Global marketing

1. Outline the environment for international business. What dimensions

need to be considered by organizations that operate internationally?

 Cultural Differences: Understanding local customs, values, and behaviors is

crucial for effective communication and relationship building.
 Economic Factors: Analyzing economic conditions, exchange rates, and market
trends to make informed decisions.
 Political and Legal Framework: Complying with local regulations, trade policies,
and political stability is essential.
 Global Competition: Competing with local and international rivals necessitates a
strong competitive strategy.
 Technological Trends: Adapting to technological advancements and ensuring
cybersecurity in a global context.

2. Suppose export customers of a consumer product are highly sensitive to

price. However, the firm is experiencing substantial price escalation in
the market. What factors may be causing this situation? What can
management do to reduce the harmful impact of international price
escalation?
International Price Escalation: Price escalation in international markets can be
attributed to various factors, including currency fluctuations, increased
production costs, import duties, and transportation costs. These factors can
significantly impact the cost of goods or services and pose challenges for
organizations operating internationally.

To reduce the harmful impact of price escalation,

1. Negotiate with Suppliers: Talk to your suppliers to get better prices or deals.
2. Make Operations More Efficient: Find ways to do things more efficiently to save
money.
3. Buy in Bulk: Buy more at once to get lower prices.
4. Protect Against Currency Changes: Use tools to protect against money value changes.
5. Help from the Government: Sometimes, governments can help with money problems.
6. Adjust Prices Carefully: Be careful when changing prices, so customers don't go away.
 3. What are the most important factors to consider when formulating
international pricing strategies? What steps would you follow in arriving
at international prices?

When pricing products for international markets, consider key

factors and a clear process. Begin by looking at production costs,
market demand, competition, currency changes, and local rules.

follow these steps: Calculate all production and distribution

expenses, research market rates, understand what customers want,
study competitors prices, be aware of local laws and taxes, adjust
prices for each market, and keep testing for improving our pricing
strategies to attract customers and ensure profits

4.How does a positioning strategy help an organization differentiate itself

from competitors?
Positioning Strategy's Role in Differentiation:
A positioning strategy helps a company figure out what makes its products
or services special. It could be better quality, lower prices, unique features,
or a strong brand. This differentiation is the key to success and long-term
growth. When customers feel that a company offers something they can't
find elsewhere, they become loyal. They keep coming back for more.
International trade theories

1. Describe the classic theories of international trade. Which theories do you

believe are relevant today?

Both classic trade theories are still important today. Comparative

Advantage shows how countries can specialize in what they're good
at and trade with others to benefit everyone. It's like teamwork on a
global scale. Absolute Advantage tells us that a country should focus
on what it does best to compete internationally. These theories help
us understand why countries trade and how they can do it effectively
in today's interconnected world.

2. What are the main sources of national competitive advantage? Think about a
successful product in your country; what are the sources of competitive
advantage that explain its success?

National competitive advantage comes from factors like skilled

workers, demand, supportive industries, government policies, and
competition. For instance, in my country, our electric bikes success is
due to skilled engineers, a strong motor industry, government green
incentives, high local demand, and intense competition that drives
innovation. These factors create a competitive edge for our electric
bike.
 3. Do you believe your country should adopt a national industrial policy? Why
or why not?

National Industrial Policy: Whether a country should adopt a

national industrial policy depends on its circumstances. Such policies
can promote strategic industries, innovation, and job creation.
However, they also carry risks like market distortions and
inefficiencies. The decision should consider a nation's specific
challenges, balancing the potential benefits with the need for careful
planning and implementation.

4. Why and How Firms Internationalize

To seek new markets. Many firms find that they can achieve greater growth by
expanding into new markets.

To reduce risk. By diversifying their operations into multiple countries, firms can
reduce their risk exposure.

To learn from other markets. By operating in different countries, firms can learn
about new markets, cultures, and technologies.

Exporting. This involves selling products or services to customers in other

countries.

Importing. This involves buying products or services from suppliers in other

countries.

Joint ventures. This involves forming a partnership with a company in another

country.
 Government intervention

1. Explain tariffs, nontariff trade barriers, investment barriers, and government

subsidies. What are their main characteristics? How do they differ?
Tariffs, Nontariff Trade Barriers, Investment Barriers, and Government Subsidies:
 Tariffs: Tariffs are taxes that are imposed on imported goods. They can be used
to protect domestic industries from foreign competition

 Nontariff Trade Barriers: Nontariff trade barriers are any measure other than a
tariff that restricts trade. They can include quotas, technical barriers to trade
measures.
 Investment Barriers: Investment barriers are measures that restrict the flow of
foreign investment into a country.

 Government Subsidies: Government subsidies are payments made by the

government to businesses.

Main Characteristics: The main characteristics of tariffs are that they are taxes on
imported goods, and they are imposed by the government.

2. In what ways do government subsidies amount to protectionism?

Government Subsidies as Protectionism:

 Subsidies can protect domestic producers from foreign competition. This is

because subsidies lower the costs of production for domestic producers, making them
more competitive with foreign producers.
 Subsidies can distort the market. This is because subsidies can artificially lower
prices or increase production, which can lead to inefficient allocation of resources and
higher prices for consumers.
 Subsidies can harm consumers. This is because subsidies can raise prices and
reduce the quality of goods and services, make it more difficult for businesses to
compete, which can lead to lower quality products and services.
 3. How are tariff payments physically assessed and collected by a country?

1. Customs Declaration: Importers provide a customs declaration detailing the imported

products' nature, quantity, and value.
2. Customs Inspection: Customs officials inspect the products to verify the information
provided and assess the correct tariff rate.
3. Tariff Calculation: Based on the products' classification and value, the customs
authority calculates the applicable tariff amount.
4. Payment: Importers pay the assessed tariff amount to the customs authority, often
electronically.
5. Release of product: Once payment is confirmed, customs releases the products for
entry into the country's market.

4. Describe various company strategies to manage government intervention.

 Lobbying: Companies can lobby the government to change or remove regulations that
are harmful to their business.
 Public relations: Companies can use public relations to build support for their position
and to counter negative government regulations.
 Legal challenges: Companies can challenge government regulations in court.
 Compliance: Companies can comply with government regulations, even if they
disagree with them.
 Exit: Companies can exit the market if government regulations make it too difficult to
operate.

The best strategy for a company will depend on the specific circumstances. However,
all companies should be aware of the potential impact of government intervention and
should develop strategies to manage it.
 5. What are the roles of FDI, licensing, and joint ventures in reducing the
impact of import tariffs?
Roles of FDI, Licensing, and Joint Ventures in Reducing Import Tariffs:

 FDI (Foreign Direct Investment) can help to reduce the impact of import tariffs by
allowing the company to produce goods and services in the target country, rather than
importing them.
 Licensing can help to reduce the impact of import tariffs by allowing the company to
sell its products or services in the target country without having to physically import
them.
 Joint ventures can help to reduce the impact of import tariffs by allowing the
companies to share resources and expertise, and to pool their financial resources.

6. Why are countries likely to go beyond a free trade agreement?

 Increase trade and investment: FTAs can reduce or eliminate tariffs and other barriers
to trade, which can lead to increased trade and investment between the countries
involved.
 Promote economic growth: Increased trade and investment can lead to economic
growth in the countries involved.
 Create jobs: FTAs can create jobs in the countries involved.
 Improve standards of living: Increased trade and investment can lead to improved
standards of living in the countries involved.
 Protect the environment: Some FTAs include provisions to protect the environment.
 Promote human rights: Some FTAs include provisions to promote human rights.