Grade 12 Revision Questions
International Marketing and PESTG
1.
Analyse the factors CMA should consider when marketing its products internationally.
(Total 8 marks)
Factors include:
• exchange rate fluctuations if price is affected
• product perception
• culture
• legal considerations
• global or multi domestic strategy ( i.e.
should there be a single strategy or should it be adapted for the various markets?)
The answer shows a thorough understanding of the major issues and their relative importance to CMA . The analysis is detailed.
[7 to 8 marks]
The answer shows an understanding of the importance of some factors. An analysis is attempted. There is reference and relevance to CMA .
[4 to 6 marks]
The answer describes some factors though they may lack detail, relevance and reference to CMA .
[2 to 3 marks]
A limited and general response.
[1 mark]
2.
Compare the different strategies that NPF could use to enter overseas markets.
(Total 6 marks)
Strategies include:
• licensing
• franchising
• joint venture
• direct marketing
• direct investment
The answer compares at least three different strategies NPF could use to enter overseas markets. They are relevant to overseas market opportunities and to NPF .
[5 to 6 marks]
The answer attempts to compare some different strategies that NPF could use to enter overseas markets. They should have relevance to overseas market opportunities and to NPF .
[3 to 4 marks]
A limited and general response.
[1 to 2 marks]
3.
Analyse the potential benefits and problems associated with Tesco
’s and
Carrefour
’s decision to expand their businesses in overseas locations, rather than seek expansion in their own countries.
(Total 8 marks)
Potential benefits of expansion overseas:
• larger market and sales potential, especially if the domestic market is saturated
• the spreading of risk by not relying on any single economy
• greater opportunities for economies of scale
• location costs may be lower
• lower wage rates in countries with lower standards of living may provide higher profit margins
• restrictions on development may be less and the employment opportunities sufficient to persuade governments to offer grants and tax breaks
• competition may be less intense and existing competitors may be forced out of the market by their lack of efficiency, especially in previous command economies, such as those found in Eastern Europe
• the foreign nature of the company may provide competitive advantage and exclusivity, positioning the business in a different market segment
• first mover advantages
Potential problems of expansion overseas:
• lack of experience in, and knowledge of, the new market
• the advantages of customer and brand loyalty and recognition are lost
• distribution may be more costly
• distribution may be lengthy requiring greater costs in specialist equipment and storage, with higher possible risks of damage and/or loss

• PEST factors may make operations problematic e.g.
legal restrictions, language and cultural differences
• the infrastructure may be less developed
The analysis is balanced with detailed assessment of the benefits and problems of expansion overseas. The analysis shows evidence of critical, reflective thinking and employs examples appropriate to Tesco and Carrefour .
[7 to 8 marks]
The analysis is sensible and appropriate to Tesco and Carrefour , but may lack detail and/or balance, especially at the lower end of the band.
[3 to 6 marks]
A brief, generalized and probably unbalanced answer, which tends to description or listing.
[1 to 2 marks]
4.
Using a PEST framework analyse the potential advantages and disadvantages to foreign firms of locating in China.
(Total 6 marks)
Political-legal
Advantages
• membership of the WTO guarantees the future extension of free trade in China
• apparent commitment to economic reform opening markets shown as tariffs removed or cut
• fewer restrictions / laws placed on business activity.
Disadvantages
• a command economy works against capitalist approaches and entrepreneurship, flexibility etc.
• barriers to trade increasing in some areas, e.g.
health and safety legislation
• illegal copying of products and ideas tolerated which may discourage transfer.
Economic
Advantages
• significant growth in GDP and therefore standard of living/disposable incomes, leading to higher demand and profits
• dynamic market places, particularly along the coast e.g.
Shanghai
• location of many multinationals in the region providing improved infrastructure and market opportunities and technology transfer
• lower costs of production such as wage rates
• potential market of 1.3 billion people offers huge profit potential.
Disadvantages
• gap between rich and poor widening, reducing growth potential and economic stability
• unemployment as local firms lose their protection, possibly leading to lower incomes and demand.
Social-cultural
Advantages
• desire for material goods
• access to new technology is developing a desire for imported goods and services
• well-educated workforce available in large numbers providing necessary skills.
Disadvantages
• social discontent as wealth gap increases, may lead to instability
• language barriers and/or culture clashes.
Technological
Advantages
• increasingly technologically aware population eager for new products
• technology transfer possible
• presence of the world’s largest technology firms such as
Dell and Sony improves climate and dynamism.
Disadvantages
• technologies are illegally copied which reduces profits and leads to more protection of ideas.
A PEST framework is presented with at least one entry in each category. Advantages and disadvantages should be analysed in at least three of the categories. The issues are relevant to China with examples from the stimulus materials. Appropriate business terminology is used.
[5 to 6 marks]
The analysis is sound and appropriate, but there may be gaps in the content of the PEST and format may be less structured.
The entries may lack detail and/or balance, especially at the lower end of the band. There may insufficient reference to the stimulus materials.
[3 to 4 marks]
A brief, generalized and probably unbalanced answer, which tends to description or listing. There may be no attempt to use a
PEST framework.

