Examination Paper: International Business Management 5
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Global Marketing Management
Section A: Objective Type (30 marks)
· This section consists of Multiple choices/Fill in the blanks/True-False & Short Answer type
questions.
· Answer all the questions.
· Part One questions carries 1 mark each & Part Two questions carry 5 marks each.
Part One:
1. All the ethnocentric orientations are collectively
called…………………………………………………………….
2. Presently number of members countries in OECD are:
a. 12
b. 20
c. 24
d. 29
3. If the value be ‘a’ , benefit be ‘b’ and the price be ‘c’ then relation between the threes is given
by:
a. a=b/c
b. a=c/b
c. a=b+c
d. None of the above
4. If the confidence limit be ‘t’ standard deviation be ‘b’ and the error limit be ‘c’ then the sample
size will be given by:
a. n=t+b/c
b. n=t*b/c
c. n=t*c/b
d. none
5. According to Backer spielvogel and Bates’s global scan the segment content of Achiever is:
a. 26
b. 22
c. 13
d. 18
6. CAT stands for ………………………………………………………………………….…
7. Cave dwellers are…………………………………………………………………………
8. LIFO stands for life in fire option.(T/F)
Examination Paper: International Business Management
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IIBM Institute of Business Management
9. Starbursts are
………………………………………………………………………………………………………
10. Name one of the common wealth of independent States
(CIS)……………………………………………..
Part Two:
1. Write short “Hofstede’s Cultural Typology”.
2. Write a short note on “Diffusion Theory”.
3. According to “D’arcy Massius Benton & Bowles’s Euroconsumer Study”. Who are disaffected
survivors?
4. What do you understand by “Piggyback Marketing”?
END OF SECTION A
Section B: Caselets (40 marks)
· This section consists of Caselets.
· Answer all the questions.
· Each Caselet carries 20 marks.
· Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
Which Company Is Transnational?
Four senior executives of companies operating in many countries speaks:
COMPANY A
We are transnational company. We sell our products in over 80 countries, and we manufacturer in 14
countries. Our overseas subsidiaries manage our business in their respective countries. They have
complete responsibility for their country operations including strategy formulation. Most of the key
executives in our subsidiaries are host-country nationals, although we still rely on home-country
persons for the CEO and often the CFO (chief financial officer) slots. Recently, we have divided the
world regions and the United States. Each of the world regions reports to our world trade
organization, which is responsible for all of our business outside United States.
The overseas companies are responsible for adapting to the unique market preferences that exist
in their country or region and are quite autonomous. We are proud of our international reach: We
manufacture not only in the United States but also in Europe and the United Kingdom, Latin
America, and Australia.
We have done very well in overseas markets, especially in the high-income countries with the
exception of Japan. We would like to enter the Japanese market, but let’s face it, Japan is a protected
Examination Paper: International Business Management
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IIBM Institute of Business Management
country. There is no level playing field, and as you no doubt know, the Japanese have taken
advantage of the protection they enjoy in their home country to launch an export drive that has been a
curse for us. Our industry and our home country (the United States) has been a principle target of the
Japanese, who have taken a real bite out of our market share here in the United States. We are
currently lobbying for more protection from Japanese competition.
COMPANY B
We are a unique transnational media company. We do not dominate any particular area, but we have
an important presence on three continents in magazines, newspapers, and television. We have a global
strategy. We are a global communications and entertainment company. We’re in the business of
informing people around the world on the widest possible basis. We know how to serve the needs of
our customers who are readers, viewers, and advertisers. We transfer people and money across
national boundaries, and we know how to acquire and integrate properties as well as how to start up a
new business. We started out as Australian, and then the weight of our main effort is in the United
States. We go where the opportunity is because we are market driven.
Sure, there are lots of Australians in the top management of this company, but we started in
Australia, and those Aussies know our business and the company from the ground up. Look around
and you’ll see more and more Americans and Brits taking the top jobs. We stick to English because I
don’t believe that we could really succeed in foreign print or broadcast. We know English, and so far
the English-speaking world is big enough for us. The world is shrinking faster than we all realize, and
to be in communications is to at the center of all change. That’s the excitement of what we’re doing –
and also the importance.
