MKT421: International Marketing, Spring 2010Slides for the First Exam (Ch. 1–5 + 8)

Please note: These are selected slides and

are not sufficient by themselves to prepare for the exam. Please read the book and class notes in addition to these slides to be adequately prepared for the exam.

I. Khera

Chapter 1

The Global Marketing Imperative

The World – 1.• About 220 countries in all; out of which:

• About 30 countries are classified as Developed Countries – Also called OECD (Organization for Economic Cooperation and Development) countries. Include U.S., Canada, Mexico, most of Europe, Japan, Australia, New Zealand, Singapore, Turkey, etc.

• Another 30 are Upper Middle/Middle Income Countries: Korea, Taiwan, Malaysia, Mexico, South Africa, Brazil, Israel, Chile, several Eastern/Southern European countries, Mexico, Turkey, Russia, etc.

• Another 15 or so are Major Oil Exporters : 11 OPEC members like Saudi Arabia, Kuwait, Iran, Iraq, Indonesia, Nigeria, Venezuela, etc. Plus non-members like Mexico, Russia, U.K., and Norway.

• K

The World – 2.• Developing Countries: Most Asian and African

countries (A majority of the world’s countries belong here).

• Rapidly Developing Very Large Countries: China, India, Brazil, Russia (BRICs)

• Poor Countries: Countries stagnant at very low levels of development, e.g., Burma, Bangladesh, Afghanistan, Haiti, Nepal, most sub-Saharan African countries.

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The World – 3.

• Big Emerging Markets (BEMs): In the next 10-20 years, BEMs such as the Chinese Economic Area (CEA: China + HK+ Taiwan), India, South Korea, Mexico, Brazil, Argentina, South Africa, Poland, Turkey, Russia, and the Association of Southeast Asian Nations (ASEAN: including Indonesia, Brunei,

Malaysia, Thailand, the Philippines, and Vietnam) will provide major/dominant opportunities in global business.

World’s Largest Countries(by population)

World 6.72 billion people1. China 1.3billion2. India 1.1b3. U.S. 305million4. Indonesia 232m5. Brazil 188m6. Pakistan 164m7. Bangladesh 159m8. Nigeria 148m9. Russia 142m10. Japan 128

What is International Marketing? • Activity, institutions, and processes across

national borders that create, communicate, deliver, and exchange offerings that have value for stakeholders and society.

Global Marketing Imperative

• Saturation of domestic markets: especially, First World markets.

• Global competition intensifying.• Need for global cooperation (global competition brings

global cooperation).

• Internet: the Internet and electronic commerce (e-commerce) revolution

• Expanding market opportunities.

Advantages of International Trade for Consumers.

- More quantity

– Better quality– Greater variety within product categories– More customized products/Services– Lower prices– Choice of products not available without

international trade

Advantages of International Trade for Firms.• More trade: World trade in merchandise: from $6.2 trillion in 2000

to over $15.1 trillion in 2008; Services: from $1.5 trillion to $3.3 trillion.

• Access to:– Bigger markets– Foreign resources– Talent– New management knowledge– New technologies

Experience with selling to diverse marketsChance to deal with different forms of governmentsChance to work in different competitive environmentsEnhanced ability to compete in home market

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Arguments Against Free Trade.

• Infant industry argument• Strategic industry argument• Protection of world species (CITES: Convention on

International Trade in Endangered Species)

• Protection of local species, crops, etc.• Domestic environment & culture protection• Domestic politics, jobs etc.• Health & safety of domestic residentsIK

Evolution of Global Marketing.

Five stages in the evolution of global marketing1. Domestic Marketing 2. Export Marketing 3. International Marketing (markets in many countries;

polycentric orientation). 4. Multinational Marketing (many markets; consolidation

on regional basis).5. Global Marketing (global perspective; global products

with local variations - Standardized efforts, Coordination across markets, Global integration).

Global Linkages

• World trade → global reorientation of corporate processes, which opens up entirely new horizons.

