Solution Manual for Global Marketing, 8th Edition

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Solution Manual for Global Marketing, 8th Edition is the ultimate guide for understanding and solving textbook problems.

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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 comprise 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 the 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 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 will address
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, market capitalization, 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. The 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, where the marketing mix is adapted
by country managers operating autonomously. Managers at global and transnational
companies are regiocentric or 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, and recognition of opportunities to develop leverage by operating globally.
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 environments of global marketing.
Part 3: Approaching global markets (global strategy)
Part 4: The marketing mix in global marketing.
Part 5: Corporate strategy, leadership, and the impact of the digital revolution on global
marketing.
LEARNING OBJECTIVES
1 Use the product/market growth matrix to explain the various ways a company can expand
globally
2 Describe how companies in global industries pursue competitive advantage
3 Compare and contrast single-country marketing strategy with global marketing strategy (GMS)
4 Identify the companies at the top of the Global 500 rankings

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5 Explain the stages a company goes through as its management orientation evolves from
domestic and ethnocentric to global and geocentric.
6 Discuss the driving and restraining forces affecting global integration today.
DISCUSSION QUESTIONS
1-4. 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.
1-5. 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.
1-6. A company’s global marketing strategy (GMS) is a crucial, competitive tool. Describe
some of the global marketing strategies available to companies. Give examples of companies that
use the different strategies.
This question invites reference to Table 1-2. Strategies include global branding (Coca-
Cola, Marlboro), product design (McDonald’s restaurants and menu items), positioning
(Harley-Davidson), packaging (Gillette Sensor), distribution (Benetton), customer service
(Caterpillar), and sourcing (Toyota, Gap).
1-7. 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 Angela Ahrendts recently
unveiled a new strategy that includes all the elements of the marketing mix. Their strategy also
addresses key markets that Burberry will participate in, as well as the integration and
coordination of marketing activities. Search for recent articles about Burberry and write a brief
summary that outlines Burberry’s GMS.
Student answers will vary, but all should contain the facts that the new CEO intends to
broaden the brand’s appeal and introduce two new logos.

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1-8. 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.
1-9. Describe the difference 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.
1-10. 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 1-2. 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.
1-11. Define leverage and explain the different types of leverage utilized by companies with
global operations.

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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.
1-12. Each July, Fortune publishes its Global 500 listing of the world’s largest companies.
You can find the current rankings online at: http://money.cnn.com/magazines/fortune/
global500/2012/full list. Alternatively, you can consult the print edition of Fortune.
Browse through the list and choose any company that interests you. Compare its 2012
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.
1-13. 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. Now, Google owns Motorola Mobility. Also, Starbucks CEO Howard
Shultz recently 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 5)
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 barista can scan.
Market development: Starbucks is entering India via an alliance with the Tata Group.
Phase one calls for sourcing coffee beans in India and marketing them at Starbucks
stores throughout the world. The next phase will likely involve opening Starbucks
outlets in Tata’s upscale Taj hotels in India.
Product development: Starbucks created a brand of instant coffee, 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.
Diversification: Starbucks has launched several new ventures, including music CDs
and movie production. Next up: Revamping stores so they can serve as wine bars and
attract new customers in the evening.

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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. He or she 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) comprises 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 central to this 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 or lower the price. 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
Competitive Advantage, Globalization, and Global Industries

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✓ (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.
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)

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The way a company addresses this task is a reflection 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 1-2).
The Cultural Commentary from Great Britain
Tells the story about how the rock band the Kinks were a hit in the US and other western
countries in the 60’s due to their globalization of their music and the story of Ford’s plant in
England now accounting for 25% of the company’s engine manufacturing.
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.
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.
Global marketing does mean widening business horizons to encompass the world in scanning for
opportunities and threats.
The four emerging markets of Brazil, Russia, India, and China represent significant growth
opportunities. They are known as BRIC. 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. 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:

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Promotion: Roll out new logo to reduce “plaid overexposure.” Use social media such as Twitter
and www.artofthetrench.com.
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) “homogenized global market.” 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.
Coca-Cola succeeded through the application of global localization. What does the term “global
localization” really mean? Global localization: Think globally, act locally (refer to Table 1-3).
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 (refer to Exhibit 1-4).
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 1-4).
a) For example, Harley-Davidson’s 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 America and advertising that the Camry is “Made in the
USA” by Americans.

