advanced global marketing 4 (agm401) booklet of...

Advanced Global

Marketing 4

(AGM401)

BOOKLET OF

SUGGESTED

SOLUTIONS

Dear Students

Please keep in mind that the answers provided in this document are mere guidelines of how to

approach and answer questions from your learner guide, and your answers may vary

somewhat to the answers provided in the booklet, so please use this as a guideline.

Good luck with your studies.

Kind regards,

The IMM GSM Team

IMM GSM Booklet of Suggested Solutions Advanced Global Marketing 4 AGM401 of 98

STUDY UNIT 1: CHANGES AND NEW CHALLENGES

Revision Question 1

1. Define domestic marketing in your own words. Give an example.

Domestic marketing operates on a local or national level. This means that domestic marketing takes

place within a set physical or geographical boundary that has little concern with marketers outside

that boundary. Domestic marketers know their consumers, their wants and needs whereby they can

anticipate changes. The domestic marketer does not have many restrictions on his/her planning,

implementing or controlling of marketing plans. There is less competition within domestic markets and

it generally has a more limited range.

2. Define international marketing in your own words. Give an example.

International marketing takes place when the marketer looks outside of the domestic or national

boundaries for marketing opportunities. This very simply takes the form of basic import and export of

goods and services. The marketer scouts out the international markets to see if there is opportunity or

demand for a product or service that is similar to those in the domestic markets.

3. Define global marketing in your own words. Give an example.

Global marketing refers to the idea that the world has no central point. In other words, there are no

borders or geographical boundaries limiting the operation of marketing. All countries form part of

global marketing, regardless of the type of economy – established or emerging. This type of

marketing opens up trade and markets worldwide.

4. Discuss the similarities and differences between domestic, international and global

marketing.

Similarities:

All three involve marketing and trading of products and services.

All three require entry into markets.

All three have certain regulations and rules of operation.

Influence of culture on marketing has to be considered with all three types of marketing.


Differences:

The location and area of operation is different – local, international or global.

Competition levels in the different marketing domains differ – global is more competitive than

domestic.

Restrictions may be put in place for global and international marketing – these restrictions will be

less for domestic marketing and trading.

Revision Question 2

1. Discuss the seven (7) factors that influence the changes in the global market environment.

Students should use the diagram in Lee and Carter (2012) or study guide as a starting point and

elaborate:

New Economic Powerhouses – countries such as Brazil, Russia, India and China will

experience great economic and population growth and will draw more focus from marketers.

New Direction of Global Engagement – through recent experiences in Canada and the USA it

has become clear that globalisation has its place in global markets, but also that local markets

are just as important and should be developed equitably and allowed to grow as a free market.

Changing Consumer Demographics – consumer demographics and expectations change

often and influence marketing on all levels. Factors such as increased wealth, longer life

expectancy and lower fertility are changing consumer expectations.

Changing Nature of Competition

- Size of competitors has increased and they have more and better resources at their disposal.

- Competition is now global and no longer only national.

- Boundaries between industries are less clear and competition is between different industries and

no longer only between similar businesses in the same industry.

Global Services Economy

- The service sector is quickly replacing the manufacturing sector as the main source of GDP.

- Services include transportation, communication, education, etc.


New Technologies

- Advances in technology have extended the reach of marketing to millions of people worldwide.

- New technologies also enable the lowering of distribution and marketing costs and also reduces

errors and the amount of time spent on services, etc.

- Allows the development of relationships between consumers and marketers/businesses.

Growing Transparency of Corporate Practices

- Global media has resulted in more transparency regarding the global practices of companies in

different countries.

- Forces companies to be more ethical in their operations and to pay more attention to social and

environmental issues.

2. Read the Mini-case Illustration – Facing up to the challenge.

- Why is it so remarkable that Challenger Superstore flourished?

It is remarkable because the company suffered great losses during the Asia financial crisis and the

recession. The company had to make cut-backs and retrench staff as well as pull out of Thailand,

Indonesia and Brunei in order to survive.

- List the steps Loo took to counter the effects of the Asia financial crisis on his business. Do

you think there are any other measures he could have taken?

Cut back costs and daily expenditure

Pulled out of Indonesia, Thailand and Brunei

Disposed of some of the company’s assets

Retrenchment of staff.

3. Read the article Whose responsibility is it? – Making free and fair trade for all.

- Your answer should reflect the issues surrounding free trade undermining smaller producers as well

as your opinion of free trade by rich countries.

4. Read the article The Digital Impact – The evolution of e-commerce.

- List the potential advantages of e-commerce that you can identify from this article.

Communication mechanism for academic and research community

Reduces costs


Improves quality goods and services

Convenience

Offers business opportunities

Offers marketing and market entry opportunities.

- What disadvantages could e-commerce have?

Sharing or stealing of personal info such as banking details or credit card numbers

The fall of traditional shops and trade

Loss of personal relationships between buyers and sellers.

Revision Question 3

1. Briefly discuss the history of how approaches to global marketing have changed in the last

100 years or so.

Approaches to marketing changed as the world environment and demands changed. The approaches

listed below are in order of development over the last 100 years.

Production – companies produced at will and paid little attention to specific consumer wants and

needs (1920s – 1950s).

Selling – after the world wars, people had more stable incomes to spend (1950s – 1960s).

Transactional – characterised by focus on streamlining business operations and the relationship

between a company and its external stakeholders (1960s and 1970s).

Corporate re-engineering – companies were forced to downsize and make company structures

less expansive and specialised because of an increase in competition and a decrease in profits

(1980s).

Resource-based – more collaboration between different parts of the supply chain (1990s).

Relationship – approach that attempted to get closer to the customer and build a personal

relationship (1990s and 2000s).

Organisational learning (1990s and 2000s).

Expert systems/database (1990s and 2000s).

Interactive/benchmarking (1990s and 2000s)

Customer centricity – focus is placed on increasing buyer power through knowledge of products

and services and constantly adapting to the changing nature of consumer needs (2000s).

Sustainability – on a business, social and environmental level (2000s).


2. What is the triple bottom line?

The triple bottom line refers to marketers being conscious of

1) environmental sustainability,

2) social sustainability,

3) economic sustainability.

3. Read the Mini-case Illustration – BP caught fire in disastrous oil spill.

Students should read the case study and reflect on the examples of real-life situations describing the

theory they have learned.

4. Discuss the eight (8) new challenges that global businesses face today. Give an example to

illustrate each challenge and a company that can overcome the challenge.

Students should use the diagram in Lee and Carter (2012) and the study guide as a starting point and

elaborate.


5. Read the Mini-case Illustration – How Microsoft stays ahead of global competition.

- What is the one thing that keeps Microsoft on the forefront of computer technologies?

Innovation through research.


6. Read the article The Relationship Perspective – Partnership for strategic advantage.

- Discuss your opinion on companies entering into partnerships to get ahead.

Students must offer their own opinion. An example of a way you can construct an answer would be:

Your opinion could be that it is a good idea because there would be extra capital and more human

resources at your disposal, or your opinion could be that it is a bad idea as you are merging two

companies with different values leading to a confused business focus.

Revision Question 4

1. Choose a type of business – petroleum, food and beverage, steelworks, etc. – and use

Figure 1.3 in Lee and Carter (2012) to analyse how you need to organise your business in

order to go global.

Students should follow the development strategy as indicated in Figure 1.3 in Lee and Carter (2012),

and do their own analysis of developing analytic competence, strategic and managerial competence

and operational competence. This is application of the theory they have learned.


2. Read the End-of-Chapter Case Study – Google: The Next 20 Billion Dollars Question.

- What do you think are the factors that make Google so successful?

Student’s own answer. Possible answers can include innovation, targeting a gap in the market,

offering great services, etc.

- In your analysis, what are the internal and external challenges confronting Google? To what

extent do these challenges threaten the future of the company?

Challenges facing Google include:

Escaping the mature markets it is in

Innovation

Creating new competitive advantage

Entering new markets

Obtaining new partners to assist growth in new innovations

Keeping up with market changes

Possible restructuring

Internet experience becoming more social and network-oriented.

What do you think Google needs to do to maintain its dominant market position? How would

you go about it?

Developing products and services that go outside of its core business

Keeping up with changes in the markets

Developing new services that will compete more successfully with new companies on the scene

of social networking and online shopping, for example.

Revision Exercise 1

1. Discuss how changing consumer demographics globally will impact on consumers and

their expectations of products and services.

As consumers get older, get jobs, earn less or more money, get married, have children, move to

different countries or regions, etc., their needs and behaviour will change. The more children there

are in the world, the more marketing will be aimed at their market and what they want and need. As

certain generations grow older and get jobs and buy houses, certain marketers will focus on them.


Certain trends are global and will influence how marketers approach marketing strategies. Cultural

differences play a big role in consumer needs and behaviour.

2. Any global marketing strategy – that is – in the words of Drucker (1999) – ‘any commitment

of present resources to future expectations’, has to start with taking stock of the changes in

the global marketing environment. Discuss.

Students should discuss the statement by referring to how organisations need to keep up with

changing global marketing environments in order to wisely invest their resources in future

developments. An analysis for marketers will start with investigating and researching global marketing

trends and changes in recent years. Only when the trends are clear and positive future projections

and expectations can be done, should the organisation invest its resources.

3. After the financial turmoil that engulfed the US and Western Europe, evaluate how likely it is

that much of the world’s economic growth in the immediate future will be fuelled by the

emerging markets in the Asia Pacific and Latin American regions, and why.

Students should discuss with their own insight and opinions.

4. In the light of rapid global market changes, discuss the changing nature of global

competition and the ways in which it will present new challenges for organisations which

operate globally.

Students should discuss their opinions by referring to the following:

The size of (usually foreign) competitors is increasing and they have more resources, i.e. more

people and capital (to compete).

While competitors can seemingly access any international markets and compete freely, they are

protected by government in their own domestic market.

Competitors will not be limited to those that currently operate in the same industry.

The new competition is between networks rather than single organisations.

5. Why do you think the issues of corporate social responsibility and ethics are of tremendous

significance for global marketers today?

Student’s own answer based on the fact that consumers have become more centred on sustainability

and social issues such as child welfare, animal cruelty, etc. Companies that embrace such causes

are more likely to have competitive advantage than those that don’t.


STUDY UNIT 2: THE GLOBAL MARKETING ENVIRONMENT

Revision Question 5

1. Define the term global marketing environment in your own words.

Students to give a definition in their own words based on the following definition:

‘Those variables, largely out of the organisation’s control but which it must account for, within which it

conducts its business globally.’(Lee & Carter, 2012)

These variables are also called uncontrollable and environmental. These refer to the factors or

situations over which a business or marketer has little or no control, as opposed to the greater control

over the chosen marketing mix. In other words, the global marketing environment can be seen as the

unpredictable ocean of events that influences businesses and marketers without them having control

over the coming waves.

2. Discuss the reasons why the global environment is important to marketing.

There are several reasons why it is important to take the international environmental factors into

account that can influence a business’s operations and success. These reasons include:

Minimising the risk of failing

Helps point out the most important environmental factors that should be considered instead of

wasting valuable time on less important factors

Helps with decision making when strategies are planned

Helps to choose the best and most appropriate market and marketing mix

Helps with risk assessment when businesses consider which countries to do business with.

3. What are the three models for doing an environmental analysis?

SLEPT, PEST and STEEPLE, and also HELPS FREDICT

4. Discuss the factors within the global environment with reference to the macro and

intermediate environments.

a. Physical environment – involves ecological factors such as natural resources, location, etc.

b. Macro environment – refers to the factors that are viewed as uncontrollable and involves:


National and international socio-cultural factors

National governments and regional trading blocs

National and international political factors

Technological changes

Local and international pressure groups

Currencies

Global competitors

National and international economic factors

National and international institutions.

c. Intermediate environment – refers to the factors over which the business has some control and

involves:

Global customers – the reason for profit-making companies’ existence. Marketing is aimed at

customers/consumers in order to make money. Customers are very complex and their behaviour

and expectations change often. Certain cultural and social influences also play a role in the

approach to customers.

Global suppliers – any person or company that provides goods and services that are used by an

organisation. If the supplier is not owned by the organisation, it minimises the control and

therefore increases the risk. Risks include breakdown of supply, changes in currency and political

factors. In order to keep closer control of suppliers, networking and a close relationship with

suppliers are good practices.

Global distributors – provide transport, warehousing and fulfil orders. Less control if not owned

by the organisation, and networking and close relationships with distributors can minimise risks.

Global partners – include all companies which provide services that help international operations

run smoothly and efficiently. These include banks, freight forwarders, market research agencies,

insurers, accountants, etc. It is important to ensure that the organisation makes use of partners

that have the best knowledge and skills at the best price.

Other stakeholders – include customers, employees, interest groups and shareholders who

provide capital or may own stock in the organisation. Shareholders expect returns on their

investments and can demand action when results are not to their satisfaction.

Global supply chains.

d. Organisation – refers to the strategy, structure, people and process involved.


5. Read the Mini-case Illustration – A typical SLEPT analysis. Make sure you understand how

to do such an analysis.

Students must read the case study and reflect on the examples of real-life situations describing the


6. Do a SLEPT analysis for a toy company that wants to sell dolls in North Africa.

Students must use the SLEPT analysis and show how they would weigh the factors.

Revision Question 6

1. Read the Mini-case Illustration – Entrepreneurship at the ‘bottom of the pyramid’.



2. Read the Mini-Case Illustration – The Chinese in Africa.



3. What is your view on the partnership between China and Africa?

Student’s own answer.

Revision Question 7

1. Describe the political environment and give an example of its influence on marketing.

The political environment includes political factors on a national and international level and can

influence an organisation’s decision making, planning, implementation and control mechanisms. It is

of great importance to study and evaluate the political environment of the new markets that the

organisation wants to enter as the political environment can be very volatile and can change in the

blink of an eye. The ideal is to enter markets in countries that are politically stable and secure.

The government of a country plays a major role in if and how marketers function in that country. If a

country feels that it needs to protect a certain industry within its own country, then it may not allow

outside marketers in the country for products of that specific industry. Factors that can influence a


ruling party’s politics towards marketers include: attitudes towards sovereignty, taxes, expropriation of

profits, equity dilution and political risk.

2. Describe the legal environment and give an example of its influence on marketing.

The legal environment is created by a country’s laws as well as those countries it wants to trade with

or market in. These laws are influenced by the political and cultural approaches to business within a

specific country. Local domestic laws as well as international laws of all countries involved must be

considered and carefully studied. It can be quite a problem if an organisation is unfamiliar with a

country’s laws and is found to have broken these laws. It could incur large costs, as a representative

might have to stay in the country until the issues are resolved, on top of the legal costs.

3. Describe the economic environment and give an example of its influence on marketing.

In essence, the economic environment plays a great role in marketing. Therefore, it is very important

to study, analyse and be familiar with the economies of the marketing country as well as the target

countries. This will give the marketer better insights into how to approach the marketing mix.

