Solution Manual for Global Marketing, 10th Edition

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Global Marketing
Tenth Edition
Mark C. Green
Warren J. Keegan
Resource Manual
for
Global Marketing
Revised by Kerry Walsh

1-1
CHAPTER 1
INTRODUCTION TO GLOBAL MARKETING
SUMMARY
A. Marketing is an organizational function and a set of processes for creating,
communicating, and delivering value to customers and for managing customer
relationships in ways that benefit the organization and its stakeholders. A company that
engages in global marketing focuses resources on global market opportunities and threats.
Successful global marketers such as Nestlé, Coca-Cola, and Honda use familiar
marketing mix elements – the four Ps – to create global marketing programs.
B. Marketing, R&D, manufacturing, and other activities compose a firm’s value chain. The
value equation (V =B/P) expresses the relationship between values and the marketing
mix.
C. Global companies also maintain strategic focus while pursuing competitive advantage.
The marketing mix, value chain, competitive advantage, and focus are universal in their
applicability, irrespective of whether a company does business only in its home country
or has a presence in many markets around the world. However, in a global industry,
companies that fail to pursue global opportunities risk being pushed aside by stronger
global competitors.
D. A firm’s global marketing strategy (GMS) can enhance its worldwide performance. The
GMS addresses several issues. First is the nature of the marketing program in terms of the
balance between a standardization (extension) approach to the marketing mix elements
and a localization (adaptation) approach that is responsive to country or regional
differences. Second is the concentration of marketing activities in a few countries or the
dispersal of such activities across many countries. Companies that engage in global
marketing can also engage in coordination of marketing activities. Finally, a firm’s GMS
addresses the issue of global market participation.
E. The importance of global marketing today can be seen in the company rankings compiled
by the Wall Street Journal, Fortune, Financial Times, and other publications. Whether
ranked by revenues or some other measure, most of the world’s major corporations are
active regionally or globally. The size of global markets for individual industries or
product categories helps explain why companies “go global”. Global markets for some
product categories represent hundreds of billions of dollars in annual sales; other markets
are much smaller. Whatever the size of the opportunity, successful industry competitors
find that increasing revenues and profits means seeking markets outside the home
country.

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F. Company management can be classified in terms of its orientation toward the world:
ethnocentric, polycentric, regiocentric, or geocentric. These terms reflect progressive
levels of development or evolution. An ethnocentric orientation characterizes domestic
and international companies; international companies pursue marketing opportunities
outside the home market by extending various elements of the marketing mix. A
polycentric worldview predominates at a multinational company, whose country
managers operate autonomously, adapt the marketing mix. When management moves to
integrate and coordinate activities on a regional basis, the decision reflects a regiocentric
orientation. Managers at global and transnational companies are geocentric in their
orientation and pursue both extension and adaptation strategies in global markets.
G. The dynamic interplay of several driving and restraining forces shapes the importance of
global marketing. Driving forces include market needs and wants, technology,
transportation and communication improvements, product costs, quality, world economic
trends, recognition of opportunities to develop leverage by operating globally, and
innovation and entreprenuershp. Restraining forces include market differences,
management myopia, organizational culture, and national controls such as nontariff
barriers (NTBs).
OUTLINE OF THE BOOK
The book is divided into five parts.
Part 1: An overview of global marketing and the basic theory of global marketing.
Part 2: The environment of global marketing.
Part 3: Approaching global markets (global strategy)
Part 4: The global context of marketing mix decisions
Part 5: Issues of corporate strategy and leadership in the 21st century.
LEARNING OBJECTIVES
1-1 Use the product/market growth matrix to explain the various ways a company can expand
globally.
1-2 Describe how companies in global industries pursue competitive advantage.
1-3 Compare and contrast a single-country marketing strategy with a global marketing strategy
(GMS).
1-4 Identify the companies at the top of the Global 500 rankings.