COMPANY C
We’re a transnational company. We are committed do being the number-one company in our industry
worldwide. We do all of our manufacturing in our home country because we have been able to
achieve the lowest cost and the highest quality in the world by keeping all engineering and
manufacturing in order to maintain our cost advantage. We are doing this reluctantly but we believe
that the essence of being global is dominating markets and we plan to do whatever we must do in
order to maintain our position of leadership.
It is true that all of our senior managers at home and in most of our foreign markets are homecountry
nationals. We feel more comfortable with our own nationals in key jobs because they speak
our language and they understand the history and the culture of our company and our country. It
would be difficult for an outsider to have this knowledge, which is so important to smooth-working
relationships.
COMPANY D
We are a transnational company. We have 24 nationalities represented on our headquarters staff, we
manufacture in 28 countries, we market in 92 countries, and we are committed to leadership in our
industry. It is true that we are backing off on our commitment to develop business in the Third World.
We have found it extremely difficult to increase sales and earnings in the Third World, and we have
been criticized for our aggressive marketing in these countries. It is also true that only home-country
nationals may own voting shares in our company. So, even though we are global, we do have a home
and a history and we respect the traditions and sensibilities of our home country.
We want to maintain our number-one position in Europe, and over time achieve the same position
of leadership in our target markets in North America and Japan. We are also keeping a close eye on
the developing countries of the world, and whenever we see a country making the move from low
income to lower middle, or from lower middle to upper middle, or from upper middle to high income
Examination Paper: International Business Management
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IIBM Institute of Business Management
we commit our best effort to expand our positions, or, if we don’t have a positions, to establish a
position. Since our objective is to achieve an undisputed leadership position in our industry, we
simply cannot afford not to be in every growing market in the world.
We have always had a European CEO, and this will probably not change. The executives in this
company from Europe tend to serve all over the world, whereas the executives from the United States
and Japan serve only in their home countries. They are very able and valuable executives, but they
lack the necessary perspective of the world required for the top jobs here at headquarters.
Questions:
1. Which company is transnational?
2. What are the attributes of a transnational company?
3. What is the difference between a domestic, international, multinational, global, and transnational
company?
4. At what stage of development are your company and your line of business today? Where should
you be?
Caselet 2
Parker Pen Co. (A)
INTRODUCTION
The meeting at sunny Palm Beach concluded with nary a whimper of dissent from its participants.
After years of being run as a completely decentralized company whose managers in all corners of the
world enjoyed a high degree of flexibility, Parker Pen Co., Janesville, Wisconsin, was forced to
reexamine itself. The company had enjoyed decade after decade of success until the early 1980s. By
this time, Parker faced strong competitive threats and a deteriorating internal situation. A new
management team was bought in from outside the company – an unprecedented step for what had
been until then an essentially family-run business. At the March 1984 Palm Beach meeting, this new
group of decision makers would outline a course of action that would hopefully set Parker back on a
path to success.
The men behind the new strategy were supremely confident of its chances for success – and with
good reason. Each was recognized as a highly skilled practitioner of international business and their
combined extensive experience gave them an air of invincibility. They had been recruited from larger
companies, had left high-paying, rewarding jobs, and each had come to Janesville with a grand sense
of purpose. For decades, Parker had been a dominant player in the pen industry. In the early 1980s,
hoe-ever, the company had seen its market share dwindle to a mere 6 percent and, in 1982, net
income plunged a whopping 60 percent.
To reverse this decline, Parker recruited James Peterson, an executive vice president at R.L.
Reynolds, as the new president and CEO. Peterson hired Manville Smith as president of the writing
instruments group at Parker Smith, who was born in Ecuador and had a broad international
background, came from 3M where he had been appointed division president at the tender age of 30.
Richard Swart was vice president/marketing of the writing instruments group. He spent 11 years at
the advertising agency BBDO and was an expert on marketing planning and theory. Jack Marks was
head of writing instruments advertising. Marks came to Parker from Gillette, where, among other
things, he assisted in the worldwide marketing of Paper Mate pens. Rounding out the team was Carlos
Examination Paper: International Business Management
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IIBM Institute of Business Management
Del Nero, manager of global marketing planning, who brought with him considerable international
experience at Fisher-Price. Each of these men was convinced that Parker would right itself by
following the plan they unveiled at Palm Beach.
