SMU

ASSIGNMENT
SEMESTER – 4
MK0018

INTERNATIONAL MARKETING
Set-1
SUBMITTED BY:
GYANENDRA KUMAR
MBA
ROLL NO:-520941253

Q.1 Explain Ethnocentric, Polycentric, Regiocentric and Geocentric orientations.

Ans.: Ethnocentric orientation: A home country orientation or an unconscious bias or belief that the
home country approach to business is superior.

In this concept, the assumption is that the home country marketing practices will succeed elsewhere
without adaptation. Ethnocentrism is a natural result of the observation that most people are more
comfortable with and prefer the company of people who are like themselves, sharing similar values and
behaving in similar ways. It is not unusual for a person to consider that what ever they believe is the most
appropriate system of belief, or that however they behave is the most appropriate and natural behavior. In
fact in such organizations, international marketing is viewed as secondary to domestic operations and very
little special effort is made for international marketing.

Ethnocentricity: the following features characterize this behaviour:

Strong orientation toward home country
Centralization of decision-making
Efficient but not effective

Polycentric orientation: The unconscious bias or belief that it is necessary to adopt totally to local culture
and practice. It is a host country orientation in management.

This is the opposite of ethnocentrism. Polycentrism is the principle of organisation of a region around
several political, social or financial centers. In intercultural competence the term polycentrism is
understood as attitude and openness towards other cultures, opinions and ways of life: when intercultural
actions and correlations are interpreted not only with the background of own cultural experiences, but when
the independence of other cultures is recognized and appreciated and when cultural values are relativized
and seen in the whole context. This in the way of non-ethnocentrism, opposite to ethnocentrism.
Management of such multinational firms place importance on international operations, as a source for
profits and the management believes that each country is unique and allows each to develop its own
marketing strategies locally.

Polycentricity: This comprises of:

Strong orientation to host country
Decentralization of decision-making
Effective but not efficient

Geocentric orientation: A management orientation based upon the assumption that there are similarities
and differences in the world that can be understood and recognized in an integrated world strategy. The
geocentric orientation or world orientation is a synthesis of the ethnocentric orientation (home country) and
polycentric orientation (host country).

Geocentricity: which consists of:

World orientation
Centralization + decentralization + coordination
Efficiency and effectiveness

Regiocentric orientation: It is an approach for staffing of foreign operations on a regional basis. If the
firm is an MNC than it would recruit local people under this orientation.

Regiocentric orientation is an attitude or orientation toward internationalization with the focus on regional
orientation. In this concept, the organisation sees the world as one market and develops a standardized
marketing strategy for the entire world.

Regiocentric and Geocentric are synonymous with a Global Marketing Orientation where a uniform,
standardized marketing strategy is used for several countries, countries in a region, or the entire world.
Q.2 ‘International marketing is subject to influences from all kinds of environmental factors’.
Discuss.

Ans.: Definition of International Marketing

So, as with many other elements of marketing, there is no single definition of international marketing, and
there could be some confusion about where international marketing begins and global marketing ends. We
will assume that both terms are interchangeable, and will define international marketing as follows:

International Marketing is a multinational process of planning and executing the conception, pricing,
promotion, and distribution of ideas, goods, and services and to create exchanges that satisfy individual and
organizational objectives.

Why is International Marketing important?

Trade is increasingly becoming global in scope today. There are several reasons for this. One significant
reason is technological in nature–because of improved transportation and communication opportunities
today, trade is today more practical. Thus, consumers and businesses now have access to the very best
products from many different countries. Increasingly rapid technology lifecycles also increase the
competition among countries as to who can produce the newest in technology. In part to accommodate
these realities, countries in the last several decades have taken increasing steps to promote global trade
through agreements such as the General Treaty on Trade and Tariffs, and trade organizations such as the
World Trade Organization (WTO), North American Free Trade Agreement (NAFTA), and the European
Union (EU).

Apart from the above environmental factors, there are three reasons for the shift from domestic to
International marketing.

Saturation of domestic markets

For a company to keep growing, it must increase sales. Industrialized nations have, in many product and
service categories, saturated their domestic markets and have to turn to other countries for new marketing
opportunities. Companies in some developing economies have found profitability by exporting products
that are too expensive for locals, but are considered inexpensive in wealthier countries.

Worldwide competition

One of the product categories in which global competition has been easy to track is in automotive sales.
Three decades ago, there were only the big three: General Motors, Ford, and Chrysler in USA. Now,
Toyota, Honda, and Volkswagen are among the most popular manufacturers. Companies are on a global
playing field whether they had planned to be global marketers or not. Similar changes are happening all
over the world.

E-Commerce

With the proliferation of the Internet and e-commerce (electronic commerce), if a business is online, it is a
global business. With more people becoming Internet users daily, this market is constantly growing.
Customers can come from anywhere. Business-to-business (B2B) e-commerce is larger, growing faster,
and has fewer geographical distribution obstacles than even business-to-consumer (B2C) e-commerce.
With e-commerce, a brick and mortar storefront is unnecessary.

Driving and restraining factors affecting International Marketing

Over the last few decades’ internationalism has grown because of a number of market factors, which have
been driving development forward, over and above those factors, which have been attempting to restrain it.
These include market and marketing related variables. Some of these are as under:

Market Needs: Many global opportunities have arisen because of the clustering of market opportunities
worldwide. Organizations have found that similar basic segments exist worldwide and, therefore, can be
met with a global orientation. Cotton, as an ingredient in shirting’s, suiting, and curtain material can be
globally marketed as natural and fashionable. One can see in the streets of New York, London, Kuala
Lumpur or Harare, youth with the same style and brand of basketball shirts or American Football shorts.
Coca Cola can be universally advertised as "Adds Life", or appeal to a basic instinct " You can’t beat the
Feeling" or "Come alive" as with the case of Pepsi. One can question "what feeling?", but that is not the
point. The more culturally unbounded the product is, the more a global clustering can take place and the
more a standardized approach can be made in the design of marketing programs.

Technology: This standardized approach can be aided and abetted with technology. Technology has been
one of the single most powerful driving forces to internationalism. Rarely is technology culturally bound. A
new pesticide is available almost globally to any agricultural organization as long as it has the means to buy
it. Computers in agriculture and other applications are used universally, with IBM and Macintosh becoming
household names. The need to recoup large costs of research and development in new products may force
organizations to look at global markets to recoup their investment. This is certainly true of many veterinary
products. Global volumes allow continuing investment in R and D, thus helping firms to improve quality.
Farm machinery, for example, requires volume to generate profits for the development of new products.

