QUESTIONS FOR DISCUSSION

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Solutions Manual for Global Marketing, 5e Kate Gillespie, Scott Swan (All Chapters)

CHAPTER 1

Introduction to Global Marketing

QUESTIONS FOR DISCUSSION

• How is global marketing as a field related to your future career? How would you expect

to come into contact with global marketing activities?This question parallels the chapter sections on “Why Study Global Marketing” and “A Need

for Global Mindsets.” Answers are personal but may include:

• A desire to work in international marketing • Working in domestic marketing but dealing with foreign competitors • Entering other professions but with an international orientation

• What do you think are the essential skills of a successful “global marketer”?

Again, this calls for a personal response, but suggestions at this introductory stage might

include:

• A knowledge of and sensitivity to other cultures • Foreign language knowledge • An understanding of the global economy as well as national politics and laws • A good knowledge of your domestic business • The ability to identify market opportunities internationally • An understanding of how to manage within a multinational firm

• Which important skills make up an effective “global mindset”?

A global mindset involves an ability to predict what foreign competitors will do next. Skills might include being able to think like your competitors: understanding their background and 1 / 4

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culture as well as speaking their language; knowing how to integrate actions among national markets; and synthesizing experiences across national markets.

• List ten things that are important to you that you hope to be able to understand or

accomplish after studying this book.• This is a more personal question that can get students thinking about the field and what they hope to gain from the course.• Note: Many courses now draw students from all over the world. If this is true of your course—and if the class is not too large—you may want to ask students to introduce themselves on the first day of class and tell which countries they have experience with as citizens, students, tourists, or workers.

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CHAPTER 2

The Global Economy

QUESTIONS FOR DISCUSSION

• Suppose that Brazil can produce, with an equal amount of resources, either 100 units of

steel or 10 computers. At the same time, Germany can produce either 150 units of steel or 10 computers. Explain which nation has a comparative advantage in the production of computers. Choose a mutually advantageous trading ratio and explain why this ratio increases the welfare of both nations.It costs Brazil ten units of steel to produce one computer, while it takes Germany fifteen units of steel to produce one computer. Brazil has a comparative advantage in the production of computers, as it costs Brazil fewer units of steel to produce one computer. A trading ratio of 1 computer = 13 units of steel will be beneficial to both countries. Since Brazil will be importing computers, it gains by getting thirteen units of steel rather than the ten units it would have produced locally. Likewise, Germany will be exporting steel; it gains because one computer can be imported for the cost of thirteen units of steel rather than fifteen if it made them locally.

• What problems could export tariffs cause?

Governments sometimes utilize export tariffs for reasons that make sense to them. A government might utilize export tariffs to keep scarce resources in the country that are necessary to the welfare of its citizens (such as food.) If world prices for a commodity were higher than the local market, then businesses would choose to export before selling to the local markets, thus causing shortages at home. Also, if a government were subsidizing prices in the home market for the welfare of its citizens, then it would not want the product purchased at the subsidized price to be then shipped abroad. For example, when Mexico subsidized its local petroleum prices, it put export controls on gasoline.However problems can arise from these policies. Export earnings will decrease. This can put pressure on the local currency. A devaluation of the currency would make critical imports more expensive. Export controls may (from inertia) remain longer than needed and thus continue to discourage exports. Local producers may be less inclined to become internationally competitive.

• Do you agree with the critics who claim that the WTO has excessive power over national

governments? Will free trade widen the gap between rich and poor? Why or why not?This, of course, is one of the toughest questions of our time. The WTO strongly supports letting markets rule. Other issues—such as protecting culture—are not really on its agenda.As long as you are a winner in the free-market system, it is easy to conclude that all is well.Arguably, all stand to win to some degree. Still, the implications of free trade are not clear, even to the United States.One challenge to college students from the developed world is the increasing trend to contract out white-collar work to professionals in developing countries—software designers, architects, financial analysts, accountants, and even lawyers. Free trade in white-collar services will likely lessen the gap between currently richer and currently poorer counties. 3 / 4

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However, it is hard to project the impact of this loss of professional jobs on the U.S. society and economy.

• Should the WTO have forced Utah to accept gambling?

The answers are likely to be personal but several suggestions are offered.

Yes, the WTO ruled correctly because:

• US policies may not be fair to our trading partners and there is a need for an international body to mediate problems.• Economic policy may be more politicized in some countries, making it harder for politicians to make changes and do what is good for the larger whole or the longer term.Outside pressure may be helpful to achieve a fairer solution.

No, the WTO ruled incorrectly because:

• Our government is required to follow our constitution and cannot be controlled by whatever outside governmental policies that may be instituted.• There are additional concerns with gambling (e.g., criminal behavior, personal addiction) that should be controlled or monitored locally.

CASE 2.1: ARGENTINA: TROUBLE IN MERCOSUR

This case examines the challenges of Mercosur over a period of nearly 20 years. It highlights the problems of regional integration in developing countries as well as the difficulties these problems pose for businesses.

DISCUSSION QUESTIONS

• How might Argentina’s devaluation in 2002 and again in 2014 affect a U.S. exporter of

heavy machinery? A European exporter of cosmetics? A Brazilian exporter of automobiles? An Argentinian textile exporter with debt denominated in US dollars?• U.S. exporter of heavy machinery: This company is most likely be hurt by these devaluations. Customers would have to pay a much higher price in pesos. They will likely negotiate a lower price in dollars, seek cheaper options or forego purchases.•  European exporter of cosmetics: This company’s Argentinian customers face the same dilemma as those in the above scenario. However, this is a lower-priced product and may command strong brand loyalty. Perhaps they will suffer less.• A Brazilian exporter of automobiles: This exporter faces the same challenges as the U.S. exporter of heavy machinery. However, they may be more at risk due to the deteriorating relations between Argentina and Brazil. Autos appear to be a category for trade retaliation between these countries, and Argentinian devaluations signal trouble in its economy and consequent protectionist measures.• An Argentinian textile exporter with debt denominated in US dollars: This firm should see its costs, when translated into foreign currencies, go down. So it has the option of lowering prices abroad to gain greater sales or of keeping prices steady in overseas currencies and earning more money in pesos. However, if they import any inputs, the cost of these inputs in pesos will rise. Also, the peso cost of paying a debt in dollars increases.However, they could offset this by their export earnings.

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