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1-5 Explain the stages a company goes through as its management orientation evolves from
domestic and ethnocentric to global and geocentric.
1-6 Discuss the driving and restraining forces affecting global integration today.
DISCUSSION QUESTIONS
1-1. What are the basic goals of marketing? Are these goals relevant to global marketing?
Marketing activities represent an organization’s efforts to satisfy customer wants and
needs by offering products and services that create value. These goals are relevant in
virtually every part of the world; however, when an organization pursues market
opportunities outside of its home country (domestic) market, managers need an
understanding of additional conceptual tools and guidelines in order to do business in
these other countries – in other words, to create value and satisfy consumer needs and
wants.
1-2. What is meant by “global localization?” Is Coca-Cola a global product? Explain.
The phrase “global localization” represents an attempt to capture the spirit of the rallying
cry for organizations in the 21st century, namely, “think globally, act locally, and manage
regionally.” Most students will agree that Coca-Cola is a global product by virtue of the
fact that it is available in more than 195 countries in red cans bearing the distinctive
signature style. It must be noted, however, that customer service efforts are adapted to the
needs of particular markets (for example, vending machines in Japan). Thus, Coca-Cola
is both global and local.
1-3. A company’s global marketing strategy (GMS) is a crucial, competitive tool. Discuss some
of the global marketing strategies available to companies. Give examples of companies that use
the different strategies.
Strategies include global branding (Coca-Cola, Apple), product design (McDonald’s
restaurants and menu items), positioning (Harley-Davidson), packaging (Gillette Sensor),
distribution (Benetton), customer service (Caterpillar), and sourcing (Toyota, Gap).
1-4. UK-based Burberry is a luxury fashion brand that appeals to both genders and all ages. To
improve Burberry’s competitiveness in the luxury goods market, CEO Marco Gobetti must
update the marketing program put in place by his predecessor. The strategy should address key
markets that Burberry will participate in, as well as the integration and coordination of marketing
activities. Research recent articles about Burberry and write a brief summary that outlines
Burberry’s GMS.

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Student answers will vary, but all should contain the new challenges to the company’s
GMS including the declining popularity of department stores in the US and the slowing
sales of luxury goods in China.
1-5. Discuss the differences between the global marketing strategies of Harley-Davidson and
Toyota?
Harley-Davidson motorcycles are known the world over as “the” all-American
motorcycle. Harley’s mystique and heritage are associated with America. The company
backs up this positioning with exports from two U.S. manufacturing locations. By
contrast, Toyota builds some models (e.g. Camry) for the U.S. market in the U.S., a fact
that Toyota stresses in its American advertising. Thus, Harley-Davidson serves global
markets while sourcing locally, while Toyota’s strategy calls for serving world markets
and using the world as a source of supply.
1-6. Describe the differences between ethnocentric, polycentric, regiocentric, and geocentric
management orientations.
The premise of an ethnocentric orientation is that home country products and
management processes are superior. An ethnocentric company that neither sources inputs
from, nor seeks market opportunities in the world outside the home country may be
classified as an international company. A company that does business abroad while still
presuming the superiority of the home country may be classified as an international
company. Such a company would rely on an extension strategy whereby it would export,
without adaptation, products designed for the domestic market.
The polycentric orientation that predominates at a multinational company leads to a view
of the world in which each country market is different from the others. Local country
managers operating with a high degree of autonomy adapt the marketing mix in a
polycentric, multinational company. Managers who are regiocentric or geocentric in their
orientations recognize both similarities and differences in world markets. Market
opportunities are pursued using both extension and adaptation strategies. The regiocentric
and geocentric orientations are characteristic of global transnational companies.
1-7. Identify and briefly describe some of the forces that have resulted in increased global
integration and the growing importance of global marketing.
The dynamic involving driving and restraining forces is shown diagrammatically in
Figure 1-1. Driving forces include regional economic agreements such as NAFTA,
converging market needs and wants, technology advances such as the Internet and global
TV networks, transportation improvements, the need to recoup high product development
costs in global markets, the need to improve quality through R&D investment, world
economic trends such as privatization and finally, opportunities to use leverage, corporate
culture, and the continuing presence of national controls that create trade barriers.

