Question

1. Describe the market conditions that influence a firm's decision to enter foreign markets.

2. Assume you are the marketing department for a low end retail store chain, you might think of a chain similar to Dollar General. Your firm has decided to begin an expansion into the global market. Currently, you are considering building stores in France, Ecuador, Brazil and Australia. Gather information about these countries using the CIA Factbook available online and other resources. Using the data you have about each country, develop ideas on the pros and cons of entering each country. Which country do you feel is best? Why?

3. Think of a company in the industry that you would like to go into for employment. What is the name of the company? What is their competitive advantage? Will this competitive advantage "travel" well to other countries if it were to go global? Why or why not?

4. Define the following terms and give an example of each: import quota, embargo, tariff

5. When determining a country's ____________, economists look at how the country is attempting to reduce poverty, inequality and unemployment in addition to considering the country's GDP.

6. Marketers need to understand the economic environment of a country from two perspectives. What are they?

7. What are a monopoly, an oligopoly, monopolistic competition and pure competition? Name an example of each.

Answer 1

Answer 1:

Factors stimulating a firm’s decision to internationalize :

1.Organizational

2.Environmental

Organizational : These factors are split into two forces.

• Decision maker
• Firm specific
• Decision –maker factors : Recognition by the top manager or the top management team of the importance of international activities is an essential part of the process of internationalization. Top manager’s exposure to foreign market is a critical component in the decision. Reid- Foreign travel and experience abroad, foreign language, decision maker background and personal traits are the factors that positively influenced the internationalization decision.
• Firm Specific factors : Size of the firm and international appeal. Bigger firms tend to internationalize more than smaller ones. They have more managerial and financial resources. They understand risks of IB. Production of a unique product with an international appeal could act as a stimulus for international expansion. Advertising aggressively by companies like Nike shoes or Levi’s jeans helped these companies cross global borders on the basis the appeal of these products. Unique features and quality were highlighted through high pitched advertising, sales promotion and public relations. Global success stories

Environmental Factors : External driving forces stimulate a firm to internationalize. The important factors are

• Unsolicited proposals : Some unsolicited proposals from foreign governments, distributors or clients are the basis of companies to go international. Chinese government delegation’s visit to VW’s headquarters in Germany in 1978 led to the proposed JV that had the support of the Chinese Govt. Successful JV in China. Internet today gets unsolicited proposals to the companies from their websites
• The ‘Bandwagon effect : One large company decides to go international with its products or services- others in the same business do not wish to be left behind. Competing firms tend to observe, benchmark and imitate each other’s strategic moves
• Attractiveness of the host country : Degree to which the country’s host market is desirable for business operations by foreign firms. Host country’s market size may attract MNCs. FDI Policy, Ease of Doing business, Labour Laws etc are important issues. These provide potential to MNCs for growth, profit and stability of operations. Per capita income is a good indicator of country’s attractiveness for companies seeking markets. Other factors could be availability of cheap labor and skills.

Answer 3:

• I would like to go in an automobile industry
• Company I would like to go would be Tesla.
• Competetive advantage of tesla:-
  • First mover advantage in Electrical Vehicle technology.
  • Heavily investing into batteries.
  • Excellent brand recall.
  • Customer loyalty.
• Yes, it can go global and it fact it has started its expansion in Asian and European markets.

Answer 4:

• Tariff: A tariff, or customs duty, is a federal tax on an imported good or service. Eg:- Revenue tariff, protective tariff
• Embargo: An embargo is a government order that restricts commerce or exchange with a specified country or the exchange of specific goods. An embargo is usually created as a result of unfavorable political or economic circumstances between nations. Eg:- U.S. Sanctions on Nicaragua, U.S. Sanctions on Russia
• Import Quota: It is a type of trade barrier that limits the quantity of a product a government will allow into a country during a specified time period. An import quota specifies a quantity limit by number of items, weight, volume, or other measurement.

Answer 5:

• Economic Growth

Answer 6:

• Micro Environment Factors
  • The suppliers
  • The resellers
  • The customers:
  • The competition
  • The general public

• Macro Environment Factors
  • Demographic forces
  • Economic factors
  • Natural/physical forces
  • Technological factors
  • Political and legal forces
  • Social and cultural forces

Answer 7:

Type	Define	Example
Monopoly	Monopoly is a market situation in which there is only one seller of a product with barriers to entry of others. The product has no close substitutes	Luxottica,Indian Railways
Oligopoly	Oligopoly is a market situation in which there are a few firms selling homogeneous or differentiated products	Smartphone operating systems
Monopolistic competition	Monopolistic competition refers to a market situation where there are many firms selling a differentiated product. There is competition which is keen, though not perfect, among many firms making very similar products.	Designer labels
Pure Competition	In pure competition the number of buyers and sellers is very large. There is a perfect competition among them. Price is determined for the entire industry by the forces of demand and supply.	Agricultural products like corn, wheat.