Marketing Chapter 5 Homework when a country can produce a product or service at a lower cost than any other country or when it is the only country that can provide that product or service.

Unlock access to all the studying documents.

View Full Document

Instructor Manual

Lamb/Hair/McDaniel, MKTG 13E, 9780357127810; Chapter 5: Developing a Global Vision

Table of Contents

Purpose and Perspective of the Chapter …………………………………………………………………………. 2

Cengage Supplements …………………………………………………………………………………………………… 2

Learning Outcomes ……………………………………………………………………………………………………….. 2

Complete List of Chapter Activities and Assessments ……………………………………………………… 3

Key Terms ……………………………………………………………………………………………………………………… 5

What’s New in This Chapter ……………………………………………………………………………………………. 7

Chapter Outline …………………………………………………………………………………………………………….. 8

Discussion Questions …………………………………………………………………………………………………… 22

Additional Activities and Assignments …………………………………………………………………………… 23

Appendix …………………………………………………………………………………………………………………….. 29

Generic Rubrics ……………………………………………………………………………………………………………………… 29

Standard Writing Rubric …………………………..……………………………………………………………………………… 29

Standard Discussion Rubric ……………………………………………………………………………………………………… 30

Purpose and Perspective of the Chapter

The purpose of this chapter is to learn the importance of being able to identify global

marketing opportunities and understand global networks in order to create effective global

Cengage Supplements

The following product-level supplements provide additional information that may help you

in preparing your course. They are available in the Instructor Resource Center.

• Transition Guide (provides information about what’s new from edition to edition)

• Educator’s Guide (describes assets in the platform with a detailed breakdown of

activities by chapter with seat time)

Learning Outcomes

The following learning outcomes are addressed in this chapter:

5-1 Discuss the importance of global marketing

5-2 Discuss the impact of multinational firms on the world economy

Complete List of Chapter Activities and Assessments

For additional guidance refer to the Teaching Online Guide.

Chapter

Learning

Objective

PPT slide

Activity/Assessment

Duration

Certification

Standard

N/A

MindTap: Why Does the

Global Marketing Mix

Matter to Me?

5 minutes

BUSPROG:

Reflective

Thinking

DISC:

International

5-1

MindTap: Learn It 5-1:

Rewards of Global

Marketing and the

Shifting Global Business

Landscape

5 minutes

BUSPROG:

Analytic

DISC:

Diversity

5-3

MindTap: Learn It 5-3:

External Environment

Faced by Global

Marketers

5 minutes

BUSPROG:

Analytic

DISC:

International

Perspective

5-4

MindTap: Learn It 5-4:

Global Marketing by the

Individual Firm

5 minutes

BUSPROG:

Analytic

DISC:

International

Perspective

MindTap: Learn It 5-5 and

BUSPROG:

MindTap: Assignment

BUSPROG:

Analytic

DISC:

Marketing

Plan

5-1 – 5-6

MindTap: Case Activity

15 minutes

BUSPROG:

Analytic

DISC:

Diversity

International

5-3

Knowledge Check 1 in PPT

5 minutes

BUSPROG:

Diversity

DISC:

International

Perspective

5-4

Knowledge Check 2 in PPT

5 minutes

BUSPROG:

Diversity

DISC:

International

Perspective

Diversity

International

[return to top]

Key Terms

absolute advantage: when a country can produce a product or service at a lower cost

than any other country or when it is the only country that can provide that product or

service.

balance of payments: the difference between a country’s total payments to other

countries and its total receipts from other countries.

contract manufacturing: private-label manufacturing by a foreign company.

countertrade: a form of trade in which all or part of the payment for goods and services is

in the form of other goods or services.

countervailing duty: a tax on imported goods to offset a subsidy or other financial

assistance given to a foreign exporter by its government that enables the foreign exporter

to sell at an artificially low price in the global marketplace.

export agent: an intermediary who acts like a manufacturer’s agent for the exporter; the

export agent lives in the foreign market.

export broker: an intermediary who plays the traditional broker’s role by bringing buyer

and seller together.

global marketing: marketing that targets markets throughout the world.

global vision: recognizing and reacting to international marketing opportunities, using

effective global marketing strategies, and being aware of threats from foreign competitors

in all markets.

gross domestic product (GDP): the total market value of all final goods and services

produced in a country for a given time period.

licensing: the legal process whereby a licensor allows another firm to use its

manufacturing process, trademarks, patents, trade secrets, or other proprietary knowledge

Mercosur: the largest Latin American trade agreement; full members include Argentina,

Brazil, Paraguay, Uruguay. Associate members are French Guiana, Suriname, Guyana, Chile,

Colombia, Ecuador, Peru, and Bolivia.

protectionism: where a nation protects its home industries from foreign competitors by

establishing artificial barriers, such as tariffs and quotas.

