Chapter four Review &Application

CH. 4 Questions 2.1, 4.2, 4.3, 4.4, and 5.3

2.1 Rubbermaid, the U. S. manufacturer of kitchen products and other household items, is considering moving to global marketing standardization (GMS). What are the pros and cons of this strategy?

The pros of global marketing standardization (GMS) are like Ford making the model T. GMS allows for lower production, marketing costs and increased profits. This may work well with Rubbermaid, for its products such as bins come in many sizes and colors. Often companies may take on a GMS strategy and still make a few tweaks to product or marketing. A downside is some cultures prefer a slightly different taste or different name to the product. For example, the Chevy Nova in Spanish means ‘no go’. Again, Rubbermaid could mean robot helper in French.

4.2 Explain how the U.S. Commercial Service can help companies wanting to enter the international market.

The U.S. Commercial Service that is within the Department of Commerce is an aide in promoting trade. The service has staffing in 150 posts around the world. The Commercial Service staff aides those just starting out in business and the veterans in trade. The service helps in market research, finding suitable buyers, partners and they also do some consulting. Often this service can lead a business to find a buyer for export, export broker or export agent.

4.3 What are some of the advantages and potential disadvantages of entering joint venture?

Joint venture, and often international joint venture, has many advantages. It can gain a company in expertise, speed, and cost. The downside is often they fail, or subject one side to a take over or disagreement.

4.4 Why is direct investment considered risky?

A firm takes all the risk or all of the profits. Sometimes the investment is as a minority interest or controlling interest. In international affairs, treaties, laws and governments play a role and they can and do change which could cause problems.

5.3 Explain how exchange rates can affect a firm’s global sales.

Prices for Japanese-made Toyotas can increase in cost if the dollar decreases in value in the U.S. Prices move up and down (floating exchange rates) based on demand of currency, economic strength of a country. If Brazil imports steel to the U.S. and can’t find a buyer, they may lower the price until a buyer is found which is termed as (steel) dumping.