SET 1.

SUB CODE. MK 0009

SUBJECT. International
Marketing

CENTER CODE. 01561

NAME. PATIL YOGENDRA

ASHOK

ROLL NO. 520837702

CLASS. MBA 4th Sem

( Marketing-

Weekend)

DATE. 6.05.10
 SIGN

Q.1 The marketer’s task is the same, whether applied in

Bangalore, India, or Beijing, China. Do you agree or
disagree with this statement?

Ans.:
International Marketing Task
The task of the international marketer is more complicated since he has to
deal with two levels of uncertainties instead of one. Such uncertainty is
created due to uncontrollable factors and each foreign country in which
the company operates adds its own unique set of uncontrollable factors.
Assuming the necessary overall corporate resources, the marketing
manager decides on price, product, promotion and channels of
distribution activities to capitalize on the anticipated demand. These
controllable elements can be altered in the long run and also usually in
the short term, to adjust to changing market conditions, consumer
preferences and corporate objectives. The uncontrollable factors are as
under:

Domestic uncontrollable factors:

These include home country elements which can directly affect the
success of a foreign venture and these factors are out of immediate
control of the marketer. These factors are as under:
 Political decisions involving domestic foreign policy: Examples are
that of US restrictions of trade with countries like Libya, Iraq and South
Africa, due to so called support to terrorists in Libya and Iraq and due
to apartheid policies in South Africa. When South Africa abolished
apartheid, many US companies had a positive effect and opportunities
were created for US companies
 Domestic economic climate: This has far reaching effects on
competitive position in foreign markets. The capacity to invest in
plants and facilities are directly affected with this variable, which could
in turn create a positive or negative effect on foreign trade.
 Currency value: This gives the price advantage or disadvantage to
marketers depending on the exchange value and this is another
influence the home environment economy has on the marketer’s task.
 Competition within home country: This can also have a profound
effect upon the international marketer’s task. Competition within their
home country affects the company’s domestic as well as international
plans.

Foreign Uncontrollable Factors:

A significant source of uncertainty is the number of uncontrollable
elements in the foreign country. Some of these factors are as under:
 Political/Legal forces: One example is that of China which has
moved from a communist legal system in which all business was done
with the State, to a commercial legal system. Another example is that
of the Indian Government, which in 1977 gave Coca Cola the choice of
either revealing its secret formula or leaving the country.
 Economic forces: The local economic forces in the foreign country
may have strong influence on the currency value and repatriation.
 Competitive forces: The nature of competition may vary from
country to country and will have different responses, depending on
deep rooted cultural factors to competition in terms of price,
distribution, advertising and sales promotion.
 Level of Technology: There are vast differences that may exist
between developed and underdeveloped countries. Technical expertise
may not be available at a level necessary for product support and for
maintenance.
 Structure of Distribution: The channels of distribution vary from
country to country and there could even be state controls on
distribution in some countries.
 Geography and infrastructure: The transportation and physical
distribution depends on these factors and this will also be different in
different countries.
 Cultural forces: Each country’s culture is different and this could
affect all the marketing variables like product design, brand name,
logo, advertising campaigns, sales promotions, pricing policies, price
negotiations, distribution networks and strategies, etc.
Q.2 What are the main features of the WTO? How is it an
improvement over the GATT?

Ans.:
WTO
The World Trade Organization (WTO) is an international organization
designed to supervise and liberalize international trade. The WTO came
into being on January 1, 1995, and is the successor to the General
Agreement on Tariffs and Trade (GATT), which was created in 1948, and
continued to operate for almost five decades as a de facto international
organization.

The World Trade Organization deals with the rules of trade between
nations at a near-global level; it is responsible for negotiating and
implementing new trade agreements, and is in charge of policing member
countries’ adherence to all the WTO agreements, signed by the bulk of the
world’s trading nations and ratified in their parliaments. Most of the WTO’s
current work comes from the 1986-94 negotiations called the Uruguay
Round, and earlier negotiations under the GATT. The organization is
currently the host to new negotiations, under the Doha Development
Agenda (DDA) launched in 2001.

The WTO is governed by a Ministerial Conference, which meets every two

years; a General Council, which implements the conference’s policy
decisions and is responsible for day-to-day administration; and a director-
general, who is appointed by the Ministerial Conference. The WTO’s
headquarters are in Geneva, Switzerland.

The WTO’s stated goal is to improve the welfare of the peoples of its
member countries, specifically by lowering trade barriers and providing a
platform for negotiation of trade. Its main mission is "to ensure that trade
flows as smoothly, predictably and freely as possible". This main mission
is further specified in certain core functions serving and safeguarding five
fundamental principles, which are the foundation of the multilateral
trading system.

