Business Finance
MKTG 3375 Saint International Marketing Articles Executive summary


Question Description

Current events play an important role in this course. Therefore, you are encouraged to regularly read articles related to international marketing in newspapers and (business) magazines, such as The Wall Street Journal, The Globe and Mail, The Economist, Business Week, Canadian Business, Fortune, Forbes, and even in publications like Time and Maclean’s.

To structure this effort during the semester, you are required to complete a portfolio of executive summary briefs of newspaper/magazine articles. This activity involves reading one article per week (from Jan 22nd to Feb 22nd - 4 weeks, not including Winter Break week) that is relevant to one of the topics in the course and completing a short write-up (typed, maximum 1 page, single-spaced) of that article. A summary brief report template will be handed out in class. A copy of the newspaper/magazine article should be stapled to each brief. A complete citation and the source and date of the article should appear at the top of the summary. For each weekly summary brief, the article summarized must have been published within 2 weeks of the summary date.

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MKTG 3375 INTERNATIONAL MARKETING RESEARCH Marketing Research The American Marketing Association defines market research as: • The function that links the consumer, customer, and public to the marketer through information 2 Marketing Research Marketing research is used to: • Identify marketing opportunities and problems • Generate, refine and evaluate marketing actions • Monitor marketing performance • Improve understanding of marketing as a process 3 International versus Domestic Research Four primary differences: • New parameters • New environment • Number of factors involved increases • Broader definition of competition 4 Recognizing the Need for Research Firms are reluctant to engage in international marketing research activities due to: • Lack of sensitivity to consumer differences • Limited appreciation for the different marketing environments • Lack of familiarity with data sources • International activity may be gradual 5 Formal Marketing Research Process 1. 2. 3. 4. 5. 6. 7. 8. 9. Firm objective Information requirement Problem definition Choose unit of analysis Examine data availability Assess value of research Research design Data Analysis Interpretation and presentation 6 Step 2: Information Requirement 7 Step 5: Examine Data Availability Secondary Data - Data from sources that already exist. They have not been gathered for the specific research project. • Pros: Minimal effort and cost • Possible problems: • accuracy • availability • timeliness • comparability of data 8 Secondary data for international marketing research can be procured from: • Governments • US Census Bureau • StatsCan • Eurostat • Canadian Trade Commissioner Service • CIA World Factbook • International organizations • UN Statistical Yearbook • World Bank World Atlas • Service organizations • • Trade associations • Directories and newsletters • Other firms 9 Step 6: Assess Value of Research • If secondary data are not available, managers may conduct further studies • Assess the cost of research vs. what the information is worth • Would the company enter the market without spending big money on research? • Small markets may merit only modest research expense 10 Step 7: Research Design • Primary Data • when secondary data not available • provides accurate data which give exact answers to a given research problem • Possible problems • difficulties in gaining the data • cost • more time is necessary to gather the data 11 Common Research Methodologies • Survey Research: Qualitative or Quantitative • Make use of back-translation technique to insure accuracy • Consumer Panel: Respondents behavior tracked over time; Nielsen Media tracks television audience measurement (TAM) • Observation: Trained observers or a mechanical device (video camera) watch & record actual or potential consumers • Focus Groups: Moderator leads 6-10 person discussion 12 Step 9: Interpretation & Presentation • The report should clearly link to the problem or opportunity indentified in Steps 1-3 • Use language with which managers are comfortable • Simplify complex quantitative analysis 13 In Class Activity Using some of the secondary data sources that we discussed today (and any other sources that you feel are credible), find the following information as it relates to the country chosen for your project: • Recent population data • Top 3 trading partners (for imports and exports) • Purchase power parity gross national income • Literacy rate • Telephones per capita • Life expectancy • Primary industries • List of top 20 foreign companies doing business in the country. How many are American companies? ➢Be sure to provide the source for each piece of data 14 MKTG 3375 POLITICAL & LEGAL ENVIRONMENT Political/Legal Environment When considering the legal/political environment, you need to consider 3 areas: • The political and legal circumstances of the home country • The political and legal circumstances of the host country • The