International Marketing-2

Assignment – A

Question 1. What do you understand by the term globalization? What are the factors behind the globalization of the automobile Industry?

Question 2. What is culture? What are the different components of culture? Explain why culture of a country might influence the cost of doing business in that country. Illustrate your answer with suitable examples.

Question 3. Critically evaluate the various alternatives available to an organization to enter the foreign market. Give suitable examples to support your answer.

Question 4. What is PEST analysis? How is it used to evaluate the attractiveness of a foreign market? Explain with the help of relevant examples.

Question 5. Write short notes on :
(a) Dumping
(b) Role of WTO in promoting international trade
(c) EPRG Framework
(d) International, Global, Multinational and Transnational Corporations
(e) Difference between International and domestic Marketing

Assignment – B

Question 1. By 2020 we will see emergence of enormous global markets for standardize consumer products. Do you agree with this statement? Justify your answer.

Question 2. (a)Explain different types of pricing strategies used in international marketing.
(b)What is counter trade. Explain different types of counter trade arrangements.

Question 3. Write short notes on :
(a) International Product Life Cycle
(b) Channel selection for Overseas market
(c) Role and importance of internet in International marketing
(d) Letter of Credit
(e) Segmentation for International Marketing

Case Study

McDonald’s and Hindu culture

In many ways, McDonald’s Corporation has written the book on global expansion. Every day, on an average, somewhere around the world 4.2 new McDonald’s restaurants are opened. By, 2003, the company had 30,000 restaurants in 121 countries that collectively served 46 million customers each day.

One of the latest additions to McDonald’s list of countries entered by famous golden arches had been India, where McDonald’s started to establish restaurants in the late 1990s. Although India is a poor nation, the large and relatively prosperous middle class, estimated to number 150 to 200 million, attracted McDonald’s. India, however, offered McDonald’s unique challenges. For thousand of years, India’s Hindu culture has revered cows. Hindu scriptures state that cow is a gift of the god to the human race. The cow represents the Divine mother that sustains all human beings. Cows gives birth to bulls that are harnessed to pull the ploughs, cows milk is highly valued and used to produce yogurt and ghee (a form of butter), cow urine has a unique place in traditional Hindu medicine and cow dung is used as fuel. Some 300 million of these animals roam India untethered, revered as scared providers. They are everywhere, ambling around roads, grazing in rubbish dumps and resting in temples – everywhere, that is except on your plate, for Hindus do not eat meat of scared cow.

McDonald’s is the world’s largest user of beef. Since its founding in 1955, countless animals have died to produce Big Macs. How can a company whose fortunes are built on beef enter a country where consumption of beef is grave sin? Use pork instead? But there are around 140 million Muslims in India and Muslims don’t eat pork. This leaves chicken and mutton. McDonald’s responded to this cultural dilemma by creating its Indian version of its Big Mac – the Maharaja Mac – which is made from mutton. Other additions to the menu conform to local sensibilities such as the McAloo Tikki Burger. All foods are strictly segregated into vegetarian and nonvegetarian lines to conform with the preferences in a country where many Hindus are vegetarian. According to the head of the McDonald’s Indian operations, “We had to reinvent ourselves for the Indian palate.

For a while, this seemed to work. Then in 2001 McDonalds’s was blindsided by a class action lawsuit brought against in United State by three Indian Businessmen living in Seattle. The businessmen, all vegetarians and two of whom Hindus , sued McDonald’s for ‘fraudulently concealing’ the existence of beef in McDonald’s French Fries! McDonald’s has said it used ony 100 percent vegetable oil to make Frennch Fries, but the company soon admitted that is used a “miniscule” amount of beef extract in the oil. McDonald’s settled the suit for $10 million and issued an apology, which read, “McDonald’s sincerely apologise to Hindus, vegetarians, and others for failing to provide the kind of information they needed to make informed dietary decisions at our U.S. restaurant”. Going forward, the company pledged to do a better job of labeling the ingredients of its food and to find a substitute for the beef extract used in its oil.

However, news travel fast in the global society of the 21st century, and the revelation that McDonald’s used beef extract in its oil was enough to bring hindu nationalists onto the streets in Delhi, where they vandalized one of the McDonald’s restaurant causing $45,000 of damage; shouted slogans outside of another; picketed the company’s headquarters; and called on India’s prime Minister to close McDonald’s 27 stores in the country. McDonald’s Indian franchise holders quickly issued denials that they used oil that contained beef extract, and Hindu extremists responded by stating they would submit McDonald’s oil to laboratory tests to see if they could detect the beef extract.

The negative publicity seemed to have little impact on McDonald’s long-term plans in India, however. The company continued to open restaurants, and by 2003 had 38 in the country and announced plans to open another 80 by 2005. When asked why they frequently McDonald’s restaurants, Indian customers noted that their children enjoyed the “American” experience, the food was of consistent quality, and the toilets were always clean!

Question 1. Why is it essential for MNC to have a thorough understanding of the culture of the host country? What implications it can have on its long term business plans?

Question 2. What strategies McDonald’s adopted to respond to the taste and preferences of the Indian consumers?

Question 3. Should a MNC go in for localizing its products to account for cultural differences? If yes, don’t you think that it might lose an advantage by doing so?

