978-1337116800 Chapter 5 Solution Manual Part 2

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Chapter 5: Developing a Global Vision

every purchase of eyewear. TOMS Roasting Co. supplies clean water with each purchase of

coffee.

PTS: 1 OBJ: LO: 5-3 TOP: AACSB: Reflective Thinking

KEY: CB&E Model: Strategy MSC: BLOOMS: Level I Knowledge

5. TOMS is a multinational corporation.

1. Which of the following is NOT part of the external environment faced by global marketers?

a. the global economy

b. political structure

c. culture

d. competition

2. __________ is the riskiest way to enter into the global marketplace.

a. Direct investment

b. Exporting

c. Licensing

d. Joint venture

3. If TOMS decided to enter the tea business and they purchased part of a foreign tea company to

join with them to found TOMS Teas, this would be an example of __________.

a. direct foreign investment

b. contract manufacturing

c. a joint venture

d. licensing

4. If TOMS advertised their shoes differently in European markets than it did in American, this

would be an example of __________ adaptation.

a. product

b. promotion

c. distribution

d. price

5. As TOMS utilizes social media in global marketing, they must always be aware of the

__________ in countries in which they operate.

a. climate

b. countertrade

c. culture

d. currency

Great Ideas for Teaching Chapter 5

James S. Cleveland, Sage College of Albany

Discussion Board Topics to Encourage Participation

Discussion board questions, which are provided to students to encourage them to engage in

thinking and writing about the content of the Principles of Marketing course, usually take the

form of a provocative statement to which students are asked to respond. An example of this

would be “All PR is good PR.”

Discussion topics such as this one are abstract and often require that the instructor provide an

initial reply to show students what is expected of them in their own replies. For students with

limited work experience, this approach may be quite appropriate. For adult students with

extensive experience as employees and consumers, however, the abstract nature of such topics

can be frustrating.

I have developed, therefore, a series of discussion board questions to use with experienced adult

students. These questions are designed to encourage them to use their experiences as employees

Chapter 5: Developing a Global Vision

and consumers as doorways to better understand the course material. The questions are also

designed to make these students’ responses more interesting to themselves and to the other

students in the class who will read and comment on them.

Each question has three parts.

1. First, there is a sentence or two from the students’ textbooks introducing the topic. By

using the text author’s own words, students are enabled to locate relevant material in the

text more easily, the text content is reinforced, and confusion resulting from use of variant

terms or expressions is minimized.

2. Second, there is a reference to text pages the student should review before proceeding.

Since the goal of the exercise is for students to apply the course content to their own

experiences, reviewing the content first is important.

3. Third, there is a request for the student to think about or remember some specific situation

in their experience to which they can apply the text material, and a question or questions

for them to address in their reply.

Here are additional discussion board questions that are similar and have been developed for

Chapter 5 of MKTG11. Each is written to fit the same text cited above but could easily be

rewritten and revised to fit another text.

Series A

1. No longer just an option, global marketing—marketing that targets markets throughout the

world—has become an imperative for business.

2. Review the information on the rewards of global marketing in section 5-1 of your text.

3. Then describe how your employer (current or past) participates in the global marketplace

by buying foreign-made goods and services or selling its goods and services abroad.

Series B

1. A company that is heavily engaged in international trade, beyond exporting and importing,

is called a multinational corporation.

2. Review the information about multinational corporations in section 5-2 of your text.

3. Describe the products you buy that are manufactured by multinational corporations. How

many of them are not made in this country? (Check labels or packaging to see where they

were made.) Do you think this is a good situation? Why, or why not?

John L. Beisel, Pittsburg State University

Forcing International Communication

Students from other countries who are studying in the United States bring with them a rich

Chapter 5: Developing a Global Vision

cultural heritage and perspective that most American students seldom bother to learn about. In

fact, many American students rarely even take the opportunity to talk to an international student

during their college years, even though they have sat in class with them time after time. I have

had international students tell me upon graduation that they regret the fact that they never

became friends with an American student.

I decided to force communication between the two groups at every opportunity in my classes. In

my International Marketing course, the students are divided up into teams consisting of four

students, and each team is assigned a country. Their task is to develop a plan for marketing a

specific consumer product to their assigned country, in 25 pages or less.

In a recent class, I appointed 11 teams of 4 students each. Each team was assigned a different

country. Those 11 countries that were most represented by students in our university were the 11

countries assigned. They were India, Indonesia, Japan, Malaysia, Nigeria, Pakistan, Paraguay,

Singapore, South Korea, Taiwan, and Thailand. The teams were expected to personally interview

a minimum of four students from the country that they were assigned. The interviews consisted

of learning about the customs, product preferences, buying habits, prices, competitors, types of

retail outlet shops, and so forth, in the home country of the students interviewed, especially

relating to the product assigned.

The final report for each team included, among other things, a country analysis with a brief

description of the market (demographics, primary marketing areas, etc.), an economic profile of

the country, business customs, consumer behavior, general U.S. relationships with the country,

export prospects to the country, and the country’s restrictions on imports.