Communications and Transport: Communications and transport are shrinking the global market place.
Value added manufacturers like Cadbury, Nestlé, Kellogg’s, Beyer, Norsk Hydro, Massey Ferguson and
ICI find themselves "under pressure" from the market place and distributors alike to position their brands
globally. In many cases this may mean an adaptation in advertising appeals or messages, as well as
packaging and instructions. Nestle will not be in a hurry to repeat its disastrous experience of the "Infant
formula" saga, whereby it failed to realize that the ability to find, boiled water for its preparations, coupled
with the literacy level to read the instructions properly, were not universal phenomena.

Regional Economic Agreements: A number of multilateral trade agreements like NAFTA have
accelerated the pace of global integration. In Europe, the expanding membership of the European Union is
lowering barriers to trade within the region.

Product Development Costs: The pressure for globalization is intense when new products require major
investments and long periods of development time. The pharmaceutical industry provides a striking
illustration of this driving force. Any single national market cannot recover the huge costs of developing
new molecules and it has to be necessarily recovered in the global marketplace.

Quality: International Marketing can generate greater revenue and greater operating margins, which can
hence be ploughed back for quality improvements and design. That is the reason why global companies like
Nissan, Matsushita, Caterpillar, Sony, GE, GM, Toyota, etc. are able to achieve world class quality.

Leverage: Marketing globally also provides the marketer with four types of "leverage" or "advantages".
These are:

· Experience Transfers: A global company can leverage its experience in any market in the world and
apply them in other comparable markets.

· Scale Economics: The global company can take advantage of greater manufacturing volume to obtain
traditional economies of scale in a single factory. Also, combining components manufactured in scale
efficient plants in different countries can make finished products.
· Resource utilization: A major strength of a global company is its ability to scan the entire world to
identify people, money and raw materials to enable it to compete most efficiently in world markets.

· Global strategy: A global strategy is built on an information system that scans the world business
environment to identify opportunities, trends, threats and resources.

· A multi-product global giant like Nestle’, with over £10 billion turnover annually, operates in so many
markets, buys so much raw material from a variety of out growers of different sizes, that its international
leverage is huge. If it consumes a third of the world’s cocoa output annually, then it is in a position to
dominate terms.

Restraining Forces:

Management Myopia and Organizational culture: A company, which is short sighted and ethnocentric,
will not expand geographically. International Marketing does not work without a strong local team that can
provide information about local market conditions.

National Controls and Barriers: Every country protects local enterprise and interests by maintaining
control over market access and entry in both low and high tech industries and advertising. The only way
global companies can overcome these barriers is to become “insiders” in every country in which they do
business.

Q.3 Evaluate any 2 classical trade theories.

Ans.: Classical Theory Of International Trade

Economic Blocs: The principal forces have been the development of economic blocs like the European
Union (EU) and then the "economic pillars"- the World Bank (or International Bank for Reconstruction and
Development to give its full name), the International Monetary Fund (IMF) and the evolution of the World
Trade Organization from the original General Agreement on Tariffs and Trade (GATT).

Foreign Exchange Base: Until 1969, the world economy traded on a gold and foreign exchange base. This
affected liquidity drastically. After 1969, liquidity was eased by the agreement that member nations to the
IMF accept the Special Drawing Rights (SDR) in settling reserve transactions. Now an international reserve
facility is available. Recently, the World Bank has taken a very active role in the reconstruction and
development of developing country economies, a point that will be expanded on later.

GATT: Until the General Agreement on Tariffs and Trade (GATT) after World War II, discriminating
trade practices had restricted the world trading system. GATT had the intention of producing a set of rules
and principles to liberalize trade. The most favored nation concept (MFN), whereby each country agrees to
extend to all countries the most favourable terms that it negotiates with any country, helped reduce barriers.
The "round" of talks began with Kennedy in the 60s and Tokyo of the 70s. The latest round, Uruguay, was
recently concluded in April 1994 and ratified by most countries in early 1995. Despite these trade
agreements, non-tariff barriers like exclusion deals, standards and administrative delays are more difficult
to deal with. A similar system exists with the European Union, – the Lomè convention. Under this deal,
African and Caribbean countries enjoy favored status with EU member countries.

Global Peace: Relative global peace has engendered confidence in world trade. Encouraged by this and
the availability of finance, global corporations have been able to expand into many markets. The break up
of the former Soviet Union has opened up vast opportunities to investors, aided by the World Bank and the
European Development Bank. This atmosphere of peace has also allowed the steady upward trend of
domestic growth and again opened up market opportunities domestically to foreign firms. Peace in
Mozambique, the "normalization" of South Africa, and peace in Vietnam as examples, have opened up the
way for domestic growth and also, therefore, foreign investment. The liberation of economies under World
Bank sponsored structural adjustment programs has also given opportunities. This is very true of countries
like Zambia and Zimbabwe, where in the latter, for example, over Z$2.8 billion of foreign investment in the
stock exchange and mining projects have occurred in the early 1990s.

Acts of GOD: Sometimes, market opportunities open up through "Acts of God". The great drought of
1992 in Southern Africa necessitated a large influx of foreign produce, especially yellow maize from the
USA and South America. Not only did this give a market for maize only, but opened up opportunities for
transport businesses and services to serve the drought stricken areas. Speedy communications like air
transportation and electronic data transmission and technology have "shrunk" the world. Costs and time
have reduced enormously and with the advent of television, people can see what is happening elsewhere
and this can cause desire levels to rise dramatically. Only recently has television been introduced into
Tanzania, for example, and this has brought the world and its markets, closer to the average Tanzanian.

Collapse of old Communist blocs: No doubt a great impetus to global trade was brought about by the
development of economic blocs, and, conversely, by the collapse of others. Blocs like the European Union
(EU), ASEAN, and the North American Free Trade Agreement (NAFTA) with the USA, Canada and
Mexico have created market opportunities and challenges. New countries are trying to join these blocs all
the time, because of the economic, social and other advantages they bring. Similarly, the collapse of the old
communist blocs has given rise to opportunities for organizations, as they strive to get into the new market
based economies rising from the ruins.

Q.4 Explain the role of international packaging.

Ans.: Role of international packaging:

Packaging is another integral part of a product. Packaging serves two primary purposes: functional and
promotional. First and foremost, a package must be functional in the sense that it is capable of protecting
the product at minimum cost.

1 Functional Aspect:

If a product is not manufactured locally and has to be exported to another country, extra protection is
needed to compensate for the time and distance involved. A country’s adverse environment should also be
taken into account. When moisture is a problem, a company may have to wrap pills in foil or put food in tin
boxes or vacuum-sealed cans. Still, the type of package chosen must be economical. In Mexico, where
most consumers cannot afford to buy detergents in large packages, detergent suppliers found it necessary to
use plastic bags for small packages, because cardboard would be too expensive for that purpose.

