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
6
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
9
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
11
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
12
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
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