A BRIEF HISTORY OF PARKER PEN
The “Rolls Royce” of the Pen Industry
The Parker name has been identified with pens since 1888 when George S. Parker delighted inksplotched
pen users everywhere by introducing a leakproof fountain model called the Parker Lucky
Curve. Parker Pen would eventually blossom into America’s, if not the world’s, largest and bestknown
pen market. Parker’s products, which would eventually include ballpoint pens, felt-tip pens,
desk sets, mechanical pencils, inks, leads, erasers, and, of course, the fountain pen, were also known
for their price tags. In 1921, for example, Parker introduced the Duofold pen. The Duofold, even
though it was comparable to other $3 pens on the market, was extravagantly priced at $7. Parker was
able to charge a premium price because of its reputation for quality and style, and its skill in
positioning products in the top price segment.
Parker’s position as America’s leading pen marker was solidified during the years when the pen
was mainly viewed as a gift item. High school and college graduates in the 1940s and 1950s, for
example, were quite likely to receive a Parker “51” fountain pen (priced at & 12.50) commemorating
their achievement. Indeed, it was with a “51” that General Douglas MacArthur signed the Japanese
Peace Treaty in 1945. Parker’s stylish products and high profile name would keep it at the top of the
pen market until the late sixties as well as a few foreign brands, knocked them out of first place once
and for all.
Of course, Parker would not have lost its hold on the market had it not made some oversights
along the way. In addition to a more competitive environment, Parker failed to come to terms with a
fundamental change in the pen market – the development of the disposable, ballpoint market. When
Parker unveiled the $25 “75” pen in 1963, it showed that it remained committed to supplying high
showed that it remained committed to supplying high priced pens to the upper end of the market. As
the 1960s wore on, a clear trend toward cheap ballpoint and soft-tip pens developed. Meanwhile,
Parker’s only ultimately successful addition to its product range in the late sixties was the “75”
Classic line, yet another high-priced pen.
A Brief Flirtation with Low-Priced Pens
Parker did, however, make an effort to compete in the lower price segment of the market in the late
1960s only to see it fail. In an attempt to capitalize on the trend toward inexpensive pens, Parker
introduced the T-Ball Jotter, priced at $1. 98. The success of the Jotter led it to move even further
down the price ladder when it acquired Ever sharp. Whereas the Jotter had given Parker reason to
believe it could make the shift from pricy pens to cheap pens with little or no difficulty, the Ever
sharp experience proved to be different. George Parker, a grandnephew of the company’s founder and
president of Parker at the time, stated the reasons for the ever sharp failure, as well as its
consequences:
All the market research surveys said go lower, go lower, go lower, that’s where the business is.
So I said, ‘Go lower? Fine. But we don’t know how.’ We bought Ever sharp and tried to run it
ourselves, and we couldn’t do it. our people just couldn’t think in terms of big units, and they didn’t
know how to sell people on the lower-priced end of the business – grocers, supermarkets, rack
jobbers. The result was, Bic and Paper Mate were cleaning up in the lower-priced end, Cross in the
high, and Parker was getting up, but our costs went up faster, and our profits were squeezed.
The 1970s: The Illusion of Success
Examination Paper: International Business Management
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IIBM Institute of Business Management
Despite the difficulties Parker encountered when it left its niche in the upper end of the pen market,
the company experienced a healthy period of growth and profitability for most of the 1970s. Demand
for its products remained strong, and its worldwide markets expanded significantly due to a rise in
consumer income and increasing literacy rates in much of the Third World. Parker also chose to
diversify during this decade, and its most noteworthy acquisition, Manpower, Inc., proved to be a
temporary-help firm, Parker was the slightly more profitable of the two. With the boom in temporary
services in the late seventies and early eighties, however, Manpower eclipsed Parker in sales and
earnings and eventually subsidized its parent company during down periods.
Why did parker fall from its position of leadership in the writing instrument market” there were
many reasons, and one of the most important was the weakening of the U.S. dollars. At its peak,
Parker accounted for half of all U.S. exports of writing instruments and 80 percent of its total sales
came from 154 foreign countries. Parker was especially strong in Europe, most particularly in the
United Kingdome. When sales in the strong European currencies were translated into dollars, Parker
earned huge profits.
The downside of a weak dollar, however, was that it gave Parker the illusion that it was a wellrun
company. In fact, throughout the 1970s, Parker was a model of inefficiency. Manufacturing
facilities were dated and inefficient. Production was so erratic that the marketing department often
had no idea what type of pens they would be selling from year to year or even month to month. Under
the leadership of George Parker, nothing was done by company headquarters to update these facilities
or to develop new products. As a result, subsidiaries and distributors around the world saw fit to
develop their own products. By the end of George Parker’s reign, the company’s product line
included 500 writing instruments.