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1-8. Define leverage and explain the different types of leverage utilized by companies with
global operations.
Webster’s New World Dictionary defines “leverage” as an “increased means of
accomplishing some purpose.” A global company can take advantage of several types of
leverage in pursuit of corporate goals such as profit or revenue growth. These include
experience transfers, scale economies, enhanced resource utilization, and global strategy.
1-9. Each July, Fortune publishes its Global 500 listing of the world’s largest companies.
You can find the current rankings online at: www.fortune.com/global500. Alternatively, you can
consult the print edition of Fortune. Browse through the list and choose any company that
interests you. Compare its 2017 ranking with the most recent ranking. Has the company’s
ranking changed? Consult additional sources (e.g., magazine articles, annual reports, the
company’s Web site) to get a better understanding of the factors and forces that contributed to
the company’s move up or down in the rankings. Write a brief summary of your findings.
Each student’s answer will vary based upon the company they chose.
1-10. There’s a saying in the business world that “nothing fails like success”. Take Gap, for
example. How can a fashion retailer that was once the source for wardrobe staples such as chinos
and white T-shirts suddenly lose its marketing edge? Motorola has also fallen victim to its own
success. The company’s Razr cell phone was a huge hit, but Motorola struggled to leverage that
success. Google acquired Motorola Mobility but then sold it to Lenovo in 2014. Recently,
Starbucks CEO Howard Shultz warned that his company and brand risk becoming
commoditized. And, as noted in Case 1-3, some industry observers are saying that Apple has
“lost its cool”. If you were to make separate recommendations to management at each of these
companies, what would you say?
Each student’s answer will vary but their answers should incorporate such terms as global
marketing, marketing mix strategy, value chain, V = B/P, strategic focus, global
marketing strategy, extension, adaption, ethnocentric, polycentric, regiocentric, or
geocentric orientations in their responses. Perhaps, a phrase that could be said to each of
these chief executives is “think globally, act locally”.
OVERVIEW
The growing importance of global marketing is one aspect of a sweeping transformation that has
profoundly affected the people and industries of many nations during the past 160 years.
Four decades ago, the phrase global marketing did not even exist. Today businesspeople utilize
global marketing to realize their companies’ full commercial potential. However, there is
another, even more critical reason why companies need to take global marketing seriously:
survival. A management team that fails to understand the importance of global marketing risks
losing its domestic business to competitors with lower costs, more experience, and better
products.

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But what is global marketing? How does it differ from “regular” marketing? Marketing can be
defined as the activity, set of institutions, and processes for creating, communicating, and
delivering value for customers, clients, partners, and society at large.
Marketing activities center on an organization’s efforts to satisfy customer wants and needs with
products and services that offer competitive value and for managing customer relationships in
ways that benefit the organization and its stakeholders. The marketing mix (product, price, place,
and promotion) comprises a contemporary marketer’s primary tools. Marketing is a universal
discipline – as applicable in Argentina as it is in Zimbabwe.
 (Learning Objective #1)
This book is about global marketing. An organization that engages in global marketing focuses
its resources and competencies on global market opportunities and threats. A fundamental
difference between regular marketing and global marketing is the scope of activities. A company
that engages in global marketing conducts important business activities outside the home-country
market. The scope issue can be conceptualized in terms of the familiar product/market matrix of
growth strategies (see Table 1-1). Some companies pursue a market development strategy; this
involves seeking new customers by introducing existing products or services to a new market
segment or to a new geographical market.
Global marketing can also take the form of a diversification strategy in which a company creates
new product or service offerings targeting a new segment, a new country, or a new region. Four
of the growth strategies shown in Table 1-1:
(Chapter 1, Page 4)
Four Stages - Starbucks
Market penetration: Starbucks is building on its loyalty card and rewards program in
the United States with a smartphone app that enables customers to pay for purchases
electronically. The app displays a bar code that the customer can scan.
Market development: Starbucks is entering Italy in 201, starting with a 25,000-
square-foot flagship Reserve Roastery in Milan. Walking distance from the landmark
Duomo, the Roastery will offer pastries by local bakery Princi as well as the apertivo
beverages that are so poplular throughout Italy.
Product development: Starbucks created a brand of instant-coffee brand, Via, to
enable its customers to enjoy coffee at the office and other locations where brewed
coffee is not available. After a successful launch in the United States, Starbucks
rolled out Via in Great Britain, Japan, South Korea, and several other Asian countries.
Starbucks also introduced its first coffee machine. The Versimo allows Starbucks’
customers to “prepare their favorite beverages at home.”
Diversification: In 2011, Starbucks dropped the word “Coffee” from its logo. It
recently acquired a juice maker, Evolution Fresh; the Bay Bread Bakery, and tea

