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1.1 ETHICAL DIMENSION 15
Ethical Perspective
1McDonald’s: Should McDonald’s support the additional costs of carrying environmentally
coffee if it becomes unprofitable? Do you see any challenges for McDonald’s in selling
Kenco coffee?
2Consumers: What is the price differential you would be willing to pay for McDonald’s
environmentally friendly gourmet coffee?
3 Competitors: How should Starbucks respond to this challenge by McDonald’s?
1.2 KEY TERMS
developed economies Specific economies that have fueled world economic growth for much of
the 20th century, including Western Europe, the United States, and Japan.
emerging markets Growing economies that have developed over the last 25 years that are
projected to contribute toward 75 percent of world economic growth over the next 20 years.
regional marketing zones A group of countries that create formal relationships for mutual
economic benefit through lower tariffs and reduced trade barriers.
European Union A successful regional marketing zone founded more than 50 years ago by six
European countries (Belgium, France, Italy, Luxembourg, The Netherlands, and West Germany)
with the Treaty of Rome that now includes 25 countries.
NAFTA The North American Free Trade Agreement: created to eliminate tariffs between
Canada, Mexico, and the United States, and stands as the single largest economic alliance today.
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MERCOSUR Inaugurated in 1995, it is the most powerful market zone in South America and
includes the major economies of South America: Argentina, Bolivia, Brazil, Chile, Paraguay, and
Uruguay.
ASEAN Founded in 1967, it is the most important Asian market zone and includes 10 countries
running the entire length of the Pacific Rim (Brunei Darussalam, Indonesia, Malaysia,
Philippines, Cambodia, Laos, Myanmar, Singapore, Thailand, and Vietnam).
exporting The most common method for entering foreign markets, it offers firms the ability to
penetrate foreign markets with minimal investment and very little risk.
distributors Represent the company and often many others in foreign markets.
contractual agreements Enduring, nonequity relationships with another company that allow a
company to expand its participation in a foreign market.
licensing When a firm offers other manufacturers the right to use their brand in exchange for a
set fee or percentage of sales.
franchising A contractual agreement in which a firm provides a contracted company in a foreign
market with a bundle of products, systems, services, and management expertise in return for
local market knowledge, financial consideration, and local management experience.
strategic alliances A market entry strategy designed to spread the risk of foreign investment
among its partners. Examples of strategic alliances would be international joint ventures or
direct foreign investment.
joint ventures A strategic alliance formed by legal entities consisting of a partnership of two or
more participating companies that share management duties and a defined management structure
in which every partner holds an equity position.
direct foreign investment A strategic alliance with long-term implications in which a company
moves
decision-making authority An issue that arises when companies grow internationally and lines
of authority become longer and more complicated resulting in difficulty in defining
decision-making protocols.
degree of centralization The degree to which decisions are made at the firm’s home office.
global product lines A broad, diverse range of products with global functionality
geographic regions An international organizational structure that divides international markets
by geography, building autonomous regional organizations that perform business functions in the
geographic area.
matrix structure An international organizational structure that encourages regional autonomy
among organizations while building product competence in key areas around the world.
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country-of-origin effect The influence of the country of manufacture, assembly, or design on a
customer’s positive or negative perception of a product.
global marketing themes Global advertising strategy in which a basic template is used for
global ads that allows for slight modifications depending on local markets
global marketing with local content Global advertising strategy in which a firm keeps the same
global marketing theme as the home market but adapts it with local content
basket of global marketing themes Global advertising strategy in which distinct ads built
around several marketing messages are created that local marketers can select from to best fit
their specific market situation
local market ad generation Global marketing strategy in which a firm allows local marketers to
create local ads that do not necessarily coordinate with its global marketing messages.
dumping A global pricing issue that refers to the practice of charging less than their actual costs
or less than the product price in the firm’s home markets.
gray market A global pricing issue that references the unauthorized diversion of branded
products into global markets.
1.3 APPLICATION QUESTIONS
1 You are the marketing manager for a small company located in the United States that
manufactures specialized parts for high end inkjet printers. The company’s largest customer
(Hewlett Packard) has asked your company to supply parts to 10 of its distribution and repair
sites around the world. The company has never sold products outside the United States so
this represents a significant step for the company. What stage in the global experience
learning curve is the company likely entering and why? Identify the activities the company
should undertake at this stage.
1. You are the market research director for a consumer product company. You have been asked
to evaluate China as a potential market for your company’s products and begin a search of
secondary data. What are the three primary issues you must consider in assessing the data
available on China? How would you find information on these issues?
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2. You are the marketing manager for Oxymoron Detergent and have been tasked with
introducing this product into Argentina. What six factors would you need to consider in
determining the proper channel of distribution for the introduction of Oxymoron detergent?
3. Compare and contrast the pricing strategy of Apple iPod’s around the world to Microsoft’s
Zune. Then, as marketing manager for SanDisk, how would you price a new MP3 player
that will be introduced in 35 countries in the very near future. What pricing strategy would
you choose and why?
4. You are the Chief Marketing Officer for Digital Distributed Products (DDP), manufacturer of
Wi-Fi hardware found on laptop computers. The company’s number one distributor in
Germany just called and said they are experiencing significant “gray market” products
coming in from Russia. Customers are saying DDP products are available at a significant
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discount from the distributor’s legitimate price. As the CMO how would address this
problem?
MANAGEMENT DECISION CASE: A New Global Competitor: Commercial Jetliner
Production Begins in China
Questions for Consideration
1 One of the suppliers working with Comac to provide parts for the C919 is a company called
Parker Hannifin, which is supplying hydraulic, fuel, and flight control systems. Based on this
information, what type of global market entry strategy do you believe Parker Hannifin is
following with its efforts toward Comac? Support your conclusion.
5. The case mentions a potential legal issue many companies have in doing business with
Chinese companies—the potential for loss of trade secrets and intellectual property rights.
What other essential information do you think is necessary for companies to investigate
before committing to do business with a firm based in China?
6. Comac has decided to enter an extremely competitive market with the C919. What global
market strategy do you recommend for Comac as it explores the possibility of marketing its
product to major airlines in the United States and Europe? That is, how will it position itself
to gain orders against Boeing and Airbus?
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1.4 SUGGESTED VIDEO
Yum! Brands (11:30 minutes)
Description: YUM! Brands customizes its marketing approach to expand to global markets.
Peter Bassi (President of YUM! Restaurants International) describes 7 key marketing
perspectives that company focuses on to be competitive and successful on a global scale.
1. What central changes are contributing to the growth of Yum! Brands in global markets?
2. Give some examples of ways that you believe Yum! Brands will have to adapt its offerings to
appeal to global customers in different countries.
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