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SUB CODE. SUBJECT. MK 0009 International Marketing 01561 PATIL YOGENDRA ASHOK ROLL NO. CLASS. 520837702 MBA 4th Sem ( MarketingWeekend)
CENTER CODE. NAME.
Q.1 The marketer’s task is the same, whether applied in Bangalore, India, or Beijing, China. Do you agree or disagree with this statement?
Ans.: International Marketing Task The task of the international marketer is more complicated since he has to deal with two levels of uncertainties instead of one. Such uncertainty is created due to uncontrollable factors and each foreign country in which the company operates adds its own unique set of uncontrollable factors. Assuming the necessary overall corporate resources, the marketing manager decides on price, product, promotion and channels of distribution activities to capitalize on the anticipated demand. These controllable elements can be altered in the long run and also usually in the short term, to adjust to changing market conditions, consumer preferences and corporate objectives. The uncontrollable factors are as under: Domestic uncontrollable factors: These include home country elements which can directly affect the success of a foreign venture and these factors are out of immediate control of the marketer. These factors are as under: Political decisions involving domestic foreign policy: Examples are that of US restrictions of trade with countries like Libya, Iraq and South Africa, due to so called support to terrorists in Libya and Iraq and due to apartheid policies in South Africa. When South Africa abolished apartheid, many US companies had a positive effect and opportunities were created for US companies Domestic economic climate: This has far reaching effects on competitive position in foreign markets. The capacity to invest in plants and facilities are directly affected with this variable, which could in turn create a positive or negative effect on foreign trade. Currency value: This gives the price advantage or disadvantage to marketers depending on the exchange value and this is another influence the home environment economy has on the marketer’s task. Competition within home country: This can also have a profound effect upon the international marketer’s task. Competition within their home country affects the company’s domestic as well as international plans. Foreign Uncontrollable Factors:
A significant source of uncertainty is the number of uncontrollable elements in the foreign country. Some of these factors are as under: Political/Legal forces: One example is that of China which has moved from a communist legal system in which all business was done with the State, to a commercial legal system. Another example is that of the Indian Government, which in 1977 gave Coca Cola the choice of either revealing its secret formula or leaving the country. Economic forces: The local economic forces in the foreign country may have strong influence on the currency value and repatriation. Competitive forces: The nature of competition may vary from country to country and will have different responses, depending on deep rooted cultural factors to competition in terms of price, distribution, advertising and sales promotion. Level of Technology: There are vast differences that may exist between developed and underdeveloped countries. Technical expertise may not be available at a level necessary for product support and for maintenance. Structure of Distribution: The channels of distribution vary from country to country and there could even be state controls on distribution in some countries. Geography and infrastructure: The transportation and physical distribution depends on these factors and this will also be different in different countries. Cultural forces: Each country’s culture is different and this could affect all the marketing variables like product design, brand name, logo, advertising campaigns, sales promotions, pricing policies, price negotiations, distribution networks and strategies, etc.
Q.2 What are the main features of the WTO? How is it an improvement over the GATT?
Ans.: WTO The World Trade Organization (WTO) is an international organization designed to supervise and liberalize international trade. The WTO came into being on January 1, 1995, and is the successor to the General Agreement on Tariffs and Trade (GATT), which was created in 1948, and continued to operate for almost five decades as a de facto international organization. The World Trade Organization deals with the rules of trade between nations at a near-global level; it is responsible for negotiating and implementing new trade agreements, and is in charge of policing member countries’ adherence to all the WTO agreements, signed by the bulk of the world’s trading nations and ratified in their parliaments. Most of the WTO’s current work comes from the 1986-94 negotiations called the Uruguay Round, and earlier negotiations under the GATT. The organization is currently the host to new negotiations, under the Doha Development Agenda (DDA) launched in 2001. The WTO is governed by a Ministerial Conference, which meets every two years; a General Council, which implements the conference’s policy decisions and is responsible for day-to-day administration; and a directorgeneral, who is appointed by the Ministerial Conference. The WTO’s headquarters are in Geneva, Switzerland. The WTO’s stated goal is to improve the welfare of the peoples of its member countries, specifically by lowering trade barriers and providing a platform for negotiation of trade. Its main mission is "to ensure that trade flows as smoothly, predictably and freely as possible". This main mission is further specified in certain core functions serving and safeguarding five
