1) Define Multinational Corporation. How is international marketing different from domestic marketing?

Answer: The striking difference between international and domestic marketing lies in the environment in which the two take place. The important points of differences between international and domestic marketing are: 1. Sovereign Political Entities: Each country is a sovereign political entity and, therefore, they for importing and exporting the goods and services in order to safeguard their national interest impose several restrictions. The traders in international marketing have to observe such restrictions. These restrictions may fall in any of the following categories. i) Tariffs and customs duties on import and export of goods and services in order to make them costly in the importing country and not to ban their entry into the country completely. In the post war period, through the efforts of General Agreement on Tariffs and Trade (GATT) there has been a significant reduction in tariff globally and on regional basis due to the emergence of regional economic groupings. ii) Quantitative restrictions are also imposed with an intention to restrict trade in some specific commodities. The major objective behind the restriction is the protection of home industries from the competition of the foreign commodities. iii) Exchange control is another restriction imposed by almost every sovereign state. The Government, in some cases, does not ban the entry of goods in the country but the importer is not allowed the necessary foreign exchange to make the payment for the goods imported. But, in some cases, exchange control and quantitative controls are put together along with the grant of import licence. iv) Imposition of more local taxes on imported goods with an object to make the imported goods costly is one of the restrictions in international marketing. 2. Different Legal Systems: Different countries operate different legal systems and they all differ from each other. In most of the countries follow English Common Law as modified from time to time. Japan and Latin American countries are important exceptions to this rule. The existence of different legal systems makes the task of businessmen more difficult as they are not sure as to which particular system will apply to their transactions. This difficulty does not arise in the domestic trade, as laws are the same for the whole country. 3. Different Monetary Systems: Each country has its own monetary system and the exchange rates for each countrys currency are fixed under the rules framed by the International Monetary Fund and, therefore, they are more or less fixed. However, in recent years the exchange rates are fluctuating and are being determined by demand and supply forces. Some countries operate multiple rates; i.e. different rates are applicable to different transactions. 4. Lower Mobility Factors of Production: Mobility of different factors of production is less as between nations than in the country, itself. However, with the advent of air transport, the

mobility of labour has increased manifold. Similarly, the development of international banking has increased the mobility of capital and labour. In spite of these developments, the mobility of labour and capital is not as much as it is within the country itself. 5. Differences in Market Characteristics: Market characteristics in each segment are different, i.e. demand pattern, channels of distribution, methods of promotion etc. are quite different from market to market. If we take each country a separate market, we can assume different market characteristics there. These differences are accentuated due to the existence of government controls and regulations. However, this is a difference of degree only. Even in one single country, for example, India and America, these differences in market patterns may be found from state to state. 6. Differences in Procedure and Documentation: The centuries old laws and customs of trade in each country demand different procedures and documentary requirements for the import and export of the goods and services. The traders residing in the territory have to comply with these regulations and customs if they want import and export of goods and services.

2) Differentiate between absolute advantage and comparative advantage theories. Answer: Principle of absolute advantage Adam Smith was the first economist to investigate, formally, the rationale behind foreign trade. In his book Wealth of Nations, Smith used the principle of absolute advantage as the justification for international trade. According to this principle, a country should export a commodity that can be produced at a lower cost than can other nations. Conversely, it should import a commodity that can only be produced at a higher cost than other nations. Principle of relative advantage One problem with the principle of absolute advantage is that it fails to explain whether trade will take place if one nation has absolute advantage for all products under consideration.

According to Ricardos Principle of Relative (or Comparative) Advantage, a country may be better than other countries in producing many products but should only produce what it produces the best. Theory of comparative advantage David Ricardo developed the important concept of comparative advantage in considering a nations relative production efficiencies as they apply to international trade. In Ricardos view, the exporting country should look at the relative efficiencies of production for both commodities and make only those goods it could produce most efficiently.

3) Write short note on international Advertising .How is it important for international marketing. Answer: Advertisement plays a very important role in the international marketing. Advertisement is a paid form of non-personal presentation of ideas, goods or services by the sponsor. It is a non-personal method of selling the product or in other words it is a salesmans imprint. Every manufacturer wants to sell his products at a reasonable price to the target buyers. Role of advertising The role of advertising in international promotions includes: Communicating, to a target audience that differs in terms of language, literacy, and other cultural factors Business activity through which a firm attempts to inform target audiences in multiple countries about itself and its product or service offerings It provides reassurance to the firms and brands and reminds consumers about their offerings Through the selective reinforcement of certain social roles, language and values, it acts as an important force fashioning the cognitions and attitudes that underlie behavior not only in the market place, but also in all aspects of life.

The best strategy out of the three mentioned above when the firm has a sole authority, it must keep in mind two important criteria identified by Gardon Miracle to decide on the strategy. The criteria are (a) Type or Nature of Product: The nature of product may be the most important factor in determining whether or not to use any particular strategy. Products that are low priced and nondurable fulfilling the same basic needs everywhere or products having certain universal selling points and certain potentials to grow, the universal advertising strategy would be better in foreign advertising. (b) Homogeneity and Heterogeneity of Market: If markets are homogeneous or in other words where characteristics such as income, education and occupation are alike, the consumer characteristics and their needs, attitudes, and customs may also be alike. Where customers motivation matrix and buying habits in different geographical areas are more or less similar, unified advertising strategy may be suggested. Contrarily, where markets are heterogeneous i.e. there is no similarity in customers individual characteristics in two markets the diversified strategy may be feasible.