Countries with stable economies and opportunities for growth would be ideal for organisations that

are looking to enter new markets. A good way of analysing the stability of the economy is by looking

at past trends within the country’s economy over a relatively long period of time.

4. Read the Mini-case Illustration – China’s entry into the WTO.



Revision Question 8

1. Discuss the socio-cultural environment and its influence on marketing.

The socio-cultural environment has to do with the demographics of a country – its people and how

they live, what they want and what they prefer. Factors such as social class, income, religion, culture,

customs, etc. must be considered when considering marketing opportunities within a country. Cultural

environments specifically involve the influence of religions, family, education and social systems. Part

of the socio-cultural environment is people’s values, their language and their idea of what is beautiful.

Things like concept of time and business norms also vary across different cultures and within different

social groups.


2. What are the pitfalls of misjudging ‘culture’ when looking for marketing opportunities in

other countries?

Misunderstandings can arise, people may be offended, marketing methods or content might be

against certain religious beliefs, some religions and countries do not eat or use certain products, etc.

3. Discuss the technological environment and its influence on marketing.

Technology factors have to do with how knowledge is applied in operations as well as the materials

and machines that are used to produce, market and sell products and services. The job for marketing

managers is to stay on top of all the new developments in technology and all the different options,

platforms, media, etc. that are available for marketing. This will entail determining or predicting the

possible advances or changes that can take place in the near future with regard to technology that

have to do with the organisation’s operations.

4. Read the article The Digital Impact – Keeping track on the music industry. This is a good

example of how technology is changing the world of commerce.



5. Read the article Whose Responsibility is it? – Ethics and the Internet.

- Discuss your view on ethics relating to computer crimes and privacy. Do you think enough is

being done to keep the Internet safe? What else would you do? Are there any gaps in the

market for other types of Internet security?


6. Read the article The Relationship Perspective – Radio frequency identification. This is yet

another example of how technology and its advances are taking over how things are done.

As a consumer, do you think ‘the big brother effect’ is a small price to pay to ensure safety

and security?



7. Discuss the competitive environment and its influence on marketing.

Competition between companies and organisations is increasing in the local and international sector.

This competitive environment is further increased through alliances and mergers taking place

between big organisations to increase their competitive edge.


A cluster can be described as a group of different companies or businesses that are interconnected

based on producing a product or delivering a service and they choose to work together in order to

increase each individual company’s ability to compete. The companies and organisations that make

up these clusters can include anyone from the suppliers to government officials, etc.

There are three ways in which clusters influence competition:

Forcing better productivity from companies in the surrounding and nearby areas

Directing the pace of innovation

Resulting in business development within the cluster when gaps are recognised and filled.

Revision Exercise 2

1. Discuss the currency environment and its influence on marketing.

The currency environment involves the money units of different countries and the comparative value

of those currencies. Different countries have different currencies and each currency has its own value

in comparison to another currency. The difference between currencies is called the exchange rate

and this influences trade between countries. The value of a currency is very important when import

and export is considered. The value of a currency is influenced by different factors and because of

this, it can change very quickly. These changes can also influence other countries because of the

influence the currency has on trade and the economy of a country.

2. Discuss pressure groups as a factor that influences marketing and decisions on how an

organisation is to be run.

Pressure groups play an important role in keeping an organisation honest and transparent. These

groups place focus and pressure on companies and organisations to enforce ethical codes of practice

and also take the environment into account in their daily operations. Organisations have been

attacked in the media for not being ethical or environmentally friendly. This type of media can be very

bad for organisations and because of this pressure groups can have great influence on the success

of a company or organisation.

3. Read the End-of-Chapter Case Study – The Qantas Moment’: Responding to sudden

changes in the global market environment.

- Other than Rolls-Royce and Airbus, identify the other stakeholders in the case and assess the effect

on them of the Qantas Moment.

EADS, Singapore Airlines, Lufthansa, passengers, newspapers, US Federal Aviation Administration,

Emirates, British Airways.


Regulating bodies are influenced by the financial costs and possible loss of trust as well as the safety

of future flights.

Passengers and their families are influenced by not trusting Rolls-Royce and the airlines it supplies.

Airlines are influenced by the dilemma of whether Rolls-Royce engines will fail again or whether they

can continue trusting them.

Rolls-Royce is influenced by a blow to its reputation and safety concerns. This will have financial

repercussions.

- Identify the marketing environmental factors in the case. Discuss the possible effects of

these factors on Rolls-Royce and Airbus.


- Make recommendations on how Rolls-Royce can re-engage with customers and other

stakeholders and restore their confidence and trust in its products.


4. Discuss the importance of the global marketing environment and its different factors on a

global marketing organisation.

Students must discuss the global marketing environment with reference to the political, economic,

legal, technological, competitive, socio-cultural and currency environments and how they influence

global organisations.

5. Culture is a very important factor to consider when planning marketing strategies and the

marketing mix. How can global marketers identify, analyse and account for culture and

cultural differences in planning the marketing operations?

Culture and its influences can be studied through various approaches:

Maslow’s Hierarchy of Needs,

Lee’s self-reference criterion, and

Hall’s high-context and low-context cultures.

6. How can alertness and proper handling of the marketing environmental factors give a global

marketer a competitive advantage?

Being ahead of the competition and always knowing what the global trends and changes are, gives

an organisation an edge. If an organisation does proper analysis of the global environment and all its


factors, it is much better equipped and can even anticipate or predict certain events and changes.

This ensures that the organisation is prepared and this gives it the competitive advantage.

7. What are the advantages and disadvantages of the growing power of the economic or trade

blocs?

Students must do research and answer in full. Some general advantages that can be named include:

Better relationships between different countries

Better bargaining grounds

Fair regulations between blocs

Grouping of countries makes them stronger to compete and trade.

Disadvantages include preferential treatment of certain countries or blocs, distrust between blocs,

etc.

8. How can developments in technology give a service supplier a competitive edge in a global

context?

Developments in technology can make delivery of services easier and faster. Depending on the

service and the technological advances, the service delivery might need very little organisation by a

human manager. Orders can be placed, messages or workers sent out, invoices emailed and the job

completed all through technology.

If a service delivery organisation were to do proper market analysis as well as know where the gaps

in the market are and who the competition is, it will have a competitive advantage. All of these

analyses and research can also be done faster and more efficiently through technology and its new

advancements.

STUDY UNIT 3: UNDERSTANDING GLOBALISATION

Revision Question 9

1. Identify the three waves of globalisation and briefly describe the factors that contributed to

these developments.

The three waves are:

Migration wave – due to people going to the New World and better jobs and money.


Integration wave – 1950 to 1980 – aftermath of World War II and the attempts to restore trade

relations, economic growth and stability.

Technology wave – 1980 to now – due to technological advances and the internationalisation of

business corporations.

2. Read the Mini-case Illustration – The global success of Starbucks. This is an example of

globalisation and how a company caters for cultural differences.



3. Define globalisation in your own words by referring to economic, political, technological

and cultural aspects.

Students to define the term in their own words based on the following:

Economic, political, technological and cultural aspects to define globalisation.

Economic globalisation: Transaction costs and barriers to doing business with other countries

are less. Markets become integrated. International competition emerges.

Political globalisation: The distribution of power on an international (between developed and

developing countries) and national level (different states or provinces). Decline of national

sovereignty – governments giving in to international pressures or demands in order to save the

national economy, for example.

Technological globalisation: Advances in global transportation and communication

technologies make the world a smaller place. People and goods can be transported across the

world in short time spans.

Cultural globalisation: More frequent exchange of culture through cheap travel, television and

communication. Increased trade of ‘cultural goods’. It is now easier to learn about different

cultures and to interact with people from different cultures.

Revision Question 10

1. Read the article The Relationship Perspective – The merger of Sony and BMG in the music

business.




2. Read the article The Digital Impact – Putting the ‘e’ into commerce.



3. Read the article Whose responsibility is it? – Does globalisation work for everyone?



4. Discuss whether globalisation is an opportunity or a threat for organisations that want to

operate globally.

Globalisation brings about both opportunity and threats for global organisations and marketers.

Opportunities of globalisation:

Market access – fewer trade barriers and cheaper costs make it easier for organisations to enter

global markets.

Financial integration – to make it easier for different countries and their currencies to do

business.

Reduction of communication and transportation costs.

Threats of globalisation

Macroeconomic volatility – the interlinked and interdependent nature of national economies

increases the influence of economic crises on individual economies.

Globalisation of competition – global markets are very competitive and successful competition is

absolutely crucial for survival of industries and organisations at the global level.

Growing anti-globalisation sentiments.

Revision Exercise 3

1. What are the major drivers of global migration?

Migration refers to people moving across country borders in search for better opportunities or living

conditions.

2. Explain the economic and social impacts of global migration.

Migration has an influence in different areas:


Economic growth – the influence of migration is different for the sending country than the

receiving country. The influence is also determined by whether the countries involved are rich or

poor. In some instances, migration can be positive in terms of filling labour demand or acquiring

skills not locally available. It can also be negative in the sense that the sending country might be

left with shortages.

Humanitarian crises – many people are forced to flee their countries because of violence and

inhumane conditions and treatment. For the true refugees, fleeing a country can save their lives.

Today, however, many are wary of the status ‘refugee’ as they believe that some people, who

simply want to enter a country for financial gains, now pretend to be refugees. Many refugees flee

to countries neighbouring their own and often these are the poorest countries in the world and a

large number of refugees who need assistance can make the burden on the already poor

economy, even heavier.

3. What are the main global issues which are posing a threat to environmental sustainability?

There are many concerns regarding environmental sustainability including:

Climate change – this is a very controversial issue at present. Climate change is said to be the

result of an increase in greenhouse gas emissions. These emissions inhibit the functioning of the

earth’s ozone layer and other climate regulators and cause the globe to warm to higher degrees

than in previous years. Environmentalists believe that if the earth is warmed to a specific

temperature, life sustainability and food production will be negatively influenced.

Food security – the production of food is already a problem in many poverty-stricken countries.

Climate change makes the problem of malnutrition and hunger even worse because it influences

the availability of foodstuffs. Weather conditions influence how and when crops can be grown;

agricultural land is becoming less by the day, warmer temperatures are influencing ecosystems

which leads to changing animal migration patterns and plants ceasing to grow where they used

to. This all influences the food security of the world.

Energy security – energy plays an important role in developing businesses, employment and

income generation. It is a large part of how an economy grows. There are real concerns regarding

the supply of crude oil for energy generation. It is predicted that the peak of production will be

reached in the not-too-distant future.

4. What will existing and future businesses and organisations have to do to become and

remain competitive within the global market?

Many companies have taken to becoming more environmentally friendly and implementing policies to

ensure that their operations cause as little harm as possible. Companies that are paying heed to the

demand for more environmentally friendly practices give themselves a greater competitive


advantage. In order to keep a competitive edge, however, companies will need to look at sustainable

development. Sustainable development refers to a concept of development (economically, socially,

etc.) for the present that does not compromise the ability of future generations to sustain themselves,

their families and the environment.

5. Read the Mini-case Illustration – The business of managing waste disposal.



6. Read the End-of-Chapter Case Study – The making of a global fast food giant.

- In what ways do you think political, economic, cultural, and technological discourses/

influences of globalisation have enabled McDonald’s to become the largest global fast food

company?

On the economic globalisation side, it helped McDonald’s to cross country borders and set up

restaurants in many different countries on every continent. Technological advances have made

production of the product and its packaging easier and more efficient. They have also helped improve

service delivery and expansion. Revamping the image of McDonald’s as well as advertising it through

different media can also be seen as making use of technological advances. McDonald’s has been

adjusting its products for cultural and other differences worldwide. It makes a point of knowing what

customers in different countries want and then makes sure that they get it.

- Use the information in the case study as well as your own knowledge and identify and

discuss the criticisms that have been directed towards McDonald’s. Do you think these

criticisms are justified?

Students must do research to add to the information they already have. A starting point can be the

following criticisms from Lee and Carter (2012):

Being American

Being authoritarian

Animal abuse

Exploitation of workers

Unhealthy, ecologically unsound, ruthlessly profiteering.


- What are the changes that McDonald’s has been undertaking in order to reinvent its

business? What are the potential benefits and risks associated with those changes for the

future of the business?

McDonald’s has been changing its image, its packaging as well as how it makes its food and serves

it. It has also made huge changes to accommodate country or culture-specific customers. These

changes seem to have had a positive influence as millions of people still eat McDonald’s every day.

Risks that could go with these changes include rejection of new products or images, people not

identifying with a new look or slogan, people not liking a new way of making or serving food, and

misjudging cultural preferences and offending or upsetting customers.

7. Discuss the statement: ‘Globalisation is a highly complex and contentious phenomenon.

There is simply no straightforward or accepted consensus as to what the term represents’.

Students must discuss in their own words by referring to the different definitions of globalisation and

what they mean.

8. Discuss the economic, political, technological and cultural aspects of globalisation. Give

examples of each.

Students must expand on the information below. They can do extra research and give their own

examples.

Economic globalisation: Transaction costs and barriers for doing business with other countries

are less. Markets become integrated. International competition emerges.

Political globalisation: The distribution of power on an international (between developed and

developing countries) and national level (different states or provinces). Decline of national

sovereignty – governments giving in to international pressures or demands in order to save the

national economy, for example.

Technological globalisation: Advances in global transportation and communication

technologies make the world a smaller place. People and goods can be transported across the

world in short time spans.

Cultural globalisation: More frequent exchange of culture through cheap travel, television and

communication. Increased trade of ‘cultural goods’. It is now easier to learn about different

cultures and to interact with people from different cultures.


9. To what extent does globalisation present market opportunities for businesses, or is it a

threat?

Students must do research to base their opinions on and give examples of their own.

10. The anti-globalisation protesters have accused the current wave of globalisation of being

the source of accelerating global inequality, MNC’s exploitation and environmental

degradation. How valid is this accusation? Discuss your view with examples.

Students must do research to base their opinions on and give examples of their own.

11. Why has there been an increase in the concerns regarding the influence of business

operations on the environment? In what ways can companies take on social responsibility

in order to address these concerns?

Concerns have increased because of environmental issues and challenges that threaten the future of

life on earth as we know it. Many people are concerned about making changes to improve

sustainability and they encourage businesses to do the same.

There are many concerns regarding environmental sustainability including:

Climate change – this is a very controversial issue at present. Climate change is said to be the

result of an increase in greenhouse gas emissions. These emissions inhibit the functioning of the

earth’s ozone layer and other climate regulators which cause the globe to warm to higher degrees

than in previous years. Environmentalists believe that if the earth is warmed to a specific

temperature, life sustainability and food production will be negatively influenced.

Food security – the production of food is already a problem in many poverty-stricken countries.

Climate change makes the problem of malnutrition and hunger even worse because it influences

the availability of foodstuffs. Weather conditions influence how and when crops can be grown;

agricultural land is becoming less by the day, warmer temperatures are influencing ecosystems

which leads to changing animal migration patterns and plants ceasing to grow where they used

to. This all influences the food security of the world.

