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Questions and Answers
Which of the following characteristics is not typical of low-income countries?
Which of the following characteristics is not typical of low-income countries?
What defines Upper-Middle-Income Countries in terms of per capita income?
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?
Which of the following countries is NOT classified as part of the BRICS?
What is a characteristic of high-income countries?
What is a characteristic of high-income countries?
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What is a primary characteristic of market capitalism?
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?
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'?
Which term best describes the economic freedom ranking 'Free'?
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What occurs during a trade deficit?
What occurs during a trade deficit?
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In centrally planned socialism, who decides what goods and services are produced?
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?
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?
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?
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?
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?
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?
What role does the government play in market capitalism?
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Which of the following statements about economic freedom rankings is true?
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?
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?
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?
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?
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)?
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?
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?
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?
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?
What distinguishes international marketing from domestic marketing?
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Which statement correctly defines global marketing?
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?
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?
How does 'global' differ from 'international' in marketing terminology?
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What is a primary reason for companies to pursue international markets?
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?
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?
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?
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?
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?
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?
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?
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?
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?
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?
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.?
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?
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?
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.