Also, customs regulations had to be cited regarding documentation, packing, labeling, marking,

import quotas and restrictions, tariffs, trademark protection, taxes, import licensing, shipping

documents, health and sanitary requirements, and so forth. Much of this information could be

found in Overseas Business Reports.

Each team also created a brand name and a package design. A pricing policy was decided on, as

well as a promotional strategy. Common distribution channel alternatives were named, and entry

alternatives (i.e., licensing, trading companies, franchising, agents, joint venture, wholesalers,

etc.) were chosen.

The students were quite positive about the project as a learning experience, especially regarding

the face-to-face contact with international students. During the interviews, the students found

new friends, and in some instances, they were even invited to the interviewees’ living quarters

for a meal with an international flavor.

Chapter 5: Developing a Global Vision

David J. Brennan, Webster University – St. Louis, Missouri

It’s Not Funny Money!

In teaching International Marketing, it is important for American students to develop a

knowledge of foreign currencies. For marketing students, this need not be a detailed financial

knowledge but simply an awareness of a few key international currencies and their names,

symbols, and relative values.

Given a list of several relatively familiar countries, students are asked to name the currency of

that country and to indicate the symbol used to designate that currency. Some typical countries,

currencies, and symbols (with the United States as an example) could include (answers in

brackets):

Country

Currency

Symbol

Example:

USA

Dollar/cent

$ US

Australia

[Dollar/Cent]

[$AUS]

Belgium

(or other

member)

[Euro]

[€]

Canada

[Dollar/Cent]

[$CD]

Russia

[Ruble]

[RUB]

Great

Britain

[Pound/Pence]

[£]

Hong Kong

[Dollar]

[$HK]

Ireland

[Punt]

[Pt]

Japan

[Yen/Sen]

[¥]

Poland

[Zloty]

[Z]

Switzerland

[Franc]

[Sf]

Mexico

[Peso]

[$MXN]

Argentina

[Peso]

[$ARS]

China

[Yuan]

[元]

These, as well as other countries and their respective currencies, can be found in the foreign

exchange listings in the Financial Section of the Wall Street Journal. This listing provides the

country, its major currency and foreign exchange values for the previous two business days in

terms of foreign currency value in $US, and $US in terms of value in the foreign currency. If

possible, it is also useful to go to a local bank and get/buy a few foreign currency bills (£, DM,

Chapter 5: Developing a Global Vision

Ff, $CD) for class.

Several aspects of foreign currencies, as they may apply to marketing students, can be raised

during class discussion. These could include the features given below.

• Some currencies have similar names (e.g., the dollar in the United States, Canada, and

Hong Kong and the peso in Mexico, Argentina, Chile, Colombia, and Uruguay), but all

have very different values.

• It is important for marketing students to be aware of the relative values of the currencies of

key major trading partners (Canada, Germany, Great Britain, China, and Japan). It

illustrates how one can use those foreign currencies with values less than, approximately

equal to, and greater than the U.S. dollar. For example, in fall 2012:

✓ The Canadian ($CD) dollar is close to the value of the U.S. dollar ($US): 1 $CD =

0.97 $US or 1 $US = 1.03 $CD

✓ The euro (€) is worth more than the U.S. dollar ($US): 1 € = 0.76 $US or 1 $US =

1.31€

✓ The Japanese yen (¥) is worth much less than the U.S. dollar ($US): 1 ¥ = 0.013 $US

(1¢ US) or 1 $US = 79 ¥

✓ The British pound (£) is worth more than the U.S. dollar ($US): 1 £ = 1.62 $US or 1

$US = 0.62 £ (62 pence)

• Changes in foreign currency values in terms of the U.S. dollar can impact international

business. A good example of that is of the Japanese yen (¥). In 1987, 1 $US was worth

(bought) approximately 250 ¥, while in 1992 the U.S. dollar weakened (and the Japanese

yen strengthened), and 1 $US was only worth (bought) approximately 128 ¥. In 1996, it

hovered in the 80–100¥ to the 1 $US range. A useful point of discussion is the change in

foreign or U.S. consumer buying power due to such a change of currency values.

This exercise can educate American marketing students who are typically used to operating only

in the U.S. dollar. Although the U.S. dollar is still a key global currency, other currencies (such

as the euro) are important to understand. It can illustrate to our students that foreign currencies

are not “funny money” and need to be taken seriously in international marketing.

Jacqueline J. Kacen, University of Michigan—Dearborn

Cross-Cultural Marketing: Taking the Brand Local?

What must international and cross-cultural marketers think about when introducing products into

foreign markets? Instead of focusing on familiar U.S. products being introduced into a new

foreign market, this exercise has students introduce a foreign product into the United States. This

exercise works well as an in-class exercise, a group project, or an individual homework

assignment.

Chapter 5: Developing a Global Vision

The product I use for this exercise is Vegemite, a Kraft product manufactured and sold in

Australia and New Zealand. However, any foreign product that is not currently marketed in the

United States can be used in class.

As an introduction to the exercise, I provide students with a one-page summary of the product—

its history, ingredients, uses, target market, and position—in its home market. Alternatively,

depending on time and resources, students can be required to research the product on their own.