Energy security – energy plays an important role in developing businesses, employment and

income generation. It is a large part of how an economy grows. There are real concerns regarding

the supply of crude oil for energy generation. It is predicted that the peak of production will be

reached in the not-too-distant future.

Many companies have taken to becoming more environmentally friendly and implementing policies to

ensure that their operations cause as little harm as possible. Companies that are paying heed to the

demand for more environmentally friendly practices, give themselves a greater competitive


advantage. In order to keep a competitive edge, however, companies will need to look at sustainable

development. Sustainable development refers to a concept of development (economically, socially,

etc.) for the present that does not compromise the ability of future generations to sustain themselves,

their families and the environment.

12. Discuss what sustainable development means.

One of the best known definitions of environmental sustainability is ‘meeting the needs of the current

generation without compromising the ability of future generations to meet their needs’. In further

specifying this definition it can also be said to mean ‘a condition of balance, resilience, and

interconnectedness that allows human society to satisfy its needs while neither exceeding the

capacity of its supporting ecosystems to continue to regenerate the services necessary to meet those

needs nor by our actions diminishing biological diversity’.

Sustainable development can be defined from this definition of environmental sustainability.

Sustainable development means that developments take place, but not at the expense of the

environment or other important factors. For example, when mines are built there has to be balance

between the huge amount of damage that will be done to agricultural soil, the pollution that will take

place, etc. and the financial and development benefits that mines will bring. Irresponsible

development would be to open the mine and after its reserves are depleted just leave everything as it

is. Sustainable development will require the mine to take certain precautions with regard to water use

and pollution, air pollution, noise pollution, safety and rehabilitation after the mine is closed down.

STUDY UNIT 4: UNDERSTANDING GLOBAL CULTURES AND BUYER

BEHAVIOUR


1. Read the Mini-case Illustration – The consequences of getting it wrong culturally

- How would you go about ensuring you do not offend a potential client who has a different

culture than your own?


2. Read the article The Digital Impact – Mobile text messaging and imaging: a global

phenomenon.




3. Define culture in your own words.

Culture is not easy to define and is commonly explained as ‘the way we do things around here’.

Mühlbacher et al. (2006) define culture as ‘the standards of beliefs, perception, evaluation and

behaviour shared by the members of a social group’. There are three characteristics that explain

culture:

It is learned from other people through interaction

It is interrelated/connected

It is shared.

4. Discuss the different aspects of culture with regard to its influence on global marketing

operations.

Culture plays an important role in business as it influences how people perceive certain actions and

situations. The success of a business is influenced by culture in two main ways: the consumer culture

which refers to cultural factors on which consumers make decisions, and the business culture which

refers to any cultural factors that influence the operations of a business or the choices it has to make

to meet the needs of the target group.

The aspects of culture include:

Language – language can be verbal or non-verbal. Speaking the language of another culture will

help to gather information from and about the culture and this will improve future dealings. There

are many different languages spoken in the world and it is rare to find people who can speak

more than two or three. If the marketer is not competent in the language of the target country, an

interpreter should be used to ensure clear communication.

Religion – religion influences consumer behaviour in many ways. The rules and regulations that

form part of a religion determine how consumers will buy and what they will buy. Packaging and

advertising can also influence consumer behaviour if it is seen as disrespectful or sinful. Religious

holidays, praying times, etc. can also influence business and how and when it can be conducted.

Values and attitudes – all cultures and people have views on work, achievement, workplace

conduct, punctuality, etc. The perception of these things can, however, be very different from

culture to culture.

Education – education is not a given in all countries. Some countries have very low literacy rates

and some have large numbers of children and adults who have never been to school or learned to

read or write. Marketing in such countries can be difficult as the consumer may not be able to

read the labels of products or understand the advertisements. On the other hand, countries with


high education levels can also be a challenge as educated people might question the integrity or

value of a product.

Social organisation – this refers to how a group of people organises themselves. In other words,

it includes things like the roles of women and men, status systems, classification of people based

on wealth, social institutions and interest groups.

Aesthetics – this has to do with how different cultures view design and beauty. A good example

is the meaning of colour. Certain colours mean different things in different cultures and may be

offensive or unacceptable if used as part of marketing, packaging, labelling and uniforms.

Adoption of technology – this refers to how people adapt to technology. In some countries,

simpler technology might be needed because of literacy levels or because of the physical and

economic environment that might not be suited for it.

Political discourse – this refers to the discussions people have regarding the political events in a

country or the world. It also includes riots and protests by groups opposing certain decisions or

conditions.


1. Read the article Whose Responsibility is it? – Role models – heroes or villains?

- With reference to the Model of Interaction of Culture and Consumer Behaviour, discuss how

consumer behaviour is affected by culture.

Students must consult Lee and Carter (2012) and answer in their own words.

- What different types of needs do consumers have? How are these needs fulfilled through

marketing?

The purpose of marketing is to fulfil the needs of the consumer. In order to fulfil a need, the consumer

must take an action. A motive can be defined as ‘an internal force that orients a person’s activities

towards satisfying a need or achieving a goal (Czinkota, 2012). People have different types of needs

that need to be fulfilled and different things will motivate them to fulfil these needs. Maslow is one of

the best known theorists on human needs and motivation. Human needs are classified into five

groups by Maslow: physiological needs (survival), safety and security, belonging, ego needs, and

self-actualisation. According to his theory, a person will start at the bottom level (physiological needs)

and move up as each level of needs is fulfilled.

Marketing fulfils these needs by addressing them through advertising certain products and services

that consumers would want to buy.



1. Read the Mini-case Illustration – Cultural differences, West vs. East.

- What type of differences would you predict to influence marketing strategy with a marketing

opportunity between West and East?


2. Read the article The Relationship Perspective – Business ethics at work in China.



3. What is a self-reference criterion? Why is it considered dangerous when seeking to

understand another culture?

People tend to use their own frame of reference to see the world and interpret situations. This can

lead to people trying to understand other cultures through their own culture. This is called the self-

reference criterion (SRC). This approach can be problematic when a marketer is seeking new

markets where cultures are different from the marketer’s own. It is dangerous because

preconceptions or assumptions can influence the reality of the situation.

4. What is cross-cultural analysis?

To make planning easier for the marketer, a cross-cultural analysis can be done. During this analysis,

the similarities and differences between different cultures within a certain country or region are

compared. This would point out common points of interest and preference that would assist the

marketer in an approach to marketing while taking into consideration the cultural aspects.

5. Describe Hofstede’s and Hall’s approaches to cross-cultural analysis.

Students must use the information below as a starting point and elaborate further with their own

answer.

Hall: High vs. Low context

approach

Focus on the role of language and time structures


Hofstede: Dimensions of culture Different cultures compared based on power distance

(deals with human inequality), uncertainty avoidance

(deals with uncertainty of future), individualism

(relationship between individual and others),

masculinity (male and female stereotypes) and

Confucian dynamism (universalistic or particularistic)

6. Explain how the following approaches can be used to conduct cross-cultural analysis.

Students must use the information below as a starting point and elaborate further with their own

answer.

- Hampden-Turner and Trompenaar’s behaviour and value patterns

Cultures are compared on seven different aspects:

Universalism vs. Particularism – the degree to which a culture emphasises rules and consistency

in relationships, or accepts flexibility and the bending of rules to fit circumstances.

Communitarianism vs. Individualism – the degree to which a culture emphasises individual

freedoms and responsibilities in relationships, or focuses more on group interests and consensus.

Neutral vs. Emotional – the degree to which feelings are openly expressed.

Diffuse vs. Specific cultures – the degree to which a culture emphasises focused and in-depth

relationships or displays broader and more superficial ones.

Achievement vs. Ascription – the degree to which a culture emphasises earned or performance-

based status, or status based on social standing and non-performance factors.

Human-time relationship – different attitudes towards time.

Human-nature relationship – how a culture sees the environment and the extent to which it should

be controlled.

- Schwartz’s value inventory model

Schwartz Value Inventory with ten individual value types. A value type is a set of values that can

collectively be given one description. The value types are:

Power

Achievement

Stimulation

Self-direction


Universalism

Benevolence

Tradition

Conformity

Tradition

Security.

- Fang’s cross-cultural theory

Study and compare a variety of demographic, political and other aspects.

Revision Exercise 4

1. What are the important considerations of B2B buying in an international context? Identify

and describe the three types of B2B buying.

Business-to-business buying takes place directly between businesses without a middleman. The

decision making can be challenging and buying requires quite a complex process between decision

makers and the businesses that are supplying the goods. The behaviour of organisations that are

B2B is different from others. A chosen committee does the buying and the decisions are

specification-driven. Another difference in behaviour is that B2B organisations market directly to their

target group and do not use mass media.

There are different models that are used in B2B buying decisions:

Straight re-buy – goods are replenished on a need-to basis and there is no need to look for new

suppliers.

Modified re-buy – the specifications of goods change, but the supplier remains the same.

New task – a completely new buying operation is started and involves a lot of research to find the

right supplier.

2. Read the End-of-Chapter Case Study – Rise of the middle classes in Asia.

- Identify the reasons why the middle classes in Asia are emerging as ‘global consumers’.

Classify them into external and internal factors.

Due to successful economic policies and improved access to education, previously poor households

have moved up the social ladder to the middle class.

They have higher disposable incomes than before.

The masses of newly educated Chinese care more about their stability and material gains.


The educated young want to find out about other countries and travel.

- Giving the continuous growth of markets in Asia such as China, how useful are concepts like

‘market segments’ and ‘competitive positioning’ to the middle classes? If useful, on what

basis might organisations successfully segment the market?

Student’s own answer which includes a definition of market segmentation as the focus on different

needs within a specific market. The rest of the answer should include opinions on whether different

segments in the middle class market are useful as well as whether this will create competitive

advantage. It must also refer to how the market can be successfully segmented.

3. What are the main components/influences of culture? Discuss the marketing implications of

cultural influences on consumer behaviour and give examples.

The aspects of culture include:

Language – language can be verbal or non-verbal. Speaking the language of another culture will

help to gather information from and about the culture and this will improve future dealings. There

are many different languages spoken in the world and it is rare to find people who can speak

more than two or three. If the marketer is not competent in the language of the target country, an

interpreter should be used to ensure clear communication.

Religion – religion influences consumer behaviour in many ways. The rules and regulations that

form part of a religion determine how consumers will buy and what they will buy. Packaging and

advertising can also influence consumer behaviour if it is seen as disrespectful or sinful. Religious

holidays, praying times, etc. can also influence business and how and when it can be conducted.

Values and attitudes – all cultures and people have views on work, achievement, workplace

conduct, punctuality, etc. The perception of these things can, however, be very different from

culture to culture.

Education – education is not a given in all countries. Some countries have very low literacy rates

and some have large numbers of children and adults who have never been to school or learned to

read or write. Marketing in such countries can be difficult as the consumer may not be able to

read the labels of products or understand the advertisements. On the other hand, countries with

high education levels can also be a challenge as educated people might question the integrity or

value of a product.

Social organisation – this refers to how a group of people organises themselves. In other words,

it includes things like the roles of women and men, status systems, classification of people based

on wealth, social institutions and interest groups.


Aesthetics – this has to do with how different cultures view design and beauty. A good example

is the meaning of colour. Certain colours mean different things in different cultures and may be

offensive or unacceptable if used as part of marketing, packaging, labelling and uniforms.

Adoption of technology – this refers to how people adapt to technology. In some countries,

simpler technology might be needed because of literacy levels or because of the physical and

economic environment that might not be suited for it.

Political discourse – this refers to the discussions people have regarding the political events in a

country or the world. It also includes riots and protests by groups opposing certain decisions or

conditions.

4. How would you define your own culture? Using relevant examples, discuss how language

can interfere with clear communication.


5. Discuss the validity of the statement: ‘It is dangerous for the marketer to make

generalisations about consumer behaviour in other countries’.

Student’s own answer that includes reference to the influence of culture and religion on consumer

behaviour and marketing. Generalisations can lead to misunderstandings and offense. It can also

cost marketers a lot of money if they generalise a product and because of this cannot break into the

market or attract any consumers.

6. Cross-cultural analysis is the systematic comparison of similarities and differences in the

material and behavioural aspects of cultures. Discuss and evaluate the approaches to

cross-cultural analysis.

APPROACH AND THEORISTS ELEMENTS

Hall: High vs. Low context

approach

Focus on the role of language and time structures

Hofstede: Dimensions of culture Different cultures compared based on power distance

(deals with human inequality), uncertainty avoidance

(deals with uncertainty of future), individualism

(relationship between individual and others),

masculinity (male and female stereotypes) and

Confucian dynamism (universalistic or particularistic)

Hampden-Turner and Cultures are compared on seven different aspects


Trompenaar’s: Behaviour and

value patterns

Schwartz: Value inventory Schwartz Value Inventory with ten individual value

types

Fang: Cross-culture theory Study and compare a variety of demographic, political

and other aspects

7. Define values, heroes, rituals and symbols. How do these elements influence consumer

behaviour in an international context?

Culture influences behaviour through values, heroes, rituals and symbols.

Values – the preferred way of living and what is seen as right and wrong and good and bad.

Heroes – people who are popular or are seen as role models. They have great influence over

consumer behaviour when associated with certain products.

Rituals – the repetition of behaviour over time. For example, giving gifts at birthdays and certain

holidays. Rituals involve goods that are consumed and therefore they influence consumer

behaviour.

Symbols – objects or signs that carry specific meaning. The same object can have opposite

meanings in different cultures. Marketers should pay close attention to the symbols that are

important in the cultures where they want to operate.

Students to give their own examples.

STUDY UNIT 5: UNDERSTANDING SOCIAL, ETHICAL AND ECOLOGICAL

ASPECTS OF MARKETING PLANNING


1. Read the Mini-case Illustration – The Co-operative Bank’s ethical policy.




2. Read the article The Digital Impact – Shell’s dialogue with stakeholders.



3. Draw up a timeline of the history of CSR and CSP.

CSR and CSP are not such new concepts. The idea of CSR started in the 1970s based on concerns

regarding ‘not for profit’ marketing. Today, CSR and CSP have evolved into a major and very

necessary part of all operations and strategies of organisations, from the code of ethics to the

individual behaviours of employees.

Students must consult Lee and Carter (2012) for the history and draw up a timeline.


1. Read the article ‘Whose responsibility is it?’ – Starbucks: Sharing concerns.



2. Read the Mini-case Illustration – Dell computers: Moving towards environmental

sustainability.




1. Read the Mini-case Illustration – The Texas Instruments Ethics Office. This is a good

example of how ethics are implemented in a company.



2. Read the Mini-case Illustration – The Global Brands Group and labour practice.

- Identify the unethical behaviours evident in the company’s operations.


Cheap labour

Poor working conditions

Too long hours

Waste spill.

3. Read the Mini-case Illustration – The Sialkot football programme. This is a good example of

ethical policies to prevent exploitation.



