economic activity. Various methods have been derived to classify economies. These are:

Stages of market development

Global markets are at different stages of development which can be divided into five categories based on the criterion of gross national product per capita.

i) Preindustrial countries - incomes less than US$ 400 GNP per capita. Limited industrialisation, low literacy rates, high birth rates, heavy reliance on foreign aid, political instability. Parts of Sub-Saharan Africa. Little market potential.

ii) Less developed countries - per capita between US$ 401 and US$ 1,635. Early stages of industrialisation, growing domestic market, mature product markets, increasing competitive threat.

iii) Developing countries - per capita income between US$ 1,636 and US $ 5,500. Decrease in percentage of agricultural workers, industrialisation, rising wages, high literacy rates, lower wage rates than developed countries, formidable competitors.

iv) Industrialised countries - per capita income between US$ 5,501 and US$ 10,000. Moving towards post industrialisation, high standard of living.

v) Advanced countries - per capita income in excess of US$ 10,000. Post industrialisation, information processors, knowledge based, less machine based. Product opportunities are in new products, innovations and raw materials plus fresh foods.

The World Bank classification

The World Bank has drawn up a classification of economies based on GNP per capita.

i) Low income economies, China and India, other low-income-GNP per capita income of between US$ 675 or less, 41 nations including Tanzania, Kenya, Zambia and Malawi.

ii) Middle income economies, lower middle income, GNP per capita of between US$ 676 and US$ 2,695, 40 nations including Zimbabwe, Mexico and Thailand.

iii) Upper middle income, GNP per capita of between US$ 2,676 and US$ 8,355, 17 nations including Brazil, Portugal and Greece.

iv) High income economies, OECD members and others, GNP per capita of between US$ 8,356 or more, 24 nations including UK and the USA.

v) Other economies - communist bloc.

Mozambique and Switzerland are the two extreme ends of the spectrum with US$ 80 per capita and US$ 29,880 per capita respectively.

produced a five stage model of economic takeoff:

· Stage 1 traditional society, little increase in productivity, no modern science application systematically, low level of literacy

· Stage 2 the preconditions of takeoff, modern techniques in agriculture and production, developments in infrastructure and social institutions

· Stage 3 the takeoff, normal growth patterns, rapid agricultural and industrial modernization, good social environment.

· Stage 4 the drive to maturity, modern technology applied to all fronts, international involvement, can produce anything

· Stage 5 the age of high mass consumption, production of durable goods and services, large amounts of

These classifications enable marketers to assess where and how to operate in countries which may display the stage characteristics. For example African exporters would look to stage 4 and 5 economies to obtain the greatest revenue opportunities for other produce.

Another way to assess the market alternatives to a potential global marketer is to look at the origin of its national product - is it farm or factory generated? Farm workers tend to have low incomes. Input-output tables provide other insights into a country's potential, that is, what inputs go into a particular industry's output? What combination of labour, materials and equipment?

Infrastructure

Infrastructure is a very important element in considering whether to market in a country or not.

Transportation, for example, is vital. Zambia and Zimbabwe are landlocked and have relatively poor transport facilities. Tanzania, whilst having direct access to the coast, has also a relatively poor internal rural infrastructure. Chaos can therefore ensue, especially during the rainy season. Without being able to get produce to the point of exportation, countries will suffer poor export performance accordingly.

Energy consumption shows the overall industrialisation of a society as does its infrastructure. The less energy is consumed, the less likely the development of the market resulting in a not too attractive market proposition.

Communications are essential. India has only some 10 million telephones to a population of 1 billion people. Media availability is important. Zambia has 680 radios per 1000 population, France 2,059 per 1000. Malawi has no domestic television service but access to satellite television.

Commercial infrastructure is also vital - banks, accountants, advertising agencies and other services. Without these " transaction " facilities, exporting cannot take place.

Urbanisation

Differences exist between "urban" and "country" dwellers. City dwellers may have more income, more developed communications and access to new products. Developing countries tend to suffer from rural drift, but without the accompanying incomes characteristic of developed countries. So when assessing market opportunities widespread urbanisation is no guarantee of a good market potential.

The economic environment is one of the major determinants of market potential and opportunity. Careful analysis of this, particularly income and the stage of economic development is essential. Failure to do so will lead, at best, to sub optimal opportunity and, at worst, to disaster. Less developed countries like Africa, are at a disadvantage, due to their primary material export dependence. It behoves these nations in the continent to derive policies and strategies for rapid industrialisation, or forever to be at the mercy of world demand and prices.

Q 4: Discuss the various regional agreements and treaties.

a) APEC

Ans: APEC is Asia-Pacific Economic Cooperation,

As the title suggest the APEC aims at developing economic coordination among the member economies.

