Assignment International Marketing

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Answer 2. (a) Forces of Globalization

Globalization (or globalisation) describes an ongoing process by which regional economies,

societies, and cultures have become integrated through a globe-spanning network of communication and execution. The term is sometimes used to refer specifically to economic globalization: the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology. However, globalization is usually recognized as being driven by a combination of economic, technological, sociocultural, political, and biological factors. The term can also refer to the transnational circulation of ideas, languages, or popular culture through acculturation

Globalization is this amazing phenomenon that has shaped the last few decades of existence throughout the world. But what, exactly, is globalization? According to Merriam and Webster: "globalization (n): the act or process of globalizing : the state of being globalized; especially : the development of an increasingly integrated global economy marked especially by free trade, free flow of capital and the tapping of cheaper foreign labor markets."

There are obvious economic advantages to globalization (at least in purely monetary terms). There is even something desirable about eating delicious mangos when its 14 degrees outside. But mangoes are neither native to the North American continent nor are they sustainably produced. For that matter, they ride north to those of us here on the 45th parallel via a fossil fuel machine that will eventually falter (perhaps taking human society down with it.) And so we must ask the question: what are the consequences of this globalization thing that brings us these lovely mangoes all the way from … where do they grow mangoes anyway?

An early description of globalization was penned by the American entrepreneur-turned-minister Charles Taze Russell who coined the term 'corporate giants' in 1897. However, it was not until the 1960s that the term began to be widely used by economists and other social scientists. It had achieved widespread use in the mainstream press by the later half of the 1980s. Since its inception, the concept of globalization has inspired numerous competing definitions and interpretations.

The United Nations ESCWA has written that globalization "is a widely-used term that can be defined in a number of different ways. When used in an economic context, it refers to the reduction and removal of barriers between national borders in order to facilitate the flow of goods, capital, services and labour... although considerable barriers remain to the flow of labour... Globalization is not a new phenomenon. It began in the late nineteenth century, but its spread slowed during the period from the start of the First World War until the third quarter of the twentieth century. This slowdown can be attributed to the inward looking policies pursued by a number of countries in order to protect their respective industries... however, the pace of globalization picked up rapidly during the fourth quarter of the twentieth century..."

Modern Globalization

Globalization, since World War II, is largely the result of planning by politicians to break down borders hampering trade to increase prosperity and interdependence thereby decreasing the chance of future war. Their work led to the Bretton Woods conference, an agreement by the world's leading politicians to lay down the framework for international commerce and finance, and the founding of several international institutions intended to oversee the processes of globalization.

Since World War II, barriers to international trade have been considerably lowered through international agreements — GATT. Particular initiatives carried out as a result of GATT and the World Trade Organization (WTO), for which GATT is the foundation, has included:

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Promotion of free trade: o elimination of tariffs; creation of free trade zones with small or no tariffs

o Reduced transportation costs, especially resulting from development of containerization for ocean shipping.

o Reduction or elimination of capital controls

o Reduction, elimination, or harmonization of subsidies for local businesses

o Creation of subsidies for global corporations

o Harmonization of intellectual property laws across the majority of states, with more restrictions

o Supranational recognition of intellectual property restrictions (e.g. patents granted by China would be recognized in the United States)

Cultural globalization, driven by communication technology and the worldwide marketing of Western cultural industries, was understood at first as a process of homogenization, as the global domination of American culture at the expense of traditional diversity. However, a contrasting trend soon became evident in the emergence of movements protesting against globalization and giving new momentum to the defense of local uniqueness, individuality, and identity, but largely without success

Globalization has various aspects which affect the world in several different ways such as:

Industrial - emergence of worldwide production markets and broader access to a range of foreign products for consumers and companies. Particularly movement of material and goods between and within national boundaries. International trade in manufactured goods increased more than 100 times (from $95 billion to $12 trillion) in the 50 years since 1955. China’s trade with Africa rose seven-fold during 2000-07 alone.

Financial - emergence of worldwide financial markets and better access to external financing for borrowers. By the early part of the 21st century more than $1.5 trillion in national currencies were traded daily to support the expanded levels of trade and investment. As these worldwide structures grew more quickly than any transnational regulatory regime, the instability of the global financial infrastructure dramatically increased, as evidenced by the financial crisis of 2007–2009.

