Archive for the ‘Business’ Category
Staying at home can be the best solution for people who can’t go outside, either due to old age or too young. For our elders, who can no longer take care of themselves alone, getting them an auxiliaire de vie can help them perform their usual activities. And a great source of entertainment is playing at pari en ligne websites. For our kids, home school can be the best school for them especially if you trust their education at garde d’enfants à paris. Stay at home and still get the best services!
A nation’s size, per-capital income, and stage of economic development determine its prospects as a host for international business expansion. Nations with low per-capital incomes may be poor markets for expensive industrial machinery but good ones for agricultural hand tools. These nations cannot afford the technical equipment that powers an industrialized society. Wealthier countries may offer prime markets for many U.S. industries, particularly those producing consumer goods and services and advanced industrial products.
In India, for example, the median annual household income is only $480. Economic reforms have improved the country’s standard of living somewhat, but most Indians have very few Western conveniences. Only 2 percent own cars, 4 percent have running hot water, and 7 percent have phones. Color television and refrigerator ownership run a bit higher at 12 percent.
Successful marketing in India requires an understanding of how the economy affects Indian consumers. Both rich and poor Indians practice frugal buying habits and spend as little as possible at one time. They prefer small packages with low prices, even though larger packages may offer more economical purchases. Even the wealthy are price-conscious consumers. Nestlé S.A. improved its market penetration in India by reducing package sizes and then pricing more than half of its food products under 25 rupees (about 70 cents). For example, sales of Maggi instant noodles tripled after Nestlé reduced the price from 19 cents to 14 cents a package. Recycling, a way of life for many Indians, is another issue U.S. marketers must keep in mind before entering the Indian marketplace. Although that country is the world’s largest market for razor blades, disposable razors sell very poorly because the idea of throwing them away mystifies typical Indians.20
Another important economic factor to consider when planning to enter a foreign market is a country’s infrastructure. Infrastructure refers to a nation’s communication systems (television, radio, print media, telecommunications), transportation networks (paved roads, railroads, airports), and energy facilities (power plants, gas and electric utilities). An inadequate infrastructure may constrain marketers’ plans to manufacture, promote, and distribute goods and services in a particular country.
People living in countries blessed by navigable waters often rely on them as inexpensive, relatively efficient alternatives to highways, rail lines, and air transportation. As Figure 3.5 shows, Thai farmers use their nation’s myriad rivers to transport their crops. Their boats even become retail outlets in so-called floating market like this one located outside Bangkok.
Marketers expect developing economies to have substandard utility and communications networks. China encountered numerous problems in establishing a 21st-century communications industry infrastructure. The Chinese government’s answer was a huge investment in wireless technology. By 2001, over 60 million Chinese had their own cell phones, and the number will grow to 200 million subscribers by 2010. Unlike the high phone rates paid by their Japanese neighbors, Chinese consumers pay only a nickel a minute, one of the cheapest rates in the world.
Changes in exchange rates can also complicate international marketing. An exchange rate is the price of one nation’s currency in terms of another country’s currency. Fluctuations in exchange rates can make a nation’s currency more valuable or less valuable compared to those of other nations. In Europe, a new currency was introduced—the euro—to eliminate problems associated with exchange rates. Before the euro, prices for the same goods and services varied between 30 percent and 100 percent among European nations. In the first year of the euro, price differences fell to only 28 percent and continue to drop as the euro becomes the dominant currency in Europe. ByJuly 1,2002, national currencies will no longer be legal tender for countries in the European Monetary Union.
Russian and many eastern European currencies are considered soft currencies that cannot be readily converted into such hard currencies as the dollar, euro, or Japanese yen. Rather than taking payment in soft currencies, international marketers doing business there may resort to barter, accepting such commodities as oil, timber, or even alcoholic beverages as payment for exports. Needless to say, U.S. currency is a hot commodity; in fact, demand for American dollars is higher than ever. About 60 percent of the new $100 bills printed last year were sent directly overseas. When the Berlin Wall fell in 1989, signifving the end of the cold war, U.s. dollars flooded former Soviet-bloc countries. In response, many regions, including much of Africa, Asia, and the Middle East, have placed restrictions on currency trading.2
Federal, state, and local governments have established regulatory agencies to enforce laws. At the federal level, the Federal Trade Commission (FTC) wields the broadest powers of any agency to influence marketing activities. It has the authority to enforce laws regulating unfair business practices and can take action to stop false and deceptive advertising. The Federal Communications Commission regulates communication by wire, radio, and television. Other federal regulatory agencies include the Food and Drug Administration, the Consumer Products Safety Commission, the Federal Power Commission, and the Environmental Protection Agency.
