Review and Applications
2.1 – Rubbermaid, the U.S. manufacturer of kitchen products and other household items, is considering moving to global marketing standardization. What are the pros and cons of this strategy?
Pros – Some consumers from different countries might have seen the Rubbermaid products and they would like to try them out as they had seen them in the U.S. Some countries look at the U.S. as a leader and try to follow the things we do and the products we use. This would be an example of a different country wanting to use the same product as the U.S. Some other countries may use the same products that Rubbermaid sells in the U.S. and they would be able to get them at a cheaper price if Rubbermaid sold the products in their country. It would also be beneficial to Rubbermaid because they could possibly save on production and marketing costs. Rubbermaid may also carry products, in which there are no similar products that can’t be found in other countries.
Cons – Other countries might not use the same products Rubbermaid sells, which would not help Rubbermaid’s profit in that new country. Rubbermaid might have to modify the products for different countries and that could cost more than it’s worth. The countries Rubbermaid is planning to sell in may have a market that has many similar products causing Rubbermaid to not gain much market share.
4.2 Explain how the U.S. Commercial Service can help companies wanting to enter the international market.
The U.S. Commercial Service offers help to companies look at increasing their business by exporting. It also helps companies that are currently exporting to increase their business. They offer help through the use of trade specialists strategically placed throughout the U.S. and other countries. The primary services they offer to companies are marketing research, trade events, consulting, and locating qualified buyers and partners. The U.S. Commercial Service has recently added a website in which companies can go to get one-on-one export counseling and can complete a questionnaire that helps lead to exporting in global markets. They also promote and protect U.S. commercial interests abroad.
4.3 What are some of the advantages and potential disadvantages of entering a joint venture?
Advantages – Joint ventures are a quick and easy way to bring your company into a global market. It is also an inexpensive way to go global. The products that are created from the joint venture may become great, which increases company profit.
Potential disadvantages – Many joint ventures fail. One company may become a victim to takeover by the other company they have joined with. The joint venture partners may not agree on the aspects of running a business such as management and policies causing the joint venture to fail.
4.4 – Why is direct investment considered risky?
Direct investment is risky because there are sometimes national differences in the way businesses are run. The policies, management, currencies, culture and geography might be different from the home country. The domestic company must make sure they’re investing in a company that will increase the profits. Transferring resources to the new investment may also be tricky for a domestic business.
5.3 – Explain how exchange rates can affect a firm’s global sales.
If the currency in the country that is exporting products depreciates, it will cost more for their residents to buy products from other countries. Then these other countries can now buy products from the exporting country at a lower price. If the currency in the country that is exporting products appreciates, it will be cheaper for their residents to purchase products from other countries.
Case Study/Application Exercise
Marketing Miscue: Vermont Teddy Bear
1. Did Vermont Teddy Bear Company violate the requirement of corporate social responsibility? Why or why not?
Part of the definition of corporate social responsibility is the company taking responsibility for the impact of their activities on the consumers and the community. The Vermont Teddy Bear company did not take responsibility. They kept selling the bears with the straitjackets even though the public was upset. They also did not take ensure their adherence to ethical standards. The company did not think of the mentally ill when creating the straitjacket, but even when it was brought to their attention they kept promoting their product.
2. Was the controversy a positive or negative for the company? For Robert?
I think the controversy was both positive and negative for the company. It made the company more popular increasing their sales, but it also gave the company a bad rapport. The controversy was negative for their CEO, Robert. She was asked to give up her seat on the board of one of Vermont’s largest hospitals for her perceived belittling of the mentally ill. Robert seemed to be more concerned with the profit of the company versus the feelings of the community.
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Your answers are very good and right on target. A few general comments:
ReplyDelete1. World Product?
Promoting standardized products globally is a recent marketing trend that offers significant advantages including economies of scale in manufacturing and promotion. However, global marketing standardization appears to have significant limitations as well. Few, if any, products have been marketed successfully without at least minor modifications to the marketing mix. Furthermore, even multinational corporations that have adopted the global marketing standardization concept still market the majority of their products locally or regionally. Thus it seems that although world markets do seem to be becoming more alike, many substantial differences in culture, lifestyle, and taste still exist among nations.
2. Exchange Rates
The exchange rate is the price of one country’s currency in terms of another country’s currency. If a country’s currency appreciates, less of that country’s currency is needed to buy another country’s currency. If a country’s currency depreciates, more of that currency will be needed to buy another country’s currency.
If, say, the U.S. dollar depreciates relative to the Japanese yen, U.S. residents have to pay more dollars to buy Japanese goods. As the dollar depreciates, the prices of Japanese goods rise for U.S. residents, so they buy fewer Japanese goods—thus, U.S. imports decline. Or seen in another way: sales of Japanese goods in the United States decline. At the same time, as the dollar depreciates relative to the yen, the yen appreciates relative to the dollar. This means prices of U.S. goods fall for the Japanese, so they buy more U.S. goods—and U.S. exports (i.e., sales in foreign markets) rise.