Economic - realization of a global common market, based on the freedom of exchange of goods and capital. The interconnectedness of these markets, however meant that an economic collapse in any one given country could not be contained

Health Policy - On the global scale, health becomes a commodity. In developing nations under the demands of Structural Adjustment Programs, health systems are fragmented and privatized. Global health policy makers have shifted during the 1990s from United Nations players to financial institutions. The result of this power transition is an increase in privatization in the health sector. This privatization fragments health policy by crowding it with many players with many private interests. These fragmented policy players emphasize partnerships, specific interventions to combat specific problems (as opposed to comprehensive health strategies). Influenced by global trade and global economy, health policy is directed by technological advances and innovative medical trade. Global priorities, in this situation, are sometimes at odds with national priorities where increased health infrastructure and basic primary care are of more value to the public than privatized care for the wealthy.

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Political - some use "globalization" to mean the creation of a world government which regulates the relationships among governments and guarantees the rights arising from social and economic globalization. Politically, the United States has enjoyed a position of power among the world powers, in part because of its strong and wealthy economy. With the influence of globalization and with the help of The United States’ own economy, the People's Republic of China has experienced some tremendous growth within the past decade. If China continues to grow at the rate projected by the trends, then it is very likely that in the next twenty years, there will be a major reallocation of power among the world leaders. China will have enough wealth, industry, and technology to rival the United States for the position of leading world power.

Informational - increase in information flows between geographically remote locations. Arguably this is a technological change with the advent of fiber optic communications, satellites, and increased availability of telephone and Internet.

Language - the most popular language is Mandarin (845 million speakers) followed by Spanish (329 million speakers) and English (328 million speakers).

o About 35% of the world's mail, telexes, and cables are in English.

o Approximately 40% of the world's radio programs are in English.

About 50% of all Internet traffic uses English.

Competition - Survival in the new global business market calls for improved productivity and increased competition. Due to the market becoming worldwide, companies in various industries have to upgrade their products and use technology skillfully in order to face increased competition.

Ecological - the advent of global environmental challenges that might be solved with international cooperation, such as climate change, cross-boundary water and air pollution, over-fishing of the ocean, and the spread of invasive species. Since many factories are built in developing countries with less environmental regulation, globalism and free trade may increase pollution. On the other hand, economic development historically required a "dirty" industrial stage, and it is argued that developing countries should not, via regulation, be prohibited from increasing their standard of living.

Cultural - growth of cross-cultural contacts; advent of new categories of consciousness and identities which embodies cultural diffusion, the desire to increase one's standard of living and enjoy foreign products and ideas, adopt new technology and practices, and participate in a "world culture". Some bemoan the resulting consumerism and loss of languages. Also see Transformation of culture.

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Answer 2. (b) Basic Theories of International Trade

International trade is exchange of capital, goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), it’s economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. International trade is a major source of economic revenue for any nation that is considered a world power. Without international trade, nations would be limited to the goods and services produced within their own borders.

International trade is in principle not different from domestic trade as the motivation and the behavior of parties involved in a trade does not change fundamentally depending on whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or a different culture.

Another difference between domestic and international trade is that factors of production such as capital and labor are typically more mobile within a country than across countries. Thus international trade is mostly restricted to trade in goods and services, and only to a lesser extent to trade in capital, labor or other factors of production. Then trade in goods and services can serve as a substitute for trade in factors of production. Instead of importing the factor of production a country can import goods that make intensive use of the factor of production and are thus embodying the respective factor. An example is the import of labor-intensive goods by the United States from China. Instead of importing Chinese labor the United States is importing goods from China that were produced with Chinese labor. International trade is also a branch of economics, which, together with international finance, forms the larger branch of international economics.