4. Read the article The Relationship Perspective – Nike and the University of Wisconsin.



5. Identify the main global social and ethical issues. Briefly explain how each of these issues

is impacting on the operations of transnational organisations.

Ethical issues are:

Making codes effective

Ethics training

Customers’ privacy and security

Responsibility to vulnerable people

Human rights

Labour practices

Sweatshops.

Revision Exercise 5

1. Read the Mini-case Illustration – Honeywell International.



2. Read the Mini-case Illustration – The World Bank.




3. In what way does corruption negatively affect the economic development of developing

nations?

Corruption is defined as ‘the abuse of public office for private gain’. Actions that form part of

corruption include bribery, fraud, extortion, money laundering and embezzlement. Corruption can be

present in government as well as in private companies.

Corruption has a negative influence on the development of a country. It influences the financial

situation and availability of funds which can lead to limited research for health and education. In

developing countries this can cause a huge blow to the already limited resources available.

Corruption is also bad for business. It is not an efficient manner in which to conduct business and can

easily increase business costs which is not good for the company. Another important consideration

regarding corruption is legislation. Many countries have legislation that deals with corruption, but

these laws tend to only be applicable to the country itself and not to countries outside its borders.

There have, however, been changes in this regard and countries are paying more attention to the

legislation for corruption. Conventions have been drawn up to assist with the regulation and

implementation of new laws on corruption.

4. What are the methods which can be used by organisations to manage the social and ethical

issues that arise from their international operations?

Adopt and implement effective codes of conduct.

Be proactive in responding to complaints or requests.

Be socially and ethically responsible and support good causes.

Ensure that labour practices are legal.

Ensure that all laws are followed.

5. The CEO of a clothing manufacturing company has discovered that its suppliers in India are

employing child labour in their factories. What advice would you give to the CEO?


6. Read the End-of-Chapter Case Study – HSBC – The world’s first carbon neutral bank.

- Critically evaluate the reasons why HSBC included employees, partners, customers and the

community at large as necessary stakeholders in a ‘sustainability’ programme.

Student’s own answer. It should include reference to the fact that it is necessary to include as many

stakeholders in a new programme as possible. The more input and support a programme has, the

higher the chances of success. HSBC probably wanted to make sure that it can help its clients and


suppliers and also get everyone involved with the company to also take on more environmentally

friendly practices.

- Evaluate the type of support HSBC is offering in its sustainability programme and suggest

other activities it could have considered.

HSBC is offering knowledge, practice tools and help in getting a necessary corporate culture to

implement strategies from top to bottom.

Students must make their own suggestions for other activities.

- How would you defend the criticism that HSBC’s sustainability programme was really only a

thinly disguised ploy to gain more customers?


7. Prepare a short presentation explaining how socially responsible practice may provide

competitive advantage in the global market-place.

- Explain what social responsibility is.

Corporate social responsibility (CSR) can be defined as ‘a company’s sense of responsibility towards

the community and environment (ecological and social) in which it operates’.

- Give examples of socially responsible practices and the positive effects that they could

have.


8. Discuss the view that corruption is ‘an awkward but necessary’ part of doing business in

international markets.

Student’s own answer that includes reference to the difference in how countries and cultures view

corruption. In some countries bribery is accepted and expected and in others it is an absolute taboo.

9. Given that corruption is widespread around the world, why should companies refuse

bribes?

Corruption is also bad for business. It is not an efficient manner in which to conduct business and can

easily increase business costs which is not good for the company. Another important consideration

regarding corruption is legislation. Many countries have legislation that deals with corruption, but

these laws tend to only be applicable to the country itself and not to countries outside its borders.

There have, however, been changes in this regard and countries are paying more attention to the


legislation for corruption. Conventions have been drawn up to assist with the regulation and

implementation of new laws on corruption.

Companies who are found guilty of corruption may face blacklisting and credit restrictions by

international institutions and organisations. This should be a consideration when contemplating

whether bribery or embezzlement, for example, is worth it.

10. What are the main pressures that companies face for behaving in socially responsible

ways? Is it sufficient for a company to adopt a code of conduct to be considered a socially

responsible company?

The company’s own ethical values

Its home country government or constituencies that threaten to boycott its products or spread

negative publicity about it.

Student’s own answer regarding the adoption of a code of conduct.

11. What contribution do you feel the UN Social Impact can make to fostering socially

responsible business practice?


12. Choose any large organisation and evaluate the organisation with regard to the factors

below. These factors form part of CSP and will give an idea of how the company is

addressing sustainability.

- Consumer values, enjoyment, involvement and power

- Community inclusion, involvement and access

- Networks as partners

- CSR – ethics, corruption and bribery, health education, labour practices, human rights, fair trade,

employee welfare, social inclusion

- The broader environment – recycling, energy, raw materials, water, waste, packaging, chemicals,

climate change.


STUDY UNIT 6: OPPORTUNITY ANALYSIS AND SELECTION OF

MARKETS


1. Discuss the methods used to screen international markets.

There are two main groups of characteristics that help the choice of which global opportunities to

follow:

Environmental characteristics – a country’s politics, competition, economics, international industry

structure, degree of internationalisation

Organisation characteristics – internal to the organisation and includes degree of international

experience, resources, type of business, existing international networks, objectives for

internationalisation.

2. Read the Mini-case Illustration – Mobile phones and Kerala fishermen.



3. Read the Mini-case Illustration – Data collection in less developed countries.

- Identify the difficulties of collecting data in less developed counties.

Low literacy level

Lack of physical access

Limited technical availability

Lack of personal safety

Technical skills

Cost.

- Make suggestions on how these difficulties might be overcome.


4. Read the article Whose responsibility is it? – Ethics in marketing research.

- Based on the possibilities to fake information and results as mentioned in this article, draw

up a short code of conduct that you would expect all persons on your research team to

follow in order to remain ethical.


Student’s own answer. Refer to Chapter 5 (Lee & Carter, 2012) for more information on codes of

conduct. Keep in mind ethical behaviour and behaviour that must benefit the group and not a single

individual.

5. Read the Mini-case Illustration – International failures on p. 194 for examples of

international marketing failures and what not to do.



6. Describe the role market research plays in identifying and describing potential global

marketing opportunities.

As with any research, marketing research involves the collection, recording, analysis and

interpretation of information. This research process helps an organisation to make decisions on how

to approach the marketing process. Decisions that need to be made include:

Whether to go global

Which markets the organisation should and can enter

How to enter the chosen market or markets

What the marketing mix will be

How to implement the marketing mix and which control procedures will be needed.


1. Why is it important to the success of global marketing operations that marketers segment

global markets?

Segmentation basically means to put into groups. Global market segmentation therefore refers to

marketers using the information gathered and the suggestions made through the research process to

group together consumers and markets with similar needs and buying behaviour. This makes it

easier to know which markets to enter and which methods and strategies will be most effective. It

helps the organisation choose the best markets to enter.

2. Read the article The Digital Impact – Customer specific segmentation with the Internet.

- Identify the advantages and disadvantages of the Internet and reactive data collection as

explained in this article. What is your opinion on this method?


Advantages:

Organisations have the opportunity to explore customers’ needs and characteristics to develop a

basis for selective planning and control

Enables companies to target customers

Provides global marketers with new and abundant opportunities to target segments and

individuals

Brings global segmentation into reality

Gain detailed customer information to personalise services.

Disadvantages:

Concerns regarding invasion of privacy

Concerns regarding SPAM.

3. Read the Mini-case illustration – VALS as a segmentation method in international

marketing.



Revision Exercise 6

1. Discuss the argument that it is better to segment markets on a global market segment basis

than a country-by-country basis.

Student’s own opinion.

The key is to find a variable(s) that describes the global segment.

2. Critically appraise (evaluate) the recent attempts to describe global market segments on the

basis of single descriptors, e.g. convenience for consumer shopping.

Student’s own answer. The answer should be based on the information given in Lee and Carter

(2012) as well as extra research.

3. Read the Mini-case illustration – Greenergy: A case of latent market opportunism.




4. Read the Mini-case Illustration – Experian and Mosaic UK customer segmentation.



5. Read the article The Relationship Perspective – The world travel and tourism industry.



6. Read the Mini-case Illustration – Market segmentation and personas.

- Discuss the difference between segmentation and personas.

Segmentation basically means to put into groups.

Personas are a set of fictional, representative user archetypes based on the behaviours, attitudes,

and goals of people. A persona is a stand-in for a group of people who share common goals.

- How can segmentation and personas be used to complement each other?

Personas and market segments provide different information. Market segmentation provides a

quantitative breakdown of the market while personas provide a qualitative analysis of consumer

behaviour.

7. Read the End-of-Chapter Case Study – Shanghai Jahwa Cosmetics: The seed of a global

giant.

- As a potential new cosmetics and toiletries entrant in the UK and Italian markets, critically

analyse Shanghai Jahwa’s market analysis and assess if it is sufficient or not to make its

decision to enter.

Student’s own critical analysis based on knowledge learned from Lee and Carter (2012).

- Identify the market research needed to inform Shanghai Jahwa on its specific market

segment and the marketing mix.

Product and market growth across a period of time in Europe to determine the interest in the

products that it offers

Cosmetics market size forecast.


- What alternative (other) means could be used to classify the cosmetic consuming segments

in the UK and Italy other than those described in the case study? How would you go about

identifying and classifying such alternative segments?


8. Critically discuss the role of marketing research and the marketing information system in

the identification and description of potential market opportunities and market segments.

The Marketing Information System (MKIS) of an organisation is very important during the selection

and research process. The MKIS can be defined as ‘a system that analyses and assesses marketing

information, gathered continuously from sources inside and outside the organisation’.

A good information system will include:

A data bank for all internal and external information to be stored

A statistical function to aid decision making

A communications function that could consist of human or machine or both.

Two types of information can be researched and stored within the data bank:

Continuous information that is collected and scanned on a regular basis in order to keep track of

what is happening in the marketing environment

Special problem data that the organisation might have to start gathering due to changes in the

marketing environment and possible threats or opportunities.

Having constant and fresh information helps an organisation to make informed and timely decisions

about product development or improvement, pricing, packaging, distribution, media selection, and

promotion.

9. Examine the arguments for and against the use of country-by-country versus global market

segment descriptors as bases for market segmentation. Provide evidence to support your

arguments.

Student’s own answer using information from Lee and Carter (2012), extra research and existing

knowledge.

10. Critically assess the criteria, both internally and externally, for selecting potential market

opportunities/segments.

Organisations that form part of the global environments gather information and do research on

possible marketing opportunities. The organisation decides which opportunities will be best to pursue,


selects its target market and begins the process of putting together the marketing mix and strategies.

A good place to start the process of market selection, is looking at markets that have characteristics

that are similar to those of the existing market in which the organisation is operating (Nagel, 2012).

According to Nagel (2012) it is also very important to visit the selected markets to see the actual look

and feel and operation.

After market research has been completed, the marketer must consider segmentation, targeting and

positioning.

Marketing segmentation

One of the main reasons for segmenting markets is that it helps organisations to have a better

understanding of the needs of specific customers (http://www.wisegeek.org/what-is-market-

segmentation.htm). When an organisation knows its customers, it will be easier to ensure that they

are satisfied and will keep buying the product or service.

It is also done to profile resulting segments, meaning that it sets out the characteristics of different

groups.

Targeting

Targeting is done to evaluate the attractiveness/promise of different segments. Based on this

evaluation, the most promising segment is chosen.

Positioning

Positioning has to be done to determine the best possible stance for each segment in order to meet

and/or beat the competition. It is also necessary to determine the specific marketing mix for each

segment.

STUDY UNIT 7: MARKET ENTRY STRATEGIES


1. Discuss the factors that will influence international market entry decisions.

Students must discuss in their own words the socio-economic, technological, legal, political,

competitive and ethical environments surrounding a specific market entry opportunity that must be

considered and carefully analysed.

http://www.wisegeek.org/what-is-market-segmentation.htm

http://www.wisegeek.org/what-is-market-segmentation.htm


2. Read the article The Digital Impact – Trading on eBay.



3. Critically discuss the eight different theories on internationalisation.

Students must use the table below as a starting point and elaborate on each theory.

THEORY/APPROACH DESCRIPTION

Uppsala or incremental

approach

Internationalisation is a gradual process of development

and involves gathering of information over time and

assessing of risks. (See Figure 7.3 on p.224 in Lee &

Carter, 2012)

Industrial network approach Internationalisation happens through networking.

Business relationships with partners, customers,

suppliers, etc. grow from domestic to international.

Bargaining power approach Internationalisation or the choice of market entry mode is

determined by negotiations between the organisation and

the government of the host country.

Born global Organisations that do business globally from the

beginning and do not necessarily start with domestic

markets as was traditionally done.

Transactional cost analysis

theory

Organisations will internationalise if the transaction costs

of going global will be lower than establishing

relationships locally.

Eclectic theory or

contingency theory

Combination of different theories. Based on three factors:

ownership specific, location and internationalisation.

Agency approach One party delegates to another, for example franchises.

Business strategy approach Trade-off between the number of variables in

internationalisation decision and the methods needed to

internationalise.


4. Read the article The Relationship Perspective – Zambian high-value horticultural export.




1. Read the Mini-Case Illustration – Nu Skin Enterprises.

- Identify the business plan of Nu Skin Enterprises.

Multi-level marketing

2. Briefly name and discuss the different types of business models. Give an example of

existing organisations that use each of these models.

Students must use the table below as a starting point and elaborate on each model. They must also

give their own examples for each.

BUSINESS MODEL DESCRIPTION

Subscription business model People are charged a fee to view information

or use a service, e.g. magazines.

Razor and blades business model Selling a main or master product at a lower

price, e.g. cell phones.

Multi-level marketing Products are sold through a distributor

structure where word-of-mouth plays a big

role. The distributor receives commission on

sales marketed by him or her.

Network effect Sharing of expensive resources by many

different people.

Cutting out the middleman More direct contact between the

manufacturer and the customer – no

intermediate agent or distributor, etc.


Auction Goods are put up for bidding. People bid a

certain price for a product and the highest

bidder wins the sale.

Online auction Same as a normal auction, all the processes

simply occur on the Internet through special

software.

Clicks and mortar Combination of physical store and online

store. Customers can make use of either

one.

Loyalty business model Using resources to provide the best possible

product and service to gain loyalty from the

consumer.

Service quality model Focused on customer satisfaction and

expectations.

Collective business system A number of different businesses,

professionals, etc. Share resources and

often have similar fields of practice.

Industrialisation of services Provision of services is seen as an industrial

process.

Low-cost carriers Airline that offers low airfares at the expense

of traditional services and comforts.

Transformational model The business plan, organisational structure

and management are adjusted or

transformed in accordance with changes that

happen over time.


Revision Exercise 7

1. Read the article Whose responsibility is it? – Euro 2004 and China.



2. Identify and describe the factors which determine the mode of market entry.

There are several factors that influence the choice and importance of entry mode. The questions to

ask include:

What are the organisation’s goals or objectives?

