1. What is the PESTEL framework and what is its purpose?
PESTEL is a tool used by marketers in identifying and analyzing the external marketing environmental aspects affecting an organization. They include political, economic, social, technological, environmental, and legal factors. PESTEL analysis provides a deeper understanding of the market, helps in the preparedness of threats involved in the market, and presents an in-depth realization and a method to exploit the opportunities available. A PESTEL framework aids in compiling a SWOT analysis, a significant tool in the growth of a business.
2. Michael Porter is famous for his Five Forces Framework. What was the purpose of this framework and what is his theory?
Porter's five force framework helps to determine an industry's strengths and weaknesses and helps in explaining why there is a divergence in the levels of profitability in different sectors. Porter theorizes that competition, the potential of new entrants, supplier power, customer purchasing power, and threats to company products are the forces that determine competition intensity, profitability, and attractiveness of a particular market. These factors also play a part in the shaping of industries and markets in the world.
3. When a firm enters the international markets, explain the two opposing forces they face.
Two opposing forces organizations face in international markets are cost reduction and adaptation to local markets. Firms are faced with the decision of reducing the cost of their product or service to stay in business and increase its market share in low-income countries. Another problem is adapting to the dynamics of the local markets in the countries that the firm is conducting business. Different states require different strategies of surviving therein. Thus it becomes difficult for firms to adapt to different local markets.
4. The two opposing pressures in the international markets result in four different strategies. What are they and how are they different?
International strategy refers to the plans that guide commercial transactions between firms of different countries.
The global strategy involves an organizations' strategic guide to operating in international trade. It also consists of the process through which companies incorporate the variation of its commodities in different countries.
The multi-domestic strategy involves customizing both product offering and marketing strategy to correspond to the different local conditions.
Transnational strategy in which a company's activities are coordinated in cooperation between head office and operational divisions internationally located.
5. There are four international strategies associated with expansion outside the U.S. Export strategy (or sometimes also called international strategy), multi-domestic strategy, transnational strategy, and global strategy.
Exporting which involves a sale of domestically produced products across the border. It includes low risk, less commitment and company exposure to an international market.
Licensing involves agreements that allow companies at target countries to transact using intangible properties such as trademarks, patents, and production techniques of an organization.
Franchising which involves a semi-independent company (franchisee) pays royalties to the franchiser to use the company's trademark in selling products.
A joint venture where two or more organizations from different countries with aligned objectives come together and form a partnership that trades in the international market.
6. Explain innovation diffusion. What does it mean and what are some of the aspects of the supply and demand factors that determine diffusion pace? Give an example of innovation diffusion.
Innovation diffusion analyses the conditions that affect the likelihood of a commodity being accepted by the target market. The theory indicates that people's behavior influences the acceptance of merchandise, called adopters, and human interactions through interpersonal networks. Phillips emulates the approach in the Netherlands in selling its coffee machines. The company offers old machines for laggards, Senseo machine for the early and late majority groups, luxury espresso machines for early adopters, and a Nespresso machine for the innovators.
7. What is the difference between deliberate strategy and emergent strategy? Give examples.
Emergent strategy is a set of actions that develop in an organization over time in the absence or despite outlined planning strategy. Levi Strauss dominated top denim wear by concentrating efforts towards marketing trendy and quality denim wear. On the other hand, a deliberate policy is a concept of strategic formation in an organization that emphasizes the advantages of acting intentionally. Nike women employ specific marketing activities according to declines in channel sales.
8. Organizations are structured differently. Most common structures are divisional, functional, matrix, multinational and project based. How does a company decide which structure is best suited for them?
Factors affecting organizational structure include the size of the organization concerning the number of employees. Businesses with a small number of employees may be served by a simple structure in which a single manager implements all strategies. Secondly, business development stage influences business structure in which businesses in beginning stage concentrate powers to the founders. Types of business strategy also affect the business structure that is defined by the products, goals, and mission of the company.
9. How do you describe a turnaround strategy? When is it necessary and what does it entail? Give an example.
Turnaround strategy is a retrenchment policy that an organization follows in the realization of a wrong decision made that would affect the profitability of the firm. It is necessary during times of consecutive losses, poor management, declining market share, and presence of uncompetitive products. The strategy involves measures such as reducing staff, selling redundant assets, reducing operational costs, and increasing revenue. General motors were declared bankrupt in 2000, but after the reorganization, it came back to business in 2010 with a high recording of sales in the market.
10. Balogun and Hailey identify four types of strategic change. What are they and what is their message regarding these changes?
Strategic changes include:
- Transformational change that entails changing an organization's culture through an entirely new organizational paradigm.
- Realignment change that involves making changes within the organization other than the reassessment of the core beliefs and assumptions of the company.
- Incremental change involves a slow process requiring a modification of the overall organization arising in a different structure when completed.
- Big bang change is more likely a forced, reactive transformation using parallel resourcefulness from various fronts in a relatively short span of time in a relatively short span of time.
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