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Tutorial 1
Tutorial 1
Tutorial 1
What is internationalization and what is the difference between standardized products and adapted
products?
Internalization occurs when a transaction is handled by an entity itself rather than routing it out to
someone else. This process may apply to business and investment transactions, or to the corporate
world. In business, internalization is a transaction conducted within a corporation rather than in the
open market. Internalization can occur when an individual, business, or firm decides to handle an
issue in-house instead of outsourcing it to a third-party.
Product standardisation (also called globalisation) involves making one global product in the belief
the same product can be sold across markets without significant modification. This concept has
become more meaningful because of the growing trend by multinational corporations to outsource
components in order to gain economies of scale. By having standardized components, economies of
scale are achieved by the firm while products are adapted to offer a wide range of models in
accordance to the needs of various country segments. The strategy of product standardization requires
a particular industry or organization to follow certain guidelines in order to maintain the consistency
of a product’s nature, appearance, and quality. The major constraints on product standardization
include the consumer preferences and the governmental and trade restrictions. It lowers the available
variety of products that serve a similar purpose. Examples of standardized products include
agricultural products (such as grain and milk), most mined minerals, and fish. A buyer of wheat
cannot tell who produced the bushels of wheat. Furthermore, the buyer does not care because the
grains are identical
Product adaptation means that the firm adapts the product to the local markets. It is the process of
modifying products for different countries and regions or designing new products for foreign
markets. Marketing strategies in a country- by-country basis are tailored with the peculiarities of the
local market. By this, product adaptations are considered as necessary strategy in order to cater to the
different needs of customers in various countries. It is vital for companies that export their goods to
foreign nations as it enables them to meet the foreign laws and regulations. There are several product
adaption strategies that an entity can use such as product, target market, package and design.
For example, in China, the spiciness varies from region to region. Their menu changed also; for
example, in Shanghai, KFC serves porridge for breakfast and Peking Duck burgers for lunch.
Companies get to evaluate and enter markets worldwide based on individual potential and worldwide
strategy. They get to procure capital and invest funds on a worldwide basis according to costs and
opportunities.It is easier for the companies to purchase raw materials, components, equipment, and
supplies from sources worldwide. Companies get to have staff organizations with best qualified
managers and employees without regard to national origin.
As an example, McDonald’s adapted ‘think global act local’ which proves to be successful in several
parts of the world. The internationalization strategy of McDonald’s is based on the understanding of
cultural differences. McDonald’s follow the standard menu in different cultures but adapt it according
to the local tastes. Anywhere the company operates, it offers identical food products such as
McFlurry, McNuggets, McChicken, Happy Meal or Filet-O-Fish. However, to cater the preferences of
consumers in Japan, the company introduced Green Tea ice cream, Rice Burger, Seaweed Shaker and
Teriyaki Burger.
3. Give two or more examples of how external factors (PEST) in the international environment
make export marketing more complex than domestic marketing.
Political factors (adhering to foreign customary rules-billboard sign in Malaysia, language must
be in malay first before English, English word must be small ) ex: parliament enact the laws and
rules
Social factors (understanding social norms in accepting products or advertisement)
When do assignment, not use marketing PEST use export PEST
Strategic decisions such as which countries to target, the products market, target segments, methods of
operation and timing.
Exporting is defined as the sale of products and services in foreign countries that are sourced or made
in the home country. Any good or commodity, transported from one country to another country in a
legitimate fashion, typically for use in trade. Export goods or services are provided to foreign
consumers by domestic producers. The buyer of such goods and services is referred to an “importer”
who is based in the country of import, whereas the overseas-based seller is referred to as an “exporter.
” Thus, an import is any good (e.g., a commodity) or service brought in from one country to another
country in a legitimate fashion, typically for use in trade. It is a good that is brought in from another
country for sale. Import goods or services are provided to domestic consumers by foreign producers.
An import in the receiving country is an export to the sending country. Importing is also known as
global sourcing. Import can lead to export. For example, importing of machinery mad lead to
exporting of products. Another example is Boeing and Mitsubushi. 90% of Boeings aircraft
component parts are made by Mitsubushi. Mitsubishi would first import raw materials, make the
aircraft’s component by parts and sell it to Boeing. Boeing will then assembly those parts to make an
aircraft and sell those aircraft back to Japan.