That distant subsidiaries would have the leeway to make such decisions was not at all unusual at
Parker, for it had long been known as one of the most globally decentralized companies in the world.
Decentralization, in fact, was something that Parker took pride in and considered to be vital to its
success as a multinational. Yet it was this very concept that Peterson and his new management team
would hold to be responsible for much of what ailed Parker Pen.
PARKER’S GLOBAL OPERATIONS BEFORE PETERSON
In addition to having a hand in manufacturing and product-line decisions, Parker’s subsidiaries
developed their own marketing strategies. More than 40 different advertising agencies promoted
Parker pens in all the corners of the globe. When Peterson came to Parker, he was proudly informed
that the company was a “federation” of autonomous geographical units. The downside to the
“federation” concept, Peterson though, was that home country management often lacked the
information needed to make and coordinate basic business decisions. Control was so completely
decentralized that Parker didn’t even know how many pens it was selling by the time Peterson and his
group arrived.
On the other hand, decentralization obviously had its positive aspects, most noticeably in the field
of advertising. Pens mean different things to different people. Whereas Europeans are more likely to
choose a pen based on its style and feel, a consumer from a lesser-developed country in the seventies
viewed the pen as nothing less than a badge of literacy. In additional, tastes varied widely from
country to country. The French, for example, remained attached to the fountain pen. Scandinavians,
for their part, showed a market preference for the ballpoint. The logic behind having so many
different advertising agencies was that, even if it appeared to be somewhat inefficient, in the end the
company was better off from a sales standpoint.
Some of the individual advertising agencies were able to devise excellent, imaginative
campaigns that struck a responsive chord among their local audiences. One example was the Lowe
Howard-Spink agency in London. The Parker U.K. division became the company’s most profitable
Examination Paper: International Business Management
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IIBM Institute of Business Management
during the tenure of the Lowe agency. An example of its creativity is an ad is a picture of a dead
plumber, on his back, with a giant Parker pen protruding from his heart. Part of the text is as follows:
Do you know plumbers who never turn up?
Hairdressers who missed their vocations as butchers?
Drycleaners who make your stains disappear – and your clothes with them?
Today, we at Parker give you the chance to get your own back.
Not only are we offering a beautiful new pen called the Leque which owes its deep luster to a Chinese
technique 2000 years old, but we are attempting to revive something that went out when the telephone
came in.
The well-armed, witty, malicious dart.
Although the Parker U.K. division was a success, however, the company’s general inefficiencies,
loss of market share, and lack of strategic direction were finally revealed in the early 1980s with the
rise of the U.S. dollar. Parker’s financial decline was even more precipitous than the dollar’s increase.
When the huge 1982 losses were registered, Peterson was brought in from R.J. Reynolds to try and
turn things around for Parker. He decided that every aspect of the company needed to be closely
examined, not the least of which was Parker’s decentralization of global operations.
Questions:
1. What would you do if you were in James Peterson’s shoes in January 1982?
2. What changes, if any, would you make in Parker’s marketing strategy?
3. Which aspects of Parker’s structure would you discard? Which would you keep?
4. Assume that you are James Peterson and you have just hired a new management team composed
of highly qualified executives from outside companies. You and your new team are convinced
that you have the solution to Parker’s problems but there are many hold overs who disagree with
you. How would you implement your plan? To what extent would you incorporate the views of
Parker management into your plan?
END OF SECTION B
Examination Paper: International Business Management
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IIBM Institute of Business Management
Section C: Applied Theory (30 marks)
· This section consists of Applied Theory Questions.
· Answer all the questions.
· Each question carries 15 marks.
· Detailed information should form the part of your answer (Word limit 200 to 250 words).
1. Consider the equation Y=f(A,B,C,D,E,F,G), where Y stands for consumption of soft drinks
and D is the variable for cultural elements. How would this equation help a soft-drink
marketer understand demand for soft drinks in global markets?
2. The president of XYZ Manufacturing Company of Buffalo, New York, comes to you with a
license offer from a company in Osaka. In return for sharing the company’s patents and
know-how, the Japanese company will pay a license fee of 5percent of the ex-factory price of
all products sold based on the U.S. Company’s license. The president wants your advice what
would you tell him?
