978-0134492513 Chapter 19 Solutions Manual

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Discussion Questions

 19-1 What environmental factors must international marketers consider when entering foreign

markets? (AACSB: Communication)

 19-2 Name and explain a company’s market entry options for international markets. (AACSB:

Communication)

19-3 Name and describe the four types of joint ventures as methods for entering another country.

How does joint venturing differ from other methods of entering a foreign market? (AACSB:

Communication; Reflective Thinking)

Answer:

Joint venturing involves joining with companies in a host country to produce or market products

or services. Joint venturing differs from exporting in that the company joins with a host

19-4 Briefly outline the strategies used for adapting products to a global market. Provide an

example for each strategy. (AACSB: Communication)

Answer:

The three product strategies are straight product extension, product adaptation, and product

Product adaptation involves changing the product to meet local requirements,

conditions, or wants. For example, in China, Dunkin’ Donuts serves doughnuts covered in

Product invention consists of creating something new to meet the needs of consumers in

a given country. As markets have gone global, companies ranging from appliance

 19-5 Explain what is meant by a whole-channel view and why it is important in international

marketing. (AACSB: Communication; Reflective Thinking)

Critical Thinking Exercises

 19-6 Visit www.transparency.org and find the most recent Corruption Perceptions Index (CPI)

report. What is the most recent CPI for the following countries: Argentina, Denmark,

Jamaica, Myanmar, New Zealand, Somalia, and the United States? What are the implications

of this index for U.S.-based companies doing business in these countries? (AACSB:

Communication; Use of IT; Reflective Thinking)

19-7 In a small group, identify and research an environmental threat—such as a regulatory threat,

a cultural threat, or and economic threat—posed to global marketers. Analyze the issues

related to this threat, discuss how affected companies are reacting, and make

recommendations regarding how these companies should address the threat. (AACSB:

Communication; Reflective Thinking)

Answer:

Students’ answers will vary. Instructors may want to assign students specific threats to

research. One example is the threat U.S. technology companies such as Google, Apple,

Microsoft, and Facebook are facing in the European Union. For information see the sources

below (search “Europe against US tech firms”):

19-8 You have been asked to consult with a small business owner who wants to expand her

company overseas. She has asked you to develop a global marketing strategy. You are not

certain if the owner thoroughly understands the international expansion process and the

challenges involved. Prior to meeting with the owner next week, create a presentation listing

the factors she will need to consider prior to her company going global. (AACSB:

Communication; Use of IT; Reflective Thinking)

Answer:

Students can search the internet to find tips on global business expansion.

www.businessnewsdaily.com/8211-expand-business-internationally.html provides several

MINICASES AND APPLICATIONS

Online, Mobile, and Social Media Marketing: China’s Great Firewall

China has emerged as an enormous social media market. With more than 1.35 billion people and

635 million internet users, internet usage in China is growing explosively at about 30 percent

annually. That makes it an extremely attractive market for Western social media companies such

as Facebook, Google, Twitter, and YouTube. However, under what has come to be called the

“Great Firewall of China”—an extensive level of control and censorship of websites and internet

activities by the Chinese government—many such Western social media and other online

marketers have been largely blocked from operating in China. According to The Diplomat, eight

of the top 25 most-visited global sites are now blocked in China. However, even with constant

government monitoring of internet activities, China has become one of the world’s most active

social media environments. Chinese consumers can connect though carefully controlled local

social networking platforms such as Renren (everyone’s website), Baidu (Google-like search

engine), Youku (China’s answer to YouTube), Weixin (instant messaging), Jiepang (similar to

Foursquare), microblogging sites such as Sina Weibo (like Twitter), and Dianping (similar to

Yelp),

As more marketers enter the social media landscape in China, strategies to reach consumers must

be carefully shaped to the country’s culture, consumers, content, platforms, and regulations.

Online marketers must understand Chinese culture, translations, and etiquette to help craft better

messages and marketing content that will resonate with Chinese consumers. At the same time,

they must navigate under the watchful eye of the Chinese government.

19-9 Research the Great Firewall of China. How will such government control affect social

media marketing in China? Report on a Western online company now operating in China.

How is it able to work within and around Chinese regulations? (AACSB: Communication;

Reflective Thinking)

Answer:

According to The Diplomat, outright blocking of websites by Chinese officials appears to

19-10 Suppose that your company is preparing to enter the Chinese market with a product line

that you believe will have great success. What is the best mode of entry for your company?