For most packaging applications, marketers should keep in mind that foreign consumers are more
concerned with the functional aspect of a package than they are with convenience. As such, there is usually
no reason to offer the great variety of package sizes or styles demanded by Americans. Plastic and
throwaway bottles are regarded as being wasteful, especially in LDCs, where the labor cost for handling
returnable is modest.

Non-American consumers prefer a package to have secondary functions. A tin box or a glass bottle can be
used after the product content is gone to store something else. Consumers to recoup a part of the purchase
price can sell empty glass containers.

2 Promotional Aspects:
From the marketing standpoint, the promotional function of packaging is just as critical as the functional
aspect. To satisfy the Japanese preference for beautiful packaging, Avon upgraded its inexpensive plastic
packaging to crystalline glass. Similarly, BSR packs its product into two cartons, one for shipping and one
for point-of purchase display, because Japanese buyers want a carton to be in top condition. The successful
campaign for Bailey’s Irish Cream in the United States included a fancy gold foil box package that
promotes this whiskey-based drink’s upscale image. In any case, packaging does not have to be dull. Novel
shapes and designs can be used to stimulate interest and create excitement.

3 Packaging Modifications:

A package change may be either mandatory or at the discretion of the marketer. Mandatory Changes:

A mandatory change is usually necessitated by government regulations. Sometimes, it is for safety and
other reasons. Sometimes, packaging regulations are designed more for protection against imports than for
consumer protection.

Several countries require bilingualism (e.g., French and English in Canada and French and Flemish in
Belgium). This requirement may force the manufacturer to increase package size or shorten messages and
product name, as a bilingual package must have twice the space for copy communications. In some cases,
modification is dictated by mechanical or technical difficulties, such as the unavailability of certain
typographic fonts or good advertising typographers.

In many cases, packaging and labeling is highway related. Packages may be required to describe contents,
quantity, manufacturer’s name and address, and so on in letters of designated sizes. Any pictorial
illustration that is used should not be misleading. In Singapore, certain foods must be labeled to conform to
defined standards. When terms, are used, that simply add vitamins or minerals (e.g., enriched, fortified,
vitaminised), packages must show the quantities of vitamins or minerals added per metric unit. In addition,
if the product is hazardous in any way, marketers should adopt the United Nations’ recommendations for
the labeling and packaging of hazardous materials.

Exporters of textile products must conform to countries’ varying regulations. Spain has specific and
extensive requirements concerning fiber content, labeling, and packaging. In addition to its flammability
requirements, Sweden’s labeling regulations include size, material, care, and origin. Venezuela requires all
packaged goods to be labeled in metric units, while specifically prohibiting dual labeling to show both
metric and non metric units.

Germany wants the description of fiber content to be in German, but labeling for Denmark must be in
Danish or kindred. In the case of France, care labeling (if used) must meet an International Standardization
Organization (ISO) directive.

Discretionary Changes: Optional modification of package, although not absolutely necessary, may have
to be undertaken for marketing impact or for facilitating marketing activities. Through accidents and
history, users in many countries have grown accustomed to particular types of packages. Mayonnaise,
cheese, and mustard come in tubes in Europe, but mustard is sold in jars in the United States. Orange
bottles are popular in the Netherlands. While non-Dutch beer drinkers all over the world readily recognize a
green Heineken bottle; the domestic Heineken beer comes in a brown bottle. Ironically, because of a strike
at home, Heineken was forced to import 1.8 million gallons at one time from some of its ninety breweries
worldwide.

In selecting or modifying a package, a marketer should consider local conditions related to purchasing
habits. Products conventionally sold in packs in the United States are not necessarily sold that way
elsewhere and may require further bulk breaking. This phenomenon is in part the result of lower income
levels overseas and in part the result of a lack of unit pricing, which makes it difficult for buyers to see any
savings derived from the purchase of a bigger package. Foreign consumers may, desire to buy one bottle of
beer or soft drink at a time instead of buying a six-pack or eight pack. Likewise, one cigarette, not the
whole pack, may be bought in a purchase transaction.

Q.5 Give short notes on a) Dumping and price distortions b) e-Marketing.

Ans.: a) Dumpling and price distortions:

Dumping: In the context of international trade law, dumping is defined as a manufacturer in one country
exporting a product to another country at a price which is either below the price it charges in its home
market, or is below its costs of production. The term has a negative connotation, but advocates of free
markets see "dumping" as beneficial for consumers and believe that protectionism to prevent it would have
net negative consequences. Advocates for workers and laborers however, believe that safeguarding
businesses against predatory practices, such as dumping, help alleviate some of the harsher consequences
of free trade between economies at different stages of development (see protectionism).

A standard technical definition of dumping is the act of charging a lower price for a good in a foreign
market than one charges for the same good in a domestic market. This is often referred to as selling at less
than "fair value." Under the WTO Agreement, dumping is condemned (but is not prohibited) if it causes or
threatens to cause material injury to a domestic industry in the importing country.

Price distortion: Devaluation is the reduction and revaluation an increase in the value of one currency vis-
à-vis other currencies. Under the floating exchange rate system devaluation and revaluation occur when
currency values adjust in the exchange rate system in response to supply and demand. The idea behind
devaluation is to make the domestic price more competitive and so more of the product can be bought for
the same foreign currency. However, it can be negated by the higher price and costs induced by inboard
goods and services which make up the export product. If the product is inelastic in demand, prices can be
maintained if the competitive position is strong.

In revaluation, the revaluing country’s prices are more expensive. These price increases may be passed on
to the customers, absorbed or the domestic price may be reduced.

b) E marketing: E-marketing, also referred to as online marketing or internet marketing, is marketing that
uses the Internet. The Internet has brought many unique benefits to marketing, including low costs in
distributing information and media to a global audience. The interactive nature of Internet media, both in
terms of instant response, and in eliciting response at all, are both unique qualities of Internet marketing. E-
marketing ties together creative and technical aspects of the internet, including design, development,
advertising and sales. E-marketing methods include search engine marketing, display advertising, e-mail
marketing, affiliate marketing, interactive advertising and viral marketing. E marketing is the process of
growing and promoting an organization using online media. E marketing does not simply mean ‘building a
website’ or ‘promoting a website’. Somewhere behind that website is a real organization with real goals. E-
marketing strategy includes all aspects of online advertising products, services, and websites, including
search engine marketing, public relations, social media, market research, email marketing, and direct sales.
The E-marketer selects the best of these vehicles, given the organization’s goals and audience.

