Unit 3. Chapter 19. Globalisation and international marketing

Question 1

Def. Globalisation

Answer 1

The growing trend towards worldwide markets in products, capital and labour, unrestricted by barriers.

Question 2

Def. International marketing

Answer 2

Selling products in markets other than the original domestic market.

Question 3

Why sell products internationally? (4)

Answer 3

• Home markets are saturated
• Higher profits from lower costs (possibly from cheaper labour or materials)
• Spreading risks
• Legal differences create opportunities abroad

Question 4

How is international marketing different (4)

Answer 4

• Political differences: changes in international governments can lead to risks in operating there
• Economic and social differences: living standards, age groups, tax rates, interests rates etc.
• Legal differences: for example guns are legal to sell in the US but not in other countries.
• Cultural differences and language differences

Question 5

Methods of entry to international markets (6)

Answer 5

• Directly exporting
• Indirectly exporting
• Franchising
• Joint ventures
• Licensing
• Investing into foreign subsidiaries

Question 6

Benefits (2) and limitations (2) of directly exporting

Answer 6

Benefits:
• Complete control over international marketing of the product
• No commission is taken by intermediaries -> lower costs
Limitations:
• With no local agent, the business may lack important local knowledge
• The business has to handle the logistics of transporting which is time consuming

Question 7

Benefits (2) and limitations (2) of indirectly exporting

Answer 7

Benefits:
• Local agents has local market knowledge
• Transport and administrative procedures are handles by the agent
Limitations:
• Less control over marketing
• Commissions have to be paid

Question 8

Franchising and Joint ventures

Answer 8

have been explained in AS

Question 9

Licensing (what it is + 2 benefits + 2 limitations)

Answer 9

• Business licence another firm to produce the products under the original business’s brand.
Benefits:
• Saving time and costs from transportation
• Avoids capital costs of setting up another firm abroad
Limitations:
• Lapses in quality
• Unethical production methods

Question 10

Subsidiaries (what it is + 2 benefits + 2 limitations)

Answer 10

• Company owned branches in foreign countries
Benefits:
• Head office has control over operations, but can also completely decentralise to allow local managers to control
• All profits after tax belong to the company - no commission payment
Limitations:
• Expensive, much higher capital cost required
• Decentralised foreign subsidiaries can take unethical decisions which could affect the business’s overall reputation

Question 11

Def. Pan-global marketing

Answer 11

Adopting a standardised product across the globe as if the entire world were a single market - selling the same goods in the same way everywhere.

Question 12

Def. Global localisation

Answer 12

Adapting the marketing mix, including differentiated products, to meet national and regional tastes and cultures.

Question 13

Advantages (2) and disadvantages (3) of pan-global and pan-regional marketing

Answer 13

Advantages:
• Establishes a ‘common identity’, which aids consumer recognition
• Cost reduction due to economies of scales
Disadvantages:
• Lost market opportunities
• Different legal restrictions for safety of the products and the advertisement e.g. in some countries gambling is illegal to advertise
• Setting same prices doesn’t account for the range of consumer incomes

Question 14

Benefits (3) and limitations (2) of global localisation

Answer 14

Benefits:
• Possibly higher sales and profits
• More likely to meet consumer expectations -> increase consumer satisfaction
• More likely to meet legal requirements
Limitations:
• Reduced economy of scale
• Additional costs for redesigning the product and it’s promotional strategies