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Instructor Manual
Chapter 17: Customers and Suppliers of the MNE
(Prepared by Klaus E. Meyer, March 2019)
Introduction to the Topic
Learning Objectives
1. Explain how companies may analyze consumer behaviour abroad
2. Articulate four Ps in international marketing (place, product, price, and promotion)
3. Articulate the three As in supply chain management (agility, adaptability, and alignment)
4. Discuss how institutions affect marketing and supply chain management
5. Discuss how resources affect marketing and supply chain management
6. Participate in two leading debates concerning marketing and supply chain management
7. Draw implications for action
General Teaching Suggestions
This chapter introduces two closely related aspects of operations, marketing and supply chain
management. To initiate a discussion, you as instructor may ask your class, “How many of
you are NOT involved in selling?”
Point out to the students that marketing involves more than just selling: it involves identifying
what customers want and then providing them the product they want at a price they are
willing to pay at the place that they want it and promotion lets them know about the product,
price, and place. That is a challenge and it is especially a challenge when trying to reach a
variety market segments around the world who have different tastes regarding the product,
who may respond differently to price and promotion and there are significant challenges in
providing that product at the place desired through an often very complex supply chain.
Opening Case Discussion Guide
The opening case (Zara rewrites the rules on Marketing and Supply Chain Management)
covers a firm that seems to have violated most of the rules for marketing and supply chain
management except for one: it has found innovative ways to give the customer what the
customer wants. Its strengths include being able to rapidly respond to opportunities. The case
should inspire those who like to “think out of the box.”
Many students, especially female students, will know Zara from their personal experience.
You may thus initiate a discussion by asking, “why do you go to Zara; what is different about
Zara?” They will probably explain that Zara often offers ‘something new’ making it
worthwhile to have a look – and then you can ask, “how do they achieve that frequent
newness?”
Chapter Outline, Section by Section
Section 1: Understanding Consumers Around the World
Key Ideas
A key challenge for those selling internationally is to understand their customers abroad, and
to avoid blunders. A Financial Times (Oct 10, 2010) article nicely complements this section
and In Focus 17.1. It discusses similar techniques of anthropological consumer research used
by major multinational enterprises. In addition to filming people in their everyday life, firm
may ‘embed’ their market researchers in social groups to understand what people do with
their products and how they talk about them. The techniques, described as highly innovative
in the text, are becoming quite common. http://www.ft.com/cms/s/0/f4a691ee-d6ef-11df-
aaab-00144feabdc0.html.
Key Concepts
marketing
Efforts to create, develop, and defend markets that satisfy the needs and wants of individual and
business customers.
supply chain
Flow of products, services, finances, and information that passes through a set of entities from a source
to the customer.
supply chain management
Activities to plan, organize, lead, and control the supply chain.
Section 2: The Marketing Mix
Key Ideas
This section introduces the four Ps of marketing. If students have taken a marketing class
before, they are likely to be familiar with these concepts, and you should focus on applying
these concepts when competing in foreign markets.
Key Concepts
marketing mix
The four underlying components of marketing: product, price, promotion, and place.
product
The offerings that customers purchase.
market segmentation
A way to identify consumers who differ from others in purchasing behaviour.
multi-tier branding
A portfolio of different brands targeted at different consumer segments
price
The expenditures that customers are willing to pay for a product.
price elasticity
How demand changes when prices change.
total cost of ownership
Total cost needed to own a product, consisting of initial purchase cost and follow-up
maintenance/service cost.
promotion
Communications that marketers insert into the marketplace.
place
The location where products and services are provided.
Section 3: Supply Chain Management
Key Ideas
Supply chain management concerns how to coordinate all the activities of a company’s value
chain. It incorporates the purchasing function and the distribution channel, but it critically
includes all the processes companies have to deliver products to customers at the desired
quality and at the desired time.
We introduce the three A’s of supply chain management: Agility deals with the ability to
quickly react to unexpected shifts in supply and demand. Adaptability refers to the ability to
reconfigure supply chain in response to longer-term external changes. Alignment focuses on
the alignment of interests of various players in the supply chain.
The case of Yihaodian (In Focus 17.3) illustrates the importance of operations and logistics
for e-commerce, and area where many innovations happen in emerging economies. Note that
Yihaodian was fully acquired by Walmart in late 2015.
