Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Chapter 2: Global, Ethical, and Sustainable Marketing
IV. END-OF-CHAPTER ANSWER GUIDE
CHAPTER QUESTIONS AND ACTIVITIES
QUESTIONS: TEST YOUR KNOWLEDGE
2.1 Describe the market conditions that influence a firm’s decision to enter foreign markets.
2-2 Explain what world trade means. What is the role of the WTO and economic communities in
encouraging free trade? What is the role of the World Bank and the International Monetary
Fund in global trade? What is protectionism? Explain import quotas, embargoes, and tariffs.
World trade refers to the flow of goods and services among different countries—
may take place through cash, credit payments, or countertrade. The World trade organization
seeks to create a single open world market where trade flows “smoothly, predictably and
freely as possible.” Two additional organizations influence the advancement of global trade:
the World Bank and the International Monetary Fund (IMF). The IMF stabilizes
exchange rates to try to prevent problems with the balance of payments.
2.3 Explain how GDP, the categories of economic development, and the business cycle influence
marketers’ decisions in entering global markets. What are the BRICS countries? What is the
Group of Seven (G7)?
The most commonly used measure of economic health of a country is the gross domestic
product (GDP), the total dollar value of goods and services a country produces within its
borders in a year. A similar but less frequently used measure of economic health is the gross
When marketers scout the world for opportunities, it helps if they consider a country’s level
The largest of the developing countries, Brazil, Russia, India and China, are referred to as the
BRIC countries or simply as the BRICS. These four countries are the fastest growing of the
developing countries and they represent over 42 percent of the world’s population. The
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
2.4 Explain the types of competition marketers face: discretionary income competition, product
competition, and brand competition.
Discretionary income competition is the amount of money people have left after paying for
necessities such as housing, utilities, food, and clothing. Few consumers are wealthy enough
to buy anything and everything.
2.5 What are a monopoly, an oligopoly, monopolistic competition, and pure competition?
A monopoly is a market situation in which one firm, the only supplier of a particular product,
is able to control the price, quality and supply of the product.
2.6 What aspects of the political and legal environment influence a firm’s decision to enter a
foreign market? Why are human rights issues important to firms in their decisions to enter
global markets?
2.7 What do marketers mean when they refer to technological and sociocultural environments?
Why do they need to understand these environments in a global marketplace?
The technological environment provides firms with competitive advantages. The
technological environment profoundly affects marketing activities. Toll-free telephone
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
The sociocultural environment refers to the characteristics of the society, the people who live
in that society, and the culture that reflects the values and beliefs of the society. It includes
2.8 What is ethnocentricism?
Ethnocentricism relates to the tendency to prefer products or the people of one’s own culture
2.9 Describe the four globalization strategies representing levels of involvement for a firm:
exporting, contractual agreements, strategic alliances, and direct investment.
A firm deciding to go global must determine the level of commitment it is willing to make to
operate in another country. This commitment can range from a casual involvement to a
Exporting involves the least risk. If a firm chooses to export, it must decide whether it will
attempt to sell its products on its own or rely on intermediaries to represent it in the target
country. An exporting strategy allows a firm to sell its products in global markets and
The next level of commitment a firm can make to a foreign market is a contractual agreement
with a company in that country to conduct some or all of its business there. Two of the most
Firms seeking an even deeper commitment to a foreign market develop a strategic alliance
A deeper level of commitment occurs when a firm expands internationally by buying a
business outright in the host country. Direct investment allows a foreign firm to take
advantage of a domestic company’s political savvy and market position in the host country.
2.10 What are the arguments for standardization of marketing strategies in the global marketplace?
What are the arguments for localization? What are some ways a firm can standardize or localize
its marketing mix?
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
Advocates of standardization argue that the world has become so small, with tastes so
homogenized, that basic needs and wants are the same everywhere. Those in favor of
2.11 Describe the utilitarianism, rights, fairness or justice, common good, and virtue approaches to
ethical decision making. What is ethical relativism?
Utilitarian approach: The decision that provides the most good or the least harm
Rights approach: The decision that does the best job of protecting the moral rights of all
affected
2.12 Why is it increasingly important that firms engage in sustainability? What are some ways
strategies for the Four Ps can include sustainability?