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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 6 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 300 million people in the US.
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 world view 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 in

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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 select country markets.
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
(see Exhibit 1-7)
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 select
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.

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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
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.”
Innovation, Entrepreneurship, and the Global Startup
Kevin Plank, Under Armour
In less than 20 years Under Armour is on track to reach $ 1.5 billion in sales. Under Armour is
intent on building their brand into “the biggest brand in the land”. In 2012, only 6 percent of
Under Armour’s revenues were generated outside of North America. Some industry observers
think Under Armour is planning significant global product introductions times to coincide with
the 2016 Summer Olympic Games in Brazil.
Forces Affecting Global Integration and Global Marketing
✓ (Learning Objective #6)

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The remarkable growth of the global economy over the past 65 years has been shaped by the
dynamic interplay of various driving and restraining forces. Regional economic agreements,
converging market needs and wants, technology advances, and pressures to cut costs, pressures
to improve quality, improvements in communications and transportation technology, global
economic growth, and opportunities for leverage all represent important driving forces.
Converging Market Needs and Wants and the Information Revolution
A person studying markets around the world will discover cultural universals as well as
differences. The common elements in human nature provide an underlying basis for the
opportunity to create and serve global markets. Most global markets do not exist in nature –
marketing efforts must create them. (For example, no one needs soft drinks.)
Evidence is mounting that consumer needs and wants around the world are converging today as
never before. This creates an opportunity for global marketing.
Multinational companies pursuing a strategy of product adaptation run the risk of falling victim
to global competitors that have recognized opportunities to serve global customers.
The information revolution — what some refer to as the “democratization of information” — is
one reason for the trend toward convergence. Thanks to satellite dishes and globe-spanning TV
networks (CNN and MTV), it seems as though almost everyone has the opportunity to compare
their lives against everyone else’s.
The Internet is an even stronger driving force. When a company establishes a presence on the
Internet, it is automatically a global company.
Transportation and Communication Improvements
Time and cost barriers associated with distance have fallen tremendously over the past 100 years.
The jet airplane revolutionized communication by making it possible for people to travel around
the world in less than 48 hours.
In 1970, 75 million passengers traveled internationally. By 2011, that figure rose to almost 980
million.
The newest communication technologies, such as e-mail, video teleconferencing, and Wi-Fi,
mean that managers, executives, and customers can link up electronically from virtually any part
of the globe without traveling at all.
A similar revolution is occurring in transportation technology. The costs associated with physical
distribution – in both money and time – have been greatly reduced.
Product Development Costs

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The pressure for globalization is intense when new products require major investment and long
periods of development time. The pharmaceutical industry provides a good example of this
driving force.
Today, the process of developing a new drug and bringing it to market can span 14 years and
exceed $400 million. Such cost must be recovered globally because no single national market is
likely to be large enough to support investments of this size. (Refer to Table 1- 15).
Quality
Global companies “raise the bar” for all competitors in an industry. When a global company
establishes a benchmark for quality, competitors must quickly make their own improvement and
come up to par. Global marketing strategies can generate greater revenue and greater operating
margins, which, in turn, support design and manufacturing quality.
World Economic Trends
Prior to the global economic crisis that began in 2008, economic growth had been a driving force
in the expansion of the international economy and the growth of global marketing for three
reasons:
a) Economic growth in key developing countries has created market opportunities that
provide a major incentive for companies to expand globally.
b) Economic growth has reduced resistance that might otherwise have developed in
response to the entry of foreign firms into domestic economies. (When a country such as
China experiences rapid economic growth, policy makers are more likely to look
favorably on outsiders.)
c) The worldwide movement toward free markets, deregulation, and privatization is the
third driving force. (Telephone company privatization is an example.)
Leverage
A global company possesses the unique opportunity to develop leverage. In the context of global
marketing, leverage means some type of advantage that a company enjoys by virtue of the fact
that it has experience in more than one country.
Leverage allows a company to conserve resources when pursuing opportunities in new
geographical markets.
Four important types of leverage exist:
1) Experience Transfers – A global company can leverage its experience in any
market in the world by drawing on management practices, strategies, products,

