International marketing managers make the same basic types of decisions as do those who operate in only one country. Of course, they make these decisions in a more complicated environment. As with marketing decisions, the basic function of marketing research and the research process does not differentiate between domestic and multinational research. However, the process is complicated almost exponentially as more and more countries are involved in the same decision. Marketing research practices and techniques have become truly global. For example, the world’s largest research firm, Nielsen, is headquartered in the U.S. but derives almost two-thirds of its revenue from outside the U.S. It is standardizing much of the data it routinely collects in 27 different countries. The main factors which influence marketing research in different countries are; Cultural differences. Culture refers to widely shared norms or patterns of behavior of a large group of people. It is the values, attitudes, Continue reading
International Business Management
Country of Origin Effect in International Marketing
The Country of Origin Effect is the influence that the manufacturer country has on the positive or negative consumer judgment. Studies have shown that when a customer becomes aware of the country of origin of a product his/her image about the product is influenced either positively or negatively according to his perceptions. Consumers tend to have a stereotype about product and countries that have been formed by experience, hearsay, myth. These stereotypes are generally broad and vague according to which they judge a specific country or a specific product to be the best: French Perfumes, Italian Leather, Chinese Silk and Japanese Technology are all examples of such stereotypes. Therefore the country, the type of product, and the image of the company all its brand play a crucial rule in deciding whether the country of origin will engender a positive or a negative reaction. Country Image: Precursors to Country of Origin Continue reading
Depositary Receipts – Definition, History and Types
A Depositary Receipt (DR) is a type of negotiable (transferable) financial security traded on a local stock exchange but represents a security, usually in the form of equity, issued by a foreign, publicly-listed company. The Depositary Receipt, which is a physical certificate, allows investors to hold shares in equity of other countries. One of the most common types of Depository Receipts is the American depository receipt (ADR), which has been offering companies, investors and traders global investment opportunities since the 1920s. Since then, Depository Receipts have spread to other parts of the globe in the form of global depository receipts (GDRs). The other most common type of Depository Receipts are European DRs and International DRs. ADRs are typically traded on a US national stock exchange, such as the New York Stock Exchange (NYSE) or the American Stock Exchange, while GDRs are commonly listed on European stock exchanges such as the Continue reading
Top Reasons for Mergers and Acquisitions in Global Scenario
Mergers and acquisitions are considered as one of the routes by which organisations can expand their presence into new markets across geographies or product segments. Essentially these forms of expansion are external in nature in that they all have an element of foreign presence attached to them. These methods of expansion of business have the advantages of reducing risks as there is a new local knowledge or expertise which is added onto the organisation. There are potential for the acquired organisation to bring in new knowledge and synergies to the total organisation which may be valuable in operating in the new market conditions. But along with the advantages to the organisation there are also associated disadvantages also of falling into debt due to the leveraged nature of the acquisition and higher risk of bankruptcy of the organisation. These factors are analysed below. Too much Debt and Risk of Bankruptcy Mergers Continue reading
Emerging Trends in Global Organizational Structures
Though global organizational structures tend to depict certain kind of rigidity, structure tends to change and new trends emerge. Mixed Nature of Structures Because of growth dynamics, companies change their organizational structures. Simplified organizational structures get replaced by complex or mixed structures. Until organizational re-structuring is made, new acquisitions might report to headquarters. Circumstances prevailing in a particular country, product, or function might necessitate separate handling until a re-structuring is effected, apart from the overall structure. The structure of 100% subsidiaries is different from that of JVs. 100% subsidiaries enable a deeper network of communications. Overall structure may be incomplete and less revealing. PepsiCo is organized by product lines, namely soft drinks and snacks. This would seem to imply that each product line is integrated globally. However, each line has its own global division, which separates it from domestic operations. Structures Evolve to Suit Growth and Need A company that Continue reading
Effect of Portfolio Capital Flows in an Economy
The notion that one can make inferences about the characteristics of financial flows by just observing their label is not new in economic. There is much convention wisdom that show capital flows reflect speculative, unstable behavior while flows reflect evaluations of long run profitability and are based on fundamental economic condition. The flows of funds approach used by many central banks and others for a analysis of the domestic economy developments is based on labels which are deemed meaningful. This view has also been an important part of the traditional analysis of international finance for many years. In fact, the structure of balance of payments accounts reflects an implicit theory that different types of capital flows have different economic implications. For example, the distinction between short-term “hot money” and long-term capital flows undoubtedly reflects the view that short-term capital movements are speculative and reversible while long-term capital flows are based Continue reading