fundamental principles, which are the foundation of the multilateral trading system. Functions of WTO Among the various functions of the WTO, these are regarded by analysts as the most important: It facilitates the implementation, administration and operation of the objectives of the Agreement and of the Multilateral Trade Agreements. It provides the framework for the implementation, administration and operation of the Plurilateral Trade Agreements relating to trade in civil aircraft, government procurement, trade in diary products and bovine meat. It provides the forum for negotiations among its members concerning their multilateral trade relations in matters relating to the agreements and a framework for the implementation of the result of such negotiations, as decided by the Ministerial Conference. It administers the Understanding on Rules and Procedures governing the Settlement of Disputes of the Agreement. It cooperates with the IMF and the World Bank and its affiliated agencies with a view to achieving greater coherence in global economic policy-making. Additionally, it is the WTO’s duty to review the national trade policies, and to ensure the coherence and transparency of trade policies through surveillance in global economic policy-making. Another priority of the WTO is the assistance of developing, least-developed and low-income countries in transition to adjust to WTO rules and disciplines through technical cooperation and training. The WTO is also a center of economic research and analysis: regular assessments of the global trade picture in its annual publications and research reports on specific topics are produced by the organization. Finally, the WTO cooperates closely with the two other components of the Bretton Woods system, the IMF and the World Bank. GATT: The General Agreement on Tariffs and Trade (typically abbreviated GATT) was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO). The Bretton Woods Conference had introduced the idea for an organization to regulate trade as part of a larger plan for economic recovery after World War II. As governments negotiated the ITO, 15 negotiating states began parallel negotiations for the GATT as a way to attain early tariff reductions. Once the ITO failed in 1950, only the GATT agreement was left. The GATT’s main objective was the reduction of barriers to international trade. This was achieved through the reduction of tariff barriers, quantitative restrictions and subsidies on trade through a series of agreements. The GATT was a treaty, not an organization. The functions of the GATT were taken over by the World Trade Organization which was established during the final round of negotiations in the early 1990s.
The history of the GATT can be divided into three phases: the first, from 1947 until the Torquay Round, largely concerned with which commodities would be covered by the agreement and freezing existing tariff levels. A second phase, encompassing three rounds, from 1959 to 1979, focused on reducing tariffs. The third phase, consisting only of the Uruguay Round from 1986 to 1994, extended the agreement fully to new areas such as intellectual property, services, capital, and agriculture. Out of this round the WTO was born. In 1993 the GATT was updated (GATT 1994) to include new obligations upon its signatories. One of the most significant changes was the creation of the World Trade Organization (WTO). The 75 existing GATT members and the European Communities became the founding members of the WTO on January 1, 1995. The other 52 GATT members rejoined the WTO in the following two years (the last being Congo in 1997). Since the founding of the WTO, 21 new non-GATT members have joined and 29 are currently negotiating membership. As of October 2007, there were a total of 151 member countries in the WTO. Of the original GATT members, only the SFR Yugoslavia has not rejoined the WTO. Since FR Yugoslavia, (renamed to Serbia and Montenegro and with membership negotiations later split in two), is not recognized as a direct SFRY successor state; therefore, its application is considered a new (non-GATT) one. The contracting parties who founded the WTO ended official agreement of the "GATT 1947" terms on December 31, 1995. Whereas GATT was a set of rules agreed upon by nations, the WTO is an institutional body. The WTO expanded its scope from traded goods to trade within the service sector and intellectual property rights. Although it was designed to serve multilateral agreements, during several rounds of GATT negotiations (particularly the Tokyo Round) plurilateral agreements created selective trading and caused fragmentation among members. WTO arrangements are generally a multilateral agreement settlement mechanism of GATT.
Q.3 Which aspects of the cultural environment would have to be considered by an international marketer entering the Indian market for the first time?
Ans.: Following aspects of the cultural environment would have to be considered by an international marketer entering the Indian market for the first time Material culture: Material culture is divided into two parts, technology and economics. Technology includes the techniques used in the creation of material goods; it is the technical know-how possessed by the people of a society. For example, the vast majority of U.S. citizens understand the simple concepts involved in reading gauges, but in many countries of the world this seemingly simple concept is not part of their common culture and is, therefore, a major technical limitation.