END OF SECTION C
S-2-210311
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Global Marketing Management
Section A: Objective Type (30 marks)
· This section consists of Multiple choices/Fill in the blanks/True-False & Short Answer type
questions.
· Answer all the questions.
· Part One questions carries 1 mark each & Part Two questions carry 5 marks each.
Part One:
1. All the ethnocentric orientations are collectively
called…………………………………………………………….
2. Presently number of members countries in OECD are:
a. 12
b. 20
c. 24
d. 29
3. If the value be ‘a’ , benefit be ‘b’ and the price be ‘c’ then relation between the threes is given
by:
a. a=b/c
b. a=c/b
c. a=b+c
d. None of the above
4. If the confidence limit be ‘t’ standard deviation be ‘b’ and the error limit be ‘c’ then the sample
size will be given by:
a. n=t+b/c
b. n=t*b/c
c. n=t*c/b
d. none
5. According to Backer spielvogel and Bates’s global scan the segment content of Achiever is:
a. 26
b. 22
c. 13
d. 18
6. CAT stands for ………………………………………………………………………….…
7. Cave dwellers are…………………………………………………………………………
8. LIFO stands for life in fire option.(T/F)
Examination Paper: International Business Management
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IIBM Institute of Business Management
9. Starbursts are
………………………………………………………………………………………………………
10. Name one of the common wealth of independent States
(CIS)……………………………………………..
Part Two:
1. Write short “Hofstede’s Cultural Typology”.
2. Write a short note on “Diffusion Theory”.
3. According to “D’arcy Massius Benton & Bowles’s Euroconsumer Study”. Who are disaffected
survivors?
4. What do you understand by “Piggyback Marketing”?
END OF SECTION A
Section B: Caselets (40 marks)
· This section consists of Caselets.
· Answer all the questions.
· Each Caselet carries 20 marks.
· Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
Which Company Is Transnational?
Four senior executives of companies operating in many countries speaks:
COMPANY A
We are transnational company. We sell our products in over 80 countries, and we manufacturer in 14
countries. Our overseas subsidiaries manage our business in their respective countries. They have
complete responsibility for their country operations including strategy formulation. Most of the key
executives in our subsidiaries are host-country nationals, although we still rely on home-country
persons for the CEO and often the CFO (chief financial officer) slots. Recently, we have divided the
world regions and the United States. Each of the world regions reports to our world trade
organization, which is responsible for all of our business outside United States.
The overseas companies are responsible for adapting to the unique market preferences that exist
in their country or region and are quite autonomous. We are proud of our international reach: We
manufacture not only in the United States but also in Europe and the United Kingdom, Latin
America, and Australia.
We have done very well in overseas markets, especially in the high-income countries with the
exception of Japan. We would like to enter the Japanese market, but let’s face it, Japan is a protected
Examination Paper: International Business Management
7
IIBM Institute of Business Management
country. There is no level playing field, and as you no doubt know, the Japanese have taken
advantage of the protection they enjoy in their home country to launch an export drive that has been a
curse for us. Our industry and our home country (the United States) has been a principle target of the
Japanese, who have taken a real bite out of our market share here in the United States. We are
currently lobbying for more protection from Japanese competition.
COMPANY B
We are a unique transnational media company. We do not dominate any particular area, but we have
an important presence on three continents in magazines, newspapers, and television. We have a global
strategy. We are a global communications and entertainment company. We’re in the business of
informing people around the world on the widest possible basis. We know how to serve the needs of
our customers who are readers, viewers, and advertisers. We transfer people and money across
national boundaries, and we know how to acquire and integrate properties as well as how to start up a
new business. We started out as Australian, and then the weight of our main effort is in the United
States. We go where the opportunity is because we are market driven.
Sure, there are lots of Australians in the top management of this company, but we started in
Australia, and those Aussies know our business and the company from the ground up. Look around
and you’ll see more and more Americans and Brits taking the top jobs. We stick to English because I
don’t believe that we could really succeed in foreign print or broadcast. We know English, and so far
the English-speaking world is big enough for us. The world is shrinking faster than we all realize, and
to be in communications is to at the center of all change. That’s the excitement of what we’re doing –
and also the importance.