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retailer Teavana Holdings. Next up: Revamping stores so they can serve as wine bars
and attract new customers in the evening.
Companies that engage in global marketing frequently encounter unique or unfamiliar features in
specific countries or regions of the world. In some regions of the world, bribery and corruption
are deeply entrenched. A successful global marketer understands specific concepts and has a
broad and deep understanding of the world’s varied business environments. The global marketer
also must understand the strategies that, when skillfully implemented in conjunction with
universal marketing fundamentals, increase the likelihood of market success.
ANNOTATED LECTURE/OUTLINE
Principles of Marketing: A Review
Marketing is one of the functional areas of business – distinct from finance and operations.
Marketing is the set of activities and processes that (along with product design, manufacturing,
and transportation) composes a firm’s value chain.
Decisions at every stage of the process – from idea conceptualization to customer support after
the sale – should be assessed in terms of their ability to create value for customers.
The core of marketing is to surpass the competition in creating perceived value for customers.
The value equation is the guide to this task:
Value = Benefits / Price (money, time, effort, etc.)
The marketing mix is integral to the value equation because benefits are a combination of the
product, promotion, and distribution components of the mix.
Value to the customer can be increased in two ways – 1) an improved bundle of benefits or 2) a
lower price (or both):
1) Marketers may improve the product, design new channels of distribution, communicate
better – or a combination of all three.
2) Marketers may seek ways to cut costs and prices. Nonmonetary costs may be lowered by
decreasing the time and effort customers must expend to learn about or acquire a product.
If a company is able to offer a combination of superior product, distribution, and promotion of
the benefits AND offer lower prices than its competition, it should enjoy an extremely
advantageous position. Recall the definition of a market: people or organizations that are both
able and willing to buy. In order to achieve market success, a product or brand must measure up
to a threshold of acceptable quality and be consistent with buyer behavior, expectations, and
preferences.

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Competitive Advantage, Globalization, and Global Industries
 (Learning Objective #2)
When a company succeeds in creating more value for customers than its competitors, that
company is said to enjoy competitive advantage in an industry. Competitive advantage is
measured relative to rivals with whom you compete in the industry – whether that is on a local,
national, or global level.
Global marketing is essential if a company competes in a global industry or one that is
globalizing.
The process of globalization is the transformation of formerly local or national industries into
global ones.
From a marketing point of view, globalization presents companies with tantalizing
opportunities—and challenges—as executives decide whether to offer their products and services
everywhere.
As defined by management guru Michael Porter, a global industry is one in which competitive
advantage can be achieved by integrating and leveraging operations on a worldwide scale. Put
another way, an industry is global to the extent that a company’s industry position in one country
is interdependent with its industry position in other countries. Indicators of globalization include
the ratio of cross-border trade to total worldwide production, the ratio of cross-border investment
to total capital investment, and the proportion of industry revenue generated by companies that
compete in all key world regions. One way to determine the degree of globalization in an
industry sector is to calculate the ratio of the annual value of global trade in the sector—
including components shipped to various countries during the production process—to the annual
value of industry sales.
Achieving competitive advantage in a global industry requires executives and managers to
maintain a well-defined strategic focus. Focus is simply the concentration of attention on a core
business or competence. Companies that understand and engage in global marketing can offer
more overall value to customers than companies that do not have that understanding.
Value, competitive advantage, and the focus required to achieve them are universal in their
relevance, and they should guide marketing efforts in any part of the world. Global marketing
requires attention to these issues on a worldwide basis and utilization of a business intelligence
system capable of monitoring the globe for opportunities and threats. A fundamental premise of
this book can be stated as follows: Companies that understand and engage in global marketing
can offer more overall value to customers than companies that do not have that understanding.