The FTC uses several procedures to enforce laws. It may issue a consent order through which a business accused of violating a law can agree to voluntary compliance without admitting guilt. If a business refuses to comply with an FTC request, the agency can issue a cease-and-desist order, which gives a final demand to stop an illegal practice. Firms often challenge cease-and- desist orders in court. The FTC can require advertisers to provide additional information about products in their advertisements, and it can force firms using deceptive advertising to correct earlier claims with new promotional messages. In some cases, the FTC can require a firm to give refunds to consumers misled by deceptive advertising.
The FTC and US. Justice Department can stop mergers if they believe the proposed acquisition will reduce competition by making it harder for new companies to enter the field. In recent years, these agencies have taken a harder line on proposed mergers, especially in the computer, telecommunications, financial services, and health-care sectors.
Removing regulation also affects the marketing environment. Deregulation of the telecommunications and utilities industries has changed the competitive picture considerably. No longer do utilities have the exclusive right to operate within a territory. As Figure 2.5 reveals, natural gas utilities like Mobile Gas compete with the local electric company in supplying homeowners and businesses with energy needs for heating, cooling, and preparing meals. Because of deregulation, they also compete with other gas companies. Since 1993, natural gas distributors have been able to send gas through local pipelines, similar to the way long-distance phone companies use local lines and compete with other companies around the country. The Archdiocese of Chicago saved $8 million by purchasing gas from Houston’s Enron Corp. rather than its local utilities. Customers of KN Energy in southeastern Wyoming can choose from among 12 competing gas companies.
This kind of restructuring in the utility industry after 90 years of monopoly will affect many different sectors. If power costs drop the expected 20 percent due to deregulation of the generation process, businesses and individuals will have more money to spend on other things. Competition will improve efficiency in what had become a complex and inefficient market. Consolidation of the industry will increase due to mergers between utility companies.
The latest round of deregulation brought the passage of the Telecommunications Act of 1996. This law removed barriers between local and long-distance phone companies and cable companies. It allowed the seven regional Bell operating companies and GTE Corp. to offer long- distance service; at the same time, long-distance companies—such as AT&T, WorldCom, and Sprint that control over 90 percent of this market—gained authority to offer local service. Cable companies can offer phone service, and phone companies can get into the cable business. The change promises huge rewards for competitive winners. Just capturing 20 percent of the local calling market, for example, is worth $15 billion to $20 billion per year to AT&T.
In recent years, headlines have publicized unethical conduct by several well-known businesses. In 1999, Microsoft Corp., which owns more than 90 percent of the PC operating-systems software market, was convicted of violating antitrtist laws by abusing its monopoly to stifle competition and harm consumers. Magazine subscription offers from such direct-marketing giants as American Family Publishers and Publishers Clearing House containing announcements like “You’re our newest winner!” confused a number of recipients, prompting a series of lawsuits and investigations by government agencies, and led to more stringent regulations of such sweepstakes. The U.S. Department ofJustice investigated allegations of global price fixing and other illegal activities by agribusiness giant Archer-Daniels-Midland. Despite these and other alleged breaches of ethical standards, most businesspeople do follow ethical practices. Over half of all major corporations now offer ethics training to employees, and most corporate mission statements include pledges to protect the environment, contribute to communities, and improve workers’ lives. In some cases, only media attention and pressure from consumers motivate companies to implement social responsibility programs.
Such programs often produce such benefits as improved customer relationships, increased employee loyalty, marketplace success, and improved financial performance. Technology is also playing a role in helping companies like Ford Motor Co. do the right thing. Every Ford vehicle is made from 75 percent recycled materials, ranging from old soda bottles and beer cans to telephones and tires—even old personal computers. They are melted down into brand-new parts like splash shields, lamp bodies, and battery housings. The steel Ford recycles would build 200 Eiffel towers a year, and the 2-liter bottles it converts would fill a 400 acre lake. Ford believes it makes good business sense, but saving money is secondary to saving the planet.
Many companies of all types and sizes sponsor community-based programs. Phillips Petroleum’s commitment to reducing air pollution is illustrated in Figure 1.10 in which they show that by reducing sulfur emissions, not only does the human race benefit, but so do animals and vegetation. Because ethics and social responsibility are important topics to marketers, each chapter in this book includes an experiential exercise called “Solving an Ethical Controversy.” For example, this chapter’s feature presents pro and con arguments about whether marketers should use hidden cameras at public events to assess shopping habits of prospective customers.