What is the size of the organisation and what are its resources?

What knowledge does it already have on global marketing?

What are the attitudes towards global marketing and does the organisation’s workforce have the

right skills?

What is the nature of the market, competition, product, consumer, and market coverage?

What unique skills and competitive advantages does the organisation have?

What is the organisation’s competitive advantage?

When is the right time to enter the market?

What is the level of involvement?

What are the investment and marketing costs?

What are the administrative requirements?

Is there any flexibility in the mode of entry?

What is the time horizon for payment?

What are the levels of risk and control?

Are there any barriers or requirements that can affect the mode of entry?

Can contingencies be developed if things go wrong?

3. Describe the most appropriate market entry mode for:

- Cars: Export mode entry

- Aero engines: Joint ventures/strategic alliances or export mode entry

- Retail insurance services: Joint ventures/strategic alliances.


4. How does a market entry strategy inform a market entry mode? Illustrate with an example of

your choice.

The marketing strategy has to match the entry method and this can be quite a challenge. The type of

entry method can further complicate this process. There are many different aspects that must be

taken into account when deciding on a marketing strategy and when deciding on an entry method.

The strategy and method should be aligned from the beginning in order to avoid having to do double

work or even having to start all over and waste valuable time.

5. Read the End-of-Chapter Case Study – Tesco’s unique recipe for international success.

- What is Tesco’s internationalisation strategy? Why do you think the strategy has brought

Tesco international success so far?

Production in a foreign country and either born global or industrial network approach.

- For each geographic area i.e. Europe, Asia, and the USA, identify the ‘marketing

environmentals’ that Tesco encountered in its expansion strategy and how they may have

affected Tesco’s market entry modes. In other words, identify the challenges or obstacles

that were met.

Europe: Economic downturns

Asia: Difficulty identifying locations, natural disasters influencing retail markets

USA: weak economies.

- What do you think should be Tesco’s future strategic direction in its internationalisation?

Why?


6. Discuss the importance of the market entry strategy decision in terms of a global expansion

policy.

A market entry strategy is basically a plan of how an organisation will go about getting a foreign

country’s people to be interested and want to buy its product. The decision on how to enter a specific

market should take into account the different environmental factors that can influence the success. In

other words, the socio-economic, technological, legal, political, competitive and ethical environments

surrounding a specific market entry opportunity must be considered and carefully analysed. This

should also include a risk analysis. Once these risks are identified, the market entry strategy can be

adjusted to compensate for this and ensure better success. It is also of great importance that the


environmental factors are continuously monitored after the market has been entered to identify and

adjust according to changes.

7. Critically discuss the factors that determine the choice of market entry mode. Are the

factors mutually exclusive?

Students must discuss each of the following points in their own words.

There are several factors that influence the choice and importance of entry mode. The questions to

ask include:

What are the organisation’s goals or objectives?

What is the size of the organisation and what are its resources?

What knowledge does it already have on global marketing?

What are the attitudes towards global marketing and does the organisation’s workforce have the

right skills?

What is the nature of the market, competition, product, consumer, and market coverage?

What unique skills and competitive advantages does the organisation have?

What is the organisation’s competitive advantage?

When is the right time to enter the market?

What is the level of involvement?

What are the investment and marketing costs?

What are the administrative requirements?

Is there any flexibility in the mode of entry?

What is the time horizon for payment?

What are the levels of risk and control?

Are there any barriers or requirements that can affect the mode of entry?

Can contingencies be developed if things go wrong?

8. Market entry strategy and mode decisions are interlinked. Identify the factors that give rise

to this complexity, illustrating your answers with examples.

International franchising and retailing are two of the most important drivers to internationalisation and

exemplify the complexity of matching a successful market entry strategy and mode. The changing

market environment is also a driver that makes marketers have to carefully consider their entry

options. The complexity of matching strategy and mode is making marketers adopt a mixed entry

strategy, matched to product, market and financial and competitive conditions.


9. Critically discuss how an organisation’s marketing strategy will influence the international

market entry strategy.

The marketing strategy will include the market entry strategy. Important points to consider are

adaptation or standardisation as part of the marketing strategy as this will influence the market entry

mode. The budget of the marketing strategy, the target market, the target country and the advertising

opportunities will all influence the entry mode. As always, culture will also play a role.

STUDY UNIT 8: CREATING, DEVELOPING AND MAINTAINING

COMPETITIVE ADVANTAGE


1. Read the Mini-case Illustration – The changing fortunes of Royal Selangor.



2. Read the Mini-case Illustration – Using Web 2.0 in business.



3. Briefly describe the two areas that determine the competitiveness of an industry at the

microeconomic level.

Students must start with the statement below and further elaborate.

The competitiveness of an industry is determined by how competitive the organisations within it are. If

organisations or companies within an industry are not competitive, the industry cannot be

competitive. The level of sophistication in company operations is inextricably linked to the quality of

the national microeconomic business environment, which rests on two interrelated areas: the

sophistication of business operations and strategy and the quality of the microeconomic business

environment. More sophisticated strategies require highly skilled people, better information, better

suppliers and advanced research.


4. What are the major environmental factors driving increased global competition?

The two areas in which the increase in competition is influenced are the nature of the microeconomic

business environment and the sophistication of the business operations and strategy. Factors in both

these areas are listed below.

Changing nature of the microeconomic business environment

Technology

Customer tastes

Socio-economic factors

Politics

Economics

Legal

Ethics

Competition

The ‘near’ environment.

Increasing sophistication of business operations and strategy

Production processes

Shorter life cycles

Cost reduction strategies

Management innovations

Mergers, acquisitions and joint ventures

Competitor intelligence gathering

Stakeholder needs.


1. Read the article The Digital Impact – Collaborate to create a global mobile ecosystem.



2. What is competitive advantage? Why is it important for organisations to develop and

maintain a competitive advantage in the market-place?


Competitive advantage can be defined as the skills, expertise, exclusive relationships, core

competencies, and/or ownership of unique resources which enable the organisation to outperform

others within its competitive environment. Basically, competitive advantage means that the

organisation has a thing, person, partner or secret weapon that its competitors do not. This places the

organisation at an advantage because the likelihood that consumers will rather buy its product or

service is increased with competitive advantage.

3. Briefly discuss how to use the SELECT framework to analyse the competitive advantage of

an organisation.

Students must make a summary of the information below to explain how the SELECT framework

works.

SELECT is a tool that an organisation can use to plan and design the right configuration or set-up of

its competitive advantages.

S – Substance of competitive advantage

The schemes used to categorise substance are positioning vs. kinetic advantages and homogeneous

vs. heterogeneous advantages:

Positional advantage – mostly based on ownership or access qualities of the organisation, e.g.

great manager.

Kinetic advantage – mostly based on knowledge and skills that help an organisation to outperform

the competition.

Homogeneous vs. heterogeneous – refers to advantage on similar or different bases, e.g.

Dreamworks and Walt Disney compete on the same basis.

E – Expression of competitive advantage

Two categories of the form of competitive advantage include:

Tangible vs. intangible advantage – physical forms that can be seen versus advantages that are

not readily seen, e.g. human factors.

Discrete vs. compound advantage – a single stand-alone advantage versus a number of

individual advantages.

L – Locale of competitive advantage

There are three levels on which competitive advantage can exist:

Individual-bound advantages – based on individual or certain mobile assets


Firm-bound advantages – based on fewer mobile assets that might be shared by many different

people.

Virtual-bound advantages – based outside the organisation.

E – Effect of competitive advantage

The strengths of an advantage’s effect can be seen as:

Absolute or relative – an absolute advantage is when an organisation’s advantage looks to be

impossible to beat. Relative advantage is when the advantage is not so big.

Direct or indirect – an advantage that directly creates and adds value to the business’s operations

versus one that indirectly contributes.

C – Cause of competitive advantage

The categories of causes of advantage are:

Spontaneous – advantage caused by ‘luck’ or history.

Strategic – advantage caused by planned strategies with goals.

T – Time-span of competitive advantage

An advantage will not necessarily remain indefinitely. The time span can be:

Potential or actual – potential advantage is one that has not been used yet and an actual

advantage is an existing one.

Temporal or sustainable – temporal advantages are short-term and sustainable advantages last

much longer and cannot easily be beaten by the competition.

Revision Exercise 8

1. Read the Mini-Case Illustration – Best Buy struggles to be best in China.

- Identify the mistakes that Best Buy made in terms of competitive advantage.

It tried the exact same methods and strategies as in its home country

It was too expensive for Chinese consumers

Focused on building large flagship stores instead of small retail outlets

Did not offer something new that could not be bought elsewhere.

- Make suggestions on how it could have rectified these problems and gained competitive

advantage.



2. Read the article Whose Responsibility is IT? – Promoting decent working conditions.



3. Read the article The Relationship Perspective – Microsoft and Toyota.



4. Read the End-of-Chapter Case Study

- What are the internal and external challenges confronting the management at Malaysia

Airlines? Explain how these challenges present a threat to the airline’s long-term survival.

Operating losses

Ageing fleet of aircrafts

Escalating cost structure

Network of routes that is not far-reaching enough

Natural disasters and the aftermath

Political unrests causing people to not fly often.

Students must explain their opinion of the effects of these challenges.

- Discuss how, in your opinion, Malaysia Airlines should respond to each of these challenges.

Students must explain their opinion on how to respond to these challenges.

- The ability to create and sustain a competitive advantage is vital to success in the global air travel

market. Explore and evaluate the sources from which you think a small global player such as

Malaysia Airlines should seek to build sustainable global competitive advantage.

5. Explain how an organisation can adopt generic strategies of cost leadership, differentiation

and focus to help it outperform its rivals.

The three routes to competitive advantage that an organisation can adopt to create distinguished

customer value are:

Cost leadership – organisations that aim to have the lowest prices go after this advantage


Differentiation – organisations that aim to get an advantage by developing unique or superior

products

Focus – organisations that aim to get advantage by focusing on specific groups of customers.

6. What is the so-called resource-based theory of competitive advantage? In what ways does it

enable an organisation to acquire a competitive advantage?

The resource-based theory places importance on the role of the resources and capabilities of an

organisation as the start of creating competitive advantage. In other words, the organisation uses its

existing resources and capabilities to create some form of edge over its competitors. There are two

premises on which the promotion of the resource-based theory rests:

Internal resources and capabilities provide the basic direction for an organisation’s strategy

Resources and capabilities are the primary source of profit.

(http://www.skynet.ie/~karen/Articles/Grant1_NB.pdf)

Two ways through which an organisation can create resource-based competitive advantage:

Capacity leverage – this refers to an organisation using and exploiting its own capabilities to get a

competitive advantage.

Capability building – in order to stay ahead, an organisation’s capabilities need to be replaced or

at least updated to better ones. This means that new capabilities must be invented or existing

ones must be carefully maintained and updated or upgraded as the environment changes.

7. Why do you think there is a need for today’s organisations to seek new sources of

competition?

Student’s own opinion based on the information below.

Organisations cannot afford to remain stagnant and not have any development of new capabilities or

resources if they want to be successful. There are newer ways in which an organisation can try to

create competitive advantage:

Corporate social responsibility – ensuring that operations and partnerships are ethical

Knowledge – gaining and managing knowledge/ intellectual assets

Information technology – the Internet has transformed the way the markets work today. Using the

opportunities this brings for an organisation, can create great competitive advantage

Managing relationships with partners.


8. An effective response to competitive change requires a clear understanding of the current

and future business environment. Examine, with examples, the factors driving the

increased global competition and their implications on global marketing.

Students must do research and use information in the Lee and Carter (2012) to answer this question.

9. The term ‘competitive advantage’ is not a concept which is easily understood. How would

you define the term? How would you analyse it in order to help organisations to develop

and manage it?

Students must formulate their own definition based on the information below and extra research.

Organisations cannot afford to remain stagnant and not have any development of new capabilities or

resources if they want to be successful. There are several ways that an organisation can create a


10. Discuss with examples how competitive advantage can be achieved through Porter’s

generic strategies.

The student is to explain how a company can chose one of the 3 strategies, being cost leadership,

focus, and differentiation to provide competitive advantage. If a company would like to use cost

leadership, it would create competitive advantage by being a low-cost carrier, for example Kulula, an

airline that differentiates itself from the rest by offering cheap flights. If a company choses the

differentiation strategy its product specifications and features would be different to any of its

competitors and at a much higher price, hence creating competitive advantage, for example Apple

invests a lot of money in product development and it is proud to say that its products can never get

viruses, and its products come at a much higher price than others in the industry. Lastly using focus

to create competitive advantage would be to concentrate efforts on a particular segment of the

market, servicing subgroups, which can be done either through cost leadership, being Ferrari, or

through differentiation, being a company building customised yachts.

11. The resource-based theory emphasises the role of the organisation’s resources and

capabilities as the foundation for developing competitive advantage. Discuss, with

examples, how an organisation can leverage and build new resources and capabilities for


Students must combine the information below to formulate an answer and add examples.

The resource-based theory places importance on the role of the resources and capabilities of an

organisation as the start of creating competitive advantage. In other words, the organisation uses its


existing resources and capabilities to create some form of edge over its competitors. There are two

premises on which the promotion of the resource-based theory rests:

Internal resources and capabilities provide the basic direction for an organisation’s strategy

Resources and capabilities are the primary source of profit.

(http://www.skynet.ie/~karen/Articles/Grant1_NB.pdf)

Two ways through which an organisation can create resource-based competitive advantage:

Capacity leverage – this refers to an organisation using and exploiting its own capabilities to get a


Capability building – in order to stay ahead, an organisation’s capabilities need to be replaced or

at least updated to better ones. This means that new capabilities must be invented or existing

ones must be carefully maintained and updated or upgraded as the environment changes.

12. The basis on which organisations compete in today’s market-place needs to be broadened

beyond operational effectiveness. Discuss some of the new sources from which

organisations can develop differential advantage.

Students must use the information below to formulate their own comprehensive answer with

examples.

There are newer ways in which a company can try to create competitive advantage:

Corporate social responsibility – ensuring that operations and partnerships are ethical

Knowledge – gaining and managing knowledge/intellectual assets

Information technology – the Internet has transformed the way the markets work today. Using the

opportunities this brings for an organisation, can create great competitive advantage

Managing relationships with partners.

STUDY UNIT 9: PRODUCT AND BRAND MANAGEMENT


1. Read the Mini-case Illustration – Scotland’s gift to the world.




2. Read the Mini-case Illustration – McDonald’s – A case of global product adaptation. This

case study shows how adaptation to meet specific demands can help a product stay on top.



3. Read the article The Relationship Perspective – Hollywood and branding.



4. Read the Mini-case Illustration – The melting pot: holiday homes in the sun.



5. Read the article Whose responsibility is it? – Obesity – the new sword of Damocles.



6. Identify and describe the elements of the product. Why is it important to identify the

different elements of the product in a global context?