• The level of global investment leads to: – buildup of international debt by governments.– Affect on the international value of currencies.– Provision of foreign capital for firms. – Influx of major foreign direct-investment activities

Comparative/Absolute Advantage Theory.

Comparative advantage: the ability of a firm, country or region to produce a particular good or service at a lower opportunity cost than another party, i.e. produce it most efficiently given all the other products that could be produced.

Absolute advantage refers to the ability of a party to produce a particular good at a lower absolute cost than another.

Comparative advantage explains how trade can create value for both parties even when one can produce all goods with fewer resources than the other. The net benefits of such an outcome are called gains from trade. It is the main concept of the pure theory of international trade.

Comparative Advantage Example

U.S. vs. ChinaBoth have 1,000 labor hour (lh) resourcesUS: 1lh corn, 5lh microwaveChina: 5lh corn, 2lh microwaveBoth countries split their resources to produce both items.Without Trade:- U.S. – 500 corn + 100 microwave- China – 100 corn + 250 microwaveTotal = 600 corn + 350 microwaveWith trade:- U.S. – 1,000 corn, China – 500 microwaveTotal = 1,000 corn + 500 microwave ovens

Sources of Comparative Advantage (Resource Endowment).

(A) Natural Resources (climate, size, location, topography, flora &

Fauna, minerals, etc.).

(B) Man-made Resources (technology, infrastructure, Education &

Training, etc.)

(C) Human Resources (number, age distribution, health, size, etc.)

(D) Managerial Know-how

(E) Traditions IK

Product Lifecycle Theory – 2.

Chapter 2Trade Institutions and

Trade Policy

More Recent History

• The Smoot-Hawley Act (1930) raised import duties on 20,000 products to reduce the volume of imports into the United States to help restore domestic employment → in raising of duties and imposition of imports barriers by other nations → worldwide depression and the collapse of the world financial system.

More Recent History

• Post WW II:– The Eastern bloc led by the Soviet Union: Emphasis on

centrally planned economies and heavy industry– Western world led by the United States: Pax Americana

fostered international trade as a key to worldwide prosperity. Emphasis on market economies and balanced consumer/industrial goods sectors

Transnational Institutions Affecting World Trade

GATT (General Agreement on Tariffs and Trade): A set of rules for non discrimination, transparent procedures and settlement of disputes in international trade. Adopted by 23 countries in1947:

Purpose: provide an international forum to encourage free trade among member states

Means: 1. regulation and reduction of tariffs on traded goods, 2. a common mechanism for resolving trade disputes

Name changed to World Trade Organization (WTO) on January 1, 1995 (by Uruguay Round)

Transnational Institutions Affecting World Trade

WTO currently has 153 member countries. Functions:

• Administer WTO trade agreements • Forum for trade negotiations• Handle trade disputes (empowered to enforce rulings)• Monitor national trade policies (countries found in violation of WTO rules are expected to change policies or else face sanctions)

• Also responsible for General Agreement on Trade in Services (GATS), Trade related aspects of intellectual property rights (TRIPS), and Trade related investment measures (TRIMS).

• Its 9th round of negotiations (Doha Round) was launched in 2001 in Doha, Qatar. It facilitated the way for China and Taiwan to get full membership in the WTO.

• As of now, the Doha Round is completely stalled because of unresolved subsidy issues

Transnational Institutions Affecting World Trade

• International Monetary Fund (IMF)– Established in 1944.– Designed to provide stability for the international

monetary framework.– Provided for fixed exchange rates between

countries.

World Banking Group, 1944Five major components:

- International Bank for Reconstruction and Development (IBRD) - International Development Association (IDA) - International Finance Corporation (IFC) - Multilateral Investment Guarantee Agency (MIGA) - International Center for Settlement of Investment Disputes (ICSID)

World Bank: Current areas of focus

- Sustainable growth and development.- Clean technologies.- Agricultural assistance for combating inflation in food.- Liberalization of world trade.- Greater participation of rising economic powers and

developing nations in the bank’s governance.- Reconstruction of war-torn countries.- Assists fledging economies to participate in modern

economic trade.- Resolving debt problems of developing nations.