Information about Vegemite, for example, is available through various Web sites. This exercise

can provide an opportunity for students to access Internet resources.

Globalizing the Thinking of Business Students

During the last decade, we have seen a strong emphasis being placed on providing business

students with a more global orientation. To accommodate this, we need to make the students

realize that being raised in a particular culture results in their “business perceptions,” as

employed in a particular context, being not only a function of the actual attributes, but their

respective cultural background as well. I have devised a simple exercise aimed at forcing

students to think of other cultures not in terms of the potential differences, but rather in terms of

strengths, weaknesses, opportunities, and threats that these diverse environments may provide.

On the first day of class, I ask students to write on an index card their name, major,

classification, and then two groups of countries. The students are instructed to, for Group 1,

create a list of foreign countries, which they perceive as being the most culturally similar to their

Chapter 5: Developing a Global Vision

own. Conversely, Group 2 is to be composed of five countries that they perceive as being the

most culturally dissimilar to their own country. Lastly, the students are asked to consider a

generic industrial product (such as a bearing) and use a scale of 1–10 to rate the perceived

quality of that product that is being manufactured in their own country of origin, the country they

PART 1—Integrated Case Assignments

Marketing Miscues

Concerns over Sustainability Result in Social Media Disaster for Nestlé

In March 2010, Greenpeace began coordinating environmental activists in a protest over Nestlé’s

alleged purchase of palm oil from an Indonesian company that Greenpeace International claimed

was destroying the rain forest to build palm plantations. The palm oil was used to make Kit Kat

candy bars. Although Nestlé claimed to have already made the decision to no longer do business

with the supplier, while also asserting that the purchase had comprised only 1.25 percent of the

company’s total palm oil consumption in 2009, the company was a vulnerable target for

Chapter 5: Developing a Global Vision

environmental activists because of its history of questionable practices with respect to child labor

and infant formula.

The coordinated efforts of the activists were composed of two major components. Greenpeace

staged a protest outside Nestlé’s headquarters in Switzerland and a mock Kit Kat commercial

was posted on YouTube. Protesters at the company headquarters wore cutouts of the candy bar,

but instead of the bar saying “Kit Kat,” it said “Killer.” The Kit Kat commercial parody

portrayed an office worker opening the candy bar and munching on a bloody orangutan finger.

As YouTube videos go, the Nestlé parody was shared widely on social media platforms such as

Facebook and Twitter.

Like many companies, Nestlé has a fan page on Facebook to interact with its consumers. The

Facebook fan page is a location that enables dialogue about the company’s brands. Once the

commercial parody hit the social media airwaves, protesters began posting negative comments

about the company on Nestlé’s Facebook fan page. Nestlé responded with two actions. One, it

asked Google’s YouTube to remove the commercial parody from the site due to copyright

Chapter 5: Developing a Global Vision

began to drop dramatically.

Nestlé had a social media disaster on its hands. Interestingly, that disaster was due to the way

Nestlé engaged in interactions on Facebook—not because of the fact that it had purchased palm

oil from a non-sustainable company. The negative social media engagement, however, brought

the palm oil issue to the forefront of people’s minds who might not have otherwise even thought

about sustainability concerns related to candy bars. Thus, while the sustainability concern might

have lost its luster in a few days and activists would have moved on to the next cause, the social

media engagement snowballed and affected the company financially.

Sources: Raj Dash, “The Facebook Nestlé Mess: When Social Media Goes Anti-Social,” All

Facebook, March 22, 2010; Rick Broida, “Nestlé’s Facebook Page: How a Company Can Really

Screw up Social Media,” BNET, March 19, 2010, www.bnet.com/blog/businesstips/nestles-

facebook -page-how-a-company-can-really-screw-up-social-media/6786; “Nestlé and Black

Friday,” March 23, 2010, www.rgc-media.com/nestle-and-black-friday; Emily Steel, “Nestlé

Takes a Beating on Social-Media Sites,” The Wall Street Journal, March 29 2010,

http://online.wsj.com/article/SB1000142405270230443440457 5149883850508158.html.

Open-ended questions

1. How could Nestlé have handled the situation differently? Should the company have

simply shut down its Facebook page?

Most students will agree that the employee in charge of Nestlé’s Facebook fan page really

2. Although the Kit Kat candy bar was at the original heart of the issue, what other

products/companies are owned by Nestlé? Could these products be affected by the Kit

Kat social media fiasco?

Chapter 5: Developing a Global Vision

Students should be directed to www.nestle.com to identify the product mix at Nestlé—any

of which could have been affected. Product categories and brands are listed below.

• Baby foods (Cerelac, Gerber, NaturNes, Nestum)

Close-ended questions

True/False

1. Until it was accused by Green Peace of deforestation, Nestlé had no prior controversies

surrounding its corporate ethical behavior.

True

False

ANS: F

Nestlé was a vulnerable target for environmental activists because of its history of questionable

practices with respect to child labor and infant formula.

OBJ: LO-3.2

TOP: AACSB Ethics

KEY: CB&E Model International Perspective

MSC: BLOOMS Level I Knowledge