With growing world populations and increasing demand for products, sustainable business
practices are necessary for life in the future. Many firms practice sustainability when then
develop target marketing, product, price, place/distribution, and promotion strategies
designed to protect the environment and the future of our communities.
Companies implement sustainable marketing practices in the following ways:
Target marketing strategies: They target green customers who are likely to buy
eco-friendly products.
Product strategies: Some firms choose fair trade suppliers who pay a fair price to
producers in developing countries
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
Sustainability metrics are tools that measure the benefits an organization achieves through the
implementation of sustainability.
ACTIVITIES: APPLY WHAT YOU’VE LEARNED
2.13 In Class, 10–25 Minutes for Teams Using the data in Table 2.2, select two countries that
are substantively dissimilar. Then select one of the products below. Use the data for the two
countries to develop arguments why each of the two countries would and would not be a
good opportunity for expansion of the market for your product.
1. New and more environmentally friendly method for heating and cooling houses.
2. A small automobile that runs on electricity.
3. Barbie and Ken dolls and accessories
4. A low-priced, easy to use, sewing machine that does not require electricity.
2-14 Creative Homework/Short Project With several members of your class, assume you are in
the marketing department for a low-end retail store chain; you might think of a chain similar
to Dollar General. Your firm has decided to begin an expansion into the global market.
Currently you are considering building stores in France, Ecuador, Brazil and Australia.
Gather information about these countries using the CIA Factbook available online and
other sources. Using the data you have about each country, develop ideas on the pros and
cons of entering each country. Which country do you feel is best? Present your findings to
your class.
2-15 For Further Research (Individual) Consider the six different ethical philosophies
in the chapter. Apply these six philosophies to one of the following ethical
dilemmas. What would be the most ethical decision for each? Explain why you think so.
Which would you be most likely to follow?
Decisions:
1. You see a fellow student cheating. Should you ignore what you saw, report it, or do
something else?
2. You are the president of a school club, which gives you access to the club’s money
You need to buy a new tire for your car but you won’t have enough money for a week.
You are considering borrowing the money from the club and paying it back in a
week.
3. You have been assigned to a class project team. In a different class, you have been
on a team with one of the members of your current team, and you know he or she
refuses to do any work but expects others the team to help him or her out. What are
your options, and what should you do?
2-16 In Class, 10–25 Minutes for Teams Assume you are the director of marketing for a U.S.
firm that produces one of the products listed below. Your firm is considering going after
the Indian market and is faced with the decision of the best entry strategy. Should your firm
simply export their products, or would a strategic alliance, licensing, a joint venture, or
direct investment be a better choice? Develop your ideas for a best entry strategy. Be
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
specific in your recommendations for a strategy, how to implement the strategy, and your
reasons for your recommendations.
Products:
1. Tablets (similar to the iPad) targeting the consumer market
2. Expansion of your discount retail store chain
3. Short-term (from an hour up) auto rentals
Teams can present their findings and recommendations to the class.
2-17 Creative Homework/Short Project Consumer ethnocentrism is the tendency for individuals
to prefer products from one’s own culture. Sometimes people think products made at home
are better than imported goods. Develop a small study to find out what students at your
university think about products made at home and abroad. Develop a survey that asks other
Within one class period, you could divide the class up into two groups: the survey creators
2.18 In Class, 10–25 Minutes for Teams Some people argue that our environment is not in
jeopardy and that sustainability efforts will only make products more expensive. Plan a
debate in your class with two teams, one arguing for sustainability efforts and one against.
2-19 For Further Research (Individual) You are planning a trip to another country for your
summer vacation. You are considering traveling to Greece, to Peru, to England, and to
Egypt. Determine the current forex rate for all four countries as well as the average forex
over the past five years for each. Based solely on the information you collect about forex
rates, explain where you would go and why.
Go to the library or the Internet to find out as much as you can about the forex rate for the
2-20 For Further Research (Groups) You are part of an up-and-coming coffeehouse chain in
the United States, and you know that you need to participate in competitive intelligence
activities to learn more about your competitors. Using the Internet, collect at least five
distinct pieces of information about either Starbucks or Dunkin’ Donuts that will enable
you to improve your marketing strategy.