1 Comparative Advantage TheoryRicardo explained comparative advantage as due to differences in labor productivity. Suppose that it takes two hours of labor to produce a bushel of wheat in the home country, while it takes four hours of labor to produce a bushel of wheat in the foreign country. Also, it takes three hours of labor to produce a pound of cheese in the home country while it takes eight hours of labor to produce a pound of cheese in the foreign country. Ricardo saw that the world trade equilibrium would result in the home country exporting cheese and the foreign country exporting wheat. This is because in the absence of trade, a pound of cheese is worth 1.5 bushels of wheat (3 hours per pound of cheese divided by 2 hours per bushel of wheat) in the home country while a pound of cheese is worth 2 bushels of wheat in the foreign country. The labor market equilibrium which accompanies such a trade equilibrium must have a foreign wage of at most

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one-half of the home wage (since with a foreign wage equal to one-half the home wage, a bushel of wheat costs the same amount in each country, allowing production in both). Considering a low wage foreign economy, the labor market equilibrium accompanying the trade equilibrium could have a foreign wage no lower than three-eighths of the home wage (since in this case a pound of cheese costs the same amount in each country).Notice that countries export the good in which they have the comparative labor productivity advantage, cheese for the home country and wheat for the foreign country. The numbers chosen make no difference to the logic, what is essential is that comparative labor productivities differ. One special aspect of the numbers deserves emphasis however: the home country has an absolute labor productivity advantage in both goods yet trade occurs regardless. Subsequent developments of trade theory generalized the production model.The essence of comparative advantage theory remains: trade is due to differences in relative prices that would obtain in the absence of trade, and an average of each country’s citizens gain from such trade. The Heckscher-Ohline analysis of the factor proportions model predicted that a country would have a comparative advantage in the good which made relatively intensive use of its relatively abundant factor. Thus if the home country were relatively abundant in capital (explaining why its labor was so much more productive in the preceding example), it would have a comparative advantage in the good which used capital relatively intensively (cheese in the preceding example).

Conversely the foreign country is relatively abundant in labor and has a comparative advantage in the good which uses labor relatively intensively (wheat in the example above). Trade in goods compensates for the international immobility of factors. The factor content extension of Heckscher-Ohlin trade theory predicts that trade patterns permit each country to consume factor services as if it were in a completely integrated world, smoothing out differences in national factor endowments. Recent empirical work has met with striking success in combining factor endowment differences with technology differences as anExplanation of observed trade patterns (Davis and Weinstein, 2002). Comparative advantage theory is much more general than the preceding discussion of special cases (Deardorff, 1984), but predictions about the pattern of trade weaken with generality. On average a country will import goods that would be relatively expensive in the absence of trade The assumptions of the general model are that (i) price taking consumers minimize the expenditure needed to realize any level of utility (real income), and (ii) producers behave so as to maximize the national product given the resource endowments. Assumption (i) implies downward sloping demand curves in the generalized form. Assumption (ii) leads to upward sloping supply curves in the generalized form. Scale economies and imperfect competition, treatedBelow in the section on endogenous advantage, can lead to the violation of assumption (ii).

2 The Absolute Advantage Fallacy TheoryBusinessmen naturally compare the money cost of the same good in different locations to draw inferences about the direction of trade. Absolute cost advantage appears to imply that a nation imports goods that are cheaper abroad and exports goods that are more expensive abroad. The reasoning is insidious because it makes sense in many contexts. Absolute advantage appropriately addresses the householder’s question of which good should be purchased, the businessman’s question of how tough are my competitors? The individual businessman can appropriately take all other prices as given when contemplating his own actions, such as entering a new export market.

To see the difference between absolute and comparative advantage reasoning clearly, return to the Ricardian example above. If wages (measured in a common currency) were equal in the two countries prior to the opening of trade, the home country would have a ‘competitive’ or absolute advantage in both goods: it could undersell the foreign country in both wheat and cheese. Foreign businessmen would naturally be worried that they would all be driven from the market. This universal bankruptcy could not be equilibrium, however, because the foreign workers would have no income to pay for home produced goods. The imbalance between expenditure and income would also mirror the absence of exports to pay for imports. Market equilibrium would be reached through price changes, lowering the foreign wage or raising the home wage until the foreign workers could be employed in the industry in which the foreign

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economy has the comparative advantage. (Unless the two currencies were pegged, the exchange rate of the foreign economy could depreciate and create the same effect.) More general models of production lead to the same conclusion: equilibrium costs will adjust to confer absolute advantage in the good in which each country has a comparative advantage.

