B207B MTA 2023-2024 PDF

B207B MTA: Made by: Timaa Bajabaa (2023-2024)  (Chapter 1): *The role of international financial institutions: International financial institutions play an important enabling function for the global economic system. They are established by countr...

B207B MTA: Made by: Timaa Bajabaa (2023-2024)  (Chapter 1): *The role of international financial institutions: International financial institutions play an important enabling function for the global economic system. They are established by countries to ensure mechanisms for international financial cooperation, for example by providing financial support (via grants and loans) for economic and social development activities in developing countries. * The two key international financial institutions: The International Monetary Fund (IMF): Founding countries sought to build a framework for economic cooperation to avoid a repetition of the competitive devaluations that had contributed to the Great Depression of the 1930s. The IMF’s primary purpose is: To ensure the stability of the international monetary system The World Bank: These member countries, or shareholders, are represented by a Board of Governors. The World Bank Group has set two goals for the world to achieve by 2030: End extreme poverty. Promote shared prosperity. *Explain the main parts of balance of payments. Support your answer with examples: The balance of payments is an economic indicator that tracks all transactions between individuals, firms or government bodies of a given country and the rest of the world during a certain period of time (a quarter of a year or one year). There are three main parts of the balance of payments: 1. The current account – registers payments for imports and exports for trade in goods and/or services, plus incomes and transfers of money to and from abroad made by individuals. 2. The capital account – records all transfers of capital to and from abroad. For example, A German firm building a factory in Brazil. This is counted as a credit on the Brazilian capital account. 3. The financial account – records financial inflows and also covers claims on or liabilities to non- residents, specifically with regard to financial assets; it includes direct investments, portfolio investments and *reserve assets. Reserve assets are, for example, currencies, commodities or other financial capital held by monetary authorities, such as central banks. The whole account must balance, just as it would for the financial statement. This is a technical requirement, so surpluses or deficits can be recorded on any specific part of the account. The balance of payments can help us to understand the comparative position of a country in relation to others. For example, a country with a large current account deficit is a country that is borrowing money to purchase goods and services produced outside the country.  *Discuss the concept of Foreign Direct Investment. Support your answer with examples: FDIs are a form of investment - made by companies - (for example, multinationals) that establish plants and offices in other countries in order to produce or to sell their products and services in countries around the world FDIs are – aimed - at securing operational control and they should be distinguished from portfolio investments (PIs) - whereby - financial assets are bought and sold; in this latter case, individuals or even companies make financial investments in other countries, for example by buying shares, rather than setting up their own manufacturing plant, a distribution channel or stores. For Example: The Tommy Hilfiger Corporation is 1. Headquartered in Hong Kong. 2. Incorporated in the British Virgin Islands. 3. It is listed on the New York Stock Exchange. 4. It’s owned primarily by international institutional investors. 5. Held its annual meeting of shareholders in Barbados. 6. It sourced production to manufacturers in Mexico and Asia. 7. It licensed its name to producers globally and retailed its classic American clothing in Europe and North America. —————————————————————————————————  (Chapter 2): *Highlight the role of HRM in globalization. Support your answer with discussion and relevant example: Globalization has - reinforced - the importance of HRM for organizations at the same time - limiting - its ability to set organizational strategy and priorities. The emphasis on the - ‘free market’ - has led to - declining - worker protections and wages. It has also - created - the conditions for - massive job insecurity -. This naturally provides employers with greater power to - determine working conditions. HRM, therefore, must work with managers. For example, if you want to hire people into your business, you are looking for people who fit the company culture as they will be more happier and productive. *Discuss the obstacles and hindrances that organization faces for survival and success due to globalization. Support your answer with discussion and relevant example: Globalization also creates new obstacles to organizational survival and success. For private companies, maximizing profit becomes not only a desire but a requirement. This means that even if senior managers want to introduce more ‘balanced’ priorities, they would be restricted in doing so by global competitive pressures. It also means they have to be able to manage - complex international pressures - and - an international workforce - Example: the unpredictability of foreign markets to coping with the needs of the diverse context they are operating within. For public institutions and NGOs, it means often placing fiscal