Trade Positions

• International trade positions have changed substantially when measured in terms of world market share.

• The U. S share of total world export has declined precipitously since 1950s.

• Another important development is the rise of China, India and Brazil’s trade positions.

• The impact of international trade and marketing on individuals is highlighted when trade is scrutinized from a per-capita perspective.

Trade Positions (contd.)

• Factors behind the decline in U.S. international competitiveness:– Attitude of the US policy makers - Ignoring domestic firms

in an attempt to boost the development of foreign economies (OK during Marshall Plan but disastrous when facing strong foreign competitors)

– Perception amongst US manufacturers about international marketing being risky and complicated.

– Lack of global interest (Technological arrogance, NIH syndrome, etc).

– Unfamiliarity with international market conditions.– Complicated trade regulations.

The Impact of Trade and Investment• The effect of international investment

– Almost one in seven U.S. manufacturing employees works for a foreign affiliate.

– To some extent, foreign direct investments substitute for trade activities.

– Even though theory suggests open investment policy, some uneasiness exists about the rapid growth of such investment.

• Restrictions on investment may– Permit more domestic control over industries.– Deny access to foreign capital and often innovation.– Tightening up credit markets → higher interest rates, and a

decrease in willingness to adapt to changing world market conditions

Import-related Policy Responses• Mainly ad hoc political reactions (over time) → (change to)

protectionism (protectionism OK as a bargaining tool but not when passed into laws).

• Voluntary import restrictions - aid domestic industries to reorganize, restructure, and recapture their trade prominence of years past.

• Export restrictions – to keep scarce or critical resources from overseer competitors or to encourage inward FDI, e.g. rare earths in China

• Non-tariff barriers - Providing preferential treatment to domestic bidders, using national standards, placing emphasis on design rather than performance, and preventing the market entry of foreign products.

Chapter 3

The Cultural Environment

Culture Defined

• Culture - An integrated system of learned behavior patterns that are distinguishing characteristics of the members of any given society.

• It encompasses a wide variety of elements, from materialistic to the spiritual.

• Enculturation – Absorbing one’s own culture Acculturation - Adjusting and adapting to a specific culture other than one’s own.

• Adjusting to cultures is one of the keys to success in international operations.

Elements of Culture• Language• Religion• Values & Attitudes• Manners & Customs• Aesthetics• Education• Social Institutions• Material Elements• Etc.• Cultural universals - Manifestations of the total way of life that are

common to all cultures (elements such as body adornments, courtship, etiquette, family, gestures, humor, mealtimes, music, personal names, status differentiation, trade etc.)

Elements of Culture

Language• Written/Spoken/Body Language• Formal/Informal• Forms of Address• Direct/Contextual (high vs. low context)• Hierarchy• Diversity• Etc.

Elements of Culture• Religion provides the basis for transcultural

similarities under shared beliefs and behavior.

• The major religions include:

– Christianity - Lays stress on frugality and accumulation of wealth from hard work; consists of two significant groups Catholicism and Protestantism.

– Islam - Plays a pervasive role in the life of its followers; it supports entrepreneurship and discourages exploitation.

Elements of Culture• The major religions

– Hinduism - Family is an important element in Hindu society; the extended family structure has an impact on the purchasing power and consumption of Hindu families.

– Buddhism - Views life as an existence of suffering; emphasizes on spiritual achievement rather than worldly goods.

– Confucianism - Characterized by a code of conduct; stresses on loyalty and relationships.

– Shinto – Nature-centric, polytheistic religion of Japan (tradition & family, love of nature, cleanliness)

Elements of Culture

• Values and attitudes– Values: shared beliefs or group norms that have

been internalized by individuals.– Attitudes: evaluations of alternatives based on

values (attitudes towards change is positive in industrialized countries, but change is viewed with suspicion in tradition bound societies).

