Incoterms 2010 and International Business - 101
Incoterms 2010 and International Business - Wild - Quick Study - Chapter 14
Incoterms 2010 and International Business - 101
International Business: The Challenges of Globalization, 8th Edition, Wild & Wild
Incoterms 2010 and International Business - Wild - Quick Study - Chapter 14
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Quick Study
Quick Study 1
- Q: Deciding whether to keep a marketing strategy the same or modify it a broad is also known as what?
A: This dilemma is referred to as the standardization versus adaptation decision. U.S. researcher Theodore Levitt argued that because the world is becoming standardized and homogeneous, companies should market the same products in the same way in all countries. Technology, he claimed, causes needs and preferences to converge throughout the world. Others say that standardization is just one of many strategies to enter the international marketplace successfully. They argue that standardization is not always the best strategy and advise smaller companies to adapt to local cultures while exploiting their unique images to gain local market share.
Globalization is transforming the way some products are marketed internationally. Some companies implement a global strategy that uses similar promotional messages and themes to market the same product around the world. Those companies can reduce production and marketing costs by standardizing the physical features of their products and marketing strategies. Others find that their products require physical changes to suit the tastes of consumers abroad. Consumers in different national markets demand products that reflect their tastes: cultural, political, legal, and economic environments affect consumer preferences and industrial buyers worldwide. Certain products do appeal to practically all cultures. Product standardization is more likely when nations share the same level of economic development.
- Q: What factors influence a country’s international product strategy?
A: Many factors influence a company’s product policies. First, laws and regulations of the target market can force product alteration. Cultural differences between the home and host markets can force adaptations in products to suit local buyers’ product preferences. National image of the country in which a product is designed, manufactured, or assembled can have a strong influence on the value that customers obtain from a product. It affects buyers’ perceptions of quality and reliability. Counterfeit goods can damage buyers’ images of a brand because counterfeits are often of inferior quality to the original product. Companies historically entered international markets on a sequential basis and could therefore greatly extend their products’ life cycles. But new product development at an increasingly rapid pace is shortening the life cycles of products.
- Q: What product characteristic is more likely than others to offend people in another country?
A: Whether they are standardized or adapted locally, products in international markets need carefully selected brand names. Brand names seldom offend people in international markets, but brand names can be highly offensive if they are not researched and selected.
Quick Study 2
- Q: A strategy that pressures channel members to carry and promoted a product is called what?
A: A push strategy is a promotional strategy designed to pressure channel members to carry a product and promote it to final users.
- Q: Firms that standardize international advertising often control campaigns from where?
A: Firms that standardize their advertising tend to control campaigns from the home office.
- Q: The process of sending promotional messages about products to target markets is called what?
A: The process of sending promotional messages about products to target markets is called marketing communication. Communicating the benefits of a product can be more difficult in international business than domestic business for at least several reasons. Marketing internationally usually means translating promotional messages from one language into another. Marketers must also be knowledgeable of many cultural nuances that can affect how buyers interpret a promotional message. A nation’s laws that govern the promotion of products in another country can also force changes in marketing communication.
Quick Study 3
- Q: What type of channel grants the right to sell a product to many resellers?
A: An intensive channel is one in which a producer grants the right to sell its product to many resellers.
- Q: In terms of channel length, direct marketing is known as what?
A: Direct marketing is referred to as a zero-length channel because the producers sell directly to final buyers
- Q: A product with a low value density tends to have a distribution system that is more what?
A: The value of a product relative to its weight and volume is called its value density. Value density is an important variable in formulating distribution policies. As a rule, the lower a product’s value density, the more localized the distribution system.
Quick Study 4
- Q: What makes worldwide pricing difficult to achieve?
A: A pricing policy in which one selling price is established for all international markets is called worldwide price. This is very difficult to achieve for the following reasons: First, keeping products costs the same is not possible for a company that has production bases within each market that it serves. As a result, selling prices will reflect the different costs of production. Second, a company that produces in just one location cannot guarantee that selling prices will be the same in every target market. The cost of exporting could be different in each country. Third, the purchasing power of local buyers must be taken into account. A lower price might be applied so that buyers could afford the product and the company can gain market share. Finally, currency fluctuations need to be considered. When the value of the currency in a country where production takes place rises against a target market’s currency, the product will become more expensive in the target market.