Entering global markets involves a complex decision process. Marketers must fully
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
APPLY MARKETING METRICS
Many Western firms see their futures in the growing populations of developing countries,
where eight out of ten consumers now live. Consumers from countries such as Brazil, India,
China and Russia offer new opportunities for firms because growing numbers of them are
accumulating small but significant amounts of disposable income. Firms like worldwide
cosmetics giant Beirsdorf, producer of Nivea products, are adapting their products and their
marketing activities to meet the needs of these populations. Often this means selling miniature
or even single use packages of shampoo, dishwashing detergent or fabric softener for only a
few cents. The huge Swiss company Nestlé sells shrimp-flavored instant soup cubes for two
cents each in Ghana while the financial company Allianz, in a joint program with CARE, sells
micro-insurance for five cents a month to the very poor in India. However, how do these firms
measure their success in these new markets? Firms normally use such marketing metrics as
customer awareness or satisfaction, increases in market share or profits, or return on
marketing investment (ROMI). These metrics may not be right for the new markets in the
developing world where many millions of people buy streamlined versions of a firm’s
products at a fraction of their usual price. What do you think? Develop a list of possible
metrics that firms might use to measure their success in these new developing markets.
Large companies obviously take a huge risk with the adoption of such practices in developing
countries with the hope of a huge return on their marketing investment. Such risk-return
strategies may have to be developed within the perspective of a longer time period to see
ROMI grow, so building brand strength and equity in a such a developing market may be
more valued by a firm than immediate increases in market share or profits
2.21 Do you think about the approach described above is effective for entering BRICS markets
to appeal to consumers with small but growing disposable income?
2-22 How would the success of this approach be better measured—that is, what metrics would
be more useful than the typical metrics used in developed countries? Be creative and
develop a list of several possible metrics that firms might use to measure their success in
these new developing markets. Hint: Keep closely in mind what firms hope to accomplish by
increasing their presence and sales in those markets.
CHOICES: WHAT DO YOU THINK?
2-23 Critical Thinking and Ethics Assume you are the CMO for a firm that is a major producer
of chocolate candy and baking chocolate. The bulk of your chocolate products are sold in
the United States and Europe. For many years, your firm has purchased cocoa beans (from
which chocolate is made) from Country A. Country A produces 30 percent of the world’s
chocolate but recent reports of child labor have concerned many country leaders and
consumers. On some farms, children are made to work as much as 100 hours a week and are
physically abused. Furthermore, some receive no education whatsoever. You are considering
whether or not your company should change suppliers and buy cocoa from Country B.
Country B is the leader in ethically produced cocoa. Cocoa is produced in an
environmentally sustainable manner and the country is the world leader of “fair-trade
certified” cocoa production. Unfortunately, the price of cocoa from Country B is nearly
twice that of Country A. this means you would have to significantly increase the price of
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
your products which you expect to negatively affect the firm’s sales. This, in turn would
likely lead to closing some company facilities and laying off workers. On the other hand,
consumers in your markets are increasingly concerned about human rights abuses and seek
to buy fair trade products. Develop your thoughts on the following:
a. The positive and negative outcomes (in addition to those already discussed) of
continuing to purchase cocoa from Country A.
b. The positive and negative outcomes (other than those already discussed) of changing
suppliers and purchasing cocoa from Country B (in addition to those already
discussed).
c. Which country would you choose using the Utilitarian approach to decision making?
Why?
d. Which country would you choose using the rights approach to decision making? Why?
e. Which country would you personally choose? Why?
MyMarketingLab for answers to Assisted Graded Questions.
2-24 Critical Thinking What role has technology played in the globalization of businesses? Has
2-25 Critical Thinking LDCs are not required by the WTO to meet the same environment
standards as developed countries. Do you think LDCs should be excluded from WTO
2-26 Critical Thinking Some countries have been critical of the export of American culture via
movies, television, music and many American consumer goods by U.S. businesses. What
about American culture might be objectionable? Can you think of some products that U.S.
marketers export that can be objectionable to some foreign markets? What is the solution to
the problem?
2-27 Critical Thinking Some of the U.S. population supports free trade, whereas others are
unhappy, even angry, that the government has reduced regulations on imports of such
products as textiles and furniture, causing factories to shut down and employees to lose their
jobs. They feel that the U.S. government should legislate greater regulation of imported
goods to give American companies an advantage or at least to lessen the advantage that
companies in other countries receive from their government. What do you think? How do
you justify your answer?