A product or service consists of a bundle of benefits which include the core benefits, attributes or

features, support and services and potential benefits. It is anything that can be offered to a market to

satisfy a want or need (http://www.smallbusiness.wa.gov.au/marketing-product-strategy/). Together

these benefits offer a more appealing product or service to the consumer and increase the view of the

value that is being offered. The way a product or service is viewed by consumers is called product

positioning (http://www.smallbusiness.wa.gov.au/marketing-product-strategy/). This will influence

consumer decisions on whether to buy one product above another.

The four components that form part of an international product:

Core benefits – core function, technology and performance. This is generally the main product

that meets the needs of the consumer.

Attributes – packaging, design, styling, price, brand name and quality. These factors increase

customer satisfaction and make the package being offered more appealing.

Support and services – installation, after-sale services, repairs, delivery, guarantee. These factors

increase customer satisfaction and make the package being offered more appealing.

Potential benefits – associations, aspirations and cultural factors.

http://www.smallbusiness.wa.gov.au/marketing-product-strategy/



7. List the factors that determine a standardised or adaptation global strategy. Illustrate your

answer with relevant examples.

The decision on whether to standardise or adapt is based on:

resources,

degree of local vs. central control,

product/ market similarities and differences, and

costs.

8. Read the Mini-case Illustration – Jaguar Land Rover: The renaissance of an icon.



9. Read the article The Digital Impact – New (and old) products for all.



10. With examples, describe the different types of international product strategy.

STRATEGY BASIS

One product, one message globally Global reliability

Product extension, promotion adaptation Local customers

Product adaptation, promotion extension Local market conditions

Dual adaptation Total differentiation

Product invention Tailored, new to market

Students must elaborate further on the above table and add examples.

11. Read the article The Digital Impact – New (and old) products for all.




Revision Exercise 9

1. Read the End-of-Chapter Case Study – Formula One: The brand that drives the world’s

fastest cars.

- Identify what you think are the attributes that made Formula One into a global brand.


- Is Formula One a standardised or adaptation strategy? Give reasons to support your answer.

Standardised – all products sold are custom-made and not adjusted to specific countries or people.

- Describe the role of Ecclestone as Formula One’s ‘product champion’; particularly his

product globalisation strategy.

Ecclestone being the product champion means that he decides what is sold and he is also the best

salesperson of the products.

- What lessons can be learned by global marketers from the Formula One ingredients of

unique product, global media exposure, and financial acumen.


2. What are the themes which can be used to differentiate a brand?

A brand can be defined as ‘a product, service or concept that is publicly distinguished from other

products, services or concepts so that it can be easily communicated and usually marketed’. The

name of a specific product, service or concept is called a brand name. The process of creating this

brand name and other aspects that go with creating the brand is called branding.

There are five branding strategies that organisations can use:

Corporate – based on name

Family name – based on a range of products in a variety of markets

Range – based on specific market links

Individual names – based on individual names or markets

Private – based on value for money

Co-branding – two established brands working together.


3. In what ways does a global or international brand differ from a local brand?

Global brands are seen as leaders in the world by their consumers. Consumers come from different

cultures and countries but they all have the same motivation. To create a ‘unified’ perception and

desire in the minds of the customers, organisations must develop in their brands a very clear brand

position that is consistent across diverse geographies, cultures, and market segments.

Both global and local branding strategies have advantages. On global grounds, branding can have

great financial returns for shareholders and create high barriers of entry.

4. What are the dimensions of a global brand?

The dimensions of a global brand are:

Quality signal

Global myth

Social responsibility.

5. What are the different brands of a new product? Outline the steps in the new product

development process, stating the possible problems and their solutions.

Students must refer to Lee and Carter (2012) to elaborate on the information below.

Generation of new product ideas

Initial screening of ideas

Business and market analysis

Prototype development

Prototype test marketing

Product launch.

6. Critically evaluate the notion that the product ‘attributes’, rather than the core benefits, sell

competitive products or services.

The attributes of a product are the brand name, design, packaging, styling, price and quality. These

are the things about a product that consumers first see. When it is a well-known brand with a good

reputation, it will sell more products than one that is not. Attributes are the parts of a product that

consumers identify with.

7. Identify and evaluate the role of customers’ perceptions in the success of a global brand.

Illustrate your answer with examples.



8. Explain the role and importance of the product life cycle concept and product/market

matrices in global product planning.

Product life cycle refers to how long it will last. It is used as the theoretical basis for new or even

existing product expansion. It is a useful planning concept that can be used in international

marketing. Life cycle consists of pre-launch, introduction, growth, maturity and decline.

Factors that will influence the choice of strategy include product life cycle and the product trade cycle.

The choice of strategy will be the way in which the organisation introduces the product or service to

the world and the way in which it will present it to different people in different countries.

There are different kinds of matrix approaches that help with product strategy. The two main kinds

are matrix approaches and the Ansoff matrix. The matrix approach looks at managing products that

already exist, while the Ansoff matrix looks at future products.

Students must use Lee and Carter (2012) to elaborate.

9. Illustrating your answer with examples, discuss the various dimensions of a global brand

and the ways in which an organisation can build a brand to achieve global success.

Students must discuss in their own words and add examples.

The dimensions of a global brand are:

Quality signal

Global myth

Social responsibility.

10. Critically discuss the notion that it is the cost, market, market environment, and ‘time to

market’ considerations which determine the form and extent of new product development

and introduction.

Marketing managers use the new product development process for various types of new product

development, being new product lines, revision improvements, cost reductions, a repositioning,

additions to product lines, or new to the world.

The cost will determine how extensive the research and production processes can be. The type of

market will also play a role in the type of product that will be marketed. The market environment and

its stability and ease of access will also influence the new product development as instability may

cause the strategy to be adjusted. ‘Time to market’ refers to not waiting too long to market the

product. (Students must elaborate in their own words).


STUDY UNIT 10: GLOBAL SERVICES MARKETING


1. Read the Mini-case Illustration – Competing for the best talents.



2. Read the article The Relationship Perspective – Collaborate to deliver win-win solutions.



3. What is the evidence that shows the increasing importance of the role that services play in

the global economy today?

Global statistics and growth rates of the services industry.

4. Identify and discuss the drivers for growth in global services.

The increase in growth of cross-border services can be seen as the result of various drivers or

influences. These drivers include:

Deregulation and liberalisation – in order to change existing insufficient service infrastructures.

Quality service as an imperative – after-sale customer care and service-based features such as

warranties have become a must and not just a convenience.

Homogenisation of global customers – advances in technology have made global consumers

somewhat more similar in their tastes and trends, although global consumers will never be

completely homogeneous due to culture, politics, etc.

Global economies of scale – has to do with higher production levels leading to lower costs per

unit which increases the profits.

Enabling technologies – advances in technology and communications result in better global

service delivery and quality.

Following the clients – service providers, for the company that is going global, are required to

follow the company to wherever it establishes new operations.


Revision Exercise 10

1. Read the Mini-case Illustration – Upholding the world-class service standards.



2. Read the Mini-case Illustration – The Louis Organisation.



3. Read the article The Digital Impact – Kindle and e-books: The beginning of the end for

printed books?



4. What are the differences between tangible goods and intangible services?

Tangible goods can be seen, tasted, touched, smelled and felt while intangible services cannot.

5. Think of five services and position them on the services and intangibility continuum.


6. What are the benefits of standardising and customising services respectively?

Standardising seems to be more cost-effective. It also makes production, distribution and marketing

easier as there is only one product.

Customising has its benefits in being tailor-made to a customer’s needs. This might be a more

expensive option but it might be worth it if customers want customised services and are willing to pay

for them.

7. What role does technology play in the marketing of services internationally?

Dramatic changes and technical innovations in the new communications technologies are rapidly

changing the situation in a number of sectors. The delivery of health services, education and banking

are prime examples. Technology makes service delivery easier and more efficient through

innovations in communication and transport.

8. Read the End-of-Chapter Case Study – Heathrow Terminal 5: The making of a world-class

service.


- Using the information from the case study and your own knowledge, conduct a SWOT

analysis to identify the issues confronting British Airways in today’s global airlines

industry.


- What was the problem that the management at Heathrow Terminal 5 failed to anticipate at the

opening of the new terminal building? What were the contributing factors that created the

problem?

They did not anticipate the baggage handling operation to malfunction. They had to cancel flights and

refund tickets to passengers.

- In the planning and delivery of Terminal 5’s highly complex services, what do you think are

the strategic considerations which should have been taken into account in order to prevent

the mistake made by its management?

There should be back-up systems for everything as well as alternatives to the one baggage handling

operation. The bags could have been handled by hand and flights only delayed not cancelled.

9. Discuss the role that services play in the current global economy and the reasons why it is

becoming a business-imperative for all businesses.

The services industry has grown to be a major part of the global economy and forms part of large

parts of local GDPs in various countries. The services industry keeps economies alive and growing.

Service delivery and customer care are also becoming very important as consumers are demanding

attention and great service. A business that wishes to gain advantage will have to embrace service

delivery.

10. Examine the characteristics that define the nature of services and evaluate how they

present unique challenges for service providers in marketing and managing services

internationally or globally.

Students must use Lee and Carter (2012) to elaborate on the information below.

Services have a number of fundamental characteristics that make them different from goods that can

be touched. These characteristics pose challenges to marketers in terms of how these services

should be marketed globally.

The characteristics to be considered are:


Intangibility – the degree to which a service can be seen or tested

Heterogeneity – the customer is an integral part of service delivery – without the customer the

service cannot be delivered or produced

Inseparability – there must be interaction between the customer and the producer in order for a

service to be delivered

Perishability – the lower the level of tangibility the higher the perishability of a service as services

that are not used cannot be stored as inventory.

11. Why do you think the task of defining services is so complex? Identify and discuss some

of the approaches which can be used for this purpose.


12. For service organisations that operate in today’s global environment, discuss the strategic

considerations which need to be taken into account to ensure success in cross-border

services marketing.

Service organisations that operate globally have a variety of strategic issues. Culture plays a major

role and has a great influence on how services should be marketed.

The considerations that global companies need to make with regard to how to market their services

include:

Managing of the knowledge base

Standardisation vs. customisation – is the service delivered exactly the same everywhere in the

world or adjusted to the local culture?

Managing the process of service delivery – the complexity of service delivery differs from service

to service and must be taken into account.

Using physical evidence to communicate service quality – physical evidence refers to the building,

location and any tangible goods that are used in delivering the service to the customer.

Socio-cultural differences – religion, education, family structure, gender role, customers and time

orientation is part of national culture and must be considered when planning marketing strategies.

Role of technology – technology plays a major role in service delivery and there are few, if any,

services that are being delivered today that do not use technology at one stage in their production

and delivery processes.

Ensuring service quality and standards – international service delivery is influenced by the nature

of the service, customer preferences and the degree of control that the organisation wants.


STUDY UNIT 11: MANAGEMENT OF GLOBAL COMMUNICATIONS


1. Read the article The Relationship Perspective – Building relationships by encouraging

useless dreams.



2. In what ways do international marketing communications differ from domestic marketing

communications?

While the process of communications may be relatively similar to that in the domestic context, the

contextual application of international/global communications is likely to vary due to prevailing

environmental circumstances.

3. What does it mean when an organisation adopts a standardisation approach to international

marketing communications? Under what circumstances might a standardisation approach

not work?

Supporters of the standardisation concept believe that all people across the world have the same

basic needs and that universal advertising will appeal to them. This approach might not work in very

diverse countries and cultures. Services such as food and beverage would be wise to adjust the type

of food if the market they are in includes religions that do not eat certain types of food.

Students must give more of their own examples.

4. The forces of globalisation have continued to propel organisations to invest in strong brand

names through advertising. Why do you think this is the case?

A recognisable and trustworthy brand will have a competitive advantage and loyal customers that will

return to it. Ensuring that the brand name and products are heard and seen by all can help with

growth.

Students must add more of their own opinions.



1. Read the article Whose Responsibility is it? – Climate change? Or is it just bad weather?



2. What is a creative plan? Briefly discuss the process of developing a creative plan. Make

reference to positioning, tone, appeal, music and format.

In order for an organisation to compete successfully in global markets, it must have brands that stand

out. In order to this, the organisation must have a creative plan through which it can communicate

and outsmart the competition.

Creative plan is developed by taking into account different factors. These factors include:

Positioning – what does the product do? In place of what?

Appeal – what motivates a purchase?

Tone – how is the message to be said?

Format – how is the message presented, structured and delivered?

Music – how is music used to enhance the message?


1. Read the Mini-case Illustration – Change the world with ‘Hopenhagen’.



2. Read the article The Digital Impact – How a baby elephant saved the zoo.



3. Read the Mini-case Illustration – Making an impact in show business.




4. Read the Mini-case Illustration – Monster.com.



5. Read the End-of-Chapter Case Study – New Zealand Wine: Competing on the world stage.

- Using the information provided in the case study and your personal knowledge, discuss the

issues and challenges which confront the New Zealand wine industry.

Student’s own answer based on information in the text and personal insight.

- Developed by the New Zealand Wine Growers (NZWG), ‘New Zealand’ is a now successful

brand that communicates a consistent and recognisable identity globally. If you were to be

asked to develop an integrated global marketing communications strategy which seeks to

increase New Zealand’s share of the global wine market, how would you go about doing it

and what would it be?

Student’s own answer based on information in the text and personal insight.

6. What is the purpose of using international public relations? What does it aim to achieve?

PR has to do with creating a good image and name for an organisation and taking action to ensure

that the good name remains. The job of a public relations professional is to build and maintain long-

term relationships between individuals and institutions.

7. What is direct-response marketing? Why do you think it is becoming an important

promotional tool for global marketing?

Direct-response marketing can be defined as ‘a type of marketing that elicits a specific, measured

response resulting from a consumer’s direct response to a marketer. Direct-response marketing

entails two-way communication between the customer and the company. It is very interactive and

allows for immediate response from either party. The process of direct-response marketing is linked

to a database that reacts to make certain activities take place such as handling responses and

fulfilling orders.

8. Outline the functions of international sponsorship and exhibitions.

Sponsorship has to do with a relationship between two parties where the image or products are

promoted through the course of business between the two parties. In other words, if a well-known

sport shoe brand would go into partnership with a national sports team and be its sponsor that would


be a good example of sponsorship. The team might play with jerseys showing the brand of the sport

shoe or play in the sport shoe itself and in this manner promote the brand.

Exhibitions and trade fairs are some of the most exciting and effective marketing communication

tools. It makes it possible for organisations to interact face to face with a focused group of people. It

gives the opportunity to interact with a large number of people in a short time period.

These methods allow organisations to advertise themselves and also allows closer contact with the

customer and the possibility of establishing a relationship. Sponsorship offers the potential to support

the broader PR strategy, both directly and indirectly.

9. What are the different types of electronic advertising channels that can be used to create an

interactive marketing communication campaign?

Direct emails

Banner advertising

Interactive TV advertising

Wireless devices

DVD technology.