4) What are SEZs and what benefit they provide to the international trade and marketer? Answer: Special Economic Zones (SEZs) is a specially delineated duty free enclave and shall be deemed to be foreign territory for the purposes of trade operations and duties and tariffs. Goods and Services going into the SEZ area shall be treated as deemed exports and goods and services coming into Domestic Tariff Area (DTA) from the SEZ shall be treated as if the goods are being imported. Benefit they provide to the international trade and marketer: 1. SEZ units may export goods and services including agro-products, partly processed goods, sub-assemblies and components except prohibited items. It may also export by-products, rejects, waste scrap arising out of the production process. 2. SEZ unit may import/procure from the DTA without payment of duty all types of goods and services, including capital goods, whether new or second hand, required by it for its activities or in connection therewith, provided they are not prohibited items of imports in the ITC (HS). 3. SEZ unit may, on the basis of a firm contract between the parties, source the capital goods from a domestic/foreign leasing company. In such a case the SEZ unit and the domestic/foreign leasing company shall jointly file the documents to enable import/procurement of the capital goods without payment of duty. 4. SEZ unit shall be a positive net foreign exchange earner. 5. The unit shall execute a legal undertaking with the Development Commissioner concerned and in the event of failure to achieve positive foreign exchange earning it shall be liable to penalty in terms of the legal undertaking or under any other law for the time being in force. 6. SEZ unit may export goods manufactured or software developed by it, though a merchantexporter/status holder recognised under the policy or any other EOU/SEZ/EHTP/STP unit. 7. Goods imported/procured by an SEZ unit may be transferred or given on loan to another unit, within the same SEZ which shall be duly accounted for, but not counted towards discharge of export performance. 8. SEZ unit, may subcontract a part of their production or production process through units in the DTA or through other SEZ/EOU/EHTP/STP with the permission of the Customs authorities. Subcontracting of part of production process may also be permitted abroad with the approval of the Development Commissioner. Sub-contracting by SEZ gems & jewellery units through units in DTA or through other SEZ/DOU/EHTP/STP units shall be subject to conditions given in the Handbook. 9. SEZ units may sell goods, including by-products and services, in the DTA on payment of applicable duties.

5) What are the factors that affect the pricing strategy of an international firm ? what different pricing strategics can the firms adopt? Answer: There are three main factors which affect the export price strategy to be adopted by the exporter in the foreign markets viz. the characteristics of the product and the nature of its demand, the philosophy of its management and the market characteristics. The pricing strategy is a short-term tool to make fit the prices in the changing competitive situations in the short run with its pricing policy decisions. Characteristics of the product and the nature of its demand: It is a major factor in fixing the price of the product at a particular time. In other words, improvement in quality of the product and product adaptation according to the changing competitive conditions in the foreign market should be taken as a continuous process. Elasticity of demand is another factor, which influences the price. If the demand of a product is inelastic the price reduction will not help to increase the revenue. In such a case, higher prices may be fixed taking in view the competitive position in the market. If, on the other hand, product is highly elastic the sales revenue can be appreciably increased by slightly reducing the price. Thus, pricing strategy i.e. whether to fix higher price or lower price as compared to the competitors prices very much depends upon the elasticity of demand and the competitive position Price strategies The export price quotations may not be the same for all markets. Prices may differ from market to market due to various reasons viz. political influence, buying capacity, financial and import facilities, total market turnover and other pricing and non-pricing factors etc. in order to make the local price of the product competitive. Thus, different strategies may be used in different markets. In some markets prices may be higher in some others they may be cost price or in many others, they may be less than the cost price. Normally, the following pricing strategies are used in the export market: 1. Market Penetration Strategy: Under this strategy, exporters offer a very low introductory price to speed up their sales and, therefore, widening the market base. It aims at capturing the products in the market especially if the quality of the product is proved with its wide acceptance. 2. Probe Pricing Strategy: Fixing low price for its product may have an adverse effect on the image of the firm and of the product. It may raise doubts in the minds of the buyers about the quality of the product if it is lower than the price of competitors or if it is reduced subsequently. When no information is available on the extent of the competition or the likely preferences of the buyers, sufficiently higher prices may be quoted on the first few offers. No business is really expected to grow except feed back information. Hence, the prices may be adjusted accordingly. 3. Follow the Leader Pricing Strategy: In a competitive world market or where adequate market information is not available, it may be useful to follow the leader in the market comparing its product with that of the leader the exporter may then fix the price of its product. In such cases the

