Midterm Exam International

Marketing 2022
Lecturer : Dr. I Made Bayu Dirgantara

Friday, 21th October 2022 

Time 10.00-11.30 West Indonesian Time (90 minutes)

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1. Name *

Agas Sinatrya

2. Student ID Number *

12010119190243

Section

3. Discuss the conditions that have led to the development of global markets.
 For many years, marketing and advertising managers and researchers have wrestled with the
issue of customizing versus standardizing as strategies for international markets. Managers can
achieve economies of scale, message consistency, and the ability to attract common cross-
national market segments through the use of global, standardized marketing programs (e.g.,
Levitt 1983). However, because of significant differences in consumers, cultural and
socioeconomic conditions, and market structures, customization to local/national markets may
be worth the additional expense (e.g., Douglas and Wind 1987). Although most firms' strategies
are somewhere between the extremes of total customization and total standardization (Quelch
and Hoff 1986), managers have little empirical evidence indicating when they should customize
their marketing programs and how their strategy selection will affect brand performance (e.g.,
Jain 1989; Szymanski, Bharadwaj, and Varadarajan 1993).

Researchers have begun to investigate customization and standardization strategies, but three
areas have not been adequately addressed. First, most empirical research has examined just two
aspects of the marketing mix - advertising messages and product features (see Aulakh and
Kotabe 1993 for a recent review). Research on brand equity and brand image management (e.g.,
Aaker and Keller 1990; Keller 1993; Park, Jaworski, and MacInnis 1986; Park, Milberg, and Lawson
1991; Reth 1992, 1995) suggests that marketers should develop brand image strategies before
focusing on tactical marketing mix issues. Within the field of advertising, practitioners and
researchers advocate that the brand's image be the basis for developing sound product
positioning and advertising strategies (e.g., Ogilvy 1963; Reynolds and Gutman 1984). Studies
on global brand image and brand equity strategies are needed (Szymanski, Bharadwaj and
Varadarajan 1993).

S d lth h i i l t di h i ti t d ti l t diff

4. Differentiate between a global company and a multinational company

 Global Company Distinctions

A global company has a foothold in multiple countries but the offerings and processes are
consistent in each country. For example, a major soda brand can set up shop in different
countries, but the recipe does not change in the global model. The company uses the same
ingredients and manufacturing processes, regardless of local culture. In a global model, the
business does not adapt to local norms, but rather, it imposes its existing business model on the
country. The only exception within the global model is the marketing approach to drive sales in
individual countries. The product is consistent but messaging must adapt to work within the
cultural norms. Marketing is where the two models are difficult to distinguish.

Multinational Company Distinctions

Like the global company, a multinational company operates in multiple countries, and the
company adapts marketing messaging to fit each culture group. Driving sales is always top of
mind. The major difference in a multinational business model is the adaptation of product
offerings and manufacturing processes. A multinational has more autonomy in each individual
country, whereas a global model is still beholden to its central operating model. Multinationals
adapt operations and products to fit within individual markets. Global executive search firm
Kincannon and Reid says a multinational is different, because it uses a decentralized approach
to business. Each arm acts independently, while still serving the larger brand model.

Global and Multinational Examples

Consider the same global soda company example from the section Global Company
Distinctions in the first section. The company is global, because the soda does not change. The
recipe, product and process for delivering the product to market is the same in each country. If
that same company allowed each country arm to alter the recipe and production process to be
adaptive within the specific market and culture, they would transform to a multinational model,
(which is common in the beverage industry).

Reducing controls from the central location and distributing the power of the product and
process to each arm of the business, makes it a multinational. A global company is capable of
altering the business model to transform into a multinational. The models are not entirely static,
and both are influenced by their parent company and top-level leadership.

5. Differentiate among the three international marketing concepts.

(1) The Domestic Market Extension Concept.