Values represent powerful market opportunities.

Elements of Culture • Manners and customs

– Concept of Time:• Linear vs. cyclical• Times of activities during the day• Appointments, meetings• Industrial discipline

– Negotiating Styles: (Potential problem areas): insufficient…

• understanding of different ways of thinking.• attention to the necessity of saving face.• recognition of the differences in decision-making

process and the role of personal relations.• allocation of time for negotiations.

Elements of Culture

Aesthetics: a culture’s concept of good taste,

as expressed in the arts and in the particular

symbolism of colors, form, music, etc.

Color is often used as a mechanism for brand

identification, feature reinforcement, and

differentiation.

Elements of Culture

Education:

• Levels of Participation

• Literacy

• Vocational

• Administrative

• Technical, Professional

• etc.

Elements of Culture

• Social institutions– Social organization - determines the way people relate to

one another including the roles of managers and subordinates.

– Kinship or blood relationships - family relations and family obligations.

– Tribal identity– Reference groups - Provide the values and attitudes that

become influential in shaping behavior; can be primary or secondary.

• Social stratification – Differences in the division of a particular population into classes (higher strata control most of the buying power and decision-making positions).

Elements of Culture• Material culture results from technology and is manifested in

the availability and adequacy of these basic infrastructures:– Economic - transportation, energy, irrigation, and

communications systems.– Social - housing, health, and educational systems.– Financial and marketing - facilitating agencies for the

international firm’s operation in a given market; e.g., banks and research firms.

– Technological – advancement brings about cultural convergence.

Cultural Analysis

• Hofstede’s dimensions of culture: – Individualism– Power distance– Uncertainty avoidance– Masculinity/Famininity– Long-term versus short-term orientation

Exhibit 3.8 – Culture-Based Segmentation

Cultural Analysis• Self-reference criterion – The unconscious reference to

one’s own cultural values.• Influence of one’s own cultural values can be reduced by:

– Define the problem in terms of domestic and foreign cultural traits, habits, or norms.

– Pinpoint the complicating influence of the self-reference criterion.

– Redefine the problem without the self-reference criterion.

• Ethnocentricism - Belief that one’s own culture is superior to others.– Can be mitigated only by acknowledging it and properly

adjusting to its possible effects in decision making.

The Training Challenge

The aim is to foster preparedness, sensitivity, patience, andflexibility in managers and other personnel.• Area studies - Provide factual preparation for a manager to

operate in, or work with people from, a particular country.• Cultural assimilator - Trainees must respond to scenarios of

specific situations in a particular country.• Sensitivity training - Focuses on enhancing a manager’s

flexibility in situations that are quite different from those at home.

• Field experience – Exposes managers to different cultural environments for a limited amount of time.

Making Culture Work for Marketing Success

• Embrace local culture (acculturation).

• Build relationships.

• Employ locals to gain cultural knowledge.

• Help employees understand you.

• Adapt products and processes to local markets.

• Coordinate by region.

Chapter 4The Economic Environment

Exhibit 4.1 - The Global Economy

Market Characteristics• Population

– Figures should be classified to show specific characteristics of their respective markets.

– Age distribution and life expectancy correlate heavily with the level of development of the market.

– A household includes all the persons, both related and unrelated, who occupy a housing unit.

– The degree of urbanization dictates the nature of the marketing task in terms of distribution, market potential, and buying habits.

Market Characteristics

• Income– Income-distribution: from very low to very high family

incomes with varying within-country distributions.– Per capita GDP - often used as a primary indicator for

purchasing power.– Income figures are useful in the initial screening of

markets; but in product-specific cases, income may not play a major role.

– The lack of income in a market may preclude the marketing of a standardized product but may provide an opportunity for an adjusted product.

Purchasing Power Parity

Purchasing Power Parity (PPP) of GDP for various countries (2003). The US is used as a reference (100). Bermuda has the highest index value, 154, i.e., goods sold in Bermuda are 54% more expensive than in the United States.