Review the economic and political climates. Is the timing right for entering China? (AACSB:

Communication; Use of IT; Reflective Thinking)

Answer:

Once a decision has been made to sell in a foreign country, the company must determine the

Marketing Ethics: Global Safety Standards

India is home to some of the world’s deadliest roads. However, international automobile makers

do not provide standard safety features in entry-level cars sold in India that are required in other

developed countries. India’s death toll on the roads has ranked top in the world for eight straight

years, exceeding 130,000 fatalities a year. Despite this, automakers strip safety features such as

air bags and antilock brakes out of the cars most people in India drive. They argue that Indian

consumers cannot afford or are not willing to pay for safety features that could increase the cost

of the car by 30 percent or more. Some manufacturers have begun to offer more safety features

as standard in their models. But other producers are offering them only as an option, and some

are not offering them at all to maintain price competitiveness.

 19-11 Is it right for manufacturers to include product safety features that are known to save

lives in countries that require them but to exclude such features in one country where they are

not specifically required? (AACSB: Communication; Ethical Reasoning)

19-12 Discuss world organizations that assist companies in developing and abiding by global

standards to protect consumers worldwide. (AACSB: Communication; Reflective Thinking)

Answer:

Marketing by the Numbers: Netflix’s Global Expansion

Video streaming service Netflix is expanding rapidly around the globe. It is currently available in

50 countries with the goal of expanding to 200 countries by the end of 2016. Netflix’s

international slogan is “Have content, will travel.” There are challenges to international

expansion for this type of service, such as inadequate disposable household income and a low

percentage of households with high-speed internet needed to stream videos. And even though

almost half of France’s TV-owning households have internet-connected TVs, cultural restrictions

limit English- language program content, requiring Netflix to invest in local content for French

customers. The next countries to get Netflix are Italy, Spain, and Portugal. Similar to Netflix’s

other European offerings, service will be offered at a price of €7.99 per month, which converts to

U.S. $8.97 during the time of expansion.

19-13 Refer to Appendix 2, Marketing by the Numbers, to calculate the annual market sales

potential for Spain in euros and U.S. dollars. There are 18,217,300 television households in

Spain, with 75 percent having high-speed internet. Assume 50 percent of the households are

willing and able to purchase the service and would purchase one subscription at an average

price of €7.99 per month ($8.97). (AACSB: Communication; Analytical Reasoning;

Reflective Thinking)

Answer:

Q = n  q  p

19-14 Calculate the market sales potential using the current exchange rate between euros and

U.S. dollars (see www.xe.com/currencyconverter/). Is the dollar currently strong or weak

compared to the euro? Why are U.S.-based international companies concerned when the U.S.

dollar is strong compared to other currencies? (AACSB: Communication; Analytic

Reasoning; Reflective Thinking)

Answer:

In the calculation above, the currency conversion rate was $1.00 = €0.89 or 1 euro = 1.12380

USD (June 9, 2015), so the dollar was weaker than the euro, but it is stronger than it had been

in previous years. As can be seen in the market sales potential, this means the potential in

Company Case Notes

L’Oréal: The United Nations of Beauty

Synopsis

L’Oréal is a French company that successfully markets products all over the world, selling more

than $28 billion worth of cosmetics, hair care products, skin care concoctions, and fragrances

each year in 130 countries, making it the world’s biggest cosmetics marketer. L’Oréal’s success

is based on a concept it calls “universalisation.” The company sells its brands globally by

understanding how they appeal to varied cultural nuances of beauty in specific local markets.

Then it finds the best balance between standardizing its brands for global impact and adapting

them to meet local needs and desires. With so many brands not only being sold in numerous

markets but originating in many different markets, the master global marketer is the uncontested

world leader in makeup, skin care, and hair coloring and second only to P&G in hair care.

Teaching Objectives

The teaching objectives for this case are to:

1. Gain a solid understanding of the concepts of standardizing and adapting and the roles

each play in global marketing.

2. Become familiar with the five global product and communications strategies.

3. Acquire experience in making decisions for the four elements of the marketing mix in a

global context.

4. Know the relationship between global sourcing, distribution, and price.

Discussion Questions

19-17 Of the five global product and communications strategies, which best describes L’Oréal’s

approach?

We know from the case that L’Oréal’s global strategy is based on its concept of

19-18 On a scale of one to five, to what degree does L’Oréal adapt its offering in each global

market? Support your answer.

