FS on Exam 3 Flashcards by Fatima Navarro

What some problems for foreign marketers in China?

Importance of “guanxi” – contacts

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What is the minimum discretionary income that economists believe is necessary in order to sustain a market economy in China?

$5000

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What is the value chain?

a progression of activities that a firm operating in a specific industry performs in order to deliver a valuable product to the end customer

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How do you optimize the value chain?

You assign each element of the value chain to the subsidiaries that do it best

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What are the characteristics of global companies?

Market: the world
Look for: similarities (needs)
MKT Strategy: standardization
Satisfaction goal: lowest common denominator
Satisfaction level: low
Pricing: low (economies of scale)
Costs: low (economies of scale)
Image: global
Advantages: integration of operations (optimization of the value chain)

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What are characteristics of international companies?

Market: individual country
Look for: each country has differences (each country has different needs)
MKT Strategy: adaptation
Satisfaction goal: all needs/wants
Satisfaction level: high
Pricing: high (economies of scale)
Costs: high (mfg/inv/mkt)
Image: local
Advantages: customization

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What are the benefits of a Global orientation?

Economies of Scale in Production & Marketing, Transfer of Experience and Know-How across Countries, Uniform Global Image (universal brand awareness), Control and Coordination of Operations
***(Optimization of the value chain)

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What is an example of a franchise?

Food franchises: Burger King and McDonalds

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What is a joint venture?

A joint venture is a partnership of two or more participating companies that have joined forces to create a separate legal entity they create

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What are its advantages of a joint venture?

Shared risk
Combined strengths of partners
Open doors to countries that favor local companies or prohibit foreign control
Avoid tariff and quota barriers

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What are disadvantages of a joint venture?

Differences in culture & management philosophies can lead to disagreements among partners and to divorce
Control and coordination of the venture can be very costly for the foreign partner
Local partners can evolve into strong competitors

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What are consortia?

They typically involve a large number of participants, and they frequently operate in a country or market in which none of the participants is currently active

**Form of a joint venture

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How do consortias differ from joint ventures?

While consortiums tend to share resources, they act independently when it comes to day-to-day operations. In a joint venture (JV), two or more parties generally share ownership in a venture, along with risks, profits, losses, and governance

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What are examples of consortias?

airbus
sematech

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How does a Strategic International Alliance differ from a joint venture?

Strategic Alliance: An agreement to cooperate, Partners remain independent

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Examples of strategic international alliance

Airline alliances: United or Delta (they can share gates and reservation systems)

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What is a private brand?

A brand that is owned/belongs to a distributor

Ex: Publix’s and Greenwise (Chicken/Meats)

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3 reasons that make private labels formidable competitors are…

1- Provide retailer with high margins
2- Receive preferential shelf space and strong in – store promotion
3- Quality products at low prices

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What are some of the satisfactions (or utilities) a buyer receives from a product (1)? Which ones of these are influenced by culture (2)?

Form, taste, color, odor ,and texture
o How it functions
o The package and label
o Warranty and service
o Confidence or prestige enjoyed by the brand
o Manufacturer’s reputation
o Country of origin
o Other symbolic utility

ALL ARE INFLUENCED BY CULTURE

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What are the 4 different categories of degree of newness as perceived by a market?

Congruent innovations

Continuous innovations

Dynamically Continuous Innovations

Discontinuous Innovations

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What type of innovation is : Not an innovation at all because it causes absolutely no disruption of established consumption patterns

Congruent innovations

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What type of innovation is substituting Cane sugar for Beet sugar

Congruent innovations

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What type of innovation is Least disruptive of consumption patterns; involves the alteration of a product resulting in a perceived improvement “new and improved” version of products

Continuous Innovations

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What type of innovation is fluoride toothpaste, disposable razors, flavors in coffee cream (Coffee Creamers)

Continuous Innovations

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What type of innovation is some disruption of consumption patterns

Dynamically Continuous Innovations

What type of innovation are electric toothbrushes, cell phones, electric hair curlers, central a/c, cellular phones, freeze dried foods

Dynamically Continuous Innovations

What type of innovation involves establishment of new consumption patterns; creation of new previously unknown products that fundamentally change the way things are done

Discontinuous Innovations

What type of innovation are VCR, personal computer, internet, ATM, microwave oven

Discontinuous Innovations

How disruptive of established consumption patterns is a congruent innovation and why?

Absolutely none because no big difference between products Ex: Cane sugar vs Beet Sugar

How disruptive is a continuous innovation (1)? What does it almost always involve (2)?

(1) Least disruptive (2) It involves a "new and improved" product

How disruptive is a dynamically continuous innovation (1)? What is the reaction from the consumers (2); Why?

(1) Generally disruptive (2) It is resisted; The more a product is innovative the more its going to be resisted because people are creatures of habits

What kind of strategic alternative for geographic expansion does the global launch of the Gillette Sensor shaving system represent?

Product and Communication Extension (Dual Extension)

What is Product and Communication Extension (Dual Extension)

To sell in world markets exactly the same product, with the same advertising and promotional appeals used in the home market

Successes of Product and Communication Extension (Dual Extension)

PepsiCo, gillete sensor ("the best a man can get")

What kind of strategic alternative for geographic expansion is the sale of USA bicycles, motor scooters and outboard marine motors in overseas markets? Of USA lawn and garden power equipment? Of Perrier mineral water in the USA?

Product Extension/ Communication Adaptation

What is Product Extension/ Communication Adaptation

Same physical product as home country but different marketing strategy results in product transformation

What are some successes of Product Extension/ Communication Adaptation

motorcycle

What kind of strategic alternative for geographic expansion is the use of different formulations overseas but the same “Put a Tiger in Your Tank” appeal for Exxon gasoline?