E Marketing can also be defined, as a subset of e-Business that utilizes electronic medium to perform
marketing activities and achieve desired marketing objectives for an organisation. Internet Marketing,
Interactive Marketing and Mobile marketing for example, is all a form of e marketing.

Advantages of E-Marketing: Some of the benefits associated with E-marketing include the availability of
information. Consumers can access the Internet and learn about products, as well as purchase them, at any
hour, any day. Companies that use Internet marketing can also save money because of a reduced need for a
sales force. Overall, E-marketing can help expand from a local market to both national and international
market places. Compared to traditional media, such as print, radio and TV, Internet marketing can have a
relatively low cost of entry. Since exposure, response and overall efficiency of Internet media is easy to
track, through the use of web analytics for instance, compared to traditional "offline" media, E-marketing
can offer a greater sense of accountability for advertisers.

Following are some of the other advantages of e marketing:

· Reduction in costs through automation and use of electronic media
· Faster response to both marketers and the end user
· Increased ability to measure and collect data
· Opens the possibility to a market of one through personalization
· Increased interactivity

Limitations of E-Marketing: Since E-marketing requires customers to use newer technologies than
traditional media, not all people may get the message. Low speed Internet connections can cause
difficulties. If companies build overly large or complicated web pages, Internet users may struggle to
download the information on dial up connections or mobile devices. E marketing does not allow shoppers
to touch, smell, taste or try-on tangible goods before making an online purchase. Some e-commerce
vendors have implemented liberal return policies and in store pick up services to reassure customers.

Q.6 What are the various issues related with exports and EXIM polices?

Ans.: EXIM Policy contains various policy related decisions taken by the government in the sphere of
Foreign Trade, i.e., with respect to imports and exports from the country and more especially
export promotion measures, policies and procedures related thereto. Trade Policy is prepared and
announced by the Central Government (Ministry of Commerce). India's Export Import Policy also know as
Foreign Trade Policy, in general, aims at developing export potential, improving export performance,
encouraging foreign trade and creating favorable balance of payments position.
Objectives Of The Exim Policy: -
Government control import of non-essential items through the EXIM Policy. At the same time, all-out
efforts are made to promote exports. Thus, there are two aspects of Exim Policy; the import policy, which
is concerned with regulation and management of imports, and the export policy, which is concerned with,
exports not only promotion but also regulation. The main objective of the Government's EXIM Policy is to
promote exports to the maximum extent. Exports should be promoted in such a manner that the economy of
the country is not affected by unregulated exportable items specially needed within the country. Export
control is, therefore, exercised in respect of a limited number of items whose supply position demands that
their exports should be regulated in the larger interests of the country. In other words, the main objective of
the Exim Policy is:
• To accelerate the economy from low level of economic activities to high level of economic
activities by making it a globally oriented vibrant economy and to derive maximum benefits from
expanding global market opportunities.
• To stimulate sustained economic growth by providing access to essential raw materials,
intermediates, components,' consumables and capital goods required for augmenting production.
• To enhance the techno local strength and efficiency of Indian agriculture, industry and services,
thereby, improving their competitiveness.
• To generate new employment. Opportunities and encourage the attainment of internationally
accepted standards of quality.
• To provide quality consumer products at reasonable prices.

Governing Body of Exim Policy

The Government of India notifies the Exim Policy for a period of five years (1997-2002) under Section 5 of
the Foreign Trade (Development and Regulation Act), 1992. The current Export Import Policy covers
the period 2002-2007. The Exim Policy is updated every year on the 31st of March and the modifications,
improvements and new schemes became effective from 1st April of every year.

All types of changes or modifications related to the EXIM Policy is normally announced by the Union
Minister of Commerce and Industry who co-ordinates with the Ministry of Finance, the

Exim Policy 1992 -1997

In order to liberalize imports and boost exports, the Government of India for the first time introduced the
Indian Exim Policy on April I, 1992. In order to bring stability and continuity, the Export Import Policy
was made for the duration of 5 years. However, the Central Government reserves the right in public interest
to make any amendments to the trade Policy in exercise of the powers conferred by Section-5 of the Act.
Such amendment shall be made by means of a Notification published in the Gazette of India.
Export Import Policy is believed to be an important step towards the economic reforms of India.

Exim Policy 1997 -2002

With time the Exim Policy 1992-1997 became old, and a New Export Import Policy was need for the
smooth functioning of the Indian export import trade. Hence, the Government of India introduced a new
Exim Policy for the year 1997-2002. This policy has further simplified the procedures and educed the
interface between exporters and the Director General of Foreign Trade (DGFT) by reducing the number
of documents required for export by half. Import has been further liberalized and better efforts have been
made to promote Indian exports in international trade.

SMU
 ASSIGNMENT
SEMESTER – 4
MK0018

INTERNATIONAL MARKETING
Set-2
SUBMITTED BY:
GYANENDRA KUMAR
MBA
ROLL NO:-520941253

Q.1 Distinguish between international marketing and domestic marketing. What are the benefits of
international marketing?

Ans.: International marketing:

International marketing is simply the application of marketing principles to more than one country.
However, there is a crossover between what is commonly expressed as international marketing and global
marketing, which is a similar term. For the purposes of this unit on international marketing and those that
follow it, international marketing and global marketing are interchangeable.

The intersection is the result of the process of internationalization. Many American and European authors
see international marketing as a simple extension of exporting, whereby the marketing mix is simply
adapted in some way to take into account differences in consumers and segments. It then follows that
global marketing takes a more standardized approach to world markets and focuses upon sameness, in other
words the similarities in consumers and segments.

At its simplest level, international marketing involves the firm in making one or more marketing mix
decisions across national boundaries. At its most complex level, it involves the firm in establishing
manufacturing facilities overseas and coordinating marketing strategies across the globe.

International Marketing is the performance of business activities that direct the flow of a company’s goods
and services to consumers or users in more than one nation for a profit.

The international market goes beyond the export marketer and becomes more involved in the marketing
environment in the countries in which it is doing business.

Domestic marketing:

Company marketing only within its national boundaries only has to consider domestic competition. Even if
that competition includes companies from foreign markets, it still only has to focus on the competition that
exists in its home market. Products and services are developed for customers in the home market without
thought of how the product or service could be used in other markets. All marketing decisions are made at
headquarters.

The biggest obstacle these marketers face is being blindsided by emerging international marketers. Because
domestic marketers do not generally focus on the changes in the global marketplace, they may not be aware
of a potential competitor who is a market leader in other countries. These marketers can be considered
ethnocentric, as they are most concerned with how they are perceived in their home country.