Market Characteristics

• Consumption patterns– Engel’s law - As a family’s income increases, the

percentage spent on food will decrease, the percentage spent on housing and household operations will be roughly constant, and the amount saved or spent on other purchases will increase.

– Product saturation or diffusion provides information on the percentage of households in a market that own a particular product.

Market Characteristics

• Infrastructure– Transportation networks by land, rail, waterway, or air

are essential for distribution.– Communication systems for marketing include

telephones, computers, broadcast media, print media, internet, and wireless technology.

– The more extensive the firm’s international involvement, the more it can rely on its already existing support network of banks, advertising agencies, and distributors to assess new markets.

Economic Integration of MarketsRemoval of Common Free Flow Harmonize CoordinateInternal External Of Capital Single Economic Political

Level of Integration Tariffs Tariffs and Labor Currency Policies Syatems

Free Trade Area

Customs Union

Common Market

Monetary Union

Economic Union

Political Union

Implications of Economic Integration for Marketing.

1. Increased growth for the region

2. Growth in income within the region → increased exports for

both member and nonmember countries

3. Trade creation and trade diversion

4. Opportunity for direct investments

5. Increased competition within the region

6. New standards of fair competition

7. Support for local industries

8. Greater market segmentation

EU Membership History.1952: Belgium, Netherlands Luxemburg, Germany, France & Italy1973: Denmark, Ireland, UK1981: Greece1986: Portugal, Spain1995: Austria, Finland, Sweden2004: Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic and Slovenia2007: Romania, Bulgaria (27 countries)

EU’s Governing Bodies.Council of European Union - Main decision-making body. One

minister from each member country.

European Parliament (Legislative body)

European Commission (Bureaucracy)

Court of Justice - Ensures that Community laws are uniformly interpreted and applied

Court of Auditors - Checks EU’s receipts and expenses and manages the budget.

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Other Agreements.North America: NAFTA: 1994. Includes two side agreements to correct

perceived abuses in labor and the environment in Mexico. Introduction of maquiladoras.

Europe: EFTA (European Free Trade Association): Iceland, Norway, Switzerland and Liechtenstein.

Africa: Several agreements. ECOWAS (Economic Community of West African States), SACU (South African Customs Union): Botswana, Lesotho, Namibia, South Africa, Swaziland.

Latin America: MERCOSUR (Southern Common Market – founded in 1991): Argentina, Brazil, Paraguay, Uruguay + 5 Associate members, Mexico is an observer. LAIA (Latin American Integration Association); CENCOM (Central American Common Market); ANCOM (Andean Common Market); CARICOM (Caribbean Community and Common Market)

Asia: ASEAN (Association of South East Asian Nations); SAARC (South Asian Association for Regional Cooperation)

Strategies for Regional MarketsEurope: Fill gaps in product/market portfolios; Create

alliances with strong European firms; Rationalize European organization, production, distribution; Hire senior-level European talent; Establish region-wide government relations …

Emerging markets: Adjust entry strategy; Manage affordability; Invest in distribution; Build strong brands …

Developing Markets: Research customers; Create buying power; Tailor local solutions; Improve access; Shape aspirations …

Chapter 5

The Political and Legal Environment

International Political Issues.

• Nationalism, sovereignty, imperialism, power, ideologies, national interests, political risk...

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Political/Legal Concerns of International Marketers

Home country political and legal circumstances Host country political and legal circumstances. Bilateral and multilateral agreements, treaties, and laws

governing the relations between host and home countries.

• Influence of home country government policies and the legal systems on a firm’s opportunities abroad, e.g.,– Minimum wage legislation affects the international competitiveness

of a firm using highly labor intensive production processes.

– Cost of domestic environment safety regulations may significantly affect the firm’s international pricing policies.

Consequences Of Political Actions.

• Indigenization/Domestication• Nationalization (Acceptable according to international law if it

satisfies public purpose & includes compensation)• Expropriation/Confiscation (no compensation)• Local content laws• Local hiring laws• Discriminatory taxes• Discriminatory pricing of resources• Joint-venture pressure• Import/Export controls, embargos, sanctions, etc.• Selective boycotts• Price controls• Terrorism, etc.

