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Word Bank for Test 1 Section A
Each concept is applicable once. There are 5 extra concepts.
Competitive advantage - Competitive advantage is measured relative to rivals in
specific industry sectors
Copyright - establishes ownership of a written, recorded, performed, or filmed creative
work
Expropriation - governmental action to dispossess a foreign company or investor.
Compensation is generally provided, albeit often not in the “prompt, effective, and
adequate” manner provided for by international standards
Focus - the concentration of attention on a core business or competence
Global
Globaphobia - describe an attitude of hostility toward trade agreements, global brands,
or company policies that appear to result in hardship for some individuals or countries
while benefiting others
Innovators - tend to be venturesome, more cosmopolitan in their social relationships,
and wealthier than those who adopt products later
Leverage - A global company possesses the unique opportunity to develop leverage.
Leverage means some type of advantage that a company enjoys by virtue of the fact
that it has experience in more than one country. Leverage allows a company to conserve
resources when pursuing opportunities in new geographical markets. In other words, it
enables a company to expend less time, less effort, and/or less money. Four important
types of leverage are experience transfers, scale economies, resource utilization, and
global strategy.
Long term orientation - people look to the future and value thrift and persistence
market development - involves seeking new customers by introducing existing products
or services to a new market seg- ment or to a new geographical market
market diversification - a company creates new product or service offerings targeting a
new segment, a new country, or a new region
market penetration - the amount of a product or service that is sold to customers
compared to the estimated total market for that product or service
modification
Nationalization - occurs when the government takes control of some or all of the
enterprises in a particular industry. International law recognizes nationalization as a
legitimate exercise of government power, as long as the act satisfies a “public purpose”
and is accompanied by “adequate payment” (i.e., payment that reflects fair market value
of the property).
Patent - a formal legal document that gives an inventor the exclusive right to make, use,
and sell an invention for a specified period of time
polycentric orientation
- management’s belief or assumption that each country in which a company does
business is unique
- multinational company
- localized or adaptation approach (products must be adapted in response to
different market conditions)
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Polychronic - everything in life must be dealt with in terms of its own time (perform
multiple tasks simultaneously)
Privatization - the transfer of government-run operations into the private business
sector, occurs more frequently in developed countries
product development - all stages involved in bringing a product from concept or idea
through market release and beyond
self-reference criterion - A framework for systematically reducing perceptual blockage
and distortion
Semantics - system of meaning/spoken/verbal language
standardized products - uses the same materials no matter where in the world it's sold,
from the raw supplies used to create it to the branding, naming and packaging
think globally, act locally - global localization
Trademark - a distinctive mark, motto, device, or emblem that a manufacturer affixes to
a particular product or package to distinguish it from goods produced by other
manufacturers
uncertainty avoidance - the extent to which the members of a society are
uncomfortable with unclear, ambiguous, or unstructured situations.
Mktg 480 Test 1 Section A Study Guide
Chapter 1:
● Marketing: Organizational function and processes for creating, communication and
delivering value to customers.
● Global Marketing: Focus on opportunities, threats, competition, political risk. Entering
foreign markets depends on company’s resources, managerial mind-set and the ones listed
above.
● Global companies maintain strategic focus and pursue competitive advantage.
● Growth strategies:
- market penetration: the amount of a product or service that is sold to customers
compared to the estimated total market for that product or service
- market development: involves seeking new customers by introducing existing products
or services to a new market seg- ment or to a new geographical market
- product development: all stages involved in bringing a product from concept or idea
through market release and beyond
- diversification: in which a company creates new product or service offerings targeting a
new segment, a new country, or a new region
● Competitive Advantage: Competitive advantage is measured relative to rivals in specific
industry sectors
● Levitz, the Globalization of Markets: Professor Theodore Levitt’s 1983 article “The
Globalization of Markets” in the Harvard Business Review. Levitt argued that marketers
were confronted with a “homogeneous global village.”
● Global Localization: a successful global marketer must have the ability to “think globally
and act locally.”
● Ethnocentric orientation
- A person who assumes that his or her home country is superior to the rest of the world
- domestic companies, international companies
- standardized or extension approach (products can be sold everywhere without adaptation)
● Polycentric Orientation:
- management’s belief or assumption that each country in which a company does business
is unique
- multinational company
- localized or adaptation approach (products must be adapted in response to different
market conditions)
● Regiocentric Orientation: a region becomes the relevant geographic unit; management’s
goal is to develop an integrated regional strategy. Ex: A U.S. company that focuses on the
United States, Canada, and Mexico; a European company that focuses its attention on
Europe
● Geocentric Orientation:
- views the entire world as a potential market and strives to develop integrated global
strategies.