Benefits of International Marketing: International Marketing affects consumers daily in many ways.
Government officials and other observers always seem to point out the negative aspects of international
business. Many of their charges are imaginary and the following benefits of international business will help
in dispelling such notions:

Survival and Growth:

Most countries are not having all resources for development and they have to trade with others to survive.
For example, Hong Kong would not have survived without food and water from Mainland China. Most of
the European countries have similar problems since most of them are relatively small. International trade is
hence not a matter of choice but that of survival. Along with survival, these countries have also benefited
by growth of economy due to international trade.

Sales and Profits:

Foreign markets constitute a large share of the total business of many firms that have cultivated markets
abroad. All these firms are contributing to their sales and profits by a huge chunk due to international
marketing.

Diversification:
Demand for most products is affected by many cyclical factors of recession and seasonal factors like
climate. This results in fluctuations in sales, which can be substantial enough to cause layoffs of personnel.
One way to diversify the company’s risk is consider foreign markets as a solution to variable demand.

Inflation and Price Moderation:

The benefits of export are quite evident. The imports can also be highly beneficial to a country because
they constitute reserve capacity for the local economy. Without imports there is no incentive for the
domestic firms to moderate their prices. The lack of imported product forces the consumers to pay more,
resulting in inflation and excessive profits for local firms.

Employment:
Unrestricted trade has been proven to improve world’s GNP and enhance employment generally for all
nations.

Standards of Living:
Trade affords countries and their citizen’s higher standards of living than otherwise possible. Without
international trade, product shortages would force people to pay more for less. Life in many countries
would have been much more difficult had it not been for the import of strategic materials like many
important metals, agricultural commodities, etc.

Understanding of Marketing Process:

When an executive is required to observe marketing in other cultures, the benefit derived is not so much the
understanding of the foreign culture. The real benefit is that the executive develops the knowledge of the
marketing process in one’s own culture also. Many MNCs have applied their knowledge of their experience
in foreign countries to their domestic marketing with highly profitable results.

Q.2 Explain the benefits and drawbacks of Joint ventures and Strategic alliances.

Ans.: Advantages & Disadvantage of a Joint Venture and strategic alliance:

This is the next most common form of entry beyond the exporting stage to a more regular overseas
involvement. This involves sharing risks to accomplish mutual enterprise. Widespread interest in joint
ventures is related to:

· Seeking market opportunities

· Dealing with rising economic nationalism
· Preempting raw materials
· Sharing risk
· Developing an export base
· Selling technology

Joint ventures can be defined as "an enterprise in which two or more investors share ownership and control
over property rights and operation". Joint ventures are a more extensive form of participation than either
exporting or licensing.

Joint ventures give the following advantages:

· Sharing of risk and ability to combine the local in-depth knowledge with a foreign partner with know-how
in technology or process
· Joint financial strength
· May be only means of entry and
· May be the source of supply for a third country.

They also have disadvantages:

· Partners do not have full control of management

· May be impossible to recover capital if need be
· Disagreement on third party markets to serve
· Partners may have different views on expected benefits.

If the partners carefully map out in advance what they expect to achieve and how, then many problems can
be overcome.

International Strategic Alliances

This is a new type of collaborative strategy, which has gained popularity. Commonly called international
strategic alliance, leading firms particularly in high tech industries have used this route for their mutual
benefit. These are short of complete merger, but deeper than arm’s length market exchanges. Such alliances
are especially useful for seeking entry into emerging markets. This form is very popular in Latin America,
Asia and Eastern Europe.

Strategic alliances make sense due to following reasons:

· Flexibility and informality promote efficiencies
· Access to new markets and technologies
· Creation and disbanding of projects with minimum paperwork
· Multiple parties share risks and expenses
· Partners can retain their independent brand identification
· Rivals can often work harmoniously together
· Alliance can take various forms from R&D deals to huge projects
· Ventures can accommodate dozens of participants
There are many advantages of Strategic Alliances as follows:

· Ease of market entry: It may be useful for a firm to partner with another that already has a presence in
and knowledge of a market. For example, Kentucky Fried Chicken (KFC) partnered with the Mitsubishi
Keirishi in entering Japan. By doing so, KFC was assured of managerial talent to deal with local
regulations and handling logistics (e.g., labor and construction) while Mitsubishi in turn got the use of an
authentic American brand name.

· Shared risk: Some projects are just too big for any one company to approach alone. Boeing can partner
with Rolls Royce, with the latter making the engines for the aircraft, while Boeing makes the frame. Many
times, deep-sea oil exploration is too big a commitment for any one oil company, so two or more may come
together.

· Shared knowledge and expertise: Intel, known for its cutting edge innovations in computer chips, can
partner with a Japanese firm to do its manufacturing.

· Synergy and competitive advantage: “Synergy” refers to the idea that the resources held by two firms,
when combined, add up to more than the sum of their parts. For example, Amazon.com and Federal
Express might be able to create, together, a credible image of fast, reliable service (from FedEx) and a large
selection (from Amazon). By itself, FedEx might not have a great edge over UPS, and Amazon may not
have a real edge over Barnes & Noble, but together, by coordination, they may be able, at an affordable
price, to provide faster delivery of a wider range of items than Barnes & Noble.
The disadvantages are as under:

· Legal obstacles: Since both firms have their own interests, complicated legal agreements may have to be
made up. Also, there may be limitations on market concentration, and there may be some concern about the
legality of technology transfer. In some countries, as previously mentioned, it may be difficult to enforce
agreements.

· Complacency: If two firms join forces where they previously competed, they may become complacent in
developing new products, improving quality, and lowering costs and prices. When competition is place,
firms tend to maintain greater discipline, which is needed for competitive ability in the long run.

· Costs of coordination: When two firms have different cultures (e.g., individualistic vs. collective or
authoritarian vs. more participative), more effort may be needed in circulating information and reaching
decisions. For example, Oracle, an aggressive computer firm in the Silicon Valley with a strong emphasis
on meritocracy might have difficulty working with a collectivistic Japanese firm.

· Blurred lines between areas of competition and cooperation: Suppose Sony and Compaq, which both
make computers, want to collaborate on making memory chips. To do so, they may have to share
information about other computer technology in areas where they may compete. There is now a question of
what to share and what to hold back. Not only is time spent deciding whether to share or withhold, but
essential information may end up not being available to those who need it.

Q.3 Discuss the steps involved in international marketing research process.

Ans.: Evolution of International Marketing Research

To understand the research needs of the 21st century it is important to consider how they have changed
over the past four decades. In the 60s and 70s, many U.S. firms, faced by slackening rates of growth in their
domestic markets, began to venture into international markets. Japanese and European firms with smaller
domestic markets also expanded internationally, in order to broaden the geographic scope of their
operations and take advantage of potential economies of scale, or to respond to foreign competition
entering their domestic markets. In this initial phase of international market entry, firms were mostly
concerned with collecting information to identify and assess market opportunities in other countries to
determine which markets to enter, how to position products in these markets and how far to adapt different
elements of the marketing mix to local market conditions.