The local company that seeks to extend its sales of its domestic products into

international / foreign markets illustrate the need to expand to international markets. The local

company sees its international operations as secondary to and an extension of its domestic

operations. The company motivation is to dispose of excess domestic products into foreign
markets.

China is a very good example of there is happening. The domestic business is always a priority

to sell it product into and the foreign sales are seen as a profitable extension of

domestic operations.

The domestics markets remain important to the company while pursuing foreign

markets. This Domestic Market Expansion Strategy can be very profitable. In the company I work
for

in Kansas, we see international / foreign markets as an expansion of our product line without

compromising the profitability that we enjoy in the local market.

(2) Multi-Domestic Market Concept.

A multi-domestic marketing strategy assumes consumers in different countries or geographic

regions differ drastically from one another. The company’s products are tailored for each
market, based

on consumer wants and needs. A multi-domestic marketing strategy is ideal for highly
differentiated

products, such as Cable Modems or Cable TV equipment, or any other product dictated by local

preferences. The decision-making control is decentralized because management must be able

to respond

on a local level.

A multi-domestic strategy is a strategy by which companies try to achieve maximum local

responsiveness by customizing both their product offering and marketing strategy to match
different

national conditions. Production, marketing and R&D activities tend to be established in each
major

national market where business is done. A firm that engages in multi-domestic marketing will
need a

manager in each country. The country manager will be responsible for handling all operations of
the

firm in the host country,and is directly responsible for the firm’s success or failure. An ideal
candidate

will possess a background in management and will have an in-depth knowledge of the
company. The

perfect candidate will also be knowledgeable of the political, legal and cultural landscapes in the
host

country.

6.
Discuss the three factors necessary to achieve global awareness.

As the world pushes ever forward towards a globalized economy, it is becoming increasingly
important that international corporations develop global awareness. Global awareness can be
stratified into two different competencies. One characteristic of the globally aware is the
tolerance of cultural differences. Business customs that might appear foreign and bazaar must
be tolerated for the benefit of a successful business relationship. The second stratum of global
awareness is the knowledge of cultures, history, world market potential, global socioeconomics,
and political trends (Cateora, Graham 17). With a firm knowledge of these vital aspects of global
awareness the international businessperson can better relate to people from different cultures.
Tolerance of foreign business practices can greatly benefit working relationships because those
who buy are often hesitant to adjust to those who sell. A globally aware businessperson is more
adept to understanding the cultural, historical, and political nuances that may significantly
benefit a working international relationship and help the person buying his or her product feel
more comfortable.

For example, “Shortly after Sept. 11, 2001, Secretary of State Colin Powell, concerned about
rising anti-Americanism abroad, hired Madison Ave. maven Charlotte Beers to blitz the Middle
East with pro-American advertising and PR campaigns (Risen).” The PR campaign, which was
“was nothing less than to rebrand American foreign policy,” failed miserably in the United Arab
Emirates because Charlotte Beers, the PR manager in charge of the campaign, did not
understand the Arabic socioeconomic environment (Risen). “The efforts echoed the propaganda
efforts of Nazi Germany and other authoritarian regimes,” wrote Naomi Klein, a columnist at The
Nation and the author of “No Logo.” Without an understanding of Arabic culture, or global
awareness in general for that matter, the ad campaigns failed because the PR manager only
used her own self-reference criterion to create the ads. Cultural understanding is one of the
most fundamental aspects of global awareness and often the deciding factor in the success of
an international ad campaign.

This international marketing failure could have been avoided in several ways. The first step to
achieving global awareness is to select individual managers specifically for their demonstrated
global awareness. After doing some research on Charlotte Beers it turns out she has had an
impressive career in marketing but it is almost certain that her primary focus was on advertising
to developed, modern nations. The Middle East has a very lush and diverse history and that
history largely defines modern Middle Eastern culture. With even a brief glance at this history I
think Beers would have dramatically restructured her approach to “rebranding America in the
Middle East” because history is such a large factor in the beliefs of contemporary Middle Eastern
society.

