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in India) but has some capital limitations. Your job is to evaluate whether it should use contract
manufacturing or direct foreign investment. Compare and contrast these two options and make a
CONTRACT MANUFACTURING is private-label manufacturing by a foreign company. The
foreign company produces a certain volume of products to specification, with the domestic firm’s
brand name affixed to the goods. The domestic company usually handles the marketing. This
method carries medium levels of risk and return.
DIRECT FOREIGN INVESTMENT is active ownership, either a controlling interest or a large
minority interest, of a foreign company or of overseas manufacturing or marketing facilities. This
option offers the greatest potential rewards but carries the highest risk.
The U.S. manufacturer should consider contract manufacturing for two reasons: (1) the company
has a well-established brand name that would be easily recognized on the foreign goods and (2)
contract manufacturing will enable the firm to broaden its global marketing base without direct
investment of limited capital in plant and equipment.
KEY: CB&E Model International Perspective | CB&E Model Strategy
MSC: BLOOMS Synthesis
12. Assume that you are the promotions manager for a lingerie company that has decided to market
its product line in Brazil, Mexico, Italy, France, and Japan. Your company wishes to use a global
marketing standardization strategy. In general terms, explain how your company would advertise
in these different countries.
Global marketing standardization means production of uniform products that can be sold the
same way all over the world. In this case, marketers should attempt to standardize as much of
their advertisements as possible. Advertising elements (such as a model or picture) should have
universal appeal so they can appear in many different countries. Commercials with no voice-over
or dialogue will not need translation, while print ads could share the same pictures and models
and just use translated copy. Care should be taken that advertising elements are not culturally offensive in the different countries.
KEY: CB&E International Perspective | CB&E Model Promotion
MSC: BLOOMS Synthesis
13. In the 1980s, Japanese computer chip manufacturers were accused of dumping in the United
States. Explain what this means and discuss why a company would do this.
Dumping is the sale of an exported product at a price lower than that charged for the same or a
like product in the “home” market of the exporter. The practice is regarded as a form of price
discrimination that can potentially harm the importing nation’s competing industries. Dumping
may occur as a result of exporter business strategies that include (1) trying to increase an overseas
market share, (2) temporarily distributing products in overseas markets to offset slack...
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This document was uploaded on 09/29/2013.
- Fall '13