COMPANY C
We’re a transnational company. We are committed do being the number-one company in our industry
worldwide. We do all of our manufacturing in our home country because we have been able to
achieve the lowest cost and the highest quality in the world by keeping all engineering and
manufacturing in order to maintain our cost advantage. We are doing this reluctantly but we believe
that the essence of being global is dominating markets and we plan to do whatever we must do in
order to maintain our position of leadership.
It is true that all of our senior managers at home and in most of our foreign markets are homecountry
nationals. We feel more comfortable with our own nationals in key jobs because they speak
our language and they understand the history and the culture of our company and our country. It
would be difficult for an outsider to have this knowledge, which is so important to smooth-working
relationships.
COMPANY D
We are a transnational company. We have 24 nationalities represented on our headquarters staff, we
manufacture in 28 countries, we market in 92 countries, and we are committed to leadership in our
industry. It is true that we are backing off on our commitment to develop business in the Third World.
We have found it extremely difficult to increase sales and earnings in the Third World, and we have
been criticized for our aggressive marketing in these countries. It is also true that only home-country
nationals may own voting shares in our company. So, even though we are global, we do have a home
and a history and we respect the traditions and sensibilities of our home country.
We want to maintain our number-one position in Europe, and over time achieve the same position
of leadership in our target markets in North America and Japan. We are also keeping a close eye on
the developing countries of the world, and whenever we see a country making the move from low
income to lower middle, or from lower middle to upper middle, or from upper middle to high income
Examination Paper: International Business Management
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IIBM Institute of Business Management
we commit our best effort to expand our positions, or, if we don’t have a positions, to establish a
position. Since our objective is to achieve an undisputed leadership position in our industry, we
simply cannot afford not to be in every growing market in the world.
We have always had a European CEO, and this will probably not change. The executives in this
company from Europe tend to serve all over the world, whereas the executives from the United States
and Japan serve only in their home countries. They are very able and valuable executives, but they
lack the necessary perspective of the world required for the top jobs here at headquarters.
Questions:
1. Which company is transnational?
2. What are the attributes of a transnational company?
3. What is the difference between a domestic, international, multinational, global, and transnational
company?
4. At what stage of development are your company and your line of business today? Where should
you be?
Caselet 2
Parker Pen Co. (A)
INTRODUCTION
The meeting at sunny Palm Beach concluded with nary a whimper of dissent from its participants.
After years of being run as a completely decentralized company whose managers in all corners of the
world enjoyed a high degree of flexibility, Parker Pen Co., Janesville, Wisconsin, was forced to
reexamine itself. The company had enjoyed decade after decade of success until the early 1980s. By
this time, Parker faced strong competitive threats and a deteriorating internal situation. A new
management team was bought in from outside the company – an unprecedented step for what had
been until then an essentially family-run business. At the March 1984 Palm Beach meeting, this new
group of decision makers would outline a course of action that would hopefully set Parker back on a
path to success.
The men behind the new strategy were supremely confident of its chances for success – and with
good reason. Each was recognized as a highly skilled practitioner of international business and their
combined extensive experience gave them an air of invincibility. They had been recruited from larger
companies, had left high-paying, rewarding jobs, and each had come to Janesville with a grand sense
of purpose. For decades, Parker had been a dominant player in the pen industry. In the early 1980s,
hoe-ever, the company had seen its market share dwindle to a mere 6 percent and, in 1982, net
income plunged a whopping 60 percent.
To reverse this decline, Parker recruited James Peterson, an executive vice president at R.L.
Reynolds, as the new president and CEO. Peterson hired Manville Smith as president of the writing
instruments group at Parker Smith, who was born in Ecuador and had a broad international
background, came from 3M where he had been appointed division president at the tender age of 30.
Richard Swart was vice president/marketing of the writing instruments group. He spent 11 years at
the advertising agency BBDO and was an expert on marketing planning and theory. Jack Marks was
head of writing instruments advertising. Marks came to Parker from Gillette, where, among other
things, he assisted in the worldwide marketing of Paper Mate pens. Rounding out the team was Carlos
Examination Paper: International Business Management
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IIBM Institute of Business Management
Del Nero, manager of global marketing planning, who brought with him considerable international
experience at Fisher-Price. Each of these men was convinced that Parker would right itself by
following the plan they unveiled at Palm Beach.