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advertising appeals, or sales or promotional ideas that have been market-tested in
one country and applied to another.
2) Scale Economies – The global company can take advantage of its greater
manufacturing volume to obtain traditional scale advantages. Finished products
can be manufactured by combining components manufactured in scale-efficient
plants in different countries.
3) Resource Utilization – A global company has the ability to scan the entire world
to identify people, money, and raw materials that will enable it to compete most
effectively in world markets.
4) Global Strategy – The global company’s greatest advantage is its global strategy.
A global strategy is built on an information system that scans the world business
environment to identify opportunities, trends, threats, and resources. A global
strategy is a design to create a winning strategy on a global scale. Note: A global
strategy is NO guarantee of ongoing organizational success. (Consider InBev’s
acquisition of Anheuser-Bush, Daimler-Chrysler, and Deutsche Post’s DHL unit.)
Restraining Factors
Despite the impact of the driving forces previously discussed, several restraining forces may
slow a company’s efforts to engage in global marketing. Luckily, in today’s world the driving
forces predominate over the restraining forces. That is why the importance of global marketing is
steadily growing.
Important restraining forces include:
a) Management Myopia and Organizational Culture – Management may simply ignore
opportunities to pursue global marketing. A company that is ethnocentric (or
“nearsighted”) will not expand geographically. Myopia is a recipe for market disaster if
headquarters attempts to dictate when it should listen. Successful global marketing
requires a strong local team “on the ground” to provide information about local markets.
b) National Controls – Every country protects the commercial interests of local businesses
by maintaining control over market access and entry in both low- and high-tech
industries. Today, tariff barriers have been largely removed in high-income countries.
Still, nontariff barriers (NTBs), such as “Buy American” campaigns, make it difficult for
companies to gain access to local markets.
c) Opposition to Globalization – To many people, globalization represents a threat.
Globaphobia is used to describe an attitude of hostility toward trade agreements or global
brands. Opponents of globalization include labor unions, university students and
nongovernmental organizations (NGOs).
CASES
Case 1-1: The Global Marketplace: The Assignment

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Answers given in the text book.
Case 1-1 Discussion Questions
1-14. Anheuser-Busch, which has been described as “an American icon,” is now under the
ownership of a company based in Belgium. Responding to reports that some consumers planned
to boycott Bud products to protest the deal, one industry observer said, “Brand nationality is all
about where it was born, and also the ingredients of that beer and how they make the beer:
Basically, it doesn’t matter who owns it. We are in a global world right now”. Do you agree?
Students answers will vary based on their agreement or disagreement with this statement.
Good students will introduce key words like ethnocentric, polycentric, regiocentric, and
geocentric in their answers to describe their view of the manufacturer of beer and how
they “feel” about the national origin(s) of and about the beer they drink.
1-15. Anheuser-Busch, (A-B) has long enjoyed a reputation as a very desirable place to work.
Executives were awarded well-appointed corporate suites and traveled on corporate jets; many
had secretaries as well as executive assistants. When managers took commercial flights, they
flew first class. Most employees received beer for free and could count on donations of beer and
merchandise for community events. Tickets to Cardinal home games were also used as a
marketing tool. A-B spent heavily on advertising and promotion; various advertising agencies
produced about 100 new ads for A-B each year. Given these facts, what changes, if any, would
you expect A-B’s new owners to make? Why?
Student answers should explain the differences in / among / between the different
management orientations and compare and contrast the ethnocentric orientation of A-B
beverage company versus their new Belgium owners. One could argue that A-B InBev,
the new owners of A-B practice a polycentric orientation towards selling beer around the
world. In that case, the marketing sales and promotional practices previously enjoyed by
A-B most likely will continue. However, the executive “perks” will most likely decrease.

