Entry into international markets


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Evaluate the opportunities and threats posed by entry into international markets.
Opportunities
Threats
Increase customer base
-More choices for customers
Language, culture and marketing misjudgements
Enjoy economies of scale
-Benefit from cost savings
-enable growing firms to reduce their prices--> price advantage
Brand image, ethics (child labour)
Increase brand recognition

Spread risks
--> Less exposed to the risks in one particular country (recession)

Extend product life cycle
Domestic market for its products is saturated/ in decline
--> Marketing the product overseas, firm expands its life cycle to generate high revenues
*Mobile phone companies

More profit!!!


Analyse given situations considering the cultural, legal, political, social and economic issues of entering international markets.
Cultural
Legal
Political
Social
Economic
Cultural exports
-the commercial transfer of ideas and values from one country to another
Copyright and patent legislation
Government sets up international trade barriers
Pressure groups
More and freer international trade enables people to have greater choice of products at more competitive prices
Language
Pricing decisions -regulation on market power
*In UK firms with at least 25% market share --> monopoly
->Anti-competitive legislation in the EU prevent monopolies from raising prices to exploit customers (Restrictive trade practices)
Quotas
-Quantitative restrictions on imported goods

Transportation costs
Ethics
*Pester power marketing techniques banned in the European Union but not in many parts of the world
Consumer protection laws
Tariffs
-Import taxes

Exchange rate fluctuations
Consider local preferences

Embargoes
-Bans on certain products entering a country
ex. tobacco

Interest rates
Business etiquette
  1. Research
  2. Consider the impact on the firm
  3. Implement a strategy to optimize the relationship with overseas clients

Administrative barriers
-Safety regulations
-Licences
-Employment visas

Communication costs
International business etiquette
  1. Numbers
  2. Spoken language
  3. Greetings
  4. Physical contact
  5. Dress code
  6. Body language

Subsidies
-Financial assistance given to local firms to lower their costs of production
-A comparative cost advantage over foreign rivals



Ethics ~ News article from The New York Times http://www.nytimes.com/2011/02/23/technology/23apple.html?_r=1&ref=business

Workers Sickened at Apple Supplier in China

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“We hope Apple will heed to its corporate social responsibility,” said Jia Jingchuan, 27, at right, pictured with coworkers. He said exposure at the Wintek plant to the chemical, known as n-hexane, has left him with nerve damage.

