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Questions and Answers
Which of the following characteristics is not typical of low-income countries?
What defines Upper-Middle-Income Countries in terms of per capita income?
Which of the following countries is NOT classified as part of the BRICS?
What is a characteristic of high-income countries?
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What is a primary characteristic of market capitalism?
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Which of the following best describes the economic situation of lower-middle-income countries?
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Which term best describes the economic freedom ranking 'Free'?
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What occurs during a trade deficit?
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In centrally planned socialism, who decides what goods and services are produced?
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Which of the following is NOT a variable considered in rankings of economic freedom?
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Which of the following is considered a characteristic of upper-middle-income countries?
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What is a significant issue in centrally planned socialist economies?
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Which of the following categories includes countries with a per capita of $1,025 or less?
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Which country is ranked as the 'most free' according to economic freedom rankings?
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What role does the government play in market capitalism?
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Which of the following statements about economic freedom rankings is true?
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What is primarily referred to as a negative balance of trade?
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Which method is NOT typically used as a barrier for protectionism?
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What type of trade agreement eliminates tariffs among member countries while allowing each to maintain independent trade policies with non-member countries?
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Which of the following is an element of an Economic Union?
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What is a common feature of Preferential Trade Agreements (PTAs)?
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Which agreement is characterized by the elimination of internal trade barriers and the establishment of common external tariffs?
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What significant event in 1991 set the stage for the European Union to transition into an economic union?
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What was the primary purpose of the Gulf Cooperation Council when it was established in 1981?
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What distinguishes international marketing from domestic marketing?
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Which statement correctly defines global marketing?
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What percentage of total market for goods and services is outside the U.S. for U.S. companies?
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How does 'global' differ from 'international' in marketing terminology?
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What is a primary reason for companies to pursue international markets?
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What is the primary aim of globalization in the context of marketing?
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Which of the following is considered a characteristic of companies that internationalize quickly?
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What does 'think globally, act locally' imply in terms of international marketing?
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Which stage of international marketing involvement indicates a company is actively involved in foreign markets?
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What was a significant influence on the growth of global commerce in the late 1990s?
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What is considered the most challenging task for international marketers?
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Which of the following factors is included in the uncontrollable elements of the foreign environment?
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Which type of environment is defined as comprising elements that are uncontrollable in business?
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What should international marketers primarily do when dealing with uncontrollable factors?
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Which foreign ownership is associated with the U.S. company 7-Eleven?
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Which of the following companies is owned by a foreign entity based in the U.K.?
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What element in the foreign environment involves the influence of societal norms and values?
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Which of the following companies is known to have foreign ownership from Belgium?
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Study Notes
Economic Systems
- Market capitalism is characterized by private ownership of resources, production driven by consumers, and government regulation to promote competition and consumer protection.
- Centrally planned socialism is the opposite of market capitalism, with the state controlling the economy and dictating production and distribution.
- Economic freedom is measured based on factors like trade policy, taxation, foreign investment, and property rights.
- Countries are ranked from "free" to "repressed" based on their economic freedom.
Stages of Market Development
- Low-income countries have limited industrialization, high reliance on agriculture, high birth rates, low literacy rates, and often depend heavily on foreign aid.
- Lower-middle-income countries are characterized by expanding consumer markets, cheap labor, and mature, labor-intensive industries.
- Upper-middle-income countries are rapidly industrializing, with decreasing agricultural employment, increasing urbanization, and rising wages.
- High-income countries (also known as developed countries) are characterized by sustained economic growth through innovation and high ownership levels of basic products.
Trade Deficit
- A trade deficit occurs when a country imports more goods and services than it exports.
Protectionism
- Countries often implement protectionist measures to protect their domestic markets from foreign competition.
- Protectionist barriers include tariffs, exchange barriers, quotas, import licenses, boycotts, embargoes, monetary barriers, and anti-dumping penalties.
Easing Trade Restrictions
- International organizations like the WTO, IMF, and UN work towards easing trade restrictions and promoting global trade.
Preferential Trade Agreements (PTAs)
- PTAs are agreements between countries to reduce trade barriers among themselves, offering preferential treatment to partners.
- There are over 300 PTAs notified to the WTO.
Hierarchy of PTAs
- The hierarchy of PTAs progresses from Free Trade Areas (FTAs) to Customs Unions, Common Markets, and Economic Unions.
Free Trade Area
- Countries in a FTA abolish tariffs and other trade barriers amongst themselves but maintain independent trade policies with non-member countries.
Customs Union
- Customs unions build upon FTAs by establishing common external tariffs (CETs) for trading with countries outside the agreement.
Common Market
- A common market expands on a customs union by allowing free movement of factors of production like labor, capital, and information.
Economic Union
- Economic unions integrate the characteristics of common markets with coordinated and harmonized economic and social policies among member states.
The European Union (EU)
- The EU is an example of an economic union with a central bank and a single currency (the Euro).
The Gulf Cooperation Council (GCC)
- The GCC is comprised of six Middle Eastern countries with significant oil reserves.
- The GCC is working to diversify its industries.
International Marketing Defined
- Performing business activities to sell goods and services to consumers in multiple nations.
- International marketing presents unique challenges compared to domestic marketing, with higher levels of uncertainty and uncontrollables.
Global Marketing
- Global marketing refers to business activities that reach beyond the home market.
- It addresses the concerns of the entire world.
Importance of Going Global
- The majority of market potential for U.S., Japanese, and German companies lies outside their respective home markets.
Stages of International Involvement
- High-technology and marketing-based companies tend to internationalize rapidly.
- Key factors contributing to quick internationalization include access to resources, smaller home markets, larger production capacity, and managers with international connections.
Stages of International Marketing Involvement
-
Less Strategic:
- No Direct Foreign Marketing: Companies focus solely on domestic markets.
- Infrequent Foreign Marketing: Companies engage in occasional export activities.
-
More Strategic:
- Regular Foreign Marketing: Companies actively seek foreign markets and establish regular export operations.
- Multidomestic or International Marketing: Companies adapt their marketing strategies to each individual foreign market.
- Global Marketing: Companies develop standardized products and marketing strategies for global distribution.
Environmental Adaptation
- Cultural adjustment is the most important and challenging aspect of international marketing.
- International marketers must understand the influence of uncontrollable elements on each foreign market.
Standardization vs. Adaptation
-
Globalization (Standardization):
- Focuses on developing standardized products for worldwide distribution using a similar marketing mix.
- Emphasizes mass marketing.
-
Global Localization (Adaptation):
- Combines standardization and customization to minimize costs while maximizing customer satisfaction.
- Emphasizes segmentation and the principle of "Think globally, act locally."
International Commerce Causes Peace
- Global commerce tends to flourish during periods of peace.
- Examples include the economic boom in North America during the late 1990s, driven by the end of the Cold War and the opening of former communist countries to global trade.
- However, global commerce can also lead to economic and even bloody wars.
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Description
Explore the distinctions between market capitalism and centrally planned socialism. Understand the stages of market development from low-income to upper-middle-income countries and how economic freedom affects these classifications.