A BRIEF HISTORY OF PARKER PEN
The “Rolls Royce” of the Pen Industry
The Parker name has been identified with pens since 1888 when George S. Parker delighted inksplotched
pen users everywhere by introducing a leakproof fountain model called the Parker Lucky
Curve. Parker Pen would eventually blossom into America’s, if not the world’s, largest and bestknown
pen market. Parker’s products, which would eventually include ballpoint pens, felt-tip pens,
desk sets, mechanical pencils, inks, leads, erasers, and, of course, the fountain pen, were also known
for their price tags. In 1921, for example, Parker introduced the Duofold pen. The Duofold, even
though it was comparable to other $3 pens on the market, was extravagantly priced at $7. Parker was
able to charge a premium price because of its reputation for quality and style, and its skill in
positioning products in the top price segment.
Parker’s position as America’s leading pen marker was solidified during the years when the pen
was mainly viewed as a gift item. High school and college graduates in the 1940s and 1950s, for
example, were quite likely to receive a Parker “51” fountain pen (priced at & 12.50) commemorating
their achievement. Indeed, it was with a “51” that General Douglas MacArthur signed the Japanese
Peace Treaty in 1945. Parker’s stylish products and high profile name would keep it at the top of the
pen market until the late sixties as well as a few foreign brands, knocked them out of first place once
and for all.
Of course, Parker would not have lost its hold on the market had it not made some oversights
along the way. In addition to a more competitive environment, Parker failed to come to terms with a
fundamental change in the pen market – the development of the disposable, ballpoint market. When
Parker unveiled the $25 “75” pen in 1963, it showed that it remained committed to supplying high
showed that it remained committed to supplying high priced pens to the upper end of the market. As
the 1960s wore on, a clear trend toward cheap ballpoint and soft-tip pens developed. Meanwhile,
Parker’s only ultimately successful addition to its product range in the late sixties was the “75”
Classic line, yet another high-priced pen.
A Brief Flirtation with Low-Priced Pens
Parker did, however, make an effort to compete in the lower price segment of the market in the late
1960s only to see it fail. In an attempt to capitalize on the trend toward inexpensive pens, Parker
introduced the T-Ball Jotter, priced at $1. 98. The success of the Jotter led it to move even further
down the price ladder when it acquired Ever sharp. Whereas the Jotter had given Parker reason to
believe it could make the shift from pricy pens to cheap pens with little or no difficulty, the Ever
sharp experience proved to be different. George Parker, a grandnephew of the company’s founder and
president of Parker at the time, stated the reasons for the ever sharp failure, as well as its
consequences:
All the market research surveys said go lower, go lower, go lower, that’s where the business is.
So I said, ‘Go lower? Fine. But we don’t know how.’ We bought Ever sharp and tried to run it
ourselves, and we couldn’t do it. our people just couldn’t think in terms of big units, and they didn’t
know how to sell people on the lower-priced end of the business – grocers, supermarkets, rack
jobbers. The result was, Bic and Paper Mate were cleaning up in the lower-priced end, Cross in the
high, and Parker was getting up, but our costs went up faster, and our profits were squeezed.
The 1970s: The Illusion of Success
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Despite the difficulties Parker encountered when it left its niche in the upper end of the pen market,
the company experienced a healthy period of growth and profitability for most of the 1970s. Demand
for its products remained strong, and its worldwide markets expanded significantly due to a rise in
consumer income and increasing literacy rates in much of the Third World. Parker also chose to
diversify during this decade, and its most noteworthy acquisition, Manpower, Inc., proved to be a
temporary-help firm, Parker was the slightly more profitable of the two. With the boom in temporary
services in the late seventies and early eighties, however, Manpower eclipsed Parker in sales and
earnings and eventually subsidized its parent company during down periods.
Why did parker fall from its position of leadership in the writing instrument market” there were
many reasons, and one of the most important was the weakening of the U.S. dollars. At its peak,
Parker accounted for half of all U.S. exports of writing instruments and 80 percent of its total sales
came from 154 foreign countries. Parker was especially strong in Europe, most particularly in the
United Kingdome. When sales in the strong European currencies were translated into dollars, Parker
earned huge profits.
The downside of a weak dollar, however, was that it gave Parker the illusion that it was a wellrun
company. In fact, throughout the 1970s, Parker was a model of inefficiency. Manufacturing
facilities were dated and inefficient. Production was so erratic that the marketing department often
had no idea what type of pens they would be selling from year to year or even month to month. Under
the leadership of George Parker, nothing was done by company headquarters to update these facilities
or to develop new products. As a result, subsidiaries and distributors around the world saw fit to
develop their own products. By the end of George Parker’s reign, the company’s product line
included 500 writing instruments.