- global (pursues a strategy of serving world markets from a single country, or sources
globally for the purposes of focusing on specific country markets. In addition, global
companies tend to retain their association with a particular headquarters country) or
transnational company (serve global markets and use global supply chains, which often
results in a blurring of national identity. A true transnational would be characterized as
“stateless.” Ex: Toyota, Honda)
- standardized (extension) and localized (adaptation)
● Privatization: the transfer of government-run operations into the private business sector,
occurs more frequently in developed countries
● Nationalization: when a government takes control or ownership of private property, like a
company; one of the primary risks for companies doing business in foreign countries due to
the potential of having significant assets seized without compensation
● Opposition to Globalization: To many people around the world, globalization and global
marketing represent a threat. The term globaphobia is sometimes used to describe an attitude
of hostility toward trade agreements, global brands, or company policies that appear to
result in hardship for some individuals or countries while benefiting others.
Chapter 2:
● Country Categorization: Categorized in terms of their stage of economic
development—low income, lower-middle income, upper-middle income, high income.
● Low Income Countries / Characteristics: Limited industrialization, high percentage of
population engaged in agriculture, high birth/short life expectancy, heavy reliance on foreign
aid, political instability, concentration in Africa south of Sahara.
● LDCS/Bottom of Pyramid:
- Fifty poorest countries in the low income category are referred to as least-developed
countries (LDCs).
- Mistaken assumptions: poor have no money, too concerned with fulfilling basic needs,
cannot use advanced technology, no room for new entrants, criticism for exploiting poor.
● Product Saturation Levels: The percentage of customers or households that own a product
in a particular country market; a measure of market opportunity.
● Purchasing Power Parity: control for the differences in price levels between economies
and equalize the purchasing power of currencies; what the currency will buy in the country
of issue. Ex: if a hamburger is selling in London for £2 and in New York for $4, this would
imply a PPP exchange rate of 1 pound to 2 U.S. dollars.
● Weak Dollar: A weak dollar refers to a downward price trend in the value of the U.S. dollar
relative to other foreign currencies. The most commonly compared currency is the Euro, so
if the Euro is rising in price compared to the dollar, the dollar is said to be weakening at that
time.
● Triad: 75% of world income as measured by GNP is located in the triad, which consists of
Japan, US and Western Europe.
Chapter 4:
● Culture: “ways of living, built up by a group of human beings, that are transmitted from
one generation to another;” Hofstede’s “the collective programming of the mind that
distinguishes the members of one category of people from those of another.”
- Value: an enduring belief or feeling that a specific mode of conduct is personally or
socially preferable to another mode of conduct
- Attitude: a learned tendency to respond in a consistent way to a given object or entity
- Belief: an organized pattern of knowledge that an individual holds to be true about the
world
● Language and Communication
- Verbal language: syntax (rules of sentence formation), semantics (system of meaning),
phonology (system of sound patterns), and morphology (word formation).
- Nonverbal communication: includes gestures, touching, and other forms of body
language that supplement spoken communication
● High/Low Context Cultures
- Low-context culture:
- messages are explicit and specific; words carry most of the communication power
- United States, Switzerland, or Germany
- deals are made with much less information about the character, background, and values
of the participants. Much more reliance is placed on the words and numbers in the loan
application
- High-context culture:
- less information is contained in the verbal part of a message, while much more
information resides in the context of communication, including the background,
associations, and basic values of the communicators
- function with much less legal paperwork
- Japan, Saudi Arabia
- place a great deal of emphasis on a person’s values and position or place in society. In
such cultures, the granting of a business loan is more likely to be based on “who you are”
than on formal analysis of pro forma financial documents
- a person’s word is his or her bond
● Hofstede’s typology
● Self-Reference Criterion (SRC): A framework for systematically reducing perceptual
blockage and distortion
- 4-step framework
-
Application example
● Diffusion Theory
- Complexity: The degree to which an innovation or new product is difficult to understand
and use. Product complexity is a factor that can slow down the rate of adoption,
particularly in developing country markets with low rates of literacy
- Relative advantage: How a new product compares with existing products or methods in
the eyes of customers. The perceived relative advantage of a new product versus existing
products is a major influence on the rate of adoption. If a product has a substantial
relative advantage vis-à-vis the competition, it is likely to gain quick acceptance. Ex:
When compact disc players were first introduced in the early 1980s, industry observers
predicted that only audiophiles would care enough about digital sound—and have enough
money—to purchase them. In reality, the sonic advantages of CDs compared to LPs were
obvious to the mass market; as prices for CD players plummeted, the 12-inch black vinyl
LP was rendered virtually extinct in less than a decade
- Compatibility: The extent to which a product is consistent with existing values and past
experiences of adopters. The history of innovations in international marketing is replete
with failures caused by the lack of compatibility of new products in the target market. Ex:
the first consumer VCR, the Sony Betamax, ultimately failed because it could record for
only 1 hour. Most buyers wanted to record movies and sports events; thus they shunned
the Betamax in favor of VHS-format VCRs, which could record 4 hours of programming.