- Q: To apply dual pricing successfully, how must a firm treat its domestic and international buyers?
A: Worldwide pricing sets one selling price for all international markets. Dual pricing is a pricing policy in which a product has a different selling price (typically higher) in export markets than it has in the home market. It is typically the result of price escalation resulting from exporting costs and currency fluctuations.
- Q: Parent firms and subsidiaries often transfer products among themselves as a price called what?
A: A transfer price is the price charged for products transferred between a company and its subsidiaries.
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Ethical Challenge |
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You are a lawyer working with the International Court of Justice in The Hague in the Netherlands. Your task is to review a recent decision by a U.S. judge regarding extraterritoriality. The case: French survivors of the Holocaust sued Yahoo USA because French citizens were purchasing Nazi memorabilia on Yahoo’s U.S. website. The lawsuit also charged Yahoo USA with hosting the websites of anti-Semitic groups. Although both these actions are illegal according to French law, they are permitted in the United States because of U.S. legislation protecting free speech. Because Yahoo’s French website did not violate French law, the U.S. federal judge hearing the case threw it out. The judge ruled that French law does not have the right to dictate the behavior of U.S. firms operating inside the United States. Today, the Internet can make it difficult to determine where jurisdictions begin and end.
14-5 If you had been the U.S. judge in this case, would you have ruled similarly? Explain.
14-6 What factors most influenced your decision?
14-7 Do you know of any Internet controls that companies or governments can use to stop such cases from occurring in the future?
A: There are a number of ways to view this dilemma. From the U.S. perspective, French law does not have jurisdiction over the operations of U.S. firms within their own country. Although with the Internet it does become a challenge at times to determine the exact area of operations of a Web site. Thus, from the French perspective it could be argued that because French citizens can access Yahoo.com (as opposed to Yahoo.fr in France), their laws apply. The Yahoo! managerial perspective must be considered as well. Is this negative publicity worth the marginal income for Yahoo!? Finally, the individuals who accessed the Nazi Web sites as well as the creators of these sites and sellers of memorabilia should be factored in to a final decision.
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Teaming Up |
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Products often service different needs, appeal to different buyers, or are perceived differently in different markets. Consider a good or service that is sold in your country and another using different marketing strategies in each. One of the countries must be the countries home market.
14-8 In the home market, was the product’s initial introduction a new innovation or an extension of an existing product?
14-9 From the product’s home market, which one of the five product and promotion methods was used in the other market?
14-10 What factors likely explain why the company selected that particular method?
A: Students might need to do some further research into the company’s business activities before answering this question fully.
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Practicing International Management Case |
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Psychology of Global Marketing
14-13 Q: If you were Stephan Loerke, of the World Federation of Advertisers, how would you argue for the EU to enact more strict advertising laws?
A: Students should recognize the highly political debate that will arise within the EU. Some may feel that it is foolish to enact new laws if they cannot be enforced. Sweden cannot currently control the broadcasts of other nations that are accessed by satellite. If members of the EU could agree on “voluntary” limits just the way that members agreed to institute the euro or accept certain standards for products, then the problem could be controlled. However, agreement on advertising in the EU would be difficult.
14-14 Q: Do you personally agree with the case you made above?
A: Students responses will vary based on their own personal value system.
14-15 Q: Thinking of a specific product sold in industrialized nations, do you think it could create more than it satisfies needs if it were marketed in a developing country?
A: Ads can indeed create wants. The cell phone is a good example. Before cell phones were available, the landline telephone sufficed. In developing countries, there are fewer telephones per person, but telephone access was generally possible. Now, it seems that every young person around the world wants a cell phone with all the bells and whistles and personalized, designer outer shells. The ethical issue is whether companies are creating wants in some countries that should instead be focusing on the more basic needs of young people, such as education and health.
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