At this phase of the firm’s expansion, the country was typically used as the unit of analysis for the research
design, for developing the sampling frame, as well as for data collection. Due to economic, political,
linguistic and cultural barriers, the country was the focal point of entry decisions. Equally, the firm’s
international operations were often organized on a country-by-country basis. Marketing research agencies
were also typically national organizations, with relatively few having the capability to conduct research on
a multi-country basis. Most secondary data as well as sampling lists were available on a national basis.

As, however, firms have expanded internationally and product markets are becoming increasingly
integrated worldwide, the key decision issues facing the firm in the 90s have changed dramatically. As a
result, research and information needs have changed and broadened. In industrialized nations such as North
America, Europe and Japan, regional market integration and the removal of barriers between countries, the
growth of a regional and global market infrastructure, as well as increased mobility of consumers have
created pressures to consolidate and integrate marketing strategy across countries. Consequently, increased
attention is focused on conducting studies, which cover multiple countries examining differences and
similarities in behavior and response patterns across countries.
At the same time, as growth in these markets slow down, future market potential lies in emerging market
economies, with countries such as China and India accounting for over one-third of the world’s population.
The explosive population growth in these countries, together with the opening up of markets in the former
Soviet Union makes entry into these markets mandatory for firms aspiring to be global leaders in the future.
In entering these markets, as in initially entering international markets, firms need to collect information to
assess potential opportunities, to determine how to position, price, promote and distribute their products
and brands, whether to develop local variants, etc.

Implications for International Marketing Research in the 21st century

The dramatic changes in the global environment coupled with technological advances in data collection,
analysis and dissemination imply that researchers will need to broaden their capabilities in order to design,
implement and interpret research in the 21st century. As research efforts are aligned to match markets with
the highest market potential, researchers will need to develop the capabilities and skills to conduct and
design research in these environments. New tools incorporating the latest technology will need to be
mastered and creative approaches to understanding behavior in differing cultural contexts developed.
Ability to interpret and integrate complex data from diverse sources and environments will also be critical,
in order to provide meaningful recommendations for the firm’s global marketing strategy.

Aligning research effort and capabilities with market growth potential

A first priority is to focus research effort and capabilities on markets with future growth potential. As
indicated earlier, marketing research expenditures are heavily concentrated in the industrialized countries of
North America, Europe and Japan. This reflects the current size and attractiveness of these markets.
However, the countries with the highest growth potential are the emerging market economies in Asia, Latin
America, Eastern Europe, or countries of the former Soviet Union. Firms who wish to succeed in the global
markets of the 2lst century will need to pay greater attention to examining markets in these regions of the
world, and developing or acquiring the capabilities to conduct research in these markets.

The stark differences between the developed and developing world are reflected in information taken from
the 1999 UN Human Development Report. The UN categorizes 45 countries as having a high level of
human development (HHD), 94 as medium (MHD), and 35 as low (LHD). There is a large gulf that exists
between the richest countries and the poorest. The per capita GNP in HHD countries is more than 18 times
that of MHD countries, and 87 times that of LHD countries. Yet, over 80% of the world’s population lives
in countries that are categorized as either MHD or LHD. Equally, critical for conducting marketing
research are differences in illiteracy – less than 5% in HHD countries, compared with over 50% of the
population in LHD countries.

Conducting research successfully in these regions requires both understanding and sensitivity to differences
in the market environment, as well as an ability to deal with the lack of a well-developed market research
infrastructure. The accuracy of results hinges in part on the respondents’ ability to understand the questions
being posed. Low levels of literacy in emerging markets, as well as lack of familiarity with stimuli or
response formats from industrialized markets create challenges. In designing research instruments, caution
needs to be exercised in directly transposing stimuli or research formats commonly adopted in
industrialized countries. Rather, researchers need to think creatively in designing instruments that are
readily understood and unambiguously interpreted, and as far as possible, devoid of cultural bias. In
particular, design of instruments that employ visual as well as verbal stimuli and occur in a familiar and
realistic setting, rather than requiring abstract cognitive skills, will be more effective.

Interpretation of results from emerging market countries may also pose some challenges, especially for
researchers from other socio-cultural backgrounds. Researchers need to be wary of interpreting results in
terms of their own culture and experience, and in particular, of generalizing from experience in
industrialized markets to emerging markets. Indigenous researchers, on the other hand, trained in a different
research paradigm, may interpret results in terms of the local context, and focus on the uniqueness of these
patterns. Consequently, teams of researchers from different backgrounds will be needed to provide a broad
and balanced interpretation.

Q.4 Is there any difference between national and international products? What is product adoption
and standardization?

Ans.: Difference between national and international product:

A product’s physical properties are characterized the same the world over. They can be convenience or
shopping goods or durables and non-durables; however, one can classify products according to their degree
of potential for global marketing:

i) Local products – seen as only suitable in one single market.

ii) International products – seen as having extension potential into other markets.

iii) Multinational products – products adapted to the perceived unique characteristics of national markets.

iv) Global products – products designed to meet global segments.

Quality, method of operation or use and maintenance (if necessary) are the catchwords in international
marketing. A failure to maintain these will lead to consumer dissatisfaction. This is typified by agricultural
machinery, where the lack of spares and/or foreign exchange can lead to lengthy downtimes. It is becoming
increasingly important to maintain quality products based on the ISO 9000 standard, as a prerequisite to
export marketing.

Consumer beliefs or perceptions also affect the "world brand" concept. World brands are based on the same
strategic principles; same positioning and same marketing mix, but there may be changes in message or
other image. World brands in agriculture are legion. In fertilizers, brands like Norsk Hydro are universal; in
tractors, Massey Ferguson; in soups, Heinz; in tobacco, BAT; in chemicals, Bayer. These world brand
names have been built up over the years with great investments in marketing and production. Few world
brands, however, have originated from developing countries. This is hardly surprising given the lack of
resources. In some markets product saturation has been reached, yet surprisingly the same product may not
have reached saturation in other similar markets. Whilst avocadoes have long saturated France, the UK
market is not yet, hence raising the opportunity to enter deeper into this market.