The absolute advantage is weak in the mathematical sense in the case where both countries continue to produce the good. Another illustration of the absolute advantage fallacy arises in popular concerns about the rapid productivity growth of China compared to the US. A 10% improvement in productivity will indeed secure a 10% cost advantage for the businessman over his competitor. A 10% improvement in all Chinese productivity relative to the US is unlikely to change comparative advantage (indeed, in the Ricardian example, comparative labor productivity advantage is unchanged) because Chinese wages will rise relative to US wages. Similarly a 10% drop in all US productivity due to tighter environmental regulations will be unlikely to change comparative advantage because US factor returnsWill fall.

The widespread practice of making international comparisons of ‘competitive advantage’ is essentially misguided because it suggests the metaphor of a race. The race metaphor is extended in concerns about ‘a race to the bottom’, which supposedly expresses the dilemma of countries seeking to implement pollution or labor standards but being pressured to lower standards by their competition with foreign countries that have low standards. But nations do not ‘compete’ as firms do. A firm may well be unable to surviveafter implementing pollution reduction when its competitors abroad do not follow suit and no other prices change in the new equilibrium. Nations cannot similarly put themselves out of business because factor prices will change in the new equilibrium. Polluting industries may or may not survive at the new factor prices under the new regulations, but the nation’s factors will be productively employed somewhere in the economy. Pollution reduction is costly with or without trade; nothing about the nature of a trading economy makes any essential difference to the nation’s ability to implement desired standards. The desirability of trade is an essentially separate matter.

3 Endogenous Advantages TheoryMany goods are traded because they are simply unavailable from local production. Some kinds of availability are exogenous to the interaction of nations — diamonds and oil are found only in a few locations. Endogenous availability is in contrast driven by advantage arising from the economic interaction of nations. Endogenous advantage normally coexists with comparative advantage but it is simpler to consider special cases independent of comparative advantage. Theory focuses on endogenous advantage resulting from economies of scale.

Trade based on scale economies features the possibility of multiple equilibrium — one country will produce a good with scale economies but which nation ends up producing can be a matter of chance. Since advantage is endogenous, it appears attractive in developing countries to attempt to reverse the historical head start of rich countries by starting up production behind protection and then later being able to compete on world markets. The record of success in such efforts is mixed. Openness to trade will generally allow economies of scale to be more thoroughly exploited, so this is a new source of gains from trade. Moreover, wider markets may support a wider range of products, still another source of gainsfrom trade. Each country shares in the gains from trade with scale economies under conditions that appear to be met in practice. The theoretical possibility that a country can lose from trade based on scale economies has drawn a lot of attention from development economists in particular (Ethier, 1982b).Gains can be guaranteed if a country expands production in goods with scale economies, so it looks more attractive to use policy to promote production of such goods. Scale economies come in two forms: external to the firm and internal to the firm. External scale economies are typified by specialized labor markets such as Silicon Valley, where the concentration of the market reduces search costs for computer engineers. External scale economies need not be location specific, however. Increases in the scale of downstream final production can permit carrying on upstream input production with a specialized process

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that is cheaper at large enough scale. Such scale economies can operate at the level of the world economy and appear to be bound up with the recent phenomenon of outsourcing (Ethier, 1982a). Global scale economies tend to guarantee mutual gains from trade among countries.

Internal scale economies are associated with imperfect competition when the size of the firm looms large relative to the market size. Trade tends to intensify competition and thus to reduce the inefficiency of monopoly, another gain from trade.