bilateral and multilateral agreements between countries 2 Sovereignty Sovereignty: Supreme and independent political authority ➢Some believe that global market integration is eroding national economic sovereignty 3 Political Risk • Risk of change in political environment or in government policy that would adversely affect a company’s ability to operate effectively and profitably. • When perceived political risk is high, a country will have a difficult time attracting foreign direct investment. • Major types (categories) of political risk • Ownership risk • Operating risk • Transfer risk 4 Political Risk Examples of activities that lead to political risk include: ✓War ✓Social unrest ✓Politically motivated violence ✓International disputes ✓Change in gov’t/pro-business orientation ✓Social conditions ✓Corruption, nepotism ✓Crime ✓Labor costs ✓Tax discrimination ✓Exchange controls, tariff barriers ✓Dependence on a major hostile power ✓Repatriation restrictions 5 Seizure of Assets Government policies that contribute to political risk include actions to seize company assets: • Expropriation • Nationalization • Nationalization is acceptable (according to international law) if: • it satisfies public purpose • it includes compensation • Confiscation 6 Seizure of Assets Domestication and Creeping expropriation – limits economic activities of foreign firms • May include: ✓Limits on repatriation of profits/royalties ✓Increased local content laws ✓Quotas for hiring local nationals ✓Price controls ✓Discriminatory tariff and nontariff barriers ✓Discriminatory laws on patents and trademarks 7 Taxes • Government taxation policies ➢High taxation can lead to black market growth and cross-border shopping • Corporate taxation ➢Companies attempt to limit tax liability by shifting location of income 8 International Relationships International law - the rules and principles that nation-states consider binding among themselves. Things to keep in mind: • 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 homeand host-country laws 9 Common, Civil, and Islamic Law •Common Law • Disputes are decided by reliance on the authority of past judicial decisions • Civil Law (Code law) • Legal system reflects the structural concepts and principles of the Roman Empire • Islamic Law • Legal system in many Middle Eastern countries 10 Understanding Legal Issues • Prevent conflicts ✓Establish jurisdiction ✓Protect intellectual property (via patents, trademarks, and copyrights) ✓Protect licenses and trade secrets ✓Advertising & promotion ✓Avoid bribery and corruption 11 Bribery and Corruption • US Foreign Corrupt Practices Act (FCPA) • Requires internal accounting controls recording all transactions • Makes it a crime for a U.S. corporation to bribe an official of a foreign gov’t • Prohibits payments to third parties • Corruption of Foreign Public Officials Act (CFPOA) – Canadian equivalent of FCPA • US Omnibus Trade and Competitiveness Act • Allows for facilitation “grease” payments to cut through red tape • There is no allowance for facilitation payments in Canada 12 2014 Corruption Rankings 13 Antitrust Antitrust Laws are designed to combat restrictive business practices and to encourage competition ➢Enforced by FTC in the U.S., Fair Trade Commission in Japan, European Commission in the EU, Competition Bureau in Canada • Sherman Act of 1890 • Applies to U.S. companies outside U.S. borders and to foreign companies operating in the U.S. • Competition Act (Canada) 14 MKTG 3375 ECONOMIC ENVIRONMENT The World Economy —An Overview • In the early 20th century economic integration was at 10%; today it is 50% • EU and NAFTA are very integrated • Global competitors have displaced or absorbed local ones 2 The World Economy—An Overview The new realities: • Capital movements have replaced trade as the driving force of the world economy • Production has become uncoupled from employment • The world economy, not individual countries, is the dominating factor • The struggle between capitalism and socialism began in 1917 is over • E-Commerce diminishes the importance of national barriers and forces companies to re-evaluate business models 3 Characteristics of Economic Systems Stage of market development Type of Government Trade and capital flows Control of transportation, communications & energy sectors • Services provided by the state or state funded • Institutions • Markets • • • • Video: Crash Course - Economic Systems 4 Economic Systems Resource Allocation Market Private Resource Ownership State Command Market Capitalism Centrally Planned Capitalism Market Socialism Centrally Planned Socialism Globalization has made it harder to pigeonhole economies within the four-cell matrix 5 Economic Freedom • Rankings of economic freedom among countries • “free” “mostly free” “mostly unfree” “repressed” • Variables considered include such things as: • Trade policy • Taxation policy • Capital flows and foreign investment • Banking policy • Wage and price controls • Property rights • Black market 6 Economic Freedom — 2015 Rankings Free 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Hong Kong Singapore New Zealand Australia Switzerland Canada Chile Estonia Ireland Mauritius Denmark United States Repressed 169. 