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Global Marketing: What It Is and What It Isn’t
The discipline of marketing is universal. It is natural, however, that marketing practices will
vary from country to country, for the simple reason that the countries and peoples of the world
are different. A successful marketing approach in one country may not necessarily succeed in
another. Customer preferences, competitors, channels of distribution, and communication media
may differ. An important managerial task in global marketing is learning to recognize the extent
to which it is possible to extend marketing plans and programs worldwide, as well as the extent
to which adaptation is required.
 (Learning Objective #3)
The way a company addresses this task is a manifestation of its global marketing strategy
(GMS). In single-country marketing, strategy development addresses two fundamental issues:
choosing a target market and developing a marketing mix. The same two issues are at the heart
of a firm’s GMS, although they are viewed from a somewhat different perspective (see Table 1-
3).
THE CULTURAL CONTEXT
“1-2-3-4!” 40 Years of Punk Rock, 1976 - 2016
In 1976, a new sound emerged. Punk Rock was both a musical and a cultural movement. Punk
also offered an outlet for voices of disenfranchised young people and an opportunity to rebel
against the establishment.
In the United Kingdom in the mid-1970’s, the country’s economic stagnation meant there were
few job opportunities for young people – as well as their elders. During the same period, New
York City was in social and economic decline. Across America, the energy crisis meant rising
prices for gasoline and shortages.
It was in this musical and economic context that young people in both the United States and the
United Kingdom discovered that it was relatively easy to learn to play two or three guitar chords.
Who needs technique? Who cares what the notes are?
Vivian Goldman, a former features editor who covered punk for Sounds, a weekly British music
paper, notes that punk’s relevance and impact continue today. “In Indonesia, Russia, South
Africa, and elsewhere, people use punk to rage against the system,” she said recently. “Punk’s
rebel consciousness represents a flag for a new way of thinking.”
a) Global market participation – is the extent to which a company has operations in major
world markets.
b) Standardization versus adaptation – is the extent to which each marketing mix element
can be standardized (used the same way) or must be adapted (used in different ways) in
different country markets.

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c) Concentration of marketing activities – is the extent to which activities related to the
marketing mix (such as pricing decisions) are performed in one or only a few country
locations.
d) Coordination of marketing activities – is the extent to which marketing activities related
to the mix are planned and executed interdependently around the globe.
e) Integration of competitive moves – the extent to which a firm’s competitive marketing
tactics in different parts of the world are interdependent.
The decision to enter one or more particular markets outside the home country depends on a
company’s resources, its managerial mind-set, and the nature of opportunities and threats.
The five emerging markets of Brazil, Russia, India, China, and South Africa represent significant
growth opportunities. They are known as BRICS. Mexico, Indonesia, Nigeria, and Turkey—the
so-called MINTs—also hold great potential.
We can use Burberry as a case study in global marketing strategy. The U.K.-based luxury brand
is available in scores of countries, and Burberry’s current expansion plans emphasize several
geographical areas. First are the BRICS nations and the second is the United States. Burberry’s
marketing mix strategy includes the following:
Product: Boost sales of handbags, belts, and accessories—products whose sales are less cyclical
than clothing.
Price: More expensive than Coach, less expensive than Prada. “Affordable luxury” is central to
the value proposition.
Place: Burberry intends to open more independent stores in the United States as well as
expansion in London and Hong Kong.
Promotion: Encourage advocacy and sharing social media and online channels such as Twitter,
Instagram, and www.artofthetrench.com. Launch Burberry Acoustic to enhance brand relevance
and to provide exposure for emerging music talent via www.burberry.com/acoustic.
The issue of standardization versus adaption has been at the center of a long-standing
controversy among both academicians and business practitioners. Much of the controversy dates
back to the days of Theodore Levitt’s (1983) article “The Globalization of the Markets.” Levitt
envisioned a global community where standardized, high-quality world products would be
marketed in a standardized manner.
The “homogenized global market” view didn’t work. Even those companies that have become
global successes have not done so through total standardization of the product.
Global marketing made Coke a worldwide success. However, that success was not based on a
total standardization of marketing mix elements.