10. Briefly discuss how sales promotion, publicity, and personal selling can be applied to the

online market-place.

The advances in technology have made it possible for organisations to advertise on the Internet in a

massive way. Sales promotions are far-reaching and can be advertised on any page a person opens.

Publicity can be used to improve the image of the organisation. If good publicity took place, the

organisation could share this on its website or even post a video on YouTube. Personal selling can

be done through instant chat rooms or similar features.

11. With relevant examples, discuss the pros and cons of using a standardisation approach to

the planning of cross-cultural marketing communications. Under what circumstances

might a standardisation approach be problematic?

Student’s own answer based on Lee and Carter (2012), research and his or her own knowledge.

12. What is ‘integrated marketing communications’? What are the reasons why organisations

increasingly feel the need to become more integrated in their marketing communications

strategy?

The concept of globally integrated marketing communications (GIMC) is defined as ‘a system of

active promotional management which strategically coordinates global communications in all of its


component parts both horizontally in terms of countries and organisations and vertically in terms of

promotional discipline. It contingently takes into account the full range of standardised versus

adaptive market options, synergies, variations among target populations and other marketplace and

business conditions’. Integration improves efficiency of operations.

13. ‘The revolution in Internet and communications technologies (ICT) has provided new

possibilities in the delivery of cost-effective and targeted marketing communications.’

Discuss.


14. With the use of relevant examples, discuss how you might develop and manage a cross-

cultural advertising campaign.

Student’s own answer using information in Lee and Carter (2012) and doing research.

15. Why do you think international public relations is becoming an increasingly important

marketing communications tool in global marketing management? What are the barriers

to developing an effective international public relations strategy?

There are three general kinds of PR and these are:

Publicity – usually a free type of exposure through articles, interviews, exposés, etc. on the

organisation and/or its products or operations.

Event management – involves all actions to plan product launches, press conferences, road

shows, grand openings, etc.

Publication design – designing and producing presentation media such as catalogues, brochures,

flyers, etc.

Factors that require good communication and that drive the need for PR:

Growing need for effective employee communication

Increasing importance placed on corporate branding and product branding

Environmental and sustainability issues

Political and economic changes in today’s global business environment.

16. With appropriate examples, compare and contrast the different types of online advertising

channels.

Student’s own answer. The comparisons can be listed in a column to make it easier. Consult Lee and

Carter (2012) and do research.


STUDY UNIT 12: MANAGING SUPPLY CHAIN AND DISTRIBUTION


1. Read the article The Digital Impact – Supply chain management with digital technologies.



2. What is a supply chain? What activities does a supply chain consist of?

A supply chain refers to ‘the network created amongst different companies producing, handling,

and/or distributing a specific product.’ It has to do with the steps that are followed to get a product or

service to the customer. The supply chain involves suppliers, manufacturers and retailers.

3. Discuss the factors that affect global supply chain decisions.

There are different factors that influence the international supply chain. The value-adding activities of

an organisation must be weighed against the advantages offered by the markets in which it operates.

The factors that must be considered are:

Country characteristics:

Endowment factors

Cultural variations

Arbitrage and leverage

Government incentives and regulations.

Industry characteristics:

Labour content of the product or service

Scarcity of materials

Value and cost of components

Perishability of products.

International supply chain strategy:

Nature of the markets

Infrastructure for transportation

Level of technology

Financial management

Organisational behaviour and human resources.



1. Read the Mini-case Illustration – Factors driving increased partnerships in Toys “R” Us.



2. Read the article The Relationship Perspective – Understanding the intangible aspects in

China.



3. Read the article Whose Responsibility is it? – Corporate social responsibility – is it any of

your business?



4. Why do organisations collaborate in the supply chain?

Many organisations, especially those that operate in the international retailing and construction

sectors, have long recognised the major economic benefits of strategic supply management. Few

organisations are able to keep up with increased product complexity and advances in technology on

their own. It is therefore that organisations collaborate with other organisations that can offer

complementary skills to fill the gaps.

5. What are the two main types of buyer-seller relationship? What are their goals?

Students must use the information below as a starting point and use Lee and Carter (2012) to

elaborate.

TYPE OF RELATIONSHIP GOAL ACTIVITIES NEEDED

Traditional transactional Minimise price of purchased

goods and services

1. Buyer relies on large

number of suppliers that can

play off against each other


2. Buyer allocates amounts

to suppliers to keep them in

line

3. Buyer only uses short-

term contracts

Collaborative partnership Long-term strategic gains

through establishing reliable

relationships

1. Buyer relies on small

number of strategic partners

that work close together for

price stability

2. Buyer and suppliers make

joint decisions

3. Buyer and suppliers

integrate their operations for

better efficiency and

reactions to the changing

market environment

6. Briefly discuss the three categories of supply chain collaboration.

There are different forms of potential supply chain collaboration. There are three main categories:

Vertical – two or more organisations share resources and responsibilities

Horizontal – two or more unrelated or competing organisations share information or resources

Lateral – combination of vertical and horizontal collaboration to gain more flexibility.


1. Read the Mini-case Illustration – Green Isle Foods.



2. Read the Mini-case Illustration – The ‘real’ costs of offshore manufacturing.




3. Read the End-of-Chapter Case Study – Re-engineering supply chain to achieve global


- Using information in the case study and your own knowledge of the footwear industry,

conduct a brief analysis of the opportunities and threats confronting Yue Yuen in the future.

In what ways do the results of your analysis provide a rationale for the company to re-

engineer its global supply chain?

Student’s own answer based on information in Lee and Carter (2012), research and own knowledge.

- Discuss how the re-engineering of Yue Yuen’s supply chain may benefit its business. What

do you think may be the potential, hidden problems?


- In developing a ‘new corporate culture’ for the re-engineered supply chain management

strategy, what do you think would be the problems that the company might encounter?


There might be resistance from existing employees and partners. It might be difficult to introduce the

new culture to all in the supply chain. It might take some time.

4. What is global sourcing? What can organisations gain from such a practice?

Global sourcing has become a prerequisite to compete globally. Global sourcing means that an

organisation is sourcing or buying raw materials, services, finished goods, etc. from other global

companies instead of buying from local producers. This can help an organisation gain competitive

advantage. As an organisation gains experience in global sourcing, it goes through different phases.

These phases include domestic sourcing, basic international sourcing, strategic international sourcing

and strategic global sourcing. Global sourcing has advantages and disadvantages for the

organisation.

5. What is the so-called ‘agile’ approach to manufacturing? Why is agility so important in

today’s manufacturing?

Market responsive manufacturing is needed in order for an organisation to gain competitive

advantage. In future, manufacturing will have to focus on agility rather than simply cost-reduction.

The ‘agile’ approach to manufacturing means that customised products with 100% quality must be

delivered. The most important aspects of agile manufacturing are:


Customer prosperity – in-depth understanding of customer needs

People and information – skills and knowledge that the organisation has in its people

Fitness for change – ability and authorisation of people close to customer to change organisation

methods to meet the customer’s needs.

6. When organisations collaborate, why is it important to consider integrated policies and

processes and information sharing?

Information plays an important role in many parts of strategic supply chain management. Supply

chain members share information that provides adequate visibility across both internal functions and

organisations. Information-sharing has benefits for all members of the chain. This includes mutual

understanding of the competitive advantage as well as cost efficiency.

Collaboration between organisations might require a larger or more intricate collaborative technology

infrastructure. The fundamental attributes of such an infrastructure include:

Open, low-cost connectivity

Very large, flexible multimedia data storage capabilities

Systems and channel integration

Higher-level self-service capabilities

Intelligence (knowledge) gathering and analysis

Supply chain collaboration exchanges

Sophisticated security capabilities

New electronic commerce capabilities.

7. Briefly discuss the main reasons for establishing clear measures and measurement

systems in supporting supply chain collaborations.

The establishment of clear measures and measurement systems is fundamental to supporting

collaborative supply chain excellence. There is no definitive or prescriptive set of supply chain

measures and no single best way to measure the supply chain performance. There are however four

steps that a supply chain member has to carry out: design performance, facilitate performance,

encourage performance and intensify performance.

8. Why should supply chains be viewed as a set of interrelated processes and activities that

need to be aligned, coordinated and synchronised, rather than a series of discrete, non-

aligned activities? What are the fundamentals of effective supply chain management?

Students must use the information below as a starting point and elaborate from Lee and Carter

(2012).


The management of an effective supply chain requires the coordination of a range of activities and

‘flows’ that extend across functional and organisational boundaries. These activities include:

Inbound logistics

Operations

Outbound logistics

Marketing and sales

Customer service.

Supply chains should be seen as a set of interrelated activities that need to be aligned, coordinated

and synchronised. See Figure 12.1 on p. 391 in Lee and Carter (2012) for an example of how a

supply chain works.

There are also three principals of effective supply chain management. These principals are:

Effective management of risk

Effective management of trade-offs

Effective management of strategic relationships.

The four broad types of supply chain relationships are:

Transactional – focused on reducing transaction costs

Strategic – focused on forming relationships that will lead to benefits

Market – focus is on the price

Leverage – focused on long-term contractual relationships.

9. With examples, discuss the influential factors which affect a global supply chain and their

implications on organisations within the chain.

Students must use the information below as a starting point and elaborate on each factor regarding

the implications.

There are different factors that influence the international supply chain. The value-adding activities of

an organisation must be weighed against the advantages offered by the markets in which it operates.

The factors that must be considered are:

Country characteristics:

Endowment factors

Cultural variations

Arbitrage and leverage

Government incentives and regulations.


Industry characteristics:

Labour content of the product or service

Scarcity of materials

Value and cost of components

Perishability of products.

International supply chain strategy:

Nature of the markets

Infrastructure for transportation

Level of technology

Financial management

Organisational behaviour and human resources.

10. The ability to become a world-class competitor in today’s global market-place is based to a

great degree on the ability to establish high levels of trust and cooperation with partners

in the supply chain. Taking an example of a supply chain of your choice, show how the

establishment of trust and cooperation with partners in the supply has made the

organisation world-class.


11. Global sourcing is rapidly becoming a prerequisite for competing in today’s market-place.

Why do you think this is? Discuss how an organisation may seek to develop its

international sourcing experience.

Global sourcing has become a prerequisite to compete globally. Global sourcing means that an

organisation is sourcing or buying raw materials, services, finished goods, etc. from other global

companies instead of buying from local producers. This can help an organisation gain competitive

advantage. As an organisation gains experience in global sourcing, it goes through different phases.

These phases include domestic sourcing, basic international sourcing, strategic international sourcing

and strategic global sourcing. Global sourcing has advantages and disadvantages for the

organisation.

Students must discuss their opinions and suggestions on development of international sourcing.

12. The establishment of clear measures and measurement systems is fundamental to

supporting collaborative supply chain excellence. Examine the validity of this statement

to an organisation with which you are familiar.



STUDY UNIT 13: MANAGING GLOBAL MARKETING RELATIONSHIPS


1. Read the Mini-case Illustration – Cutting it in the world of fashion.



2. Read the Mini-case Illustration – Making waves in the swimwear market.



3. Discuss the stages of relationship development.

Students must elaborate on each of these stages. The stages of development include:

Prospect

Customer

Client

Supporter

Advocate

Member

Partner.

4. Discuss the eight ‘I’s, as suggested by Kanter, needed to facilitate a more collaborative

approach to managing relationships.

Individual excellence

Importance

Interdependence

Investment

Information

Integration

Institutionalisation

Integrity.


5. Discuss the claim that the changing nature of the global market-place is encouraging

organisations to cooperate more closely in international markets.

A marketing relationship is formed when organisations reach an agreement to work together.

Marketing relationships are very important in the highly competitive global market of today. It is

important for organisations to interact with other organisations if they are to facilitate successful

market exchanges. It is especially important in business-to-business markets, as well as business-to-

customer markets. Marketing relationships have an important influence on commercial performance.

Marketing relationships are necessary if organisations want to be successful and be able to compete

globally.

6. What are the key elements of an RM approach compared with a transactional perspective?

The transactional approach has been dominant in marketing for a long time. However, the shift to

relationship marketing is necessary if organisations want to compete globally and remain successful.

This shift might be challenging to managers who have been operating on the transactional approach.

They may need some new training and skills in order to take on the relationship marketing

perspective.

TRANSACTIONAL RELATIONSHIP

Managerial perspective Focus on achieving sales

transactions

Focus on developing

relationships

Time orientation Short term Long term

Focus of quality Focus on improving product

features, not customer

service

Emphasis on relationship

quality and customer service

Customer communication Moderate, infrequent

customer communication

High level of regular

customer communication

7. Identify the key stakeholders with which a manufacturer of FMCGS seeking to trade in

foreign markets may have to build relationships.




1. Read the article The Relationship Perspective – Fabric of relationships.



2. Read the article Whose responsibility is It? – Assuming social responsibility in managing

international relationships.



3. Read the Mini-case Illustration – Relationships management in NGOs.



4. Read the article The Digital Impact – ‘E-relationships’.



5. Read the End-of-Chapter Case Study – The evolution of customer loyalty schemes

- In your experience, do loyalty schemes work in (a) retaining your loyalty, and (b) increasing

your purchases with the retailers?


- Using examples, briefly discuss the common criticisms associated with customer loyalty

schemes.


a) Loyalty schemes are nothing more than a modest discount arrangement

b) They are an intrusion into customers’ privacy

c) True loyalty does not exist given the widespread, indiscriminate use of loyal schemes by all major

high street retailers.


- How is the Tesco Clubcard loyalty scheme different from conventional ones? In what ways

does the scheme enhance customer loyalty?

It focuses on creating opportunities for customers and businesses to meet each other. Its rewards

includes meals out, home wares, travel, etc.

6. Why are horizontal partnerships as important as vertical ones in a holistic relationship

approach?

Vertical and horizontal relations must be taken into account holistically. For example, improving the

competences and position of a potential competitor can have a negative influence on an

organisation’s vertical position, whereas horizontal cooperation may improve collective bargaining

power in relation to vertical relationships. The focal partner also has the option of assisting a

horizontal partner to enter its domestic market, something which could be particularly desirable if the

entry of the alliance power would weaken the position of domestic competitors. Horizontal and

vertical relations complement each other and work together.

7. Discuss the impact of IT on relationship marketing practices in B2B contexts.

IT and other technologies help gain access to a high level of accessibility to customers. Relationships

can be established online through websites and advertisements and call centres, etc. The Internet

and computers make it easier to reach customers from all around the world and establish and

maintain those relationships.

8. Using examples, explain what is meant by the term ‘partnership’ in international supply

chain management. Debate whether all such relationships run smoothly.


Partnership refers to organisations going into agreement with each other and establishing relations

that will benefit both or all parties involved. All relationships will not always run smoothly but that does

not mean that the relationship cannot work and be of value.

9. How can cross-cultural differences affect (a) relationship marketing strategies of

organisations wishing to enter certain foreign markets, and (b) interpersonal relationships

between managers working in B2B markets?