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Export Controls

– Designed to deny or delay the acquisition of strategically important goods by the adversaries.

– The legal bases for export controls vary across nations.

– Export of dual use items (military and civilian) is controlled by the US and the European Union.

• Help avoid the proliferation of weapons of mass destruction.

• Reduce flows of technological knowledge to control the sophistication of armaments used by insurgent groups.

• Impose financial controls which inhibit funding for terrorist training.

Exhibit 5.3 - The U.S. Export Control System

Import Controls

• Problems faced while administering import controls:– They exact a huge price from domestic consumers.– The social cost of these controls may be damaging to

the economy.– They bring about downstream change in import

composition.– They often do not to work.– Supply may respond to artificial stimulation and grow

far beyond demand.

POLITICAL-RISK INDICATORS.

ECONOMIC- GDP, Inflation, Capital flight- Foreign debt, Food output- Commodity dependence...

POLITICAL- Wars or involvement in foreign conflicts...- Relations with neighbors- Degree of authoritarianism (use of coercion to retain power)- Legitimacy of government/Mechanisms for transfer of power

- Military or political control- Politically motivated violence

SOCIETAL- Urbanization,,- Corruption, nepotism…- Social Unrest (ethnic, language, religious… fundamentalism)- Xenophobia, Extreme nationalism

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Other Political “Risks”– Shortage of foreign currency.– Difficulty dealing with exchange controls.– Prolonged negotiations with government officials.– Increase in tax rates or stricter applications of the host

country’s tax codes.– Government control on the prices of imported products

or services.– Other government controls (e.g., censorship)

Legal Environment• Home country laws• Host country laws• International law• Two major legal systems popular worldwide are:

– Common law - Based on tradition and depends less on written statutes and codes than on precedent and custom.

– Code law - Based on a comprehensive set of written statutes that spell out legal rules explicitly; based on Roman law. (Islamic Law: Based on Sharia, direct impact on dietary and financial aspects)

Host Country Legal Environment

• Antidumping laws – Prohibit below-cost sales of products.

• Laws may be designed to protect domestic industries and reduce imports.

• The enforcement of laws may have a different effect on national and foreign marketers.

International law

– No enforceable body of international law exists;– Treaties and agreements respected by a

number of countries influence international business operations.

– Firms are restricted by both home and host country laws.

International Conflict Resolution

• Conflicts with foreign commercial and government entities may be resolved by mediation, arbitration or litigation.

• Procedures should always be included in the original contract.

• Mediation should be the first/preferred alternative• Arbitration is typically more formal than mediation. • Litigation is the most expensive and time-

consuming alternative.

International Terrorism

―Terrorism is the systematic use (or threat) of violence aimed at attaining a political goal and conveying a political message.

– Terrorists direct their strikes at business more than any other target.

– Terrorism creates new opportunities for firms in a few industries like construction, security, and information technology.

International Terrorism– Direct effects: the immediate cost levied on individual

firms. Physical damage to infrastructure and disruption of public services and supply of inputs, resources and services.

– Indirect effects: decline in per capita income, purchasing activity, and stock market values. Deterioration of international relations. Onerous counter terrorism regulations.

– Chill effect: Uncertainty about the state of a nation’s economy can sharply reduce domestic business activity as well as FDI. Curtailment of travel by foreign executives, etc.

Ethical Issues

• The ethical obligations faced by multinational enterprises include:– Corporate governance and responsibility– Intellectual property rights– Bribery and corruption

Striking a balance

Intellectual Property Rights: • Many countries propose a balance between IP

protection and availability of essential information in various areas of public policy such as– Health (access to affordable medicines)– Biotechnology (use of genetic research tools)– Education (access to scientific materials)– Food & agriculture (food security & preservation of

biodiversity)

Bribery and corruption

– The Foreign Corrupt Practices Act (FCPA): 1977: prohibits U.S. firms to bribe foreign officials for business purposes. Similar laws in Europe and other countries.