170. 171. 172. 173. 174. 175. 176. 177. 178. Argentina Republic of Congo Iran Turkmenistan Equatorial Guinea Eritrea Zimbabwe Venezuela Cuba North Korea Not ranked: Afghanistan, Iraq, Kosovo, Libya, Liechtenstein, Somalia, Sudan, Syria 7 Stages of Market Development • The World Bank has defined four categories of development using Gross National Income (GNI) as a base • Today, the focus is on BRICS emerging markets: Brazil, Russia, India, China and South Africa 8 World Economic Pyramid 9 (1) Low-Income Countries (or subsistence economies) • GNI per capita of $1,045 or less • Characteristics – Limited industrialization – High percentage of population in farming – High birth rates – Low literacy rates – Heavy reliance on foreign aid – Political instability and unrest – Concentrated in Sub-Saharan Africa 10 (2) Lower-Middle-Income Countries • GNI per capita: $1,046 to $4,125 • Characteristics – Rapidly expanding consumer markets – Cheap motivated labor – Mature, standardized, labor-intensive industries like footwear, textiles and toys • India is the only BRIC nation in this category 11 (3) Upper-Middle-Income Countries (or industrializing economies) GNI per capita: $4,126 to $12,745 Characteristics: •Rapidly industrializing, less agricultural employment •Increasing urbanization •Rising wages (but lower wage costs than in advanced countries •High literacy rates and advanced education •BRICS: Brazil, China, South Africa fall in this group 12 Mistaken Assumptions about Least Developed Countries (LDCs) 1. 2. 3. 4. 5. The poor have no money. The poor will not “waste” money on nonessential goods. Entering developing markets is fruitless because goods there are too cheap to make a profit. People in BOP (bottom of the pyramid) countries cannot use technology. Global companies doing business in BOP countries will be seen as exploiting the poor. 13 (4) High-Income Countries (or industrialized countries) • GNI per capita: $12,476 or more • Characteristics: • Sustained economic growth through innovation • Service sector is more than 50% of GNI • Households have high ownership levels of basic products • Importance of information processing and exchange • Ascendancy of knowledge over capital, intellectual over machine technology, scientists and professionals over engineers and semiskilled workers 14 Class Activity The seven criteria for describing a nation’s economy are as follows: • • • • • • • Stage of market development Type of Government Trade and capital flows Control of trans, comm, & energy sectors Services provided by the state Institutions Markets 1. Use the seven criteria to develop a profile of (1) Canada and (2) one of the BRICS countries. 2. What implications does this profile have for marketing opportunities in the BRICS country? 15 Product Saturation Levels • The percent of potential buyers or households who own a product • India: 20% of people have telephones • Autos: 1 per 43,000 Chinese, 21 per 100 Poles, 49 per 100 EU adults, 8 per 1,000 in India, 200 out of 1,000 in Russia, 565 out of 1,000 in Germany • Computers: 1 PC per 6,000 Chinese; 11 PCs per 100 Poles; 34 PCs per 100 EU citizen 16 Balance of Payments • Record of all economic transactions between the residents of a country and the rest of the world • Current account–record of all recurring trade in merchandise and services, and humanitarian aid • trade deficit—negative current account • trade surplus—positive current account • Capital account–record of all long-term direct investment, portfolio investment, and capital flows 17 GATT & WTO • General Agreement on Tariffs and Trade • Treaty among nations to promote trade among members established in 1947 • Handled trade disputes • Replaced by World Trade Organization (WTO) in 1995 • Forum for trade-related negotiations among 160 members • Serves as a dispute mediator • Has enforcement power & can impose sanctions 18 Preferential Trade Agreements • Many countries seek to lower barriers to trade within their regions • PTAs give partners special treatment and may discriminate against others • Over 300 PTAs have been notified to the WTO 19 Economic Integration • Economic Integration – process whereby countries coordinate to reduce trade barriers • Trading Bloc – a group of countries that join together and agree to increase trade between themselves • Success of blocs depend on: ✓Leadership ✓Proximity ✓Commitment to cooperation 20 Levels of Economic Integration Economic Union – economic/political harmonization Common Market – factor movement Customs Union – common external tariffs Free Trade Agreement – abolish tariffs 21 Economic Union Full evolution of economic union: ✓creation of unified central bank ✓use of single currency ✓common policies on issues such as agriculture, social policy, transport, competition, mergers, taxation ✓requires extensive political unity ✓would lead to a central government in time 22 North America—NAFTA • NAFTA established as a free trade area in 1994 • All three nations pledge to promote economic growth through tariff reductions and expanded trade and investment • No common external tariffs • Restrictions on labor and other movements remain • To replaced by