Student’s own answer. Students can refer to this chapter as well as previous chapters discussing

cultural differences.

Culture plays a role not only with market entry but also with managers from different cultures.


Market entry strategies must take into consideration the culture and religions of the people who form

part of the market that they want to enter. Relationships established with people and managers from

these different cultures and religions will only work if there is understanding of each other’s

differences. Different cultures place different emphasis on things like time, manners, respect, etc.

10. What advice would you give to (a) a newly appointed marketing manager, and (b) a newly

appointed purchasing manager, for an organisation sourcing components and selling

manufactured goods in global markets?


11. Why do you think information sharing and establishing integrated policies and processes

are critical to supply chain collaborations? Discuss with examples.

Student’s own opinion and examples.

STUDY UNIT 14: GLOBAL PRICING AND TERMS OF ACCESS


1. Read the article Whose Responsibility is it? – The great summer holiday price escalator.



2. Read the Mini-case Illustration – Low cost/no-frills airlines, easyJet and Ryanair.



3. Read the Mini-Case Illustration – The cost of being British.



4. Read the article The Relationship Perspective – Outsourcing.




5. Read the article The Digital Impact – Empowering customers.



6. Read the Mini-case Illustration – The case of fair trading: Oxfam and Fairtrade.



7. Why is pricing one of the key global strategic decisions?

It is believed that the price element of the marketing mix is one of the most controllable and

immediate in effect. It is the element which generates revenue. Fixing the price and making sure all

the other mix elements are more or less balanced will make consumers pay for the product happily.

8. What are the key considerations to be taken into account when setting both global pricing

strategies and specific pricing approaches?

Organisation-specific, environmental and market-specific factors. Students must refer to Lee and

Carter (2012) to elaborate.

The steps involved in an international pricing strategy are:

Identify and analyse factors affecting pricing

Set pricing in the context of corporate objectives

Develop and select the most appropriate price option

Implement the selected option

Manage and finance international transactions

Account for ‘terms of trade’.

9. What specific issues affect global pricing and how can these be taken into account when

setting prices?

Factors include location, currency fluctuations, and standard of living of target market.

10. Which is the most appropriate pricing strategy for commodities, business-to-business

products, consumer products, and services? Justify your answer with examples.

Commodities – competition-based strategy

B2B – Market pricing


Consumer products and services – promotional pricing, price discounting

11. Discuss the special issues in global price setting.

Students must use the information below as a starting point and elaborate based on the information

in Lee and Carter (2012).

Price fluctuations

Currency fluctuations

Buying forward

Devaluation and revaluation

Inflation

Transfer pricing

Grey and parallel markets

Dumping

Leasing

Counter-trade

Price coordination.


1. Read the Mini-case Illustration – Price cooperation in global markets.



2. Read the End-of-Chapter Case Study – AirAsia: Flying high with no-frills pricing.

- Given the competitive aviation environment that is confronting the company, how would the

management grapple with the company’s pricing strategy?


- Critically evaluate whether cost reduction strategies have contributed to the company’s

profitability.


- How can a low-price strategy be sustainable over time with a continual potential fuel hike?



3. Discuss the different sources of export financing and assess, giving reasons, which ones

are the most organisation- or market-friendly.

Internal sources:

Subsidiary operations

Transfers within the corporation.

External sources:

Host country borrowings

Export credit schemes

Donor agencies and foreign investors

Government

Factoring

Confirming houses

Banks

International financing markets.

4. ‘Of all the global marketing mix decisions, the pricing decision is one of the most difficult to

make’. Discuss, illustrating your answer with examples.

Student’s own answer based on information from Lee and Carter (2012) and other research.

5. What factors would determine whether the global price strategy was set on a

‘standardisation’, ‘adaptation’, or ‘invention/corridor’ pricing basis? Illustrate your answer

with examples.

The factors are:

Price ceiling – determined by the extent and type of competition.

Floor price – determined by total costs including those of manufacturing and marketing

Optimum price – determined by demand and costs.

6. How can the global marketer combat the ‘grey or parallel’ market through an astute pricing

strategy? Give examples in your answer.

Grey markets consist of the distribution of branded or trademarked goods through channels of

distribution unauthorised by the brand or trademark owner.

Student’s own insightful answer.


7. What are the key factors to be taken into account when setting prices for products and

services in countries in different stages of economic development? How do they affect the

pricing decision?

Organisation-specific, environmental and market-specific factors. Students must refer to Lee and

Carter (2012) to further elaborate.

Also see Table 14.1 in Lee and Carter (2012) for further explanation.

STUDY UNIT 15: SALES FORCE MANAGEMENT AND NEGOTIATIONS


1. Read the article The Digital Impact – Taobao’s impact on retailing in China.



2. Read the Mini-case Illustration – Market leadership through strategic sales management.



3. Read the article Whose Responsibility is it? – Does nationality affect people’s ethical

perceptions and behaviours?



4. What are the behavioural, technological, and managerial forces which are shaping the

changing nature of personal selling and sales management?

Behavioural forces include rising customer expectations, consumer avoidance of buyer-seller

negotiations and expanding power of giant retailers

Technological forces include sales force automation and electronic sales channels

Managerial forces include moving to direct marketing alternatives, outsourcing of sales functions.

5. What are the decisions involved in international sales management and planning?

There are factors that influence the international sales management decisions. These factors include:


Industry factors such as the costs of market entry

Environmental factors such as local market circumstances

Resource availability.

The sales management decisions can be divided into three categories:

The structure of the sales force – geographical, product-based or matrix-based

Administration of the sales force – a single sales force for multiple markets or separate sales

forces for each market

Resource deployment.

6. Identify and briefly discuss the environmental factors affecting sales force organisation

decisions.

Environmental factors affecting sales force organisation:

Geographic and physical dimensions

Degree of market development

Differing political and legal structures

Human relations aspects of personal selling and sales management.

7. Discuss the cultural impact on sales force recruitment and selection.

In managing foreign sales forces and working with salespeople selling to foreign clients, the sales

manager may be faced with the problems posed by language, different business norms, ethical

perceptions, negotiation styles, relationship perspectives, etc. The organisations that are seen as the

best and most successful hire people to work for them who are qualified with the skills and knowledge

necessary to keep the customers happy and establish and maintain long-term relationships with

them.

In general there are four cultural elements affecting sales force recruitment in a foreign market:

Education

Ethnic composition

Religious orientation

Social class environment.



1. Read the article The Relationship Perspective – The ‘Pink-Cadillac’ phenomenon.



2. Read the Mini-case Illustration – Ethics in global marketing.



3. Read the End-of-Chapter Case Study – Developing an effective sales force structure.

- What are the differences in the sales force structure of UK and Japanese pharmaceutical

companies? How do you think this affects the nature of personal selling, and the

relationship between the sales rep and the doctor?

UK sales forces attempt to adapt to changing environment. Approximately 60 representatives for

Schwarz Pharma to over 400 for Wyeth. Typically structured by target audience, with little

specialisation by therapy area. Considerable focus on monitoring changes in the National Health

Service.

Japanese sales force structures: Range from 660 to 1350 representatives with very little variation

between companies. Structured on regional basis with little specialisation by either customer type or

therapy area.

- Discuss the determining factors in the planning of the sales force structure for a modern

pharmaceutical company. Can these factors be applied to the planning of sales force

structures for other types of product or service? If so, provide examples.

Student’s own answer and examples.

4. Explain what is meant by customer-oriented personal selling.

Personal selling does not focus as much on closing the deal as the traditional sale-oriented model.

Today, personal selling has a more relationship-focused approach where the salesperson builds and

maintains a relationship with the customer in order to better fulfil his/her needs.

5. Name the seven elements of the selling mix.

Specifications of product

Service level


Speed of delivery

Size of order

Scope of warranty

Span of contract

Special payment terms

Economic factors.

6. What is the difference between the ‘transactional’ and the ‘relationship’ approach to

selling?

The transactional approach is more focused on making money and the trade part of selling. The

relationship approach is more focused on developing and maintaining relationships with customers

and suppliers.

7. How does ‘culture’ affect the sales negotiation process? What must an organisation do to

take into account the effect of ‘culture’ in sales negotiations?

Salacuse (2005) identified ten ways in which culture can affect international negotiations:

The view of whether the goal of negotiations is a contract or a relationship

The attitude of either win-win or win-lose towards negotiations

Difference in personal style, in other words will negotiations be formal or informal

Difference in communication methods – direct or indirect

Concept of time and punctuality

Difference in emotionality during negotiations – should emotion show or not?

Difference in whether the agreement or contract should be detailed or general

Difference in approaching the contract – from a general agreement to specific terms or the other

way around

Difference in organisation structure – decisions made by one person or a group

Difference in approach to risk taking (http://iveybusinessjournal.com/topics/global-business/the-

top-ten-ways-that-culture-can-affect-international negotiations).

8. Explain the ethical considerations of international selling and negotiation.

Student’s own answer. Refer to ethical issues that are related to differences in perceptions,

expectations and evaluations.

9. ‘The nature of personal selling and sales management is undergoing dramatic change.

Organisations are increasingly looking to new ideas, sales channels and technologies to

http://iveybusinessjournal.com/topics/global-business/the


sell products, manage buyer-seller relationships, and restructure the sales functions in

response to the changing business landscape.’ Discuss.


10. What are the decisions involved in international sales management? How are these

decisions affected by environmental factors in the international market-place?

Structure of sales force, administration of sales force and resource deployment.

Environmental factors affecting sales force organisation:

Geographic and physical dimensions

Degree of market development

Differing political and legal structures

Human relations aspects of personal selling and sales management.

11. With relevant examples, evaluate to what extent cultural differences affect sales personnel

international staffing decisions.


12. What fundamental differences in sales training must an organisation consider when

choosing a ‘transactional’ or ‘relationship’ approach to global selling?

Degree of subsidisation

Investment in training

Training content

Training methods

Training effectiveness.

13. Citing relevant examples, discuss the relevance of ‘culture’ in the preparation of global

sales negotiations.



STUDY UNIT 16: ORGANISING AND CONTROLLING GLOBAL

MARKETING OPERATIONS


1. Read the article Whose responsibility is it? – The aftermarket in less developed countries.



2. Read the article The Digital Impact – Westpac – technology and global operations control.



3. Identify and discuss the various types of global marketing organisational structures.

The different kinds of organisational structures include:

Functional

Geographical, functional, or strategic business unit approach

Product organisational structure

Matrix organisational structure

‘Hub and smoke’ organisational structure

Virtual organisational structures.

There are different management orientations that need to be considered because it helps to

determine the organisational forms. The orientations are known as EPRG – Ethnocentrism,

Polycentrism, Regiocentrism and Geocentrism.

Ethnocentrism – the domestic market is seen as supreme and the overseas market is secondary

Polycentrism – each host country is viewed as unique

Regiocentrism – regions are unique, but an integrated approach is looked for

Geocentrism – global view that recognises differences and seeks strategies to accommodate the

differences.


4. Identify and discuss the various types of global marketing control methods.

Control refers to the process through which managers make sure that resources are used properly

and in the most effective way in the process of reaching for goals and fulfilling objectives. Controlling

the global marketing plan is an important part of the planning and evaluation process.

The factors that affect control over marketing are:

Domestic practices and values

Communication systems

Distance

Product and service offer

Environmental differences

Accuracy of data.

A control system has three elements: establishment of standards, performance evaluation and

analysis of deviations and corrective action. Standards are needed to ensure that everyone behaves

according to the same basic standards and performs their duties accordingly. Performance evaluation

is done to pick up problems and rectify any issues. When behaviour is not compliant to the standards

that have been set out and agreed to, corrective action must be taken.

Students must be able to identify the various types of traditional and non-traditional control methods

and provide an example of each of the methods mentioned to show their understanding.


1. Read the Mini – Case Illustration – BP’s management structure.



2. Read the Mini-Case illustration – How technology can help to bypass ‘formal’ organisational

structure.



3. Read the article The Relationship Perspective – Downsizing and outsourcing.




4. Read the End-of-Chapter Case Study – Anglo American: A global mining conglomerate.

- Describe the basis on which Anglo American organises its business.

Anglo American’s strategy centres on achieving world class performance in all areas of the business.

- Explain how you think Anglo American balances and coordinates its strategy and interests.

Use the balanced scorecard in your answer.

Student’s own answer based on knowledge and insight.

- Currently, Anglo American has eight areas of business activity. What impact might changes

in the global marketing environment in the next decade have on these groupings and how

might Anglo-American deal with these changes organisationally?


5. What would dictate the use of more traditional or less traditional methods of global

marketing controls?

Transactional approaches are more traditional and might be more suited for standardised products or

market offerings. Less traditional methods might be used to move forward and be innovative.

6. Identify three organisations which have different structures of global marketing

organisation and discuss why they have these structures.


7. Discuss the importance of having the most appropriate structure of global marketing

organisation.

Once the global marketing and control plan has been decided on, the final thing is to decide on the

organisational structure to implement the global plans. There are different factors that determine the

development of the most appropriate form of organisation.

The factors that determine the most appropriate global organisation structure are:

Organisational goal

Level of involvement in market

Size of the business

Nature of the product

Nature of the marketing task

Number of markets operated in


International experience

Financial commitment

Width and range of product range

Risks involved.

An organisation needs to consider these factors in order to determine which structure will be best

suited to it.

8. Discuss the financial, organisational, and personnel implications of different types of global

marketing organisational structure.

The different kinds of organisational structure include:

Functional

Geographical, functional, or strategic business unit approach

Product organisational structure

Matrix organisational structure

‘Hub and smoke’ organisational structure

Virtual organisational structures.

Students must elaborate from the above structures by referring to the Lee and Carter (2012).

9. What is required to make different methods of global marketing control work effectively for

an organisation?

Planning, control and organisational forms.

10. What are the strategic considerations for choosing a global organisational structure and

control mechanism?

Geographical distance

Strategic necessity

Availability of business services.


References

Czinkota, M.R., 2012. International Marketing. 10th ed. Cengage Learning.

Drucker, P.F. 1999. Management Challenges for the Twenty-first Century. Woburn, MA: Butterworth

Heinemann.

Government of Western Australia., 2014. Marketing – Product Strategy. [Online] Available

at: http://www.smallbusiness.wa.gov.au/marketing-product-strategy/ [Accessed: 21 February 2014]

Grant, R.M., 2001. The resource-based theory of competitive advantage implications for strategy

formulation. California Management Review.

Lee, K. & Carter, C., 2012. Global Marketing Management. 3rd ed. UK: Oxford University Press.

Mühlbacher, H., Helmuth, L. and Dahringer, L., 2006. International Marketing: A Global Perspective.

3rd ed. London: Thomson Learning.

Salacuse, J.W., 2005. The top ten ways that culture can affect international negotiations. [Online]

Available at: http://iveybusinessjournal.com/topics/global-business/the-top-ten-ways-that-culture-can-

affect-international-negotiations#.UwcYRvmSzvY [Accessed: 14 February 2009]



© Copyright (First edition) 2014

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