concerns above and beyond their original purpose to realize a public good. *The role of HRM multiculturalism: Human resource management is potentially extremely valuable in this respect. HR Management help organizations to navigate these diverse cultures HR Management are key forces for assisting firms to attract an international workforce and meet their diverse needs and desires. HR Management are, moreover, important information brokers, in terms of highlighting contrasting regulations and cultural expectations between nations and regions. HR Management foster a broader culture of ‘organizational learning’ that encourages institutions to not only adapt to but also benefit from this greater diversity. —————————————————————————————————  (Chapter 3): *Transactional and global firms: Transnational company (a multinational company): defined as ‘a firm that has the power to coordinate and control operations in more than one country, even if it does not own them’. Global firm defined as ‘a firm that, by operating in more than one country, gains R&D, production, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors and ‘sees the world as one market’’ *What is meant by Globalization: Globalization refers to “greater permeability and interdependence across national boundaries and is an economic, political and cultural phenomenon”. Risks: 1. Possible economic and government instability. 2. Different legislative restrictions. 3. Trade barriers. 4. Diverse cultural preferences and practices. *Discuss any four possible Triggers for international expansion: 1. Saturated domestic markets: This is where there are limited opportunities in an organization's domestic market. 2. Small domestic markets: For organizations in some industries, larger markets are necessary for survival. 3. Low-growth domestic markets: Economic recession in an organization's domestic market can motivate it to seek growing markets overseas. 4. Customer drivers: An organization might extend its operations globally as a result of expectations by customers. 5. Competitive forces: Global expansion by an organization’s competitors. 6. Cost factors: An organization might try to reduce its costs by taking advantage of lower labor, energy or raw material. 7. Portfolio balance: Operating in variety of markets allows temporarily unfavorable conditions in one country to be offset by more favorable ones in others. *What STEEPLE model stands for. Discuss any three aspects of the macro environment: STEEPLE stands for: Social, Technological, Economic, Environmental, Political and Legal, Ethical. Additional aspects to STEEPLE: 1. Trading systems: Individual governments and trading blocs may try to protect domestic companies, by imposing charges, setting quotas. 2. Socio-cultural considerations: It can be easier for an organization to operate, at least initially, in countries that are socially and culturally similar.  3. Technological considerations: The level of technological development of a country can affect the viability of operating in it. 4. Economic considerations: Organizations need to take account of a range of economic considerations in prospective foreign market. 5. Political and legal considerations: Countries also vary in their political stability and level of regulation, which can affect their attractiveness to companies considering trading in them. 6. Ethical and legal considerations: In a globally connected world, news spreads fast and revelations of any ethical issues arising from an organization's operations in less developed countries can be damaging to its reputation and business. *What does the marketing directory mean by “Micro environment”: The market’s size and growth rate: growth rate is particularly important for predicting future demand. Competition: the strength and volatility of competition. Costs of serving the market: principal costs include distribution and control, which increase with distance. Profit potential: characteristics of the market may limit the potential for profit. Market access: existing links between suppliers, distributors and customers. The organization's capabilities include: 1. Skills. 2. Resources. 3. Product adaptation. 4. Competitive advantage. *Explain any five different Modes of entry to international markets. Support your answer with examples: 1. Indirect exporting: An organization may choose to start by exporting indirectly through an independent organization based in the organization’s domestic market, by buying its goods to sell abroad, selling them on behalf of the organization as an agent, allowing the organization to use its distribution or as cooperative acting for a number of producers. This approach enables an organization to utilize the independent organization’s exporting expertise, so requires less investment and less risk. 2. Direct exporting: Direct exporting is where an organization exports its offerings itself and manages contracts in its international markets, transportation and documentation, and the marketing mix. Exporting may be handled by a domestic-based or foreign-based office, through intermediaries in the international markets and/or via the internet. An example of direct exporting sports equipment and clothing. 3. Joint ventures: Joint ventures involve two or more organizations forming a partnership, in which the costs, risks, and profits are shared between the domestic and foreign organizations. If they create a separate entity for the partnership, it is called an equity joint venture; otherwise, it is known as a contractual joint venture. For example, airlines engage in contractual joint ventures to pool routes to provide passengers with a more extensive range of travel options. 