A second approach to achieving global awareness is to develop personal relationships in

other countries. Doing long-term business in a country is a great way to establish business
relationships but in many countries personal relationships are often more important than
business relationships. In Latin America for example, personal ties with a business partner are
considered more important than economic ties. An American manager attempting to do
b i i B il i ht h t id b i ti f ld j tt i th

7.
Define and discuss the idea of global orientation.?

 Global orientation is defined as a means of operating by which a company acts as if all

the company’s markets in a company’s scope of operations were approachable as a single

global

market, with the company standardizing the marketing mix where culturally feasible and cost

effective. (Cateora, 2013) In short global orientation is marketing on one basis instead of a

different basis for each different market sector. In order to obtain global orientation a global

brand mission, the same quality in all sectors of the business, superb market sensing and most

importantly brand infatuation is required. (Seoul, n.d.)

Taking a step back and looking at the development of the global market the need for these

international ties becomes very obvious. The increasing need for sustainability, especially in

today’s environment, is a major factor, as well as, the increasing drive for profits. In order to

maintain the current standards of living sustainability is an extremely important factor to keep in

mind. To increase the quality of products and emotional brand to the consumer access to

international markets is essential. Not only does this access allow for increased quality of the

products, but it will lead to a reduced price to the consumer and increased manufacturing
efficiency. Now more than ever there is an increased consumer basis on pricing due to the
recent

economic conditions, especially in the United States.

The global market is a great resource for enabling these factors and many companies

outsource production to areas where it is the most cost effective to manufacture their products

despite the fact that there are tariffs imposed in most areas in order to benefit the government
in

the foreign country. Not only is outsourcing beneficial for companies, but having access to
many

diverse markets to sell products helps generate more revenue. Take Samsung, for example, they

use several ranking and comparison tools to ensure that they are on the leading edge of

technology in a global aspect. (Seoul, n.d.) One of the tools they utilize is the Average Price

Index, which compares Samsung to all of their competitors on multiple different levels to ensure

that the same quality, features, benefits and competitive advantage is company-wide.

Another attribute that Samsung utilizes is a market driven culture where focus groups are

used to obtain feedback to ensure that their products and designs are exactly what the
consumer

wants. This is a great tool for leveraging a competitive advantage over competitors, which in

turn increases profits. By utilizing a bottom up design tactic the products that are released to

market are based on consumer input rather than a design team that has a limited opinion on
what

they think would be popular in an international market. A market driven culture increases the

emotional brand to the consumer and makes their experiences with the company as a whole

better and creates a rapport with that particular company. In conclusion, in order to maintain a
competitive advantage in a global market there are

several aspects that need to be taken into consideration. The most emphasis is placed on the

l b lb d i i dh th t t ti l tt h t t th b df th

8. Explain the role of price as a free market regulator.

 Price is the primary key in determining the supply and demand with the resources.

Prices should not fall too low or too high. Too low can cause depletion of product,

and too high can cause consumers not to buy.

9. “Theoretically, the market is an automatic, competitive, self regulating mechanism

which provides for the maximum consumer welfare and which best regulates the
use of the factors of production.” Explain.

Market demands and productivity are things that determine living standards in the

world because of free competition. Things such as government interference, cartels

and market barriers can interrupt and corrupt the free market system.

10. Discuss the bases of world trade. Give examples illustrating the different bases.

- National resources: stands for the uneven distribution of world’s resources owing to the

physical makeup of every country and region.

- Population factor: it is the size, structure, and diversity of the people residing in a country

which affects the kinds of goods and services in that area.

- Foreign investment: stands for the investment made by the foreign countries in the host

country boosting the trade activities.

- Transports: stands for the increase in transportation in the country that is able to fasten

and ease up the trade activities like rail, road, seaways, airways.

- Economic development: stands for the changes of economy of a country that goes

through the ups and downs of business trades.