the USMCA (once ratified) 23 NAFTA Income and Population 24 U.S. Goods Exports in 2014 $1.6 Trillion 25 U.S. Goods Imports in 2014 $2.3 Trillion 26 The European Union (EU) • Initially began with the 1958 Treaty of Rome • Objective is to harmonize national laws and regulations so that goods, services, people, and money could flow freely across national boundaries • 1991 Maastricht Treaty set stage for transition to an economic union with a central bank and single currency (the Euro) 27 European Union • • • • • • • 28 countries 450 million people $15 trillion GNI Euro currency, 1999 Harmonization of laws and regulations Price transparency No customs at national borders 28 European Union 29 Latin America: SICA, Andean Community, Mercosur, CARICOM • Includes the Caribbean, Central, and South America • History of no growth, inflation, debt, and protectionism has given way to free markets, open economies, and deregulation • Some concern for further growth with the rise of left-leaning politicians 30 Central American Integration System (SICA) • El Salvador, Honduras, Guatemala, Nicaragua, Costa Rica, and Panama • Moving towards a common market • Common External Tariff of 0 to 15% •Retains tariffs on goods also produced in importing country 31 DR-CAFTA • SICA members El Salvador, Honduras, Guatemala, Nicaragua, Costa Rica joined the Dominican Republic and the United States in a FTA • 80% of US goods and 50% + of agricultural goods are duty free • Paperwork is reduced • Reduced risks mean more direct foreign investment 32 Andean Community • Bolivia, Colombia, Ecuador, Peru • 45th anniversary in 2014 • Customs Union • Abolished foreign exchange, financial and fiscal incentives, and export subsidies • Established common external tariffs 33 Common Market of the South (MERCOSUR) • Argentina, Brazil, Paraguay, Uruguay, Venezuela • Customs union, seeks to become common market • Internal tariffs eliminated • Established common external tariffs up to 20% • In time, factors of production will move freely through member countries • Bolivia, Chile, Ecuador, Peru • Associate members • Participate in free trade area but not customs union 34 CARICOM Founded in 1973 by 15 members 17 million population Stagnant for 20 years Customs Union in 1991 with common external tariffs • Rejected the idea of a economic union in 1998 as a single currency would not be especially beneficial. •Caribbean Basin Trade Partnership Act exempts textile and apparel exports to the U.S. market access from duties and tariffs. Caribbean Basin Initiative of 20 nations includes CARICOM. • • • • 35 Asia-Pacific: The Association of Southeast Asian Nations (ASEAN) • Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam • Top trading partners U.S., Japan, EU, China • Geographically close; historically divided • “ASEAN plus six” (Japan, China, Korea, Australia, New Zealand, India) working towards an economic community • China/ASEAN FTA established in 2010 removes 90% of tariffs on traded goods 36 The Middle East • Afghanistan, Bahrain, Cyprus, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, the United Arab Emirates, Yemen • Primarily Arab, some Persian and Jews • 95% Muslim, 5% Christian and Jewish • Wide variation in Economic Freedom rankings • Bahrain is 18th, UAE is 25th, Saudi Arabia is 77nd • Oil prices drive commerce • 25% of world’s oil in Saudi Arabia • Arab Spring 2011 37 Gulf Cooperation Council •Established in 1981 by 6 countries with 45% of world’s oil, only 18% of output •These countries are attempting to diversify industries 38 Africa • 54 nations over three distinct areas – Republic of South Africa – North Africa – Black Africa or sub-Saharan Africa • Mena: Middle East and North Africa –Viewed as a regional entity • Regional agreements – Economic Community of West African States – East African Cooperation – South African Development Community 39 MKTG 3375 CULTURAL ENVIRONMENT Team Think • In a few sentences, define the term culture. • Identify aspects of culture that might be of interest to an international company, and give examples to illustrate the importance of these various aspects. 2 Consumer Culture Culture – ways of living, built up by a group of human beings, that are transmitted from one generation to another “Culture is the collective programming of the mind that distinguishes the members of one category of people from those of another.” ~Geert Hofstede A nation, an ethnic group, a gender group, an organization, or a family may be considered as a category. 3 Global Consumer Culture Global consumer cultur ...
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Final Answer



News Article Summary




Partington R. (2019, February 15). Cost of Brexit to UK economy running at £40bn a year –
Bank rate-setter. The Guardian. Retrieved from
The news article by Richard Partington highlights the current cost of Brexit to the United
Kingdom economy. The article explains how Brexit costs the UK £40 billion per year. The
author maintains that with the looming threat of no deal Brexit, the UK may be forced to make
emergency cuts on the Interest rates. The estimated cost report was drawn from the Bank of

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