4. Strategic alliances: Strategic alliances are similar to joint ventures, being defined as ‘cooperation between two or more industrial corporations, belonging to different countries, whereby each partner seeks to add to its competencies by combining its resources with those of its partner’. 5. Global strategic partnerships: Global strategic partnerships are defined as ‘link-ups between companies from two or more regions which jointly decide to pursue a marketing opportunity, share resources and combine ideas’. 6. Licensing: Licensing involves an organization selling the rights to use its technology, patent, trademark or know-how to one or more organizations in foreign markets. A prominent example is the wide range of Star Wars-themed products licensed to many different companies globally by Lucas Film Ltd. 7. Franchising: Franchising is a type of licensing, whereby companies in foreign markets pay to use the product or trade name belonging to an organization. A key difference is that franchising agreements offer an organization more control over the use of its intellectual property than licensing through the provision of support services. 8. Contract manufacturing: Contract manufacturing involves contracting a manufacturer in a foreign market to produce an organization’s product or service. Some clothing and automobile brands use contract manufacturing. 9. Management contracting: Management contracting involves the export of management services rather than products. For example, The management by Hilton Hotels of locally owned hotels around the world that use the DoubleTree by Hilton brand and are managed by Hilton. 10. Direct investment: Direct investment involves the greatest level of commitment to a foreign market and the highest level of control through ownership of a foreign subsidiary or division, but also entails many risks. Foreign subsidiaries may operate with a high degree of autonomy that enables them to adapt to local markets. Examples include car companies.  *Discuss the difference between Globalization versus Customization in marketing segmentation and marketing mix: Globalization involves the permeability across borders of more than just goods and services; it also involves social and cultural trends. Organizations, therefore, need to decide how much they can standardize their approach and how much adaptation is needed when entering foreign markets. Different segments (customer groups that have similar needs) have different characteristics and the same applies when serving international markets; they cannot be treated as having identical needs and preferences. Marketing communications may also be adapted to varying degrees. Some advertisements may be suitable for use in multiple international markets, whereas others need tailoring to cultural conventions and national contexts. There are also international differences in the use and reach of marketing communications channels. For example, there are differences between countries in advertising regulations, coverage by national versus local newspapers, magazine readership, and internet penetration, as well as cultural differences in taste. Three main market segments: 1. Premium segment – customers with high purchasing power, a willingness to pay for internationally admired brands. 2. Middle-market segment – customers with a mid- level income, seeking value and choosing products with a ‘good enough’ performance versus price ratio. 3. Low-end segment – customers only able to pay for basic products at a meagre price. —————————————————————————————————  (Chapter 4): *Definition of Brand: A name, term, sign, symbol, or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors. *Compare and contrast Brand identity and Brand image: Brand identity is the formulation of a brand in terms of what it stands for from the perspective of the organization that created it; Brand image is the perception or interpretation of a brand from outside the organization by, for example, consumers. “Identity” is on the “sender’s side”, whereas ‘brand image is on the receiver’s side’. It’s possible for there to be a mismatch between the two, owing to noise in communication and other influences. *Define the three types of brands: Brand reputation: it may be defined as ‘a collective representation of a brand’s past actions and results that describes the brand’s ability to deliver valued outcomes to multiple stakeholders’. This brand reputation might be derived from a variety of sources, such as: 1. Their own perceptions from viewing the brand. 2. Who they have seen consuming the brand. 3. Any marketing of the brand to which they may have been exposed. 4. Media articles about the brand. Brand equity: is the monetary value of the psychological goodwill which the brand has crated over time. Brand content: engages consumers to relate to the brand, because it does not talk about its products, but about a domain of mutual interest between the brand and its public. It also requires continuously refreshing to maintain interest. *Discuss at least four role that brands play for organizations: 1. Guarantee future income through brand equity. 2. Enable premium pricing to be charged. 3. Deter market entry from potential competitors. 4. Facilitate their own entry into new markets. 5. Increase bargaining power with distributors. 6. Command royalties through licensing. 7. Act as a communication device to consumers through a brand’s identity. 8. Benefit sales through identification and familiarity among consumers. 