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How does an investigation of social-cultural influence provide insights for international marketing

By Peter Carpenter,2014-01-18 09:28
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How does an investigation of social-cultural influence provide insights for international marketing

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    How does an investigation of social-cultural influence provide insights for international marketing?(1)

    1.International marketing in general is influenced by socio-cultural, background, religious beliefs and customs which can not be overviewed. The cultural dimension provides the chance and challenge to marketers. So the investigation is significant which will make the decision accordingly and more correctly. With the following we will introduce the necessity in detail.

    Custom is the most important factor influence the marketing. In fact, successful marketing people saw the close connection between custom and customers: the way to turn people into customers is to make your product part of their customary actions. Sometimes whole industries are created around a custom (Halloween costumes) and at other times, customs are created around a product (Valentine‟s Day cards). In both cases, marketers took advantages of the basic human need for ritual. Cultures distinguish themselves by their rituals, even when they share a common language.Collecting knowledge about local custom is best done up close and first hand. Getting “on the ground” information is well worth the cost that it may entail. If your first trip to a new country is for

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    the purpose of selling a product rather than investing the potential to sell one, you may be disappointed. Marketers have to learn how, why, and when the target market goes about its business in order to make your product fit.Another should be taken into consider is language: Most of the world‟s national boundaries are set along linguistic perimeters. Especially names, which are important in every language and for marketers, brand names are paramount. Arriving in a new market with a great new product that‟s saddled with a bad brand name could spell disaster. Even

    established international companies have problems with their names: Siemens is rarely spelled correctly anywhere but Germany, and few people in east Asia can pronounce Nestle property, nor can Westerners pronounce Hyundai. Investigation of the language was surely key in naming the product. Also, the history cannot be neglected. Every country and culture, whether it‟s as ancient as India or as young as the Czech Republic, has a history that will greatly affect both the market and the marketer. Understanding that history will enable a marketer to approach the culture in a more subtle manner, and it will certainly cause an adjustment of schedule. On the other end, a culture that has been marked by independence for some time will have few fears of foreign operations and may find the subtle approach far too lackluster and slow.Marketers may bring their own business to the process and should take care to separate themselves, at least emotionally, from their personal and cultural

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    history. Oftentimes, this includes racial prejudices that are difficult to shake, earlier political disagreements that have never been fully settled, of old unhealed war wounds.

    Moreover, when entering the foreign there will be many other aspects should be learned, such as religion, the family, the education ect. The investigation of the culture dimension will provide insights for the managers, and then they will deal with the business easily and appropriately. In some cases, it runs along gender lines.Generally speaking, the investigation of socia-cultural influences will benefit the the marketing: engage your know-how to increase security; get important details to reach your most important prospective customers; reduce your costs for goods credits and hence: increase your profit. The managers need to put great emphasis on the investigation.

    2. Entry model (think 2 different entry model) in addition to evaluating 2 alternative market entry modes. Also discuss the factors that influence affirms choice between the alternative.

    There are a variety of kinds to enter another market, the simplest form of entry strategy is exporting, and more complex forms include truly global operations which may involve joint ventures. The following will

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    introduce joint venture and FDI, also compare the difference between them.

Joint ventures

    Joint ventures can be defined as "an enterprise in which two or more investors share ownership and control over property rights and operation". Joint ventures are a more extensive form of participation than either exporting or licensing.

    There are five common objectives in a joint venture: market entry, risk/reward sharing, technology sharing and joint product development, and conforming to government regulations. Other benefits include political connections and distribution channel access that may depend on relationships.

    The key issues to consider in a joint venture are ownership, control, length of agreement, pricing, technology transfer, local firm capabilities and resources, and government intentions.

FDI:

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    Foreign direct investment (FDI) is defined as “investment made to acquire lasting interest in enterprises operating outside of the economy of the investor.” The FDI relationship consists of a parent enterprise and a foreign affiliate which together form a transnational corporation. In order to qualify as FDI the investment must afford the parent enterprise control over its foreign affiliate.

    For an investment to qualify as FDI, physical capital must be created in the foreign country (such as manufacturing facilities, or factories.) This physical capital is controlled by a firm based outside of the receiving, or host country.

    Foreign direct investment is considered to be a very stable investment because it involves the creation of physical capital. FDI is consi

    dered to be a long term investment because physical capital is not easily liquidated.

Compare the two modes:

ModeJoint venturesDirect investment

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    Conditions favoring

this modeLarge cultural Distance

Assets cannot be fairly priced

High sales potential

Some political risk

Government restrictions on foreign ownership

Local company can provides kills, resources, distribution network, brand

    name, etc,

Partners‟ size, market power, and resources are small compared to the

    industry leaders;Small cultural distance

Assets cannot be fairly priced

High sales potential

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    Low political risk

AdvantagesOvercome ownership restrictions and cultural distance

Combines resources of 2 companies

Potential for learning

Less investment required

Sharing of risk and ability

Joint financial strength

May be only means of entry and

The source of supply for a third country.Greater knowledge of local

    market

Can better apply specialized skilled

Can be viewed as an insider

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DisadvantagesDifficult to manage

Dilution of control

Greater risk than exporting a & licensing

May be impossible to recover capital

    Disagreement on third party markets to serve Higher risk

Requires more resources

and commitment

May be difficult to manage the local resources

Case:

    Quebecor World will print 20 billion directory pages a year in Mexico, equal to more than 75 per cent of the Mexican directory market. Which make use of the following two points: FDI by acquisition; FDI will

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    increase capacity, and competitiveness of target.

    Different modes of entry may be more appropriate under different circumstances, and the mode of entry is an important factor in the success of the project. If the partners carefully map out in advance what they expect to achieve and how, then many problems can be overcome.

3. Acquisition (large consumer manufacture):

Introduction:

    Under the condition of modern enterprise system and market economy, “acquisition” often refers to a legal act for an enterprise to acquire the control power and managing power of another enterprise through a certain channel. Which is also known as a takeover, is the buying of one company (the „target‟) by another. An acquisition may be friendly or hostile. In the former case, the companies cooperate in negotiations; in the latter case, the takeover target is unwilling to be bought or the target's board has no prior knowledge of the offer.

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    How does an investigation of social-cultural influence provide insights for international marketing?(2)

Types of acquisition:

    The buyer buys the shares, and therefore controls the target company being purchased. Ownership control of the company in turn conveys effective control over the assets of the company, but since the company is acquired as a going business; such transaction carries all of the liabilities accrued by th

    at business over its past and all of the risks that company faces in its commercial environment.

    The buyer buys the assets of the target company. The cash the target receives from the sell-off is paid back to its shareholders. Such transaction leaves the target company as an empty shell. A buyer often structures the transaction as an asset purchase to "cherry-pick" the assets. A disadvantage of this structure is the tax that many jurisdictions.

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