Product Adaptation/ Communication Extension

What is Product Adaptation/ Communication Extension

Same advertising appeal but product is adapted to local needs and tastes

Successes of Product Adaptation/ Communication Extension

Exxon gasoline (different formulations, but same “Put a Tiger in your Tank” appeal) and Kellogg’s Mueslix cereal (same health appeal, but different formulation in USA

What kind of strategic alternative for geographic expansion is the development by Hallmark of new greeting cards in Europe with no prepared message and cellophane wrapping?

Product Adaptation/ Communication Adaptation (Dual Adaptation)

What is Product Adaptation/ Communication Adaptation (Dual Adaptation)

Local condition, preferences, function, and receptivity to advertising appeals differ from home country

What are successes of Product Adaptation/ Communication Adaptation (Dual Adaptation)

Hallmark Greeting cards in Europe: no prepared message, card wrapped in cellophane

What kind of strategic alternative for geographic expansion is the development by Colgate of their new global toothpaste Total?

Product Invention

What is Product Invention

the creation of an entirely new products, and its promotion through a global advertising campaign

Successes of Product Invention

Colgate’s new total toothpaste for global markets (perceived as a global brand)

What are the kinds of strategic alternatives for geography expansion?

1. Product and Communication Extension (Dual Extension) 2. Product Extension/ Communication Adaptation 3. Product Adaptation/ Communication Extension 4. Product Adaptation/ Communication Adaptation (Dual Adaptation) 5. Product Invention

Under the new "Large-scale Retail Store Location Act" in Japan, who is taken out of the approval process?

Took MITI (Ministry of international Trade & Industry) out of the approval process

What is an Export Management Company (EMC)?

A consultant that comes in and becomes your export department. They offer services to countries that don’t have the ability to do exporting

What is usually the “quid pro quo” of an exclusive territory agreement when negotiating a contract with a middleman?

exclusive dealing

What is exclusive dealing?

Exclusive dealing = if they will be your exclusive representative then they have to promise that they will only represent your products

What are some of the reasons why countries impose export regulations?

To conserve scarce goods for home consumption To control flow to actual or potential enemies To comply with various regulations

The 3 purposes of Bill of Lading are…

Contract between shipper and carrier Receipt from carrier for shipment indicating that goods have been received in good condition ***Title to the goods (Certificate of ownership)

What does a Letter of Credit do to a buyer’s credit risk?

Still not risky; improves your risk

What is an irrevocable Letter of Credit?

Once letter is opened during period of validity, it can not be taken back or reversed/canceled

What are some of the document “discrepancies” that could cause delay in payment of letters of credit?

**Wrong description of goods ** Stalemated documents damaged goods-- foul bill of lading

What is a stalemated document

Document that is presented to a bank that is over 21 calendar days after shipment; Documents are no longer fresh*

What is a “sight draft”?

A draft that is required to be paid on sight; in other words, endorse the check, then when bank sees payable at sight (+ 30 days or +60 days, etc. ) then they pay it/give credit (more time to pay)

What is a time draft?

it’s a draft that is used to give credit to the buyer

What's included in the price of FOB Factory

cost of placing them on the carrier

What's included in the cost for FAS Port of Export (Shipment)

Free-alongside, cost of goods, cost to place them on carrier, cost of transport the goods alongside the vessel at the Port

What's included in the cost of C&F Foreign Port:

Cost of goods, costs to transport to Port, cost to load them on vessel, plus cost of freight to deliver them to foreign port

What's included in the cost of CIF Foreign Port

Same as C&F, plus the cost of cargo insurance

What is included in the cost of ex works

Only the cost of the goods

What is included in the cost of FOB factory with freight allowed to inland destination

The cost of goods, plus the cost to place them on board the inland carrier, plus the cost of transporting the goods from the factory to the inland destination

What is included in the cost of FOB Inland destination:

The cost of the goods, plus the cost to place them on board the inland carrier, plus the cost of transporting the goods from the factory to the inland destination

Who is responsible for the cost of cargo insurance in a C&F transaction?

The Foreign Buyer

You have purchased a car from a dealer in Miami. Where does title get transferred in each of the following terms of sale: EX WORKS

title transfers when the goods are ready for collection at the seller’s premises (work, factory, warehouse, plant) on the date agreed upon

You have purchased a car from a dealer in Miami. Where does title get transferred in each of the following terms of sale: FOB (Free on board) Factory

title transfers the minute the tires of the car hit the bed of the truck

You have purchased a car from a dealer in Miami. Where does title get transferred in each of the following terms of sale: FOB Factory with freight allowed to Inland Destination

title transfers when goods are placed “ on board” the inland carrier

You have purchased a car from a dealer in Miami. Where does title get transferred in each of the following terms of sale: FOB Inland Destination

title transferred when the goods (the car) are unloaded from the carrier at the inland destination

You have purchased a car from a dealer in Miami. Where does title get transferred in each of the following terms of sale: FAS Port of Miami (FAS Port of Shipment

title transferred when the goods are alongside at the port of shipment and in the hands of air or ocean carrier, as evidenced by a dock receipt

You have purchased a car from a dealer in Miami. Where does title get transferred in each of the following terms of sale: C&F Foreign Port

title transfers when goods are on board the vessel or plane at the port of shipment

You have purchased a car from a dealer in Miami. Where does title get transferred in each of the following terms of sale: CIF Foreign Port: (Cost Insurance Freight)

When the goods are on board the vessel at the Port of Shipment

What is gray marketing (Parallel Importation) ?

Gray Marketing is when a non-authorized d

What factors contribute to gray marketing ?

ASKKK

What is countertrade?

Doing trade without involving currency Ex: Bartering