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1-16. In 2009, Italy’s Fiat acquired a 20 percent stake in Chrysler, another iconic American
company. Are you familiar with Fiat? What do you think CEO Sergio Marchionne hope to
accomplish with this deal? How might Chrysler benefit from the alliance?
CEO Sergio Marchionne hopes to turn Fiat into a transnational company serving global
markets and utilizing global supply chains. His strategy might be to turn Fiat into a
geocentric company. Chrysler might benefit from the alliance by becoming a “global”
brand instead of just an “American icon.”
1-17. Ben & Jerry’s Homemade is a quirky ice cream marketer based in Burlington, Vermont.
Founders Ben Cohen and Jerry Greenfield are legendary for enlightened business practices that
include a three-part mission statement: product mission, financial mission, and social mission.
When the company was acquired by consumer products giant Unilever, some of the brand’s
loyal customers were alarmed. What do you think was the source of their concern?
The form and substance of a company’s response to global market opportunities depends
greatly on the management’s assumption or beliefs. In this case, Ben & Jerry consumers
were afraid that Unilever’s management orientation would be different from the original
owners views—either ethnocentric, polycentric, or regiocentric.
Case 1-2: McDonald’s Expands Globally While Adjusting Its Local Recipe
Overview: Today, McDonald’s golden arches are one of the most recognized symbols in the
world, just behind the Olympic rings. While growth within the U.S. has slowed, the picture
outside the U.S. has appeared brighter, until recently. However, globally, taste profiles and
consumer desires are changing. McDonald’s has responded to these changes by altering their
basic products (when necessary) to fit the requirements of the local markets. While not always
successful, it has proven to be a winning strategy.
1-18. Identify the key elements in McDonald’s global marketing strategy (GMS). In particular,
how does McDonald’s approach the issue of standardization? Does McDonald’s think global and
act local? Does it also think local and act global?
The popularity of American-style hamburgers, fries, and soft drinks is growing around
the world, supporting Levitt’s view of the global village. Also, the restaurants themselves
offer the consumers a chance to experience for themselves a fast food legend. However,
students should point out that, in many locations, menu items are adapted according to
the customs and tastes of individual countries. McDonald’s offers an ideal example of
“global localization.”
With McDonald’s offering of local tastes and a combination of American fare,
McDonald’s thinks globally (product adaption) and acts globally (standardization).
1-19. Do you think government officials in developing countries such as Russia, China, and
India welcome McDonald’s? Do consumers in these countries welcome McDonald’s? Why or
why not?

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Despite concerns by governments and citizens in some countries about “cultural
imperialism,” McDonald’s and other franchises with well-known brand names are
generally welcome. Such businesses provide both much-needed jobs and employee
training.
McDonald’s does a good job of earning the support of local authorities and the local
population by working with agricultural producers to develop local supply sources for
beef, potatoes, and dairy products. Finally, thanks to changing lifestyles around the globe,
more people are embracing the whole concept of fast food.
1-20. The “Plan to Win” initiative is built around five factors that drive McDonald’s business:
people, products, place, price, and promotion. As a student of marketing what can you say about
these factors?
These five factors closely mirror the four P’s of marketing: product, price, promotion,
and place. For a service marketer: people and physical evidence are also added to the
mix. For McDonald’s people and physical evidence are also important P’s of marketing.
1-21. Is it realistic to expect that McDonald’s – or any well-known company – can expand
globally without occasionally making mistakes or generating controversy? Why do anti-
globalization protesters around the world frequently target McDonald’s?
McDonald’s has a reputation for being sensitive to local issues and mentalities.
According to the staff director for international human resources in Central Europe, “One
of our guiding principles is that our restaurants should always be a reflection of the
communities they serve.” Mistakes such as the one in France represent exceptions that
can serve as learning experiences. Still, each new nation has the potential to present
unique problems. In Israel, for example, McDonald’s must deal diplomatically and
appropriately with dietary laws pertaining to kosher foods and operating restaurants on
the Sabbath (Friday and Saturday).
Another issue is to maintain the service attitude that was a cornerstone of McDonald’s
U.S. reputation. A German student noted that in Germany, good service is not associated
with McDonald’s because counter-help consists of immigrants who do not exhibit the
cheerful demeanor of their U.S. counterparts.
CASE 1-3: Apple versus Samsung: The Battle for Smartphone Supremacy Heats Up
Overview: Apple’s reputation was based on its proven ability to disrupt existing markets and
create new markets with technical and design innovations. In some circles the launch of the
iPhone 5 was viewed as an evolution, rather than a revolution. Samsung makes several versions
of their Galaxy S 4 to suit the needs of different markets, Apple does not. In India, the number
three smart-phone market, Apple lags far behind Samsung, offering an Android phone for about
$ 100. Indian consumers pay $ 500 for an iPhone 4 and about $ 850 for the iPhone 5.