9. Encourage consumer loyalty.  *Discuss at least four role that brands play for customers: 1. Facilitate identification and the cost to consumers of searching among offerings. 2. Act as cues to information about products. 3. Facilitate consumers’ decision-making. 4. Inspire trust and increase consumers’ confidence. 5. Reduce perceived risk of a purchase. 6. Communicate brand associations or activate brand inferences that contribute. 7. Stimulate emotional rewards. *Discuss the four main categories of brand name formulation: There are four main categories of brand name formulation: 1. A company as a brand name: IBM, Emirates. 2. Strong company endorsement: Apple: Apple iPhone, Apple iPad, Apple Watch. 3. Weak company endorsement Nestle: Nestle KitKat, Nestle Carnation. 4. Individual brand name: P&G: Pampers, Ariel, Crest Mixed approach: Ferrero 1. Uses the company name for its signature Ferrero Rocher chocolates. 2. A weak endorsement for is Nutella chocolate spread. 3. Individual brand names for Kinder and Tic-Tac. *Elaborate in the Brand naming types associated with brand names. Support your answer with examples: Coined– a name that uses a made- up word (for example, the insurance brand AXA). Arbitrary– a name that uses an existing word that has no prior meaning (for example, the online retailer Amazon). Suggestive– a name that infers the nature or benefits of the product or company (for example, the bread brand Sunblest). Descriptive– a name that describes the characteristics of a product or company so that what it offers can be understood without prior knowledge (for example, the London-based gutter cleaning company Gutter Cleaning London’). Generic– a name that is synonymous with the product category (for example, cellophane was deemed to be the generic name for ‘a sheet of transparent regenerated celluloid’ and could not be trademarked as a brand). *Brand naming process: Specifying the objectives of branding. Creation of candidate brand name. Evaluation. Choose the name. Trademark registration.  *Packaging and labeling: Packaging and labelling also contribute to the communication and perceptions of brands. Secure packaging can also reassure consumers that the contents are safe and have not been damaged. The sustainability of packaging is an important consideration and consumers may seek out products with recyclable packaging or avoid excessive packaging. —————————————————————————————————  (Chapter 5): *Briefly explain the advantages of Global and local brands. And Briefly explain Krell’s recommendations for building a global brand: ❖ Global, international and local brands have been defined as follows: 1. Global brands – use the same marketing strategy and marketing mix in all of the countries in which they are marketed. 2. International brands – use some of the same elements of the marketing mix across the countries in which they are marketed. 3. Local brands – are marketed in only a single country or limited geographical area. According to Kapferer (advantages of global brands): 1. Economies of scale that enable a lower price (for example, Ikea) 2. A stream of innovations (for example, L’Oréal and Google) 3. An international image that is typically more appealing to younger and more mobile population segments (for example, Ralph Lauren and Armani). According to Schniling and Kapferer (advantages of local brands): 1. The flexibility to be developed to meet local consumers’ needs 2. The flexibility to adapt pricing strategies. 3. Insulation from the risks of damage from problems. 4. Close relationships with the brand and trust by consumers. Three recommendations for building a global brand: 1. Engaging in cultural immersion – visiting and immersing oneself in each market’s local culture. 2. Finding and leveraging influencers – harnessing insights from local markets that can be incorporated to enhance global products. 3. Using global frameworks with local relevance – creating space for flexibility and adaptation to local markets in marketing programs and messages. —————————————————————————————————  (Chapter 6): *Discuss the four Ethical issues of globalization. Support your answer with examples: Different standards of consumer protection: Some companies take advantage of differences in the legal regulations to market their offerings where there are fewer constraints on their activities. For example, pharmaceutical companies have been censured for marketing their products in countries in which they are subject to lower levels of control. Exporting consumerism and increasing cultural homogenization: Involves exporting not only goods and services to other parts of the world but the transmission of the values embedded in them and therefore encourages the spread of consumerism. For example, according to the predicted increase in china’s middle- income, cars are taking over from motorcycles as the main from of transport. Targeting lower-income consumerism developing countries: Ethical issues are raised when lower-income consumers in developing countries are targeted by marketing. There are two key concerns: A. Marketing products beyond the reach of low-income consumers perpetuate dissatisfaction. B. Low-income consumers might be exploited. Geographical segregation of business operations: The effect of the geographical separation of business operations is that some large MNCs have taken advantage of national boundaries on government control to reduce the tax they pay without violating the laws in different countries. Well-publicized examples include Starbucks, Google, and Amazon. —————————————————————————————————