11. The marketer “should also examine the more complex effect of geography on
general market characteristics, distribution systems, and the state of the
economy.” Comment.
 A marketer should be prepared with the examination of the more complex effect of

geography. It is the subject that circles around the environment and sustainable

development. The study affects the exposure of the needs or capability of its residing

people which also affects the decision to be made by the marketer.

There can be no doubt that geography has had a "complex effect upon general market
characteristics, distribution systems, and the state of the economy. " Therefore, the world
marketer should be careful not to look just at how his product must be changed to fit into a
foreign market. That is, he must not just fit his electric motors, say, with high-temperature
operating characteristics and stop there.

There's more to it than that. Consider the diverse nature of South America, for example. The
channels of distribution that a domestic marketer has been accustomed to using might not even
exist because of natural barriers. These same natural barriers also cause quite varied levels of
economic development within the same country. Cities and rural areas might not even be on
the same economic plane. Finally, as a result of these barriers and thus physical isolation of
various population centers, areas of the same economic development might have entirely
diff t lt Th f th l k t h t i ti f th ld l diff

12. The world population pattern is shifting from rural to urban areas. Discuss the
marketing ramifications.

The world population is shifting from rural to urban areas. In this case, business activities

will stop growing in the rural areas. Urban areas are being over supplied and marketers

have to provide products that are small, easy to operate, and could be bought by the

large number of urban population at cost-effective prices.

13.
Why should a foreign marketer be concerned with the study of culture?

A foreign marketer should study culture in order to avoid making blunders which would not be
made if he or she had cultural knowledge. Culture should be studied because it affects the
consumer's desire and ability to buy.

14. What is the popular definition of culture? Where does culture come from?

 Popular culture is simply culture that is widely favored or well-liked by many people: it has no
negative connotations.

Popular culture is whatever is left after you've identified what "high culture" is: in this definition,
pop culture is considered inferior, and it functions as a marker of status and class.

Pop culture can be defined as commercial objects that are produced for mass consumption by
non-discriminating consumers. In this definition, popular culture is a tool used by the elites to
suppress or take advantage of the masses.

Popular culture is folk culture, something that arises from the people rather than imposed upon
them: pop culture is authentic (created by the people) as opposed to commercial (thrust upon
them by commercial enterprises).

Pop culture is negotiated: partly imposed on by the dominant classes, and partly resisted or
changed by the subordinate classes. Dominants can create culture but the subordinates decide
what they keep or discard.

The last definition of pop culture discussed by Storey is that in the postmodern world, in today's
world, the distinction between "authentic" versus "commercial" is blurred. In pop culture today,
users are free to embrace some manufactured content, alter it for their own use, or reject it
entirely and create their own.

C lt f th l d id t d thi A i d id t hi

15. “More than tolerance of an alien culture is required; there is a need for affirmative
acceptance of the concept ‘different but equal.’” Elaborate.

Culture stands for the values, beliefs, behavior, attributes, attitudes, actions, conducts

etc. that people in a particular community observes and undertakes.

It is mentioned that in a culture more than tolerance, there is a requirement for

affirmative acceptance of the concept that is different but equal. This concept could be

explained by stating that each culture is different from the culture that is followed and

observed at different locations and countries. The people residing at different locations

and places follow different cultures and thereby look forward buying certain products

and services that are quite essential and inevitable for their cultural norms. This goes

along with the kind of marketing activities an organization undertakes at a particular

cultural community related to the products and services that an organization offers to

the people.

For making the change to get accepted in a particular culture, there is a need to encourage
people

to make positive acceptance for that change, and to take the change in affirmative manner. This

will make the change stable and worthwhile to bring upon and carried it forward. Thus, this way

it could be concluded that tolerance for culture will take place only when the change in the

lt ill t k l ffi ti l d iti l b th l f h th h h

16. Why would a country rather domesticate than expropriate?

Expropriation is where the government seizes an investment but makes some

reimbursement for the assets while domestication occurs when host countries gradually

cause the transfer of foreign investments to national control and ownership through a series

of government decrees that mandate local ownership and greater national involvement in a

company’s management with the intent of forcing foreign investors to share more of the

ownership, management, and profits with the nationals.