Uruguay Round: a trade agreement to dramatically lower trade barriers worldwide

created the World Trade Organization.

[return to top]

What’s New in This Chapter

The following elements are improvements in this chapter from the previous edition:

• New discussion of why nations trade.

• New examples of U.S. firms that have a majority of their workforce abroad: Kellogg,

Fresh Del Monte, G.E., United Technologies, Honeywell, Abbott Labs, Philip Morris,

Merck, and Hanesbrands.

• New discussion of the Comprehensive and Progressive Agreement for Trans-Pacific

Partnership.

• New discussion of CAFTA-DR.

• New discussion of Brexit.

[return to top]

Chapter Outline

In the outline below, each element includes references (in parentheses) to related content. “LO

CH–##” refers to the chapter learning outcome; “PPT Slide #” refers to the slide number in the

PowerPoint deck for this chapter (provided in the PowerPoints section of the Instructor Resource

1. Rewards of Global Marketing and the Shifting Global Business Landscape (LO 5-1, PPT

Slide 3, DISC: International Perspective)

a. Global marketing, which targets markets throughout the world, has become

imperative for most large and many middle-sized businesses, but smaller firms

b. Global marketing applies to U.S. organizations doing business abroad as well as

foreign companies doing business in the United States. In many industries, U.S.

c. Why Nations Trade: A country has an absolute advantage when it can produce

a product or service at a lower cost than any other country or when it is the only

country that can provide the product or service. According to the principle of

comparative advantage, each country should specialize in the products or

services that it can produce most readily and cheaply and trade those products or

services for goods and services that foreign countries can produce most readily

and cheaply. This specialization ensures greater product availability and lower

prices.

Examples: China has a comparative advantage in assembling smartphones

d. Comparative advantage acts as a stimulus to trade. When nations allow their

e. Importance of Global Marketing to the United States: Many countries depend

on international commerce to obtain goods and services used in the production of

final products sold. Gross domestic product (GDP) is the total market value of all

final goods and services produced in a country for a given time period. France, the

United Kingdom, Canada, and Germany derive 63, 62, 64, and 87 percent of their

respective GDP from world trade—considerably more than the United States’ 27

percent. Traditionally, only large companies competed internationally. Today,

many medium- and small-sized organizations also pursue international markets.

• Job Outsourcing and Inshoring: Outsourcing involves sending U.S. jobs abroad.

Although many companies believe it leads to corporate growth, efficiency,

• Benefits of Globalization: Traditional economic theory says that globalization

relies on competition to drive down prices and increase product and service

quality. Globalization expands economic freedom, spurs competition, and

• Costs of Globalization: In some cases, global trade has increased competition

for domestic firms and led to job losses. In theory, if a country can boost

2. Multinational Firms (LO 5-2, PPT Slide 12, DISC: International Perspective)

a. A multinational corporation is a company that is heavily engaged in

international trade, beyond exporting and importing. It typically moves resources,

goods, services, and skills across national boundaries. Multinationals often

develop their global business in four stages:

• Conduct global business via the Internet

b. Many U.S.-based multinational corporations earn a large percentage of their total

revenue abroad (e.g., Caterpillar, Walmart, Exxon Mobile, Apple, General Motors,

Ford, and Chevron).

c. Are Multinationals Beneficial?: Although multinationals comprise far less than 1

percent of U.S. companies, they account for about 20 percent of all private jobs

and 25 percent of all private wages. The potential benefits of multinational

corporations include the following:

• Drive productivity growth

d. The potential drawbacks of multinationals include the following:

• Tend to focus on modern technology, resulting in employing only a small

proportion of the labor force

e. Global Marketing Standardization: Traditionally, marketing-oriented multinational

firms have operated somewhat differently in each country by offering different

product features, packaging, advertising, and so forth. Communication and

technology have made the world smaller, so now there is a trend toward global

marketing standardization, which is the production of uniform products that can

3. External Environment Faced by Global Marketers (LO 5-3, PPT Slide 18, DISC:

International Perspective)

a. A global marketer or a firm considering global marketing must consider key factors

in the external environment, including:

• Culture

b. Culture: Understanding a country’s culture is essential to success in marketing.

Elements of culture include:

• Common values

c. Each county has its own customs and traditions that determine business practices

and influence negotiations with foreign customers.