Asia-Pacific Economic Cooperation (APEC) ministers have promised not to raise any new trade barriers until the end of next year. THE RECENT issued are like growing professionalism, and global crisis.

The 21 ministers of the Asia-Pacific Economic Cooperation forum extended their current commitment introduced last November to next November, in response to growing protectionist sentiment worldwide.

Member countries, which represent almost half of world trade, undertook not to introduce any new policy initiatives that may hinder trade and investment flows.

b) ASEAN

The Association of Southeast Asian Nationscommonly abbreviated ASEAN is a geo-political and economic organization of 10 countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand Since then, membership has expanded to include Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam.

The members of the summit are all 10 members of ASEAN together with China, Japan, South Korea, India, Australia and New Zealand who combined represent almost half of the world's population.

Its aims include the acceleration of

1. Economic growth,

2. Social progress,

3. Cultural development among its members,

4. The protection of the peace and stability of the region, and

5. To provide opportunities for member countries to discuss differences peacefully.

Objectives of ASEAN

1. To promote networking amongst relevant law enforcement authorities in ASEAN Countries to curb illegal trade in wild fauna and flora.

2. To promote research, monitoring and information exchange on CITES-related issues.

3. To encourage industry groups, trade associations/ traders and local communities to comply with legality and sustainability requirements of national regulations.

4. To encourage greater regional cooperation on specific issues by:

5. To seek sufficient technical and financial assistance through collaborative initiatives by:

c) NAFTA

The phasing out of tariffs and eliminated a variety of fees and other hindrances to encourage free trade between the three North American countries.

The agreement immediately ended tariffs on some goods, and on other goods tariffs were scheduled to be eliminated over a period of time. By 2008 all tariff eliminations were to be completed.

Geneva, 20 Jan 2000 -- The preface of the newly launched CD-ROM "From GATT to the WTO" presents a snapshot of the secret story of the Uruguay Round - charting out the course the negotiations took and the principal positions of the key players.

The post-Uruguay Round built-in agenda

1996

Maritime services: market access negotiations to end Services and environment: deadline for working party report

1997

Basic telecoms: negotiations end

Financial services: negotiations end

1998

1999

Intellectual property: certain exceptions to patentability and protection of plant varieties: review starts

2000

Agriculture: negotiations start, now part of Doha Development Agenda

Services: new round of negotiations start, now part of Doha Development Agenda

2002

Textiles and clothing: new phase begins 1 January

2005

Textiles and clothing: full integration into GATT and agreement expires 1 January

The WTO generally face three primary challenges if they are to participate effectively in the WTO dispute settlement system. These challenges are:

A relative lack of legal expertise in WTO law and the capacity to organize information concerning trade barriers and opportunities to challenge them;

Constrained financial resources, including for the hiring of outside legal counsel to effectively use the WTO legal system, which has become increasingly costly; and

Fear of political and economic pressure from members exercising market power, and in particular the United States and EC, undermining their ability to bring WTO claims.

We can roughly categorize these challenges as constraints of legal knowledge, financial endowment, and political power, or, more simply, of law, money and politics.

Q 5: “While conducting marketing research. it is very important to keep the cultural difference in mind.” Elaborate upon this statement and provide examples to justify your answer.

Ans: Every Culture contains some variables important to consider while conducting marketing research.

1. Individualism

a. Supplier’s motivation to get the product finished correctly

Supplier’s understanding of your research need

2. Collectivism

Communication with supplier

Developing representative samples

Abilities of moderators or interviewers

Interpretation of results

Translation of research instruments

Governmental regulation

3. Power Distance

Language/translation

Unfamiliarity with research techniques

Unwillingness to respond

Giving the expected response

Understanding the rating scales

Functional equivalence

Conceptual equivalence

Taboos against discussion of certain subjects

4. Masculinity

Adapted techniques for maximum respondent comfort in research technique (RT).

Adapted techniques for maximum respondent comfort in respondent-related problems (RRP).

5. Femininity

Lengthened scheduled in RT.

Developed personal relationships in RT.

Lengthened schedule in RRT.

Developed personal relationships in RRT.

6. Uncertainty Avoidance

More selective recruiting of respondents: RT.

Reworded discussion guides for questionnaires: RT

Listened more carefully to in-country suppliers of consultants: RT

Counteracted research bias through training: RT.

More selective recruiting of respondents: RRP.

Reworded discussions guides to in-country suppliers of consultants: RRP.

Listened more carefully to in-country suppliers of consultants:

Q 5: You are the manager of a firm that manufactures and sells laptops. Your firm markets these laptops nationally as well as internationally. Would your national and international advertising and branding strategies remain the same or would they be different? Explain your argument.

Ans: Yes The advertising and branding strategies will bw different for the national and international markets for laptops.