By DAVID BARBOZA
Published: February 22, 2011
SUZHOU, China — Last week, when Apple released its annual review of labor conditions at its global suppliers, one startling revelation stood out: 137 workers at a factory here had been seriously injured by a toxic chemical used in making the signature slick glass screens of the iPhone.
Apple, describing it as a “core violation” of worker safety, said that it had ordered the contractor to stop using the chemical and to improve safety conditions at the plant. Apple also said that it would monitor the medical conditions of those workers.
But in interviews last weekend, nearly a dozen employees who say they were harmed by the chemical said they had never heard from anyone at Apple.
Instead, they said the contractor — a Taiwanese-owned company called Wintek — had pressed them and many other affected workers to resign and accept cash settlements that would absolve the factory of future liability, charges the company denied.
“We hope Apple will heed to its corporate social responsibility,” said Jia Jingchuan, 27. He said exposure at the Wintek plant to the chemical, known as n-hexane, had left him with nerve damage and made him so hypersensitive to cold that he now must wear down-insulated clothing even indoors. “Usually someone my age doesn’t wear this type of pants,” he said raising his voice. “Only 50- or 60-year-old men wear something like this.”
On Monday, however, a Wintek spokesman denied that the company was pressing workers to resign or sign papers absolving the company of future liability.
The company said it was working with medical professionals to assess the health of workers. Jay Huang, the spokesman, even suggested that Wintek would pay for medical care should the symptoms persist after workers resign.
“Wintek’s policy of handling this is to put workers’ benefit as the first priority,” he said.
Kristin Huguet, a spokeswoman at Apple’s headquarters in Cupertino, Calif., declined to discuss the Wintek case but said the company was committed to the highest standards of social responsibility in its supply chain. “We require our suppliers to provide safe working conditions, treat workers with dignity and respect and use environmentally friendly manufacturing processes whenever our products are made,” she said.
Many workers, though, say they do not trust the factory because some managers continue to press injured workers to resign, sometimes by insisting they work longer hours even though their health is impaired.
Mr. Jia, a machine repair worker, was among a group of Wintek employees who gathered Sunday to discuss the case in a worker’s bare, unheated one-room apartment a few miles from the factory.
Some members of the group said they were still suffering health problems while working at the factory, which employs 18,000 workers at an average monthly wage of about $200, after overtime.
Wang Mei, 37, a quality inspection supervisor at Wintek, said she was hospitalized for 10 months because of n-hexane poisoning. She said she would like to leave the factory, but only after receiving assurances that Wintek would cover her medical bills if her health problems persisted.
“It’s not that we want to work here,” she said Sunday, as she tried to explain why she remains at the factory despite recurring symptoms, such as soreness in her limbs and fatigue. “We want to fight for our legal rights.”
Another woman came into the room waving a letter from a Chinese insurance company, turning her down for life insurance because she had been poisoned at the Wintek factory.
Although many workers said they had not heard from Apple and had been pressed to leave Wintek, one worker said that an Apple employee had arrived at the Suzhou factory on Tuesday and had met with a few affected workers.
The workers also said Wintek managers appeared to be softening their position early this week by telling several injured workers that they would no longer be required to sign documents if they choose to resign.
The Wintek injuries underscore the challenges Apple faces in trying to source goods from China, which dominates electronics manufacturing with low-cost labor and highly efficient factories that often operate around the clock.
But China is also known for factories that routinely flout labor and environmental laws.
About 18 months ago, workers at the Wintek factory started complaining of sore limbs and extreme weakness. Some employees had difficulty climbing stairs or even buttoning a shirt; others said they had dizzy spells and pounding headaches. “My palms started sweating and my legs got numb,” Mr. Jia said. “At first, I didn’t think it was related to work.”
According to Wintek, doctors later discovered that the factory’s workers, scores of them, were suffering from heavy exposure to n-hexane, a toxic agent the factory had begun using to clean the sophisticated touch-screen glass panels it makes for the Apple iPhone. Some workers said they were hospitalized for months with what doctors told them was nerve damage. Because the workers had insurance, Wintek and the government paid the medical costs and some compensation during their sick leave.
Wintek said it began using n-hexane in early 2009, after the factory received a large order for the glass panels. The company says n-hexane evaporates quickly and was considered more efficient than other cleaning agents.
But the compound is also considered a narcotic, which in high concentrations can disrupt the central nervous system of humans and induce vertigo and muscular atrophy, according to the Occupational Safety and Health Administration, a division of the United States Department of Labor.
To draw attention to their plight, some affected workers organized a protest early last year. They also hired a lawyer, lobbied local government officials and even set up a microblogging site with links to their medical records.
In its report, Apple said n-hexane was no longer being used at the Suzhou factory and that Wintek had repaired its ventilation system.
But Debby Chan, project officer at Students and Scholars Against Corporate Misbehavior, a labor rights group in Hong Kong, said Apple and Wintek were slow to address the problem. “We heard rumors about the poisoning in 2009, and after a strike at the factory in January 2010, we went to the No. 5 hospital and found some of the workers,” Ms. Chan said. “When I visited workers in the hospital they said the Wintek management did not care about the situation. And after this case was exposed by the media, Apple never approached the workers or made an apology for their suffering.”
Apple’s first mention of the case came last week, in its annual overseas supplier assessment, which the company has released since 2007.
This year’s review was particularly sensitive because it was the first since several suicides last year among workers at Foxconn Technologies, one of Apple’s biggest suppliers in China. Some labor rights advocates had attributed the suicides to harsh working conditions at its huge factory compounds, some of which employ 300,000 people.
In the report, Apple praised Foxconn for its response to the deaths. Foxconn hired counselors, raised salaries and even put up nets on some of its buildings to prevent suicide attempts.
But Apple also said it had discovered that some of its other Chinese suppliers had employees younger than 16, the legal working age. One supplier factory had 42 under-age workers, the company said.
Well aware of the pitfalls of outsourcing manufacturing to China, Apple and other global brands often hire independent auditors to make surprise visits to supplier factories. They also press factories to agree to strict codes of conduct and to ensure worker safety and compliance with China’s labor and environmental laws. One of the injured Wintek workers who agreed to be interviewed Sunday, Yao Xiaoping, 22, a migrant worker from Shaanxi Province, said he had left the factory and had accepted compensation of about $12,000 but now feared for his future because of the n-hexane poisoning that he said had left him with sweaty palms and weak limbs.
“I went back to my village but everyone knows what happened to me,” he said, fighting back tears. “So it has made it difficult for me to find a wife there.”