Marketing test 2 ch 7

countertrade

the practice of using barter rather than money for making global sales. popular with many eastern European nations, Russia, and asian countries.

gross domestic product (GDP)

the money value of all goods and services produced in a country during 1 year.

balance of trade

the difference between the monetary value of a nation's exports and imports

Competitive advantage of nations

1. factor conditions - natural resources, education and skill levels, wage rates
2. demand conditions - size of market, sophistication of consumers, media exposure of products
3. related and supporting industries - existence of supplier clusters
4. compan

Economic Espionage Act (1996)

makes the theft of trade secrets by foreign entities a federal crime in the United States
prescribes prison sentences of up to 15 yrs and fines up to $500,000 for individuals

Protectionism

the practice of shielding one or more industries within a country's economy from foreign competition through the use of tariffs or quotas

4 trends in the past decade have significantly influenced the landscape of global marketing

trend 1: Gradual decline of economic protectionism by individual countries
trend 2: Formal economic integration and free trade among nations
trend 3: Global competition among global companies for global customers
trend 4: Emergence of a networked global m

Tariffs

a government's tax on goods and services entering a country, primarily serve to raise prices on imports

quota

a restriction placed on the amount of a product allowed to enter or leave a country. can be mandated or voluntary and may be legislated or negotiated by govts

World Trade Organization (WTO)

formed by the major industrialized nations of the world in 1995 to address an array of world trade issues. 153 WTO member countries, including the United States, which account for 90% of world trade

Global competition

exists when firms originate, produce, and market their products and services worldwide.

strategic alliances

agreements w/ 2 or more independent firms to coordinate for the purpose of achieving common goals such as a competitive advantage or customer value satisfaction

multidomestic marketing strategy

they have as many different product variations, brand names, and advertising programs as countries in which they do business

global marketing strategy

the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ.

global brand

a brand marketed under the same name in multiple countries with similar and centrally coordinated marketing programs

Global consumers

consist of consumer groups living in many countries or regions of the world who have similar needs or seek similar features and benefits from products or services

cross-cultural analysis

involves the study of similarities and differences among consumers in 2 or more nations or societies

values

personally or socially preferable modes of conduct or states of existence that tend to persist over time

customs

what is considered normal and expected about the way people do things in a specific country

Foreign Corrupt Practices Act (1977)

a law, amended by the International Anti-Dumping and Fair Competition Act (1998), that makes it a crime for U.S. corporations to bribe an official of a foreign government or political party to obtain or retain business in a foreign country

Cultural Symbols

things that represent ideas and concepts

semiotics

a field of study that emerged that examines the correspondence between symbols and their role in the assignment of meaning for people

back translation

where a translated word or phrase is retranslated in the original language by a different interpreter to catch errors

Consumer ethnocentrism

the tendency to believe that it is inappropriate, indeed immoral to purchase foreign-made products

bottom of the pyramid

the largest, but poorest socioeconomic group of people in the world

economic infrastructure

a country's communications, transportation, financial, and distribution systems-is a critical consideration in determining whether to try to market to a country's consumers and organizations

Economic considerations

A scan of the global marketplace should include: 1) comparative analysis of the economic development in different countries, 2) an assessment of the economic infrastructure in these countries, 3) measurement of consumer income in different countries, and

developed vs. developing countries

developed countries have somewhat mixed economies. Private enterprise dominates, although they have substantial public sectors as well. ex. United States, Canada, Japan, and most of Western Europe
developing countries are in the process of moving from an

micro-finance

the practice of offering small, collateral-free loans to individuals who otherwise would not have access to the capital necessary to begin small business or other income-generating activities

currency exchange rate

the price of one country's currency expressed in terms of another country's currency

exporting

producing goods in one country and selling them in another country. allows a company to make the least number of changes in terms of its product, its organization, and even its corporate goals. Host countries usually don't like this practice bc it provide

licensing

a company offers the right to a trademark, patent, trade secret, or other similarly valued items of intellectual property in return for a royalty or a fee.

indirect vs. direct exporting

indirect exporting- when a firm sells its domestically produced goods in a foreign country through an intermediary. least amount of commitment and risk but will probably return the least profit
direct exporting- when a firm sells its domestically produced

contract manufacturing and contract assembling

two variations of licensing, represent alternative ways to produce a product within the foreign country

joint venture

when a foreign company and a local firm invest together to create a local business

direct investment

biggest commitment a company can make when entering the global market which entails a domestic firm actually investing in and owning a foreign subsidiary or division.

product and promotion strategies

1) Product Extension -selling the same product in other countries
2) Product Adaptation -with some adaptations, changing a product in some way to make it more appropriate for a country's climate or consumer preferences is a product adaptation strategy
3)

dumping

when a firm sells a product in a foreign country below its domestic price or below its actual cost

gray market

also called parallel importing, is a situation where products are sold through unauthorized channels of distribution

3 types of companies populate and compete in the global marketplace:

1) international firms - engages in trade & marketing in different countries as an extension of the marketing strategy in its home country
2) multinational firms - views the world as consisting of unique parts and markets to each part differently. use a m