Functions of WTO
Among the various functions of the WTO, these are regarded by analysts
as the most important:
 It facilitates the implementation, administration and operation of the
objectives of the Agreement and of the Multilateral Trade Agreements.
 It provides the framework for the implementation, administration
and operation of the Plurilateral Trade Agreements relating to trade in
civil aircraft, government procurement, trade in diary products and
bovine meat.
 It provides the forum for negotiations among its members
concerning their multilateral trade relations in matters relating to the
agreements and a framework for the implementation of the result of
such negotiations, as decided by the Ministerial Conference.
 It administers the Understanding on Rules and Procedures
governing the Settlement of Disputes of the Agreement.
 It cooperates with the IMF and the World Bank and its affiliated
agencies with a view to achieving greater coherence in global
economic policy-making.

Additionally, it is the WTO’s duty to review the national trade policies, and
to ensure the coherence and transparency of trade policies through
surveillance in global economic policy-making. Another priority of the WTO
is the assistance of developing, least-developed and low-income countries
in transition to adjust to WTO rules and disciplines through technical
cooperation and training. The WTO is also a center of economic research
and analysis: regular assessments of the global trade picture in its annual
publications and research reports on specific topics are produced by the
organization. Finally, the WTO cooperates closely with the two other
components of the Bretton Woods system, the IMF and the World Bank.

GATT:
The General Agreement on Tariffs and Trade (typically abbreviated GATT)
was the outcome of the failure of negotiating governments to create the
International Trade Organization (ITO). The Bretton Woods Conference
had introduced the idea for an organization to regulate trade as part of a
larger plan for economic recovery after World War II. As governments
negotiated the ITO, 15 negotiating states began parallel negotiations for
the GATT as a way to attain early tariff reductions. Once the ITO failed in
1950, only the GATT agreement was left. The GATT’s main objective was
the reduction of barriers to international trade. This was achieved through
the reduction of tariff barriers, quantitative restrictions and subsidies on
trade through a series of agreements. The GATT was a treaty, not an
organization. The functions of the GATT were taken over by the World
Trade Organization which was established during the final round of
negotiations in the early 1990s.
The history of the GATT can be divided into three phases: the first, from
1947 until the Torquay Round, largely concerned with which commodities
would be covered by the agreement and freezing existing tariff levels. A
second phase, encompassing three rounds, from 1959 to 1979, focused
on reducing tariffs. The third phase, consisting only of the Uruguay Round
from 1986 to 1994, extended the agreement fully to new areas such as
intellectual property, services, capital, and agriculture. Out of this round
the WTO was born.
In 1993 the GATT was updated (GATT 1994) to include new obligations
upon its signatories. One of the most significant changes was the creation
of the World Trade Organization (WTO). The 75 existing GATT members
and the European Communities became the founding members of the
WTO on January 1, 1995. The other 52 GATT members rejoined the WTO
in the following two years (the last being Congo in 1997). Since the
founding of the WTO, 21 new non-GATT members have joined and 29 are
currently negotiating membership. As of October 2007, there were a total
of 151 member countries in the WTO.
Of the original GATT members, only the SFR Yugoslavia has not rejoined
the WTO. Since FR Yugoslavia, (renamed to Serbia and Montenegro and
with membership negotiations later split in two), is not recognized as a
direct SFRY successor state; therefore, its application is considered a new
(non-GATT) one. The contracting parties who founded the WTO ended
official agreement of the "GATT 1947" terms on December 31, 1995.

Whereas GATT was a set of rules agreed upon by nations, the WTO is an
institutional body. The WTO expanded its scope from traded goods to
trade within the service sector and intellectual property rights. Although it
was designed to serve multilateral agreements, during several rounds of
GATT negotiations (particularly the Tokyo Round) plurilateral agreements
created selective trading and caused fragmentation among members.
WTO arrangements are generally a multilateral agreement settlement
mechanism of GATT.
Q.3 Which aspects of the cultural environment would
have to be considered by an international marketer
entering the Indian market for the first time?

Ans.:
Following aspects of the cultural environment would have to be
considered by an international marketer entering the Indian market for
the first time

 Material culture:
Material culture is divided into two parts, technology and economics.
Technology includes the techniques used in the creation of material
goods; it is the technical know-how possessed by the people of a society.
For example, the vast majority of U.S. citizens understand the simple
concepts involved in reading gauges, but in many countries of the world
this seemingly simple concept is not part of their common culture and is,
therefore, a major technical limitation.
Economics is the manner in which people employ their capabilities and
the resulting benefits. Included in the subject of economics is the
production of goods and services, their distribution, consumption, means
of exchange, and the income derived from the creation of utilities.

Material culture affects the level of demand, the quality and types of
products demanded, and their functional features, as well as the means of
production of these goods and their distribution. The marketing
implications of the material culture of a country are many

 Language:
Carelessly translated advertising statements not only lose their intended
meaning but can suggest something very different, obscene, offensive, or
just plain ridiculous.