The most fruitful form of imperfect competition for trade theory has been monopolistic competition. Only Ford Motor Co. produces Ford autos (monopoly) but dozens of brands compete for auto buyers. Each design has a fixed cost of design (and marketing) which must be covered by sales net of variable cost. The total market size limits the number of designs which can profitably be produced. A signal accomplishment of trade theory in the 1980’s was the embedding of monopolistic competition in a general equilibrium trade model (Helpman and Krugman, 1985; Ethier, 1982a). Progress was enabled by the simplifying assumption of symmetric firms: all brands were equally desirable and all firms’ costs were the same. Monopolistic competition provides an explanation of the two way international trade that is found in many products such as autos, and for why two way trade is more prevalent between similar countries. Trade between rich and poor countries, in contrast, is explained mainly by comparative advantage as autos exchange for agriculture. Relative country size matters too, the home market effect of Krugman (1980). Here the insight has been rigorously proved only for a two country example. Start with two equally sized countries, then increase one relative to the other. Trade costs imply that the larger country will have a more than proportionally larger share of brands. Intuitively, with access to foreign markets being costly the home market being larger allows scale economies to be more readily exploited, increasing its share of differentiated goods production more than its share of world income. Monopolistic competition theory has recently focused on the heterogeneity of firms. Retaining the symmetry of firms on the demand side, differences in firms’ productivities imply differential responses to trade. The best firms export disproportionately while imports drive out the worst firms. Fixed trade costs add explanatory power; only the best firms choose to incur the cost of trade. A key element of the model is productivity shocks; firms discover their productivity after committing fixed costs. The distribution of surviving firms is related to the distribution of productivity shocks as well as economic determinants. The models of Bernard, Eaton, Jenson and Kortum (2003) and Melitz (2003) deserve special attention. The former focuses on competition within a variety while the latter focuses on competition across varieties. Both models imply new gains from trade in the form of overall productivity gains: opening trade causes the exit of weak firms and the expansion of strong ones.

4 Bilateral Trade Patterns TheoryThe trade theories presented above are focused on explaining the cross commodity trade pattern of essentially two trading countries. The contemporary world of more than 100 countries (most of which are collections of distinct economic regions) has complex trade patterns. The economic theory of gravity complements the preceding models by providing an explanation of bilateral trade (Anderson and van Wincoop, 2004). Gravity fits the data well and reveals important information. The model is based on four assumptions: expenditure on goods from all sources is equal to income from sales to all sources, markets for all goods clear, and, more restrictively, each country or region produces a unique good and all countries have the same tastes for goods. The third assumption, products differentiated by place of origin, appears to be the most restrictive. In practice, only models of this type do at all well in fitting bilateral trade patterns. Monopolistic competition provides one explanation for why products appear to be differentiated by place of origin. Eaton and Kortum (2002) show alternatively that productivity shocks in a Ricardian model will select producers within product lines, resulting at theaggregate level in what appears to be two way trade. In either case, gravity ends up describing trade flows. In a frictionless world, gravity theory predicts that the bilateral trade in a commodity as a share of world production of the commodity will be equal to the product of the source country’s share of world production of the commodity times the consuming country’s share of expenditure on the commodity. Alternatively, the model predicts that size-adjusted-trade; the bilateral flow divided by the product of

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source country supply and consuming country expenditure, should be constant across country pairs in a frictionless world.

Actual trade flows are far smaller than the frictionless prediction (while shipments within regions are far larger, home bias). The deviations of actual bilateral trade from the frictionless prediction allows inference about bilateral trade costs. Distance appears to be more costly than can be accounted forby transport costs. Other costs are associated with non-contiguity, language barriers, exchange rate barriers, insecurity and other plausible bilateral characteristics. Just crossing a border imposes a cost which is larger than can be explained by policy variables. Trade flows in the model are predicted to vary with relative resistance, equal to the ratio of the direct bilateral trade cost to the product of inward and outward multilateral resistance. Multilateral resistance is an index of bilateral trade costs, inward from every source to a particular destination or outward from a particular source to every destination. Multilateral resistance is linked to country size and thus to explaining an important aspect of trade patterns. Since borders are costly, a big country tends to have lower multilateral resistance than does a small country because a smaller fraction of its shipments must cross borders.

Answer 4. (a) Market Research

Marketing research involves conducting research to support marketing activities, and the statistical interpretation of data into information. This information is then used by managers to plan marketing activities, gauge the nature of a firm's marketing environment and attain information from suppliers. Marketing researchers use statistical methods such as quantitative research, qualitative research, hypothesis tests, Chi-squared tests, linear regression, correlations, frequency distributions, poisson distributions, binomial distributions, etc. to interpret their findings and convert data into information. The marketing research process spans a number of stages including the definition of a problem, development of a research plan, collecting and interpretation of data and disseminating information formally in form of a report. The task of marketing research is to provide management with relevant, accurate, reliable, valid, and current information.