price of the product is lower than the leaders product. However, this price has no rational or scientific base for fixing the price. 4. Skimming Pricing Strategy: Under this strategy, a very high introductory price is fixed to skim the cream of the demand at the very outset. This policy is generally introduced when there is no competition in the market. Such prices continue to be high till competitors enter the foreign market. As soon as competitors enter the market, the exporter reduces the price. exporter as the pricing strategy in foreign market. This strategy allows various types of discounts on the list price. Quantity discounts encourage to procure huge orders. It may be based on the value or on the quantity purchased or on the size of the package purchase. Special discounts may be allowed while introducing the product. These are given on all the purchases. Seasonal discount aims at shifting the storing function in the channels. This approach is buy sooner or more. Cash discount attracts prompt payment. It ensures quick pay-back. Trade discount is a reduction in list price given to channel members in anticipation of a job they are going to perform. 6. Standard Export Pricing Strategy: In some cases, exporter quotes the standard price or list price that is one price for all. But still there should be some margin for negotiations as in many markets especially in under developed countries, bargaining over prices is a part of life. In such cases, fixed prices may serve as a starting point for negotiation. Hence, it is desirable to keep a certain margin for the negotiations. This strategy is generally adopted in the export of capital goods i.e. plant and machinery. 7. Cheaper Price for Original Equipment and Higher Price for Spare Parts: In certain cases it might be useful to quote lower prices for the original equipment and charging higher prices for spares and replacement parts to be exported later as and when required. This strategy is useful where only the supplier of the original equipment can supply standard spare parts. This strategy could be used for tractors, telephone equipment, defense armaments, railway equipment and so on.

6) Write short notes on. A) e-marketing E-marketing involves the marketing of products or services on the internet. Successful Emarketing requires good search engine marketing strategies. The primary purpose of marketing an online business is the promotion of a good or service. E-marketing makes extensive use of the available tools for getting web users to purchase a product or service from a website. E-marketing approaches To accomplish their objectives, Internet marketers use many approaches, some of which include:

 Banners: A banner ad is a boxed-in promotional message that often appears at the top of the web page. If a visitor clicks on the banner ad, she/he is transported to the advertisers home page. This is the most used form of Internet promotion. Banners can be used to create brand recall or recognition. Other names given to banners include side panels, skyscrapers, or verticals. Sponsorships: This is another common advertising approach on websites. The advertiser is given a permanent place on hosts website and pays a sponsorship fee to the host. Pop-up and Pop-under: When a visitor accesses a web page, sometimes a window appears either in front or underneath the web page, the visitor is viewing. Pop-ups become visible as sooner the web site is accessed and pop-under becomes visible only when the visitor closes the browser. Portal Use: Some portals give a prominent place to a companys offer for a fee. When a visitor follows directed search, the marketers name appears prominently at or near the top of the list. E-mail: Companies send e-mails to Internet users to visit the company web site. It can be effective only when the target customer is appropriate otherwise it becomes junk mail. Interstitials: These ads appear on the computer screen while a visitor is waiting for a sites contents to download. Push Technologies: Some companies provide screen savers to its website visitors that allow the firms to directly hook the visitor to their websites. This is an approach to push a message to the consumers rather than wait for consumers to locate it. Sales Promotions: Many companies effectively use sales promotions such as contests and sweepstakes to generate consumer interest. B) Joint Venture. A joint venture is a strategic alliance where two or more parties, usually businesses, form a partnership to share markets, intellectual property, assets, knowledge, and, of course, profits. A joint venture differs from a merger in the sense that there is no transfer of ownership in the deal. Fuji-Xerox for example, was set up as a joint venture between Xerox and Fuji Photo. Establishing a joint venture with a foreign firm has long been popular mode for entering a new market. The most typical joint venture is a 50/50 venture, in which there are two parties, each of which holds a 50 percent ownership stake and contributes a team of mangers to share operating control. It can also occur between two small businesses that believe partnering will help them successfully fight their bigger competitors. While forming a joint venture, a company should keep in mind the following: Before a company forms a joint venture, they will need to look for partners to join them.

 When a company has its partner(s) chosen, agree on the terms of partnership such as who takes on what tasks, what they both earn from the business, solutions to conflicts that may arise, including if one, both, or all of them want to exit the business. Every partner will have to agree on the type of structure that the business is to have. Benefits Some of the benefits offered by joint ventures include: Joint ventures enable companies to share technology and complementary IP assets for the production and delivery of innovative goods and services. For the smaller organization with insufficient finance and/or specialist management skills, the joint venture can prove an effective method of obtaining the necessary resources to enter a new market. This can be especially true in attractive markets, where local contacts, access to distribution, and political requirements may make a joint venture the preferred or even legally required solution. Joint ventures can be used to reduce political friction and improve local/national acceptability of the company. Joint ventures may provide specialist knowledge of local markets, entry to required channels of distribution, and access to supplies of raw materials, government contracts and local production facilities. In a growing number of countries, joint ventures with host governments have become increasingly important. These may be formed directly with State-owned enterprises or directed toward national champions. There has been growth in the creation of temporary consortium companies and alliances, to undertake particular projects that are considered to be too large for individual companies to handle alone (e.g. major defense initiatives, civil engineering projects, new global technological ventures).