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1-22. Do you own a smartphone? If so, which brand did you buy, and why?
Student answers will vary based on which phone they own.
1-23. Should Apple introduce a lower-cost iPhone to attract consumers who are not willing or
able to pay a premium for an Apple device?
If Apple wants to stay in the smart-phone market, they will need to introduce a lower-cost
option. Samsung’s success has proved that in the emerging country markets, this is
necessary to compete.
1-24. Do you think Apple can continue to grow by developing break-through products that create
new markets, as it did with the iPod, iPhone, and iPad?
Apple needs to embrace the concept of formal market research. Steve Jobs downplayed
the importance of this concept saying that consumers don’t know what they want.
Samsung Electronics on the other hand, relies heavily on market research. 60,000 staff
members work in dozens of research centers in China, Great Britain, India, Japan, the
United States, and elsewhere. Samsung designers have backgrounds in such diverse
disciplines as psychology, sociology, and engineering.
1-25. How has Samsung’s global marketing strategy enabled it to compete so effectively against
Apple?
In many developing countries, there is a strong demand for inexpensive mobile phones.
Some Android-based models from Android models from Samsung sell for much less than
the iPhone 5. Apple does not offer a lower-cost version of the iPhone. Samsung has
done their research and found the unsatisfied needs of the consumers.
TEACHING TOOLS AND EXERCISES
Additional Cases:
"GENICON: A Surgical Strike into Emerging Markets" by Allen H. Kupetz; Adam P. Tindall;
Gary Haberland. June 2010, HBS: 910M41-PDF-ENG.
"Market Stretch" by Gavin Price and Margaret Sutherland. June 2009. HBS: 909M46-PDF-
ENG.
“Global Brand Face-Off”, HBR Case Study and Commentary RO 306A. Anand P. Raman, Peter
M. Thompson, Jennifer L. Aaker; Harish Manwani; Simon Clift; Masaaki Mike Kotabe.

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“Mary Kay Inc: Asian Market Entry (B)”, John A. Quelch. HBS 509067.
Video: This article is from Management International Review, March 2011. It is titled “Effective
Global Strategy Implementation: Structural and Process Choices Facilitating Global Integration
and Coordination.”
The abstract states that this article offers “a contingency framework of global strategy
implementation effectiveness on firm performance. The research question we seek to address is
what the structural and process requirements are for MNEs to successfully implement global
strategy through increased efficiency and effectiveness of integration and coordination across
world markets. Our central premise is that MNEs' capabilities in establishing supporting
structural and process mechanisms will enhance the effectiveness and efficiency of
implementing their global strategies which would, in turn, lead to better firm performance.”
Link: http://www.freepatentsonline.com/article/Management-International-
Review/256930786.html and here is a different link to the PDF of this document:
http://www.springerlink.com/content/12181r4440117312/
This next video is just a quick two-minute video showing Pepsi’s marketing throughout the
world, and how they differentiate packaging and advertising to adapt to the region in which they
are marketing. It provides a good example to show how companies cater their products to
different regions.
Link: http://www.youtube.com/watch?v=9q6onCYu0DA
Film: Assign “The Gods Must Be Crazy.” This classic, humor-filled movie examines the life of
a bushman unaware of white culture who finds a Coca-Cola bottle in the Kalahari (dropped by a
passing pilot) and promptly has his life turned around by this mystical object. It shows how our
simplest acts can have far-reaching impacts. This is a great introduction to global awareness.
Out-of-Class Reading: Zou, Shaoming and S. Tamer Cavusgil, “The GMS: A Broad
Conceptualization of Global Marketing Strategy and Its Effect on Performance.” Journal of
Marketing 66 (October 2002) pp. 40-56.
Internet Exercise: Fortune magazine profiled the world’s richest man
(http://money.cnn.com/2007/08/03/news/international/carlosslim.fortune/). Have students read
and summarize this piece and use this as the basis for an in