A distinction should be made between marketing research and market research. Market research pertains to research in a given market. As an example, a firm may conduct research in a target market, after selecting a suitable market segment. In contrast, marketing research relates to all research conducted within marketing. Thus, market research is a subset of marketing research.

Marketing environment and Process

The term marketing environment relates to all of the factors (whether internal, external, direct or indirect) that affect a firm's marketing decision-making or planning and is subject of the marketing research. A firm's marketing environment consists of two main areas, which are:

Macro environment On the macro environment a firm holds only little control. It consists of a variety of external factors that manifest on a large (or macro) scale. These are typically economic, social, political or technological phenomena. A common method of assessing a firm's macro-environment is via a PESTLE (Political, Economic, Social, Technological, Legal, Ecological) analysis. Within a PESTLE analysis, a firm would analyze national political

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issues, culture and climate, key macroeconomic conditions, health and indicators (such as economic growth, inflation, unemployment, etc.), social trends/attitudes, and the nature of technology's impact on its society and the business processes within the society.

Micro environment A firm holds a greater amount (though not necessarily total) control of the micro environment. It comprises factors pertinent to the firm itself, or stakeholders closely connected with the firm or company. A firm's micro environment typically spans:

Customers/consumers Employees

Suppliers

The Media

By contrast to the macro environment, an organization holds a greater degree of control over these factors.

Market segmentation

Market segmentation pertains to the division of a market of consumers into persons with similar needs and wants. As an example, if using Kellogg's cereals in this instance, Frosties are marketed to children. Crunchy Nut Cornflakes are marketed to adults. Both goods aforementioned denote two products which are marketed to two distinct groups of persons, both with like needs, traits, and wants.

The purpose for market segmentation is conducted for two main issues. First, a segmentation allows a better allocation of a firm's finite resources. A firm only possesses a certain amount of resources. Accordingly, it must make choices (and appreciate the related costs) in servicing specific groups of consumers. Furthermore the diversified tastes of the contemporary Western consumers can be served better. With more diversity in the tastes of modern consumers, firms are taking noting the benefit of servicing a multiplicity of new markets.

Market segmentation can be defined in terms of the STP acronym, meaning Segment, Target and Position.

Segment Segmentation involves the initial splitting up of consumers into persons of like needs/wants/tastes. Four commonly used criteria are used for segmentation, which include:

Geographical (e.g. country, region, city, town, etc.) Psychographic (i.e. personality traits or character traits which influence consumer

behaviour)

Demographic (e.g. age, gender, socio-economic class, etc.)

Behavioural (e.g. brand loyalty, usage rate, etc.)

Target Once a segment has been identified, a firm must ascertain whether the segment is beneficial for them to service. The DAMP acronym, meaning Discernible, Accessible, Measurable and Profitable, are used as criteria to gauge the viability of a target market. DAMP is explained in further detail below:

Discernable - How a segment can be differentiated from other segments.

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Accessible - How a segment can be accessed via Marketing Communications produced by a firm.

Measurable - Can the segment be quantified and its size determined?

Profitable - Can a sufficient return on investment be attained from a segment's servicing?

o The next step in the targeting process is the level of differentiation involved in a segment serving. Three modes of differentiation exist, which are commonly applied by firms. These are:

Undifferentiated - Where a company produces a like product for all of a market segment.

Differentiated - In which a firm produced slight modifications of a product within a segment.

Niche - In which an organisation forges a product to satisfy a specialised target market.

Position Positioning concerns how to position a product in the minds of consumers. A firm often performs this by producing a perceptual map, which denotes products produced in its industry according to how consumers perceive their price and quality. From a product's placing on the map, a firm would tailor its marketing communications to suit meld with the product's perception among consumers.

Marketing information system

A marketing information system (MKIS) is an information system that is commonly used by marketing management to analyse and view information pertaining to marketing activities. As the label suggests, an MKIS is a computer-based information system therefore used to input, store, process and output marketing information. An MKIS spans four subset components, which are detailed below:

Marketing intelligence system This sub-system stores information gathered from a firm's marketing intelligence activities. Marketing intelligence consists of actions a firm would undertake within its own market or industry, geared towards