Solutions Manual for Global Marketing, 5e
Kate Gillespie, Scott Swan (All Chapters)
CHAPTER 1
Introduction to Global Marketing
QUESTIONS FOR DISCUSSION
1. How is global marketing as a field related to your future career? How would you expect
to come into contact with global marketing activities?
This question parallels the chapter sections on “Why Study Global Marketing” and “A Need
for Global Mindsets.” Answers are personal but may include:
• A desire to work in international marketing
• Working in domestic marketing but dealing with foreign competitors
• Entering other professions but with an international orientation
2. What do you think are the essential skills of a successful “global marketer”?
Again, this calls for a personal response, but suggestions at this introductory stage might
include:
• A knowledge of and sensitivity to other cultures
• Foreign language knowledge
• An understanding of the global economy as well as national politics and laws
• A good knowledge of your domestic business
• The ability to identify market opportunities internationally
• An understanding of how to manage within a multinational firm
3. Which important skills make up an effective “global mindset”?
A global mindset involves an ability to predict what foreign competitors will do next. Skills
might include being able to think like your competitors: understanding their background and
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, culture as well as speaking their language; knowing how to integrate actions among national
markets; and synthesizing experiences across national markets.
4. List ten things that are important to you that you hope to be able to understand or
accomplish after studying this book.
• This is a more personal question that can get students thinking about the field and what
they hope to gain from the course.
• Note: Many courses now draw students from all over the world. If this is true of your
course—and if the class is not too large—you may want to ask students to introduce
themselves on the first day of class and tell which countries they have experience with
as citizens, students, tourists, or workers.
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, CHAPTER 2
The Global Economy
QUESTIONS FOR DISCUSSION
1. Suppose that Brazil can produce, with an equal amount of resources, either 100 units of
steel or 10 computers. At the same time, Germany can produce either 150 units of steel
or 10 computers. Explain which nation has a comparative advantage in the production
of computers. Choose a mutually advantageous trading ratio and explain why this ratio
increases the welfare of both nations.
It costs Brazil ten units of steel to produce one computer, while it takes Germany fifteen units
of steel to produce one computer. Brazil has a comparative advantage in the production of
computers, as it costs Brazil fewer units of steel to produce one computer. A trading ratio of 1
computer = 13 units of steel will be beneficial to both countries. Since Brazil will be
importing computers, it gains by getting thirteen units of steel rather than the ten units it
would have produced locally. Likewise, Germany will be exporting steel; it gains because one
computer can be imported for the cost of thirteen units of steel rather than fifteen if it made
them locally.
2. What problems could export tariffs cause?
Governments sometimes utilize export tariffs for reasons that make sense to them. A
government might utilize export tariffs to keep scarce resources in the country that are
necessary to the welfare of its citizens (such as food.) If world prices for a commodity were
higher than the local market, then businesses would choose to export before selling to the
local markets, thus causing shortages at home. Also, if a government were subsidizing prices
in the home market for the welfare of its citizens, then it would not want the product
purchased at the subsidized price to be then shipped abroad. For example, when Mexico
subsidized its local petroleum prices, it put export controls on gasoline.
However problems can arise from these policies. Export earnings will decrease. This can put
pressure on the local currency. A devaluation of the currency would make critical imports
more expensive. Export controls may (from inertia) remain longer than needed and thus
continue to discourage exports. Local producers may be less inclined to become
internationally competitive.
3. Do you agree with the critics who claim that the WTO has excessive power over national
governments? Will free trade widen the gap between rich and poor? Why or why not?
This, of course, is one of the toughest questions of our time. The WTO strongly supports
letting markets rule. Other issues—such as protecting culture—are not really on its agenda.
As long as you are a winner in the free-market system, it is easy to conclude that all is well.
Arguably, all stand to win to some degree. Still, the implications of free trade are not clear,
even to the United States.
One challenge to college students from the developed world is the increasing trend to contract
out white-collar work to professionals in developing countries—software designers,
architects, financial analysts, accountants, and even lawyers. Free trade in white-collar
services will likely lessen the gap between currently richer and currently poorer counties.
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, However, it is hard to project the impact of this loss of professional jobs on the U.S. society
and economy.
4. Should the WTO have forced Utah to accept gambling?
The answers are likely to be personal but several suggestions are offered.
Yes, the WTO ruled correctly because:
• US policies may not be fair to our trading partners and there is a need for an
international body to mediate problems.
• Economic policy may be more politicized in some countries, making it harder for
politicians to make changes and do what is good for the larger whole or the longer term.
Outside pressure may be helpful to achieve a fairer solution.
No, the WTO ruled incorrectly because:
• Our government is required to follow our constitution and cannot be controlled by
whatever outside governmental policies that may be instituted.
• There are additional concerns with gambling (e.g., criminal behavior, personal
addiction) that should be controlled or monitored locally.
CASE 2.1: ARGENTINA: TROUBLE IN MERCOSUR
This case examines the challenges of Mercosur over a period of nearly 20 years. It highlights the
problems of regional integration in developing countries as well as the difficulties these problems
pose for businesses.
DISCUSSION QUESTIONS
1. How might Argentina’s devaluation in 2002 and again in 2014 affect a U.S. exporter of
heavy machinery? A European exporter of cosmetics? A Brazilian exporter of
automobiles? An Argentinian textile exporter with debt denominated in US dollars?
• U.S. exporter of heavy machinery: This company is most likely be hurt by these
devaluations. Customers would have to pay a much higher price in pesos. They will
likely negotiate a lower price in dollars, seek cheaper options or forego purchases.
• European exporter of cosmetics: This company’s Argentinian customers face the
same dilemma as those in the above scenario. However, this is a lower-priced product
and may command strong brand loyalty. Perhaps they will suffer less.
• A Brazilian exporter of automobiles: This exporter faces the same challenges as the
U.S. exporter of heavy machinery. However, they may be more at risk due to the
deteriorating relations between Argentina and Brazil. Autos appear to be a category for
trade retaliation between these countries, and Argentinian devaluations signal trouble in
its economy and consequent protectionist measures.
• An Argentinian textile exporter with debt denominated in US dollars: This firm
should see its costs, when translated into foreign currencies, go down. So it has the option
of lowering prices abroad to gain greater sales or of keeping prices steady in overseas
currencies and earning more money in pesos. However, if they import any inputs, the cost
of these inputs in pesos will rise. Also, the peso cost of paying a debt in dollars increases.
However, they could offset this by their export earnings.
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