[1 to 2 marks]
5.
(a)
Construct a decision tree and select the most desirable option for expansion of Mr Yin’s business on financial grounds. Show all your working.
Economy
Improve
Probability
Expected return $m
EU expansion
$2m
$0.3m
US expansion
$1.75m
$0.1
Ch ina
25m m
No change
Improved product range
$0.5m
A
B
C
D
Key: decision point changing node rejected options
Calculations
Option 1:
$ 4.6m × 0.2 =
$ 2.4m × 0.5 =
$ 1m × 0.3 =
$ 0.92m
$ 1.2m
$ 0.3m
$ 2.42m – $ 2m (costs) = $ 0.42m

net expected value
* the most profitable options
Option 2:
$ 5m × 0.2 =
$ 3m × 0.5 =
($ 1.5m) × 0.3 =
$ 1.0m
$ 1.5m
($ 0.45m)
$ 2.05m – $ 1.75m = $ 0.3m

net expected value
Option 3:
• without change to product range:
$ 1m × 0.2 =
$ 0.5m × 0.5 =
0.2
0.25
$ (0.5m) × 0.3 = (0.15)
$ 0.3 m – $ 0.5m (costs) = ($ 0.2m)
Option 4:
• with a change to product range
$ 2m × 0.2 =
$ 0.5m × 0.5 =
$ (0.5m) × 0.3 =
$ 0.4m
$ 0.5m
$ 0.225m
$ 1.125m – $ 1m = $ 0.125m
Unchanged
Worsen
Improve
Unchanged
Worsen
Improve
Unchanged
Worsen
Improve
Unchanged
Worsen
20%
50%
30%
20%
50%
30%
20%
50%
30%
20%
50%
30%
4.6
2.4
1
5
3
(–1.5)
1
0.5
(–0.5)
2
1
0.75
(8)

For an accurate decision-tree which is appropriately labelled and includes workings that justify the selection of the most desirable option. [7 marks] only when a key is not provided.
[7 to 8 marks]
For [6 marks] there is a largely accurate decision-tree. At the lower end of the band labelling may be incomplete and there may be several mistakes in calculations.
[4 to 6 marks]
The decision-tree contains significant errors. The candidate may confuse decision points and chance nodes.
[2 to 3 marks]
For a fundamentally flawed decision tree.
[1 mark]
(b) Describe how Mr Yin may have gathered the information to produce the decision tree.
(3)
Mr Yin may have carried out market research, both primary and secondary, to produce the probabilities for economic growth. The research could have involved government statistics, forecasts of economic institutes and economic analysts etc .
The costs of expansion could have come from previous expansion data, various quotes from building companies and desk research using standard costing. Several of the figures are likely to be estimates.
For identification of primary and secondary sources using a range of examples mentioned above.
[3 marks]
For identification of at least some sources but may not include both primary and secondary sources.
[2 marks]
For identification of a single source of information.
[1 mark] c) Assess the difficulties that the organization may face selling its product abroad.
(Total 5 marks)
Assessment of the difficulties of expansion may include:
• culture;
• legal barriers regarding the importation of Chinese products;
• language barriers;
• competition from existing firms in the EU;
• extra costs of marketing mix … in labelling, different ways of promotion etc .;
• setting up new distribution and supply network;
• any other relevant point.
Mr Yin’s ability to overcome above will depend on the expertise of his staff, his ability to negotiate abroad, connections, level of adaptation etc .
A consideration and assessment of at least three relevant obstacles.
[5 marks]
Consideration and assessment of two obstacles.
[3 to 4 marks]
A list of possible obstacles or for an assessment of one obstacle.
[1 to 2 marks]