E3 Ch 8

Question 1

Globalization

Answer 1

Process by which goods, services, capital, everyyyything flow across national borders

Question 2

Assessing Global Markets: Economic Metrics (4)

Answer 2

• Gross Domestic Product: value of goods/services of a country in a given year
• Gross National Income: GDP + money company has made from foreign investments
• Purchasing Power Parity: how the value of a good in one country versus another country (ex. Buying gold in the US vs Colombia)
• Trade Surplus or Deficit:
  exporting > importing –> SURPLUS
  (ex. US)
  importing > exporting –> DEFICIT
  (ex. China)

Question 3

Purchasing Power Index: Big Mac Index

Answer 3

What does is cost here versus there? An avg big mac in the US will be more expensive in Switzerland, Norway; less expensive in most other countries on index.

Question 4

Population Growth Dispersal

Answer 4

Strong demand in BRIC (Brazil, Russia, India, China) nations

Question 5

Evaluating Real Income

Answer 5

Firms can make adjustments to an existing product or change the price to meet the unique needs of a particular country market

Question 6

Analyzing Infrastructure/Technology Capabilities: When establishing business in another country you must consider (4)

Answer 6

Transportation, communication, distribution channel, commerce

Question 7

Analyzing govt actions when establishing business in different countries (4):

Answer 7

Quotas, tariffs, exchange control, trade agreements
Ex. Coke was never in India for years because India wanted the coke recipe

Question 8

Tariffs vs Quotas

Answer 8

Tariffs- tax on a good when it gets imported; artificially raises prices; lowers demand

Quotas- maximum limit; reduces availability of imported goods

Both benefit domestically-made products by reducing foreign competition

Question 9

Exchange Control

Answer 9

Regulation of currency rate.
Prices are nearly always lower in the country of origin (where it is manufactured) because there are no customs/import duties to pay.

Question 10

Trade Agreements

Answer 10

There are different regional agreements between neighboring countries making it easier for goods to flow between said countries (ex. EU, NAFTA, ASEAN)

Question 11

Sociocultural Factors: Hofstede’s Cultural Dimensions (6)

Answer 11

Culture includes…
Power distance-cultural hierarchy

Uncertainty avoidance- the extent to which individuals avoid ambiguity. In the US contracts and agreements are very detailed versus in another country that may not need so much: if you shook on it, it may be offensive to draw up a 60-page contract about the agreement

Individualism- you have to understand if the nation is individually-centered, family-centered, nation-centered, etc.

Masculinity

Time orientation- when may we want to see returns, etc

Indulgence- is it culturally appropriate in this country to indulge in X?

Question 12

Global Marketing Mix: Service Strategies (3)

Answer 12

Sell the same product in both markets
Sell similar product with some modification
Sell totally new products

Question 13

Pricing Strategies in a Global Market (5)

Answer 13

Tariffs
Quotas
Anti-dumping
Currency exchange
Competitive factors

…all affect price

Question 14

In developing countries many consumers shop at ___________________.

Answer 14

family-owned stores