Assignment – C

1. A strong orientation toward the home country is an indication of
(a) ethnocentricity
(b) polycentricity
(c) geocentricity

2. According to Adam Smith’s Theory of absolute advantage, a country should. …. a commodity that can be produced at a lower cost than can other nations.
(a) export
(b) import
(c) both export and import d) neither export nor import

3. The evidence that the United States exports constitutes of labor-intensive goods and imports comprises of capital-intensive goods is known as
(a) principle of absolute advantage
(b) principle of relative advantage
(c) Leontief Paradox
(d) factor endowment

4. This export strategy involves selling a product from a home base, usually without any product modification.
(a) exporting
(b) licensing
(c) joint venture
(d) manufacturing

5. This entry strategy involves granting permits to a foreign company to use industry property, technical knowhow, or engineering design in a foreign market.
(a) exporting
(b) licensing
(c) joint venture
(d) manufacturing

6. ICICI and Prudential joined together to market Insurance products in India. This strategy is
(a) exporting
(b) licensing
(c) joint venture
(d) assembly operations

7. Indian firms were asked to build the biggest oil refinery in the world in Egypt and to train local personnel. This is known as
(a) licensing
(b) manufacturing
(c) joint venture
(d) turnkey

8. Which of the following product is most likely to require adaptation for overseas markets.
(a) musical recordings
(b) films
(c) automobiles
(d) watches

9 Which of the following cannot be used as a trademark?
(a) a word
(b) a name
(c) a symbol
(d) a device
(e) all of them can be used as a trademark

10. Which marketing component is most likely to be standardized.
(a) brand
(b) advertising
(c) price
(d) distribution

11. The promotion mix does not include
(a) advertising
(b) personal selling
(c) pricing
(d) publicity

12. This term of payment is the one most desired by importers.
(a) bill of exchange
(b) letter of credit
(c) open account
(d) cash in advance

13. This method of payment presents the least risk to an exporter.
(a) sight draft
(b) time draft
(c) open account
(d) letter of credit

14. This financial instrument is a document, issued by a bank at a buyer’s request in favor of a seller, promising that the bank will pay an agreed amount of money upon its receipt of certain documents.
(a) sight draft
(b) time draft
(c) bill of exchange
(d) letter of credit

15. Import duty to offset a subsidy is
(a) protective tariff
(b) revenue tariff
(c) tariff surcharge
(d) countervailing duty
(e) variable duties

16. This is not a form of subsidy.
(a) cash
(b) interest rate
(c) tax
(d) freight and infrastructure
(e) all of them are subsidies

17. This international organization wants to achieve a broad, multilateral, and free worldwide system of trading.
(a) WTO
(b) GSP
(c) UNCTAD
(d) MFN

18. According to the international product life cycle theory, a country that developed an innovation will eventually become
(a) a net importer
(b) a net exporter
(c) an absolute exporter
(d) a relative producer
(e) a monopolist

19. Innovations are most likely to be first introduced in
(a) least developed countries
(b) less developed countries
(c) growing economies
(d) highly developed countries

20. Which of the following is not a brand’s function?
(a) creating identification
(b) guaranteeing quality level
(c) helping with promotion
(d) lowering production cost

21. The most important packaging criterion is
(a) promotional
(b) functional
(c) attractive
(d) versatile

22. “Noise” does not affect this stage of the communication process.
(a) sender
(b) encoding
(c) decoding
(d) receiver
(e) all of them can be affected

23. Which of the following is not an example of indirect export?
(a) Export house in home country
(b) Cooperatives marketing organizations in home country
(c) State trading Corporations in home country
(d) Agent in overseas market

24. Which of the following is not an example of Countertrade Arrangement?
(a) Barter Trade
(b) Compensation Arrangement
(c) Buy Back Arrangement
(d) Counterfeiting

25. Trade in services is covered under which agreement?
(a) GATS
(b) GATT
(c) TRIPS
(d) TRIMS

26. EXIM Bank of India provide following services to the Indian Exporter?
(a) Export financing
(b) Advisory Services for Export
(c) Sector and Market specific Research for export
(d) Export Agent

27. ECGC helps exporters by providing
(a) insurance protection against payment risks.
(b) information on different countries with its own credit ratings.
(c) information on credit-worthiness of overseas buyers
(d) extending line of credit to overseas entities

28. Which of the following is not an export incentive given by Government of India as per the provisions in the FTP 2004-2009?
(a) DEPB
(b) Duty Drawback
(c) Advance License
(d) Direct Export Subsidies

29. Which of the following is not an export promotion measure in the FTP 2004-2009?
(a) Towns of Export Excellence
(b) Served from India
(c) Working Capital Management for Export
(d) Focus Market Scheme

30. This is not a characteristic of “centrally planned economies.”
(a) a communist philosophy
(b) an active government role in economic planning
(c) bureaucratic political/economic systems
(d) market-oriented economy

31. The market-oriented system is also known as
(a) capitalism
(b) socialism
(c) communism
(d) modified communism

32. Which of the following is not a strategic alliance?
(a) mergers
(b) joint ventures
(c) licensing agreements
(d) sole ventures

33. These firms allocate corporate resources without taking into consideration national frontiers and also make direct investment abroad.
(a) ethnocentric firms
(b) polycentric firms
(c) geocentric firms

34. Trade is a
(a) zero sum game
(b) positive sum game
(c) negative sum game
(d) all of the above

35. The theory of factor endowment focus on which factor of production.
(a) labor
(b) land
(c) capital
(d) all of them are considered

36. China do not have comparative advantage in which factor of production?
(a) labor
(b) land
(c) capital
(d) technology

37. According to the international product life cycle theory, a country that invented a product will eventually become
(a) a net importer
(b) a net exporter
(c) an absolute exporter
(d) a monopolist

38. The most important factor which makes product modification mandatory is
(a) country’s regulations
(b) electrical current standards
(c) measurement standards
(d) product standards

39. To sell to their subsidiaries in countries with lower corporate tax rates than that in the United States, American firms should make their transfer prices
(a) low
(b) high
(c) moderate
(d) no change

40. When compared to a trading company, an EMC
(a) has more diverse product lines
(b) is more likely to take ownership to merchandise
(c) offers less services
(d) is larger and better financed