Like Dell has done a good job in its strategic decision towards laptops market in India.

Dell's new retail strategy and Direct-only model

Dell's innovative direct- sales model with good sales growth had been successful until the mid-2000s when the company's profits and share prices began dropping considerably. Dell was selling PCs directly to customers by phone and online. On May 24, 2007, Dell disclosed its plans to sell PCs in the US, Canada, and Puerto Rico through Wal-Mart and Sam's Club retail stores. This announcement came soon after Michael Dell returned as CEO replacing Rollins.

In India, as part of the retail initiative, Dell tied up with Tata Croma (the Tata-owned electronics retail chain) in July 2008 and with select Staples stores. By the end of 2008, Dell planned to increase its presence to100 Indian cities by increasing its channel partners. In October 2008, Dell announced the opening of the first Dell exclusive stores in India at New Delhi and Coimbatore. Dell also tied up with 600 systems integrators all over the country who could take orders on its behalf.

Dell's New Marketing Strategy in India

Dell is targeting the small and medium businesses (SMB) in smaller towns in India as its main driver for growth as the company believes this market sector is growing rapidly and is not exposed to global shocks making it a much more stable market. Dell India is focusing on simplification of the business processes (basic areas to improve cost efficiencies) as part of its new rollout plan. It has even tied up with Tally to offer accounting solutions online. For an initial period, customers get a Tally subscription free along with select Dell Vostro systems. Dell has also increased its SMB team to 200 and expanded its presence to about 600 tier-II and tier-III cities. Dell will also introduce a portal titled "Dell 360" (with discussion forums) where SMBs can educate themselves on benefits of IT to their businesses.

Dell's New Advertising Campaign for SMBs

First launched in India, Dell's new advertising campaign is titled - "Take Your Own Path". The campaign targets Indian SMBs with a new range of laptops.

Testimonial Advertising instead of Transactional

In December 2007, Dell partnered with WPP (after withdrawing its advertising responsibilities from over 800 different agencies worldwide) which launched its own specialist unit Enfatico with Dell as its only customer. Enfatico's first international campaign for Dell targeted SMBs featured successful Indian faces and aimed at establishing an emotional connect with brand Dell.

Acer played a pioneering role in breaking price barriers in this high-price segment that hitherto saw characteristic popularity only with a small and niche group of buyers comprising senior business executives and technocrats.

In order to corner a larger market share the company came up with innovative strategies to make laptops affordable to the highly prospective SMB and SOHO segments. The case provides the reader a holistic picture of the notebook market in India, the various segments therein, the gradual shift in the purchasing pattern from desktops to notebooks, the company profile of Acer and the various strategies that it pursued for sustained growth.

Likewise a good decision is to be taken.

Q 6: What are major risks involved in international business? How would you minimize these risks?

Ans: Companies doing business across international borders face many of the same risks as would normally be evident in strictly domestic transactions. For example,

1. Buyer insolvency (purchaser cannot pay);

2. Non-acceptance (buyer rejects goods as different from the agreed upon specifications);

3. Credit risk (allowing the buyer to take possession of goods prior to payment);

4. Regulatory risk (e.g., a change in rules that prevents the transaction);

5. Intervention (governmental action to prevent a transaction being completed);

6. Political risk (change in leadership interfering with transactions or prices); and

7. War and Acts of God.

In addition, international trade also faces the risk of unfavorable exchange rate movements (and, the potential benefit of favorable movements).

Some tips on how to minimise risk:

The product and service offering of a business needs to change with the preferences of customers. Too much reliance on a single product (or a few products) should also be avoided.
It is advisable to have alternative supply chains (including suppliers and distribution channels). Good relationships must be built with all the relevant parties.
Debt assists companies to grow. It can, however, be dangerous to have too much debt and it should be limited to serviceable levels.
Reliance on one or a small number of customers can be very risky and wherever possible it should be avoided.
Proper financial planning must be done. Cash flow planning is one area that can highlight potential risks and pro-active action can then be taken.
Financial management should continually be done. Ratio analysis will show where problem areas exist (e.g. in profitability). It also gives an indication of liquidity and solvency risks.
It is advisable to hedge a business as far as possible against factors that are not under the control of the business. This is especially true with international trading and unexpected currency fluctuations.
Business growth should be kept to sustainable levels. Too much growth can seriously drain financial resources and can even cause bankruptcy. Systems and skills also need to keep pace with growth.
Proper standards in manufacturing should be adhered to. Products that are not on standard can damage the image of a company or even destroy it in total.
People are the core of any business and they should be treated as such. People do, however, leave a business for various reasons. Where applicable sensitive information needs to be protected by confidentiality agreements and restraint of trade agreements.

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