Product adoption and standardization:

Firms face a choice of alternatives in marketing their products across markets. An extreme strategy
involves customization, whereby the firm introduces a unique product in each country, usually with the
belief that tastes differ so much between countries that it is necessary more or less to start from “scratch” in
creating a product for each market. On the other extreme, standardization involves making one global
product, in the belief that the same product can be sold across markets without significant modification –
e.g., Intel microprocessors are the same regardless of the country in which they are sold. Finally, in most
cases, firms will resort to some kind of adaptation, whereby a common product is modified to some extent
when moved between some markets – e.g., in the United States, where fuel is relatively less expensive,
many cars have larger engines than their comparable models in Europe and Asia; however, much of the
design is similar or identical, so some economies are achieved. Similarly, while Kentucky Fried Chicken
serves much the same chicken with the eleven herbs and spices in Japan, a lesser amount of sugar is used in
the potato salad, and fries are substituted for mashed potatoes.
Changes in design are largely dictated by whether they would improve the prospects of greater sales, and
this, over the accompanying costs. Changes in design are also subject to cultural pressures. The more
culture-bound the product is, for example food, the more adaptation is necessary. Most products fall in
between the spectrum of "standardization" to "adaptation" extremes. The application the product is put to
also affect the design. In the UK, railway engines were designed from the outset to be sophisticated because
of the degree of competition, but in the US this was not the case. In order to burn the abundant wood and
move the prairie debris, large smoke stacks and cowcatchers were necessary. In agricultural implements, a
mechanized cultivator may be a convenience item in a UK garden, but in India and Africa it may be
essential equipment. As stated earlier, "perceptions" of the product’s benefits may also dictate the design. A
refrigerator in Africa is a very necessary and functional item, kept in the kitchen or the bar. In Mexico, the
same item is a status symbol and, therefore, kept in the living room.

Factors encouraging standardization are:

i) Economies of scale in production and marketing

ii) Consumer mobility – the more consumers travel, the more is the demand

iii) Technology

iv) Image, for example "Japanese", "made in".

The latter can be a factor both to aid or to hinder global marketing development. Nagashima1 (1977) found
the "made in USA" image has lost ground to the "made in Japan" image. In some cases "foreign made"
gives advantage over domestic products. In Zimbabwe one sees many advertisements for "imported",
which gives the product advertised a perceived advantage over domestic products. Often a price premium is
charged to reinforce the "imported means quality" image. If the foreign source is negative in effect,
attempts are made to disguise or hide the fact through, say, packaging or labeling. Mexicans are loath to
take products from Brazil. By putting a "made in elsewhere" label on the product this can be overcome,
provided the products are manufactured elsewhere, even though its company may be Brazilian.

On the down side, there may also be significant differences in desires between cultures and physical
environments – e.g., software sold in the U.S. and Europe will often utter a “beep” to alert the user when a
mistake has been made; however, in Asia, where office workers are often seated closely together, this could
cause embarrassment.

Factors encouraging adaptation are:

i) Differing usage conditions – These may be due to climate, skills, level of literacy, culture or physical
conditions. Maize, for example, would never sell in Europe rolled and milled as in Africa. It is only eaten
whole, on or off the cob. In Zimbabwe, kapenta fish can be used as a relish, but will always be eaten as a
"starter" to a meal in the developed countries.

ii) General market factors – incomes, tastes etc. Canned asparagus may be very affordable in the
developed world, but may not sell well in the developing world.

iii) Government – taxation, import quotas, non-tariff barriers, labeling, health requirements.

Non-tariff barriers are an attempt, despite their supposed impartiality, at restricting or eliminating
competition. A good example of this is the Florida tomato growers, who successfully got the US
Department of Agriculture to issue regulations establishing a minimum size of tomatoes marketed in the
United States. The effect of this was to eliminate the Mexican tomato industry, which grew a tomato that
fell under the minimum size specified. Some non-tariff barriers may be legitimate attempts to protect the
consumer, for example, the ever-stricter restrictions on horticultural produce insecticides and pesticides use
may cause African growers a headache, but they are deemed to be for the public good.

iv) History – Sometimes, as a result of colonialism, production facilities have been established overseas.
Eastern and Southern Africa is littered with examples. In Kenya, the tea industry is a colonial legacy, as is
the sugar industry of Zimbabwe and the coffee industry of Malawi. These facilities have long been adapted
to local conditions.

v) Financial considerations – In order to maximize sales or profits, the organization may have no choice
but to adapt its products to local conditions.

vi) Pressure – Sometimes, as in the case of the EU, suppliers are forced to adapt to the rules and
regulations imposed on them if they wish to enter into the market.

Forms of Adaptation: Adaptations can also come in several forms.

Mandatory adaptations: Mandatory adaptations involve changes that have to be made before the product
can be used – e.g., appliances made for the U.S. and Europe must run on different voltages, and a major
problem was experienced in the European Union when hoses for restaurant frying machines could not
simultaneously meet the legal requirements of different countries.

“Discretionary” changes: These changes are changes that do not have to be made before a product can be
introduced (e.g., there is nothing to prevent an American firm from introducing an overly sweet soft drink
into the Japanese market), although products may face poor sales if such changes are not made.
Discretionary changes may also involve cultural adaptations – e.g., in Sesame Street, the Big Bird became
the Big Camel in Saudi Arabia.

Physical product vs. communication adaptations: In order for gasoline to be effective in high altitude
regions, its octane must be higher, but it can be promoted much the same way. On the other hand, while the
same bicycle might be sold in China and the U.S., it might be positioned as a serious means of
transportation in the former and as a recreational tool in the latter. In some cases, products may not need to
be adapted in either way (e.g., industrial equipment), while in other cases, it might have to be adapted in
both (e.g., greeting cards, where the occasions, language, and motivations for sending differ).

Lack of equivalent at home: Finally, a market may exist abroad for a product, which has no analogue at
home – e.g., hand-powered washing machines.

Q.5 Give notes on SEZ, FTWZ and Start Export houses.

Ans.: SEZ: A Special Economic Zone (SEZ) is a geographical region that has economic and other laws
that are more free-market-oriented than a country's typical or national laws. "Nationwide" laws may be
suspended inside a special economic zone.

The category 'SEZ' covers a broad range of more specific zone types, including Free Trade Zones (FTZ),
Export Processing Zones (EPZ), Free Zones (FZ), Industrial parks or Industrial Estates (IE), Free Ports,
Urban Enterprise Zones and others.

SEZs in India:

In India, SEZs are the special zones created by the Government and run by Government-Private or solely
Private ownership, to provide special provisions to develop industrial growth in that particular area. The
government of India launched its first SEZ in 1965, in Kandla, Gujarat. The incentives and facilities offered
to the units in SEZs for attracting investments into the SEZs, including foreign investment include: -
• Duty free import/domestic procurement of goods for development, operation and maintenance of
SEZ units
• 100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income
Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export
profit for next 5 years.
• Exemption from minimum alternate tax under section 115JB of the Income Tax Act.
• External Commercial Borrowing by SEZ units up to US $ 12500 billion in a year without any
maturity restriction through recognized banking channels.
• Exemption from Central Sales Tax.
• Exemption from Service Tax.
• Single window clearance for Central and State level approvals.
• Exemption from State sales tax and other levies as extended by the respective State Governments.