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Coca-Cola succeeded through the application of global localization. What does the term “global
localization” really mean? Global localization: A successful global marketer must have the
ability to “think globally and act locally.” See Table 1-4.
a) For example, Cinnabon’s customers in Central and South America prefer dulce de leche.
Products developed in those regions being introduced in the U.S., where the Hispanic
population is a key segment.
b) Starbucks opened an experimental store in Amsterdam that serves as a testing ground for
new design concepts such as locally sourced and recycled building materials.
c) Kraft’s Tang powder became a $1 billion brand as regional managers in Latin American
and the Middle East moved beyond orange (the top-seller) into popular local flavors such
as mango and pineapple. Kraft plans to use these lessons learned on the U.S. market.
Global marketing may include a combination of standard and nonstandard approaches. Global
marketing requires marketers to think and act in a way that is both global and local by
responding to similarities and differences in world markets.
The particular approach to global marketing that a company employs will depend on industry
conditions and its sources of competitive advantage.
For example, McDonald’s global marketing strategy is based on a combination of global and
local marketing mix elements (refer to Table 1-5).
a) For example, Harley-Davidson’s motorcycles are perceived around the world as the All-
American bike. Their competitive advantage is based in part on “Made in the USA.”
Moving production to a low-wage country would tarnish its image.
b) Toyota’s and Honda’s success in the US has come through its ability to transfer world-
class manufacturing skills to the America, Asia, and Europe. Each year Honda exports
tens of thousands of Accords and Civics from U.S. plants to Japan and dozens of other
countries.
c) Uniqlo, a division of Japan’s Fast Retail operates about 850 stores in Japan and 300
stores in 12 overseas countries. Uniqlo currently has 46 stores in the U.S. but plans call
for a total of 200 stores by 2020.
The Importance of Global Marketing
The largest single market in the world in terms of national income is The United States,
representing roughly 25 percent of the total world market for all products and services.
U.S. companies that wish to achieve maximum growth potential must “go global” because 75
percent of the world market potential is outside of their home country.
Non-US companies have an even greater incentive to “go global;” their potential markets include
the 325 million people in the US.

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Management Orientations
 (Learning Objective #5)
The form and substance of a company’s response to global market opportunities will depend
greatly on its management’s assumptions and beliefs – both conscious and unconscious - about
the nature of the world.
The worldview of a company’s personnel can be described as ethnocentric, polycentric,
regiocentric, and geocentric. The orientations are collectively known as the EPRG framework.
Ethnocentric Orientation:
a) A person who assumes that his/her home country is superior to the rest of the world.
b) Associated with national arrogance or feelings of national superiority.
c) At some companies, the ethnocentric orientation means that opportunities outside of the
home country are routinely ignored (domestic companies).
d) Ethnocentric companies that conduct business outside their home country are known as
international companies – they believe products that succeed in the home country are
superior.
e) Leads to a standardized or extension approach – the belief that products can be sold
everywhere without adaptation.
f) Foreign operations or markets are viewed as inferior or subordinate to the home market.
g) Headquarters knowledge is applied everywhere; local knowledge is viewed as
unnecessary.
Polycentric Orientation:
a) The opposite view of ethnocentrism.
b) The belief that each country in which you do business is unique.
c) This assumption allows each subsidiary to develop its own unique marketing strategies so
as to succeed.
d) The term multinational company is often used to describe such a structure.
e) Leads to a localized or adaptation view that assumes products MUST be adapted to
succeed.
Regiocentric Orientation:
a) The region becomes the relevant geographic unit.
b) Management’s goal is to develop a regionally integrated strategy (e.g. NAFTA or the
EU).
c) May be viewed as a variant of the multinational view (polycentric).
Geocentric Orientation:
a) Views the entire world as a potential market and strives to develop integrated global
strategies.
b) These companies are known as global or transnational companies.
c) Serves world markets from a single country or sources globally for the purposes of
focusing on specific country markets.