Student answers will vary. Because there are so many different markets, the answer also

19-19 What are the disadvantages to L’Oréal’s global approach?

19-20 Which strategy does L’Oréal employ for entering a new market? How does the company

benefit from this approach?

19-21 Will L’Oréal continue to succeed at such a high level? Why or why not?

The evidence points to “yes.” As complex as its brand structure is, L’Oréal has mastered so

Teaching Suggestions

Send students on a global scavenger hunt to L’Oréal’s different brand sites throughout the world.

Have them access five different L’Oréal sites in five different global markets, digging in to the

individual brand sites in each. Have them note all the differences and all the similarities they

find.

This case can also be used with the segmentation chapter (Chapter 7), the product and brand

chapter (Chapter 8), and the competitive advantage chapter (Chapter 18).

Go to mymktlab.com for the answers to the following Assisted-graded writing questions:

19-22 Discuss the strategies used for adapting products to a global market. Which strategy is

best?

19-23 Name and describe the advantages and disadvantages of the different types of joint

venturing when entering a foreign market.

ADDITIONAL PROJECTS, ASSIGNMENTS, AND EXAMPLES

Projects

1. Read about the WTO (www.wto.org). What are the advantages and disadvantages of the

existence of this organization? Take a stand on its effectiveness and substantiate your

position. (Objective 1)

2. Describe the three key approaches to entering international markets. Which do you

believe would be the best for a company just beginning to work internationally?

(Objective 2)

3. Describe the five basic strategies for adapting products to new markets. (Objective 3)

4. Describe the whole-channel view of international distribution. (Objective 3)

Small Group Assignments

1. Divide students into groups of three to five and have them read the opening chapter

vignette on IKEA. Students should then answer the following questions and share their

answers with the class. (Objectives 2 and 3)

a. Why do international markets such as Asia, Eastern Europe, and South America

appear to be so promising to companies like IKEA?

b. What are some of the dangers and pitfalls that IKEA could encounter in marketing its

products in Asia?

c. What do you suppose so many Asians visit IKEA stores and buy products as they do?

What are the major appeals of this “very un-Asian” product?

2. Divide students into groups of three to five and have them read Real Marketing 19.2:

7-Eleven: Making Life a Little Easier for People around the Globe. Students should then

answer the following questions and share their answers with the class. (Objective 3)

a. 7-Eleven grants franchisees much flexibility in catering to local tastes in their stores.

How has that enabled 7-Eleven to succeed in places like Japan or Indonesia?

b. To sell convenience products in an international world, what adaptations must

7-Eleven make?

c. Can a company like 7-Eleven continue to successfully expand its product offerings

and expand even further internationally?

Individual Assignments

1. Read Thomas Friedman’s book, The Lexus and the Olive Tree. Write a five-page

summary of the major points he makes. (Objective 1)

2. The simplest way to enter a foreign market is through exporting. The two primary types

of exporting are direct exporting and indirect exporting. Define each term. Locate 10

companies that practice direct exporting and 10 companies that practice indirect

exporting. Justify your answers. (Objective 2)

Think-Pair-Share

Consider the following questions, formulate an answer, pair with the student on your right, share

your thoughts with one another, and respond to questions from the instructor.

1. How many countries are there in the world? (Objective 1)

2. What is the purpose of the World Trade Organization (WTO)? Do you believe it is doing

a good job? (Objective 1)

3. Discuss NAFTA and FTAA. In the long run, which do you believe has the greatest

probability of success? (Objective 1)

4. What is the fundamental difference between a tariff and a quota? (Objective 1)

5. What is countertrade and how does it work? (Objective 1)

6. What are some of the economic factors to consider when examining potential markets to

enter? (Objective 1)

7. What are some of the sociocultural factors to consider when examining potential markets

to enter? (Objective 1)

Outside Examples

1. Review the history of Disneyland Paris. Why was it initially such a failure? What lessons

can we take away from their experiences in France? (Objective 1)

Possible Solution:

The Disneyland Paris website (www.disneylandparis.com) provides information that will

be useful in answering this question.

2. Global organizations are companies that have stopped thinking of themselves as national

marketers who sell abroad and have started thinking of themselves as global marketers.

Name two global organizations and justify your answers. (Objective 4)

Possible Solution:

Obviously, there are a number of possible answers to this question. Ford Motor Company