– Bribery: the process driven by “individual greed,” the amount depends on the individual official and is for the official’s own personal use.

– Functional lubrication/Enabling payments: the amount is small, it is standardized, and is passed on to others involved in the processing of documents.

Chapter 8

Research

Chapter 8

Research

Purpose of Marketing Research

• Marketing Research is used to:– Identify marketing opportunities and problems.– Generate, refine and evaluate marketing

actions.– Monitor marketing performance and improve

understanding of marketing as a process.

Types of Marketing Studies Required for Doing Business Abroad

Market: Select, enter, expand, contract, leave

Product: Add, delete, change…

Price: Price-demand relationships, profitability analysis, discounts, competitors’ prices…

Promotion: Media availability, media selection, copy design, promotional mix…

Distribution: Channels, location, policies, trade discounts…

International vs. Domestic Research

• International research involves: – New parameters like information availability,

respondent access, laws governing information gathering, survey familiarity, communication infrastructures, research suppliers, etc.

– New environment: cultures, demographics, political systems, stability, different societal structures, language, etc.

Determining Research Objectives

• Exporting - Foreign market opportunity analysis– Broad-brush approach to narrow down international

marketing activities; the two goals being country ranking and clustering.

– Cursory analysis of general market variables such as total and per capita GNP, population statistics, etc.

– Information on individual market data to identify fastest-growing markets, largest markets for a particular product, market trends, and restrictions.

– governmental restrictions.– competitive assessment.

Determining Research Objectives

• Importing• Reliability of a foreign supplier.• Consistency of its product or service quality.• Length of delivery time.• Government rules in the exporting (source)

country.• Domestic restrictions and legislation.• Risks of disruption and terrorism.

• Market expansion– Detailed information for penetrating a market.– Monitoring the political climate of a country.

Sources of Secondary Information• Firm’s Internal Records

• The Internet/Electronic Databases (e.g., CIA World Fact book)

• International Agencies (e.g., UN)

• Regional Agencies (e.g., EU, OECD)

• National Governments

• Consulting Firms/Universities

• Foreign Embassies/Trade Offices

• Trade Publications/Trade Associations

• Syndicated Services

• Multinational Banks

• etc.

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Secondary Information Caveats

– Consider the quality of the data source, with primary focus on the purpose and method of original data collection.

– Assess the quality of actual data in terms of accuracy, reliability, and recency.

– Assess the comparability and compatibility of the data.

Research Techniques• Qualitative

– Interviews (gender issues)– focus groups

• Quantitative– Surveys: Questionnaire design issues such as

willingness to respond, societal constraints, ambiguous words and questions, language or data equivalence, translation/retranslation, etc.

• Observational

International Sampling• Can be difficult due to a lack of organized or current sources or

lists etc.

– Local survey organizations in some countries have devised reasonably reliable sampling techniques

– In the Web 1.0 online research model, surveys can be administered either through e-mail or via a website.

– Another trend in the Web 1.0 world is the use of social networks to access particular consumer groups.

– In the Web 2.0 model, users generate the content of the data collected.

– The limitations of Web 2.0 market research efforts are reliability, sampling, and the methodology.

The International Information System• Serves as a mechanism to coordinate the flow of

information to corporate managers for decision-making purposes.

• The system should have the following attributes:– Relevant– Timely– Flexible– Accurate– Exhaustive– Convenient

Environmental scanning• Information on:

• Political, social, and economic affairs internationally; • Changes of attitudes held by public institutions and

private citizens; • Possible upcoming alterations in international

markets.• Performed by

• Obtaining factual input regarding relevant variables. • Content analysis of communication in a society and

monitoring social, economic, cultural, and technological environment, pinpoint upcoming changes and new opportunities.

• Conducted within and/or outside the corporation.

Chapter 9

Market Entry and Expansion

Chapter 9

Market Entry and Expansion