Language may be one of the most difficult cultural elements to master,

but it is the most important to study in an effort to acquire some degree
of empathy. Many believe that to appreciate the true meaning of a
language, it is necessary to live with the language for years. Whether or
not this is the case, foreign marketers should never take it for granted
that they are communicating effectively in another language. Until a
marketer can master the vernacular, the aid of a national within the
foreign country should be enlisted; even then, the problem of effective
communications may still exist. One authority suggests that we look for a
cultural translator, that is, a person who translates not only among
languages, but also among different ways of thinking and among different
cultures.

 Aesthetics:
Closely interwoven with the effect of people and the universe on a culture
are its aesthetics, that is, its arts, folklore, music, drama, and dance.
Aesthetics are of particular interest to the marketer, because of their role
in interpreting the symbolic meanings of various methods of artistic
expression, color, and standards of beauty in each culture. Customers
everywhere respond to images, myths, and metaphors that help them
define their personal and national identities and relationships within a
context of culture and product benefits. The uniqueness of a culture can
be spotted quickly in symbols having distinct meanings.

Without a culturally correct interpretation of a country’s aesthetic values,

a whole host of marketing problems can arise. Product styling must be
aesthetically pleasing to be successful, as must advertisements and
package designs. Insensitivity to aesthetic values can offend, create a
negative impression, and, in general, render marketing efforts ineffective.
Strong symbolic meanings may be overlooked if one is not familiar with a
culture’s aesthetic values. The Japanese, for example, revere the crane as
being very lucky, for it is said to live a thousand years. However, the use
of the number four should be avoided completely, because the word four,
shi, is also the Japanese word for death.
  Education:
Education refers to the transmission of skills, ideas and attitudes as well
as training in particular disciplines. Education can transmit cultural ideas
or be used for change, for example the local university can build up an
economy’s performance.

Education affects all aspects of the culture from economic development to

consumer behavior. The literacy rate of a country is a potent force in
economic development. Numerous studies indicate a direct link between
the literacy rate of a country and its ability for rapid economic growth.
According to the World Bank, no country has been successful
economically with less than 50 percent literacy, but when countries have
invested in education, the economic rewards have been substantial.
Literacy has a profound affect on marketing. It is much easier to
communicate with a literate market than to one where the marketer has
to depend on symbols and pictures to communicate. Each of the social
institutions has an effect on marketing because each influences behavior,
values and the overall patterns of life. The UN agency UNESCO gathers
data on education information. For example it shows in Ethiopia only 12%
of the viable age group enroll at secondary school, but the figure is 97% in
the USA.
Education levels, or lack of it, affect marketers in a number of ways:
 Advertising programs and labelling
 Girls and women excluded from formal education (literacy rates)
 Conducting market research
 Complex products with instructions
 Relations with distributors and,
 Support sources – finance, advancing agencies etc.

 Religion:
Within this category are religion (belief systems), superstitions, and their
related power structures. The impact of religion on the value systems of a
society and the effect of value systems on marketing must not be
underestimated. Religion impacts people’s habits, their outlook on life, the
products they buy, the way they buy them, even the newspapers they
read.

Religion provides the best insight into a society’s behavior and helps
answer the question why people behave, rather than how they behave.

Religion can affect marketing in a number of ways:

 Religious holidays – Ramadan cannot get access to consumers as
shops are closed.
 Consumption patterns – fish for Catholics on Friday
 Economic role of women – Islam
  Caste systems – difficulty in getting to different costs for
segmentation/niche marketing
 Joint and extended families – Hinduism and organizational
structures;
 Institution of the church – Iran and its effect on advertising,
"Western" images
 Market segments – Malaysia – Malay, Chinese and Indian cultures
making market segmentation

Sensitivity is needed to be alert to religious differences.

Superstition plays a much larger role in a society’s belief system in some
parts of the world than it does in the United States. What an American
might consider as mere superstition can be a critical aspect of a belief
system in another culture

Values often have a religious foundation, and attitudes relate to economic

activities. It is essential to ascertain attitudes towards marketing activities
which lead to wealth or material gain, for example, in Buddhist society
these may not be relevant.
Also "change" may not be needed, or even wanted, and it may be better
to relate products to traditional values rather than just new ones. Many
African societies are risk averse; therefore, entrepreneurialism may not
always be relevant. Attitudes are always precursors of human behavior
and so it is essential that research is done carefully on these.

 Social institutions:
Social Institutions include social organization, education, and political
structures that are concerned with the ways in which people relate to one
another, organize their activities to live in harmony with one another,
teach acceptable behavior to succeeding generations, and govern
themselves. The positions of men and women in society, the family, social
classes, group behavior, age groups and how societies define decency and
civility are interpreted differently within every culture. In cultures where
the social organizations result in close-knit family units, for example, it is
more effective to aim a promotion campaign at the family unit than at
individual family members. Travel advertising in culturally divided Canada
pictures a wife alone for the English audience, but a man and wife
together for the French segments of the population, because the French
are traditionally more closely bound by family ties.