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For example, students can choose to market an automobile from the United States into a foreign
country or can choose to market an automobile into the United States that is not currently
available here.
At the Instructors discretion, this project can be spread over the entire semester or used as a “take
home” final exam, collected in sections as the material is covered in class or any combination
deemed.
Foreign students are especially encouraged to find products / services that they’ve been
accustomed to or enjoyed (a favorite type of food product) here in the United States and wish to
“export” to their home country.
Cultural Analysis: The data suggested in the cultural analysis includes information that helps the
marketer make market-planning decisions. However, its application extends beyond product and
market analysis to being an important source of information for someone interested in
understanding business customs and other important cultural features of the country. This
cultural analysis is composed of two parts: information on the cultural makeup of the country
and the economic analysis of the country.
The information in this analysis must be more than a collection of facts. In preparing this
material, you should attempt to interpret the meaning of cultural information. With that said,
your country analysis should contain at least one paragraph on each of the following areas:
Per the instructor’s discretion, this section could be collected either before or after Part 2 of the
text has been discussed in class (Part 2 is chapters 2, 3, 4, and 5).
PART I: Introduction to the Culture of the Country
I. Include short profiles of the company, the product to be exported and the country with
which you wish to trade.
II. Brief discussion of the country’s relevant history
III. Geographical setting

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ii) Typical size of retail outlets
iii) Customary markup for various classes of goods
iv) Methods of operation (cash/credit)
v) Scale of operation (large/small)
vi) Role of chain stores, department stores specialty shops
b) Wholesale middlemen
i) number and size
ii) Customary markup for various classes of goods
iii) Method of operation (cash/credit)
c) Import/Export agents
d) Warehousing
e) Penetration of urban and rural markets
VI. Media

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governmental, and economic parameters affecting market planning are in a constant state of flux.
These variations require international marketing executives to be specially flexible and creative
in their approach to strategic marketing planning.
PART III: Market Audit and Competitive Market Analysis
Of the guidelines presented, this is the most product or brand specific. Information in the other
guidelines is general in nature, focusing on product categories, whereas data in this guideline are
brand specific and are used to determine competitive market conditions and market potential.
Two different components of the planning process are reflected in this guideline. Information in
Parts I and II, Cultural Analysis and Economic Analysis, serve as the basis for an evaluation of
the product or brand in a specific country market.
Information in this guideline provides an estimate of market potential and an evaluation of the
strengths and weaknesses of competitive marketing efforts. The data generated in this step are
used to determine the extent of adaptation of the company’s marketing mix necessary for
successful market entry and to develop the final step, the action plan.
The detailed information needed to complete this guideline is not necessarily available without
conducting a thorough marketing research investigation. Thus another purpose of this part of the
country notebook is to identify the correct questions to ask in a formal market study.
Write at least one (1) paragraph on each in each of these areas.
I. Introduction
II. The Product
A. Evaluate the product as an innovation as it is perceive by the intended market.
1. Relative advantage
2. Compatibility
3.

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c. Shopping habits
4. Distribution of the product
a. typical retail outlets
b. Product sales by other middlemen
5. Advertising and promotion
a. Advertising media usually used to reach your target market(s)
b. Sales promotions customarily used (sampling, coupons, etc.)
6. Pricing strategy
a. Customary markup
b. Types of discounts available
B. Compare and contrast your product and the competition’s product(s).
1. Competitor’s product(s)
a. Brand name
b. Features
c. Package
2. Competitor’s prices
3. Competitor’s promotion and advertising methods

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Bartlett, Christopher A., Sumantra Ghoshal, and Paul W. Beamish. Transnational Management,
5th edition. New York: McGraw-Hill/Irwin, 2006.
Bryan, Lowell. Race for the World: Strategies to Build a Great Global Firm. Boston: Harvard
Business School Press, 1999.
Doremus, Paul. The Myth of the Global Corporation. Princeton, NJ: Princeton University Press,
1998.
Friedman, Thomas L. The World Is Flat 3.0: A Brief History of the Twenty-First Century, New
York, Picador 2005.
Friedman, Thomas L. The Lexus and the Olive Tree. New York: Anchor Books, 2000.
Garten, Jeffrey. World View: Global Strategies for the New Economy. Cambridge, MA: Harvard
University Press, 2000.
Greider, William. One World, Ready or Not: The Manic Logic of Global Capitalism. New York:
Simon & Schuster, 1997.
Johnson, Chalmers. Japan, Who Governs? The Rise of the Developmental State. New York: W.
W. Norton, 1995.

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