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
2.28 Critical Thinking In 1999, several single European nations banded together to form the
European Union and converted their individual monetary systems over to the euro. Do you
believe there will ever be other economic communities that would follow this path? Explain
your reasoning and, if necessary, provide some possible examples. What about the
possibility of a single world currency? Could this happen? Why or why not?
2.29 Ethics Ethical relativism suggests that what is ethical in one culture may not be considered
ethical in another. What should the attitude of businesses be when differences occur? Should
businesses follow the ethical values and practices of their own country or of the host
country? What should governments do about this if anything? What is the role of the WTO?
2.30 Ethics Review the AMA Code of Ethical Norms and Values for Marketers, provided in the
chapter. Which of the areas represented within the document do you anticipate are the most
challenging for marketers to consistently follow? What makes these issues particularly
troublesome? Do you think marketing in general does a good job adhering to the AMA
Code? Provide specific evidence from your knowledge and experience to support your
position.
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
MINIPROJECT: LEARN BY DOING
The purpose of this miniproject is to gain experience in understanding what it takes to move a
product that is successful in its home market into a global market in which it will continue to
be successful. Assume that you are the director of marketing for a firm that produces its own
high-end brands of makeup, skin care, and hair care products for both men and women. The
products have been endorsed by a number of male and female musicians who are highly
popular with young people. The products are sold only in the company’s own retail outlets.
2.31 Describe your local competitive advantage and why you believe this competitive
advantage will serve you globally.
2.32 Determine which global market(s) is most attractive for your service. Will you target a
single country or an economic community? Describe your reasoning.
2.33 Decide which market-entry strategy you will pursue. Again, explain your reasoning.
2-34 Describe your marketing mix strategy:
• How might you need to adapt your product?
• What other product decisions do you need to make?
• How will you promote your products?
• How will you price your products?
• What place/distribution decisions must you consider?
Prepare a short presentation to share with your class.
V. MARKETING IN ACTION CASE: REAL CHOICES AT FORD
Summary of Case
Ford Motor Company is investing $1.6 billion to construct a plant in Mexico. This will create
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
2,800 jobs in the country. U.S. automotive labor costs average $30 per hour whereas Mexico’s
labor costs average $5 per hour. Ford can lower costs, become more competitive, and increase
profit margins. The investment in Mexico has critics. The issue of jobs leaving the country is a
part of political debate in Washington, D.C. The announcement of Ford’s plans was made during
the recent presidential campaign. One candidate called for increased tariffs and penalties for U.S.
firms, like Ford, that choose to relocate manufacturing to foreign markets. Increasing its presence
in Mexico is not Ford’s only initiative Ford. The company has expanded to Spain, Germany,
China, the Middle East, and Africa. While Ford’s improves its financial outlook, how will it deal
with the negative attention generated by moving jobs outside the United States? Is it possible for
the company to increase its profitability and reduce its dependence on foreign production? In the
current political climate should the company rethink its plans?
Suggestions for Presentation
This case could be assigned for various online or in-class discussion activities.
Online Assignment Suggestions
Go to Ford’s website and search around its various links for material regarding the controversy.
What news articles do they mention?
In-Class Assignment Suggestions
In groups or as individuals, discuss the various consumer and world reactions to this situation.
Divide the class into groups of three to five students and have each group conduct a strengths,
weaknesses, opportunities and threats (SWOT) analysis to determine how Ford should proceed
with t marketing strategies.
You Make the Call
2-35. What is the decision facing Ford?
Students should restate the questions posed at the end of the case description (or create new
ones on their own):
2-36. What factors are important in understanding this decision situation?
The important factors in this decision situation stem directly from the global marketing
environment:
The economic environments of Ford’s various marketplaces as well as of the countries
that Ford can potentially produce their products
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
2-37. What are the alternatives?
2-38. What decision(s) do you recommend?
2-39.What are some ways to implement your recommendation?
MY MARKETINGLAB
Go to mymktlab.com for Auto-graded writing questions as well as the following
Assisted-graded writing questions:
2-40 Creative Homework/Short Project. As a marketing manager, you must consider whether
2-41 Ethics. Some companies have been criticized for moving their manufacturing to other
Copyright © 2018 Pearson Education, Inc.