Economics is the manner in which people employ their capabilities and the resulting benefits. Included in the subject of economics is the production of goods and services, their distribution, consumption, means of exchange, and the income derived from the creation of utilities. Material culture affects the level of demand, the quality and types of products demanded, and their functional features, as well as the means of production of these goods and their distribution. The marketing implications of the material culture of a country are many Language: Carelessly translated advertising statements not only lose their intended meaning but can suggest something very different, obscene, offensive, or just plain ridiculous. Language may be one of the most difficult cultural elements to master, but it is the most important to study in an effort to acquire some degree of empathy. Many believe that to appreciate the true meaning of a language, it is necessary to live with the language for years. Whether or not this is the case, foreign marketers should never take it for granted that they are communicating effectively in another language. Until a marketer can master the vernacular, the aid of a national within the foreign country should be enlisted; even then, the problem of effective communications may still exist. One authority suggests that we look for a cultural translator, that is, a person who translates not only among languages, but also among different ways of thinking and among different cultures. Aesthetics: Closely interwoven with the effect of people and the universe on a culture are its aesthetics, that is, its arts, folklore, music, drama, and dance. Aesthetics are of particular interest to the marketer, because of their role in interpreting the symbolic meanings of various methods of artistic expression, color, and standards of beauty in each culture. Customers everywhere respond to images, myths, and metaphors that help them define their personal and national identities and relationships within a context of culture and product benefits. The uniqueness of a culture can be spotted quickly in symbols having distinct meanings. Without a culturally correct interpretation of a country’s aesthetic values, a whole host of marketing problems can arise. Product styling must be aesthetically pleasing to be successful, as must advertisements and package designs. Insensitivity to aesthetic values can offend, create a negative impression, and, in general, render marketing efforts ineffective. Strong symbolic meanings may be overlooked if one is not familiar with a culture’s aesthetic values. The Japanese, for example, revere the crane as being very lucky, for it is said to live a thousand years. However, the use of the number four should be avoided completely, because the word four, shi, is also the Japanese word for death.
Education: Education refers to the transmission of skills, ideas and attitudes as well as training in particular disciplines. Education can transmit cultural ideas or be used for change, for example the local university can build up an economy’s performance. Education affects all aspects of the culture from economic development to consumer behavior. The literacy rate of a country is a potent force in economic development. Numerous studies indicate a direct link between the literacy rate of a country and its ability for rapid economic growth. According to the World Bank, no country has been successful economically with less than 50 percent literacy, but when countries have invested in education, the economic rewards have been substantial. Literacy has a profound affect on marketing. It is much easier to communicate with a literate market than to one where the marketer has to depend on symbols and pictures to communicate. Each of the social institutions has an effect on marketing because each influences behavior, values and the overall patterns of life. The UN agency UNESCO gathers data on education information. For example it shows in Ethiopia only 12% of the viable age group enroll at secondary school, but the figure is 97% in the USA. Education levels, or lack of it, affect marketers in a number of ways: Advertising programs and labelling Girls and women excluded from formal education (literacy rates) Conducting market research Complex products with instructions Relations with distributors and, Support sources – finance, advancing agencies etc. Religion: Within this category are religion (belief systems), superstitions, and their related power structures. The impact of religion on the value systems of a society and the effect of value systems on marketing must not be underestimated. Religion impacts people’s habits, their outlook on life, the products they buy, the way they buy them, even the newspapers they read. Religion provides the best insight into a society’s behavior and helps answer the question why people behave, rather than how they behave. Religion can affect marketing in a number of ways: Religious holidays – Ramadan cannot get access to consumers as shops are closed. Consumption patterns – fish for Catholics on Friday Economic role of women – Islam
Caste systems – difficulty in getting to different costs for segmentation/niche marketing Joint and extended families – Hinduism and organizational structures; Institution of the church – Iran and its effect on advertising, "Western" images Market segments – Malaysia – Malay, Chinese and Indian cultures making market segmentation Sensitivity is needed to be alert to religious differences. Superstition plays a much larger role in a society’s belief system in some parts of the world than it does in the United States. What an American might consider as mere superstition can be a critical aspect of a belief system in another culture Values often have a religious foundation, and attitudes relate to economic activities. It is essential to ascertain attitudes towards marketing activities which lead to wealth or material gain, for example, in Buddhist society these may not be relevant. Also "change" may not be needed, or even wanted, and it may be better to relate products to traditional values rather than just new ones. Many African societies are risk averse; therefore, entrepreneurialism may not always be relevant. Attitudes are always precursors of human behavior and so it is essential that research is done carefully on these. Social institutions: Social Institutions include social organization, education, and political structures that are concerned with the ways in which people relate to one another, organize their activities to live in harmony with one another, teach acceptable behavior to succeeding generations, and govern themselves. The positions of men and women in society, the family, social classes, group behavior, age groups and how societies define decency and civility are interpreted differently within every culture. In cultures where the social organizations result in close-knit family units, for example, it is more effective to aim a promotion campaign at the family unit than at individual family members. Travel advertising in culturally divided Canada pictures a wife alone for the English audience, but a man and wife together for the French segments of the population, because the French are traditionally more closely bound by family ties.
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