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d) Tend to maintain their association with a particular headquarters country. (Harley-
Davidson and Waterford serve world markets from the US and Ireland, respectively.)
e) Transnational companies serve global markets and utilize global supply chains.
f) Transnational companies both serve global markets and utilize global supply chains and
often have a blurring of national identity. A true transnational would be stateless. (Toyota
and Honda are examples of companies that exhibit key characteristics of transnationality.
g) A key factor that distinguishes global and transnational companies from international or
multinational companies is mind-set: At global and transnational companies, decisions
regarding extension and adaptation are not based on assumptions but rather on made on
the basis of ongoing research into market needs and wants.
h) It is a synthesis of ethnocentrism and polycentrism – it is a “world view.”
i) Seeks to build a global strategy that is responsive to local needs and wants.
It is a positive sign that, at many companies, management realizes the need to adopt a geocentric
orientation. However, the transition to new structures and organizational forms can take time to
bear fruit.
A global company can be further described as one that pursues either a strategy of serving world
markets from a single country or one that sources globally for the purposes of focusing on
specific country markets. In addition, global companies tend to retain their association with a
particular headquarters country. At global and transnational companies, management uses a
combination of standardized (extension) and localized (adaptation) elements in the marketing
program.
One way to assess a company’s “degree of transnationality” is to compute an average of three
figures: (1) sales outside the home country to total sales, (2) assets outside the home country to
total assets, and (3) employees outside the home country to total employees. Viewed in terms of
these metrics, Nestlé, Unilever, Royal Philips Electronics, GlaxoSmithKline, and the News
Corporation can also be categorized as transnational companies.
Each is headquartered in a relatively small home country market, a fact of life that has compelled
management to adopt regiocentric or geocentric orientations to achieve revenue and profit
growth.
The geocentric orientation represents a synthesis of ethnocentrism and polycentrism; it is a
“worldview” that sees similarities and differences in markets and countries and seeks to create a
global strategy that is fully responsive to local needs and wants.
A regiocentric manager might be said to have a worldview on a regional scale; the world outside
the region of interest will be viewed with an ethnocentric or a polycentric orientation, or a
combination of the two.
However, recent research suggests that many companies are seeking to strengthen their regional
competitiveness rather than moving directly to develop global responses to changes in the
competitive environment

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The ethnocentric company is centralized in its marketing management; the polycentric company
is decentralized; and the regiocentric and geocentric companies are integrated on a regional and
global scale, respectively. A crucial difference between the orientations is the underlying
assumption for each.
The ethnocentric orientation is based on a belief in home-country superiority. The underlying
assumption of the polycentric approach is that there are so many differences in cultural,
economic, and marketing conditions in the world that it is futile to attempt to transfer experience
across national boundaries.
A key challenge facing organizational leaders today is managing a company’s evolution beyond
an ethnocentric, polycentric, or regiocentric orientation to a geocentric one. As noted in one
highly regarded book on global business,
“The multinational solution encounters problems by ignoring a number of organizational
impediments to the implementation of a global strategy and underestimating the impact of global
competition.”
Entrepreneurship Leadership, Creative Thinking, and the Global Startup
Kevin Systrom and Mike Krieger, Instagram
Kevin Systrom and Mike Krieger are entrepreneurs. They developed an innovative product,
created a brand, and cofounded a company to market it. By applying the basic tools and
principles of modern marketing, the two Stanford University graduates have achieved
remarkable success.
As is true with many entrepreneurs, Systrom’s idea was based on his recognition of a problem
that needed to be solved and his own wants and needs. Krieger liked Systrom’s idea but the two
agreed “There has to be a better way.” In October 2010, Systrom and Krieger launched
Instagram on Apple’s App Store. Within two years, the photo-filtering and photo-sharing app
had 30 million users. In 2012, Facebook acquired Instagram for $1 billion. Today, Instagram has
over 600 million users who upload approximately 100 million photographs and videos each day;
only 20 percent of users are in the United States. In 2016, Instagram generated more than $1.5
billion in revenues from mobile ads.
Nearly two-thirds of Instagram users use the app to learn about products and brands.
According to Nielsen, Instagram users spend more time listening to music and are likely to pay
for streaming music services than nonusers. Artists use Stories and Live to announce new
releases and tours, and to provide behind-the-scenes looks at the creative process. Popular posts
can quickly go viral, allowing record companies and the artists themselves to see the impact on
music sales.

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Solution Manual for Global Marketing, 10th Edition

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