FTWZ (Free Trade and Warehousing Zones) is a policy of the Government of India (GoI). It was
announced in the Foreign Trade Policy 2004-09 to set up Free Trade and Warehousing Zones (FTWZ) to
create trade related infrastructure to facilitate the import and export of goods and services with freedom to
carry out trade transactions in free currency.
On June 23, 2005, the Parliament of India passed the Special Economic Zones Act 2005 and on February
10, 2006 Government of India notified Special Economic Zone Rules 2006. The Free Trade and
Warehousing Zones (FTWZ) is a special category of Special Economic Zone and is governed by the
provisions of the SEZ Act and the Rules.[1][2]
FTWZ is designated as a deemed foreign territory and are envisaged to be integrated zones and to be used
as International Trading Hubs. FTWZs will be fully independent mega-trading hubs integrated with state-
of-the-art warehouse and special storage infrastructure, Container Freight Stations, Environment friendly
equipment, Rail sidings for hinterland connectivity, Commercial complexes for offices, Independent utility
stations, banks and insurance corporations added to recreational and eventual residential complex for the
FTWZ workforce.
Benefits of the FTWZ:

Fiscal and regulatory benefits

Tax Benefits: Income tax (section 80IA) and Service Tax exemptions for developers and users of the zone
~ reduces logistics costs for users of the zone.
Duty Deferment Benefits: Custom Duty deferment benefits for products requiring longer storage time.
Excise Duty Exemptions: Excise duty exemption for products sourced from the domestic markets,
including goods, spares; DG sets, packing materials, etc.

Infrastructure Benefits
Single Product Storage Facilities: Assist in meeting specific warehousing requirement for each product
category e.g. different sections for storage of tea and coffee, etc.
Shared Equipments: Ability of users to save on capital investments by leasing equipments provided by
the zone.

Administration Benefits
Delivery Time: Reduction in custom clearance time and better logistics connectivity leading to improved
delivery time.
Support Facilities and Effective Management: Provision of efficient management services and
international expertise along with support facilities such as banking, insurance etc.

Start export house:

One of the best examples of a successful EPZ is the Mauritian EPZ12, founded in the 1970s. Since its
inception, over 400 firms have established themselves in sectors as diverse as textiles, food, watches and
plastics. In job employment the results have been startling, as at 1987, 78,000 were employed in the EPZ.
Export earnings had tripled from 1981 to 1986 and the added value had been significant- the roots of
success could be seen on the supply, demand and institutional sides. On the supply side the most critical
factor had been the generous financial and other incentives, on the demand side, access to the EU, France,
India and Hong Kong was very tempting to investors. On the institutional side positive schemes were put in
place, including finance from the Development Bank and the cutting of red tape. In setting up the export-
processing zone, the Mauritian government displayed a number of characteristics, which in hindsight were
crucial to its success.
· The government intelligently sought a development strategy in an apolitical manner
· It stuck to its strategy in the long run, rather than reverse course at the first sign of trouble
· It encouraged market incentives rather than undermined them
· It showed a good deal of adaptability, meeting each challenge with creative solutions, rather than
maintaining the status quo
· It adjusted the general export promotion program to suit its own particular needs and characteristics.
· It consciously guarded against the creation of an unwieldy bureaucratic structure.

Q.6 What is the role of IMF and OECD? Briefly explain.

Ans.: Role of IMF:

The International marketing federation (IMF) it is the stated policy of most First World countries to
eliminate protectionism through free trade policies enforced by international treaties and organizations such
as the World Trade Organization. Despite this, many of these countries still place protective and/or revenue
tariffs on foreign products to protect some favored or politically influential industries, or to reduce the
taxation demands on their internal domestic manufacturing, making their products more competitive. The
elimination of these tariffs remains a contentious peg their currencies to the dollar and, thus, set prices of
their exports lower than they would be if the market determined the relative prices of each currency.

Protectionist quotas can cause foreign producers to become more profitable, mitigating their desired effect.
This happens because quotas artificially restrict supply, so it is unable to meet demand; as a result the
foreign producer can command a premium price for its products. These increased profits are known as
quota rents.

For example, in the United States (1981–1994), Japanese automobile companies were held to voluntary
export quotas. These quotas limited the supply of Japanese automobiles desired by consumers in the United
States (1.68 million, raised to 1.85 million in 1984, and raised again to 2.30 million in 1985), increasing the
profit margin on each automobile more than enough (14% or about $1200 in 1983 dollars, about $2300 in
2005 dollars) to cover the reduction in the number of automobiles that they sold, leading to greater overall
profits for Japanese automobile manufacturers in the United States export market, and higher prices for
consumers.

OECD:
The Organisation for Economic Co-operation and Development (OECD, French: Organisation de
coopération et de développement économiques, OCDE) is an international economic organisation of
34 countries founded in 1961 to stimulate economic progress and world trade. It defines itself as a forum of
countries committed to democracy and the market economy, providing a platform to compare policy
experiences, seeking answers to common problems, identifying good practices, and coordinating domestic
and international policies of its members.
The OECD originated in 1948 as the Organisation for European Economic Co-operation (OEEC), led
by Robert Marjolin of France, to help administer the Marshall Plan for the reconstruction of Europe after
World War II. Later, its membership was extended to non-European states. In 1961, it was reformed into
the Organisation for Economic Co-operation and Development by the Convention on the Organisation for
Economic Co-operation and Development. Most OECD members are high-income economies with a high
Human Development Index (HDI) and are regarded as developed countries.

The OECD defines itself as a forum of countries committed to democracy and the market economy,
providing a setting to compare policy experiences, seek answers to common problems, identify good
practices, and co-ordinate domestic and international policies.[9] Its mandate covers economic,
environmental, and social issues. It acts by peer pressure to improve policy and implement "soft law"—
non-binding instruments that can occasionally lead to binding treaties. In this work, the OECD cooperates
with businesses, trade unions and other representatives of civil society. Collaboration at the OECD
regarding taxation, for example, has fostered the growth of a global web of bilateral tax treaties.

The OECD promotes policies designed:

• To achieve the highest sustainable economic growth and employment and a rising standard of
living in Member countries, while maintaining financial stability, and thus to contribute to the
development of the world economy;
• To contribute to sound economic expansion in Member as well as nonmember countries in the
process of economic development; and
• To contribute to the expansion of world trade on a multilateral, nondiscriminatory basis in
accordance with international obligations.