● Diffusion Theory, Adopter Categories: classifications of individuals within a market on
the basis of innovativeness. Hundreds of studies of the diffusion of innovation demonstrate
that, at least in the Western world, adoption is a social phenomenon that is characterized by
a normal distribution curve
● Diffusion of Innovation In Pacific Rim Countries
Chapter 5:
● Sovereignty: supreme and independent political authority; “Every sovereign state is bound
to respect the independence of every other sovereign state, and the courts in one country will
not sit in judgment on the acts of government of another done within its territory.”
● Political risk: the possibility of a change in a country’s political environment or
government policy that would adversely affect a company’s ability to operate effectively and
profitably
● Seizure of Assets
- Expropriation: governmental action to dispossess a foreign company or investor.
Compensation is generally provided, albeit often not in the “prompt, effective, and
adequate” manner provided for by international standards
- Confiscation: no compensation is provided. International law is generally interpreted as
prohibiting any act by a government to take foreign property without compensation.
- Nationalization: occurs when the government takes control of some or all of the
enterprises in a particular industry. International law recognizes nationalization as a
legitimate exercise of government power, as long as the act satisfies a “public purpose”
and is accompanied by “adequate payment” (i.e., payment that reflects fair market value
of the property).
● Intellectual property
-
Patents: a formal legal document that gives an inventor the exclusive right to make, use,
and sell an invention for a specified period of time
- Trademarks: a distinctive mark, motto, device, or emblem that a manufacturer affixes to
a particular product or package to distinguish it from goods produced by other
manufacturers
- Copyrights: establishes ownership of a written, recorded, performed, or filmed creative
work
- Counterfeiting: the unauthorized copying and production of a product. An associative
counterfeit, or imitation, uses a product name that differs slightly from a well-known
brand but is close enough that consumers will mistake it for the genuine product
● Common Law/Civil Law country
- Common-law country:
- many disputes are decided by reliance on the authority of past judicial decisions (cases)
- A common-law legal system is based on the concept of precedent, sometimes called
stare decisis (precedent and stare decisis represent the fundamental principles of
common-law decision making)
- the legal system of the United States; substantially influenced by English law
- Civil-law country:
- one in which the legal system reflects the structural concepts and principles of the
Roman Empire in the sixth century
- Civil-law systems rely more heavily on statutes and codes, such as the Napoleonic Code
of 1804, in deciding cases. From these code provisions, abstract principles are recognized
and then applied in specific cases.
● Foreign Corrupt Practices Act: makes it unlawful for a U.S. person or company to offer,
pay, or promise to pay money to any foreign official for the purpose of obtaining or
retaining business.
Mktg 480 Test 1 Section B Study Guide
Sr. No.
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Concept / Term
Global Marketing
Ethnocentric Orientation
Polycentric Orientation
Regiocentric Orientation
Regiocentric /Geocentric Orientation
Multinational / Global
Transnational Companies
Low Income Countries /
Characteristics
LDCS/BOP
Product Saturation Levels
Purchasing Power Parity
Weak Dollar
Values/Beliefs/Attitudes/Culture
Nonverbal Communication
Low Context Culture
High Context / Polychronic Time
Long Term Orientation
Power Distance
Self-Reference Criterion
Diffusion Theory / Complexity
Relative Advantage
Diffusion Theory/Compatibility
Diffusion of Innovation In Pacific Rim
Countries
Common Law/Civil Law
Intellectual Property/Trademark
Type
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