That distant subsidiaries would have the leeway to make such decisions was not at all unusual at
Parker, for it had long been known as one of the most globally decentralized companies in the world.
Decentralization, in fact, was something that Parker took pride in and considered to be vital to its
success as a multinational. Yet it was this very concept that Peterson and his new management team
would hold to be responsible for much of what ailed Parker Pen.
PARKER’S GLOBAL OPERATIONS BEFORE PETERSON
In addition to having a hand in manufacturing and product-line decisions, Parker’s subsidiaries
developed their own marketing strategies. More than 40 different advertising agencies promoted
Parker pens in all the corners of the globe. When Peterson came to Parker, he was proudly informed
that the company was a “federation” of autonomous geographical units. The downside to the
“federation” concept, Peterson though, was that home country management often lacked the
information needed to make and coordinate basic business decisions. Control was so completely
decentralized that Parker didn’t even know how many pens it was selling by the time Peterson and his
group arrived.
On the other hand, decentralization obviously had its positive aspects, most noticeably in the field
of advertising. Pens mean different things to different people. Whereas Europeans are more likely to
choose a pen based on its style and feel, a consumer from a lesser-developed country in the seventies
viewed the pen as nothing less than a badge of literacy. In additional, tastes varied widely from
country to country. The French, for example, remained attached to the fountain pen. Scandinavians,
for their part, showed a market preference for the ballpoint. The logic behind having so many
different advertising agencies was that, even if it appeared to be somewhat inefficient, in the end the
company was better off from a sales standpoint.
Some of the individual advertising agencies were able to devise excellent, imaginative
campaigns that struck a responsive chord among their local audiences. One example was the Lowe
Howard-Spink agency in London. The Parker U.K. division became the company’s most profitable
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IIBM Institute of Business Management
during the tenure of the Lowe agency. An example of its creativity is an ad is a picture of a dead
plumber, on his back, with a giant Parker pen protruding from his heart. Part of the text is as follows:
Do you know plumbers who never turn up?
Hairdressers who missed their vocations as butchers?
Drycleaners who make your stains disappear – and your clothes with them?
Today, we at Parker give you the chance to get your own back.
Not only are we offering a beautiful new pen called the Leque which owes its deep luster to a Chinese
technique 2000 years old, but we are attempting to revive something that went out when the telephone
came in.
The well-armed, witty, malicious dart.
Although the Parker U.K. division was a success, however, the company’s general inefficiencies,
loss of market share, and lack of strategic direction were finally revealed in the early 1980s with the
rise of the U.S. dollar. Parker’s financial decline was even more precipitous than the dollar’s increase.
When the huge 1982 losses were registered, Peterson was brought in from R.J. Reynolds to try and
turn things around for Parker. He decided that every aspect of the company needed to be closely
examined, not the least of which was Parker’s decentralization of global operations.
Questions:
1. What would you do if you were in James Peterson’s shoes in January 1982?
2. What changes, if any, would you make in Parker’s marketing strategy?
3. Which aspects of Parker’s structure would you discard? Which would you keep?
4. Assume that you are James Peterson and you have just hired a new management team composed
of highly qualified executives from outside companies. You and your new team are convinced
that you have the solution to Parker’s problems but there are many hold overs who disagree with
you. How would you implement your plan? To what extent would you incorporate the views of
Parker management into your plan?
END OF SECTION B
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Section C: Applied Theory (30 marks)
· This section consists of Applied Theory Questions.
· Answer all the questions.
· Each question carries 15 marks.
· Detailed information should form the part of your answer (Word limit 200 to 250 words).
1. Consider the equation Y=f(A,B,C,D,E,F,G), where Y stands for consumption of soft drinks
and D is the variable for cultural elements. How would this equation help a soft-drink
marketer understand demand for soft drinks in global markets?
2. The president of XYZ Manufacturing Company of Buffalo, New York, comes to you with a
license offer from a company in Osaka. In return for sharing the company’s patents and
know-how, the Japanese company will pay a license fee of 5percent of the ex-factory price of
all products sold based on the U.S. Company’s license. The president wants your advice what
would you tell him?
END OF SECTION C
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