Examples: In India, a “limp” handshake conveys respect and avoiding eye contact is a

sign of deference. Americans do not want celebrity gossip or social interaction when

d. Economic Factors: The level of economic development in the countries where an

organization operates is an important factor in global marketing. Typically, complex

and sophisticated industries are found in developed countries, and more basic

e. A marketer with a global vision can use GNI (gross national income) data to help

gauge market potential in countries around the globe. GNI is a country’s GDP

(defined earlier) together with its income received from other countries (mainly

interest and dividends) less similar payments made to other countries. The cost of

doing business in a country is another consideration.

• The Balance of Trade and the Balance of Payments: A country that exports more

goods or services than it imports is said to have a favorable balance of trade.

military presence abroad.

f. The Global Economy: Although the U.S. economy still dominates, BRICS countries

play an increasingly important role.

• Brazil – currently suffering its worst recession in 25 years

g. Political Structure and Actions: Government policies run the spectrum from no

private ownership and minimal individual freedom to little central government and

maximum personal freedom. Government regulations:

• Give businesses a framework to grow and prosper

• Can produce fairer outcomes

• Can overburden businesses, making it difficult to operate

• Legal Considerations: Many legal structures are typically designed to either

encourage or limit trade. The most common legal structures affecting trade are:

o Tariff – a tax levied on the goods entering a country

opportunities (e.g., the EU)

• Trade agreement – an agreement to stimulate international trade (e.g.,

Mercosur)

h. The Trade War: For several years, the United States and China have been waging an

escalating trade war in which one country raises tariffs to protect domestic

industries and the other retaliates. An escalating trade war does not benefit either

• Enforcing tariffs on goods entering the United States can also be complicated.

Every product imported carries a 10-digit HTS code. Tariffs can be avoided

• United States–Mexico–Canada Agreement: The North American Free Trade

Agreement (NAFTA) has been replaced by the United States–Mexico–Canada

Agreement (USMCA). The agreement states that if one of these countries makes

a free-trade agreement with a “nonmarket economy,” then USMCA could be

terminated. This is designed primarily to discourage agreements with China.

Other key provisions of the new agreement are:

o Country of Origin Rule – Cars and trucks must have 75 percent of their

components manufactured in Mexico, United States, or Canada to qualify

for zero tariffs.

o Intellectual Property Protections and Digital Trade Provisions – The agreement

extends a copyright from 50 years beyond the life of an author to 70 years.

It also extends protection to new biologic drugs from 8 years to 10. Also,

there will be no duties on products purchased electronically, such as music

or e-books. In addition, Internet companies are not held liable for content

their users produce.

i. The World Trade Organization: Created in 1994 to foster global trade, the World

Trade Organization (WTO) now has 164 members (nations). It has been successful

in lowering barriers to trade through member negotiations called “rounds.” The

Uruguay Round, which created the (WTO), reduced tariffs worldwide by one-third.

• The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPATPP):

The CPATPP consists of Australia, Brunei, Darussalam, Canada, Chile, Japan,

Mexico, Malaysia, New Zealand, Peru, Singapore, and Vietnam. The objective is

to cut tariffs and to create common trade laws and regulations.

• The Pacific Alliance: This alliance consists of Colombia, Chile, Peru, and Mexico

• Dominican Republic Central America Free Trade Agreement: Consisting of the

United States, the Dominican Republic, Costa Rica, El Salvador, Guatemala,

• European Union: The European Union (EU) is one of the world’s most important

free trade zones. It is a political and economic community comprised of more

than 510 million citizens. The EU Guarantees the freedom of movement of

people, goods, services, and capital between member states. It maintains a

common trade policy with outside nations and a regional development policy. It

compared with an average of about 9 percent among the WTO’s members.

However, both European and American policy makers have for decades

attempted to protect select industries for domestic interests, resulting in high

tariffs from both sides on certain products.

• Brexit: In June 2016, the United Kingdom (UK) voted to leave the EU because

2018, the EU passed the General Data Protection Regulations (GDPR) requiring

any firm doing business with EU citizens to explain how their data will be used,

allow them to see what is collected, obtain consent, and then permit them to

withdraw consent at any time and demand that their data be deleted. It is

estimated that companies will spend $78 billion to meet the demands of GDPR.

key issues related to global economic stability.

j. Demographic Makeup: Two primary determinants of any consumer market are

wealth and population. Between 2015 and 2030, 75 percent of global consumption

growth will be driven by individuals spending more. Three groups will generate

about half the world’s consumption growth:

• China’s working-age population

l. Natural Resources: When looking at the impact of the external environment,

marketers must consider the distribution of natural resources. Some natural

resources are found in just a few select countries, which enables these countries to

restrict supply and inflate prices. Differences in the locations and quantities of

natural resources create:

• International dependencies