Key Concepts
distribution channel
The set of business units and intermediaries that facilitates the movement of goods to consumers
inbound logistics
Purchasing and the coordination of intermediaries on the supply side
outbound logistics
Sales and the coordination of intermediaries on the customer side
intra-logistics
The effective movement of goods within a factory
agility
The ability to quickly react to unexpected shifts in supply and demand.
adaptability
The ability to change supply chain configurations in response to long-term changes in the environment
and technology.
alignment
The alignment of interest of various players.
third-party logistics (3PL)
A neutral intermediary in the supply chain that provides logistics and other support services.
Section 4: Institutions, Marketing and Supply Chain Management
Key Ideas
This section discusses some example of local institutions creating constraints on marketing
and/or SCM. The first theme is advertising standards; the second is ownership constraints, the
third concerns cultural differences.
Key Concepts
standards in advertising
Formal rules designed by governments to protect consumer
Section 5: Resources, Marketing and Supply Chain Management
Key Ideas
This section applies the VRIO criteria to marketing and SCM.
Key Concepts
No new concepts.
Section 6: Debates and Extensions
Key Ideas
The first debate introduces the challenges of marketing in business to business markets,
which may be less ‘sexy’ than consumer goods marketing, but essential for many European
businesses operating abroad. Figure 17.3 introduces a conceptual framework created based on
my own field research, In Focus 17.5 illustrates the issues for a company spun off from Bayer
in 2015 under the name of Covestro.
The second debate concerns the positive or negative effects of a country of origin image and
its impact on marketing strategies.
Key Concepts
business-to-consumer (B2C) marketing
Marketing to final consumers of a product
business-to-business (B2B) marketing
Marketing to other businesses that will further process the product
relationship marketing
A focus to establish maintain and enhance relationships with customers.
ingredient branding
Creating a brand identity for a component of a products.
country-of-origin effect
The positive or negative perception of firms and products from a certain country.
Section 7: Implications for Practice
Key Ideas
This concluding section emphasizes the need to study the relevant aspects of the local
environment for marketing and supply chain management, and to focus on agility,
adaptability and alignment of the supply chain.
Key Concepts
No new concepts.
Review Questions
Review questions are provided to students on the website accompanying the book. They
directly ask to summarize the material provided in the text. Instructors may also use the
questions to structure their lectures or review sessions.
Review Questions
(as provided to students on the website)
Material in the Book
1. Why are marketing and supply chain activities
intrinsically related in many MNEs?
2. How can companies aim to understand their
(potential) consumers in other countries and
cultures?
3. What is the marketing mix, and how can MNEs use
4. Under which circumstances are respectively global
and local brands more suitable to reach a group of
consumers?
5. How can companies combine global brand appeal
and local touch?
6. How do companies price their products abroad?
Page 473 and Opening Case
Page 474-476
Page 476-477
Page 476-477
Page 477
Page 478-479
7. How do companies adapt their promotion strategies
to varying circumstances abroad?
8. What is supply chain management?
9. Why is agility important for supply chain
management, and how can it be achieved?
10. Why is adaptability important for supply chain
management, and how can it be achieved?
11. Why is alignment with key partners important for
supply chain management, and how can it be
achieved?
12. When is third-party-logistics (3PL) best to enhance
competitiveness?
13. How do national and international institutions
shape marketing and supply chain management
practices?
14. How do marketing and supply chain management
enhance a company’s resource and capability
profile?
15. What are the key differences between marketing in
B2C markets and in B2C markets?
16. How can companies realize the positive potential of
their country of origin image?
Page 479-481
Page 481-482
Page 483-484
Page 485-486
Page 486-487
Page 486
Page 487-488
Page 488-489
Page 489-491
Page 491-492
At the end the chapter, we provide discussion questions that aim to stimulate students
thinking beyond memorizing the material learned in the chapter. They are designed to be
used at a basis for in-class discussions, group work, or individual assignments. Below, we
provide some indicative answers of issues that may be raised in response to these questions.
Discussion Questions
(as provided in the book)
Indicative Responses
1. Consider a novel product (such as
a wearable IT device) and a
These students challenge students to demonstrate
their strategic thinking and argumentation, and
country you know very little
about (say China or Brazil). How
are you going to find the
information you need to design a
marketing strategy?
2. In Hollywood movies, it is
common to have product
placement (have products, such
as cars from sponsored
companies appear in movies
such as Facebook to promote
your product without putting off
at a UK firm. A volcano breaks
out in Iceland, disrupting air
their ability to identify appropriate approaches to
gathering information on (potential) customers)
and to structuring ethical discussions.
1. This question relates directly to three
approaches introduced on page 518.
2. If you are a marketer, you may first wish to do
some “marketing research” before deciding
how to proceed. You may want to first of all
determine whether there is either an actual
ethical problem or at least perceived ethical
be gained, you might want to avoid the use of
placement even though you and some of the
Once brand manager get profile of target
consumers, he/she can use marketing mix to
travel across Europe. On the one
hand, you are considering
switching to local suppliers in the
UK. On the other hand, you feel
bad about abandoning your Asian
suppliers, with whom you have
built a pleasant personal and
business relationship, and who –
in the long run – may be able to
delivery produce much cheaper.
Yet, your tightly coordinated
production cannot afford to miss
one supply shipment. How do
you proceed?
5. As a plant manager in a car
factory in the UK, you are
heavily relying on components
sourced through longterm
partnerships with suppliers
develop marketing strategy for chocolate bars.
Social networking can also be used to create a
community of fans sharing experiences, which
in turn may enhance the brand appeal (but also
risks losing control over the brand image).
4. It might be worthwhile to consider developing
a committee or alliance in which you and your
suppliers work together in helping to solve
each other’s problems and as a group do
contingency planning for events (flu,
hurricanes, earthquakes, etc.) that could disrupt
the flow of supplies and that might include
temporary contracts to others such as one in
Europe if any or all of existing suppliers should
encounter some disaster.
5. The question challenges students to analyse
supply chain agility in connection with policy
induced uncertainty. Solutions may include
building greater warehouses, setting up
The closing case provides further opportunities to apply ideas and concepts learned in this
chapter in a real world setting. The Closing Case for this Chapter is “Li & Fung” and focuses
on how Li & Fung build a business empire by taking care of other people’s logistics, thus
introducing recent developments in 3PL. Below are some indicative responses to the case
discussion questions.
(as provided in the book)
1. From a resource-based perspective,
what distinguishes Li & Fung from
suppliers, buyers, and other
intermediaries?
2. From an institutional perspective,
how can you explain the role of trade
intermediaries in international supply
chains?
3. Intermediaries such as Li & Fung
need to be paid. Why, after paying Li
& Fung a fee, buyers and suppliers
still find it valuable to deal through
an intermediary? In other words,
why don’t they trade directly?
1. Question 1 and 2ask students to
apply the tools first introduced in
Chapter 4 to identify and assess the
resources of Li & Fung.
2. On the basis of question 1, students
should be able to explain how Li &
Fund adds value – in a nutshell, the
fees charged by Li & Fung are still
lower than the costs businesses
would incur if they were to do all
these supplementary services in
house.
Further Learning Activities
In addition to the cases and discussion questions provided in the book, instructors may want
to use any of the following activities to further engage students with the material.
1. The Integrative Case ‘SSI Schaefer: Internationalization of Intra-Logistics’
introduces the notion that companies traditionally operating as ‘manufacturing’ are
moving to become ‘solutions provider’. This requires not only much higher degrees of
customization and after sales services, but changes how they can reach international
specific options for foreign entry (Chapter 12). The main business of the firm is to
help firms optimize their intra-logistics, and hence the case also raises many issues
discussed in Chapter 17.
student understand the consequences of the Brexit process and of different options to
design future international trade regime for companies that have to make major
(Chapter 5) with institutional knowledge of the EU (Chapter 8) and of multilateral
institutions such as the WTO (Chapter 9). While the preceding case (Negotiating
Brexit) is taking a national policy perspective, this case brings the issues down to the
corporate level. The case can also be discussed to analyse the role of subsidiaries and
unit HQ within a multinational organization (Chapter 15) and the role of pan-
European supply chains and sourcing operations (Chapter 17).
3. The Integrative Case ‘McDonald’s Reinvents itself in India’ has been written to
discuss two fundamental challenges of foreign market entry: (1) how to adapt
products and processes to a local contexts, and (2) how to manage a partnership with a
local firm or entrepreneur. The case illustrates many good practices regarding
adaptation, perhaps surprising given McDonald’s image of a global brand. However,
it also highlights problems McDonald’s experienced in the relationship with one of its
local joint venture partners, a conflict that is still ongoing, and among other highlights
challenges of contract enforcement in a ‘weak’ institutional context. The case
discussion thus requires integrating learning from entry strategy (Chapters 11 and 12)
with operational strategy in logistics and marketing (Chapter 17).
4. The Integrative Case ‘Beko Washes Clothes Across Europe’ discusses the
international growth strategy of the Turkish washing machine brand Beko. It covers
initial entry strategies (Chapter 12), development of the brands and its distribution
channels (Chapter 17), mergers and acquisitions (Chapter 14) and eventually
coordination of dispersed units across Europe (Chapter 15).
5. Your company has developed a dominant global supply network that has contact with nearly
every country in the world. However, recent internal initiatives have encouraged managers to
reconfigure your company’s supply network to increase efficiency. As a part of this process,
you must use established logistics performance metrics to identify the country that has the
highest logistics competence on each continent (Africa, Asia, Europe, North America, and
South America). Prepare a report that indicates your recommendations and rationale for each
continent. What could explain the results of your analysis?
One resource which can be used is “Logistics Performance Index”. This website can be found
by entering the search term “logistics performance” at the globalEDGE™ Resource Desk
search box located at http://globaledge.msu.edu/resourceDesk/. Once at the Logistics
Performance Index website, click on Global LPI Ranking (you may need to scroll down a
little). At this point, you have the option to download the data in Excel format (button found
on right side of screen). There are 7 attributes which encompass the LPI. The attribute this
exercise focuses on is Logistics Competence. The 2007 report indicates the following
countries with the highest level on this attribute for each continent: South Africa (Africa),
Singapore (Asia), Netherlands (Europe), Canada (North America), and Chile (South
America). Students may come to many different conclusions based on the data available.
Search Term: “logistics performance”
For use with Peng and Meyer, International Business 3e, 9781473758438, © Cengage Learning
EMEA 2019
ntentMDK:21514122~menuPK:3875957~pagePK:210058~piPK:210062~theSitePK:515434,
00.html
globalEDGE™ Tags: Rankings
2. You are conducting an international survey concerning possible acceptance of a new leisure
activity: space tourism. One issue that can influence whether individuals in a country find this
new concept interesting is culture. Based on a data source that assesses culture around the world,
identify the cultural trait that could measure general acceptance of space tourism by country.
Then, determine which countries are ideal to target for commercialization. Be sure to support your
position thoroughly in the report provided.
One resource which can be used is “Geert Hofstede Resource Center”. This website can be
Malaysia could be analyzed as well. This provides a platform from which to discuss
marketability and viable commercialization of the concept in each country based on economic
status, population trends, etc.
Further Readings
At the end the chapter, suggested further readings are provided. The primary aim is to
provide students a starting point for further work, for example when preparing a class
assignment or dissertation. These references also are recommended for instructors not
familiar with the topic and wishing to ‘get ahead of the students’ before lecturing on a topic.
J. Mangan, C. Lalwani & T. Butcher, 2008, Global Logistics and Supply Chain Management,
Chichester: Wiley – a textbook on the international supply chain part of this chapter.
P. Marsh, 2012, The New Industrial Revolution: Consumers, Globalization, and the End of Mass
Production, New Haven, CT: Yale University Press – a Financial Times journalist analyzes
how globalization has changed the way manufacturing and global supply chains are organized.
M. de Mooij, 2014, Consumer Behaviour and Culture, 4th ed., London: Sage – explores how
For use with Peng and Meyer, International Business 3e, 9781473758438, © Cengage Learning
EMEA 2019
D. Ricks, 2006, Blunders in International Business, 4th ed., Oxford: Blackwell – humorously tell
the story of mistakes made by international business people, mostly in the area of marketing.
J.C. Usunier & J. Lee, 2012, Marketing across Cultures, 6th ed., London: Prentice Hall – A
marketing textbook focusing on international and cross-cultural issues.
A.J. van Weele, 2005, Purchasing and Supply Chain Management, 4th ed, London: Cengage – A
textbook on supply chain management analysis and practice.