Given the above definition, domestication is a more preferable approach in order for the host

country to collaborate with the investor, retaining its technological knowledge, expertise, and

competitiveness while still controlling the business which, in turn, results to more profit.

Expropriation (and nationalization), due to the host country’s total takeover of the business

or investment, aside from creating problems with other governments and causing potential

investors to shy away from investments in their country, often leads to inefficiency and non-

competitiveness in the market as the technological knowhow on running the business is not

retained and the continuity in smoothly running the business is oftentimes severely affected

or abruptly stopped. Further, if a country domesticates, they are able to achieve almost all, if

not all, the advantages of expropriation without the negative aspects associated with such a

drastic move.

Today, countries often require prospective investors to agree to share ownership, use local

content, enter into labor and management agreements, and share participation in export

sales as a condition of entry – all indicators that, for all intents and purposes, the company

has to become domesticated as a condition for investment.

17. How can a change in the political party in power affect an investor? Discuss and
give examples.
Almost any event can trigger political change. An unexpected resignation, a terrorist act, or a
currency collapse can completely transform the political and economic landscape. Politics and
economics are forever entwined, as was dramatically demonstrated with the collapse of the Thai
Baht in 1997. The collapse of the Thai currency set off a chain of events that ultimately led to the
economic meltdown of many of Asia's economies and impacted most of the rest of the world. It
took Asia and the world 18 months to recover from that crisis, and much of Asia has yet to fully
recover. It could be argued that one of the disadvantages of globalization is that the impact of
political change is felt instantaneously. There is less time to react, as someone else has or will
already have reacted while we were sleeping, by the time we receive the news. Perhaps the
impact of the collapse of the Thai Baht would not have been so dramatic if the international
marketplace were not so interconnected—if currency and stock trading didn't occur 24 hours a
day. This trend toward seamless international financial transactions will continue at an even
faster, even more breathtaking pace in the new decade.

Consider the impact that political change has had on us all. The Islamic Salvation Front, which is
fighting for political change against the government of Algeria, is an organization few North
Americans had ever heard of before the end of 1999. Yet this group, which has been fighting the
Algerian government for decades, apparently decided to export its version of political change to
the United States by attempting to smuggle bomb-making equipment into the United States
around the new year. The actions of perhaps three or four individuals from this organization had
a huge impact on the New Year's celebration plans of tens of millions of people. In tandem with
the expected (but unrealized) Y2K impact, about 70 percent of Americans decided to stay home
on New Year's Eve. The incident also underscores the need for closer scrutiny of Canadian
immigration practices, which is sure to have an impact on the manner in which Canadians and
Americans can cross each other's borders in the future.

Consider what impact Turkey's accession to the European Union may have on Europe and
beyond in the coming decade. For decades, Turkey has tried to join the European Union (and
previously, the EEC), but strenuous objections from Greece and other members kept it from
succeeding. Germany, for example, has long expressed concern about the impact that Turkish
immigrants have had on the composition of the country's ethnic composition. Now it appears
that Turkey will soon become an E.U. member. Turks will have the right to travel freely
throughout the European Union (as all other E.U. members do), but Turkey is Europe's only
primarily Muslim nation. There will undoubtedly be a corresponding rise in the influence of
Islam in European life and, because the United States has close ties to European politics,
economics, and culture, what impacts Europe, could impact the United States.

What about the Panama Canal? When President Carter granted ownership of the Canal to
Panama in 1978, who imagined that in 1999, when ownership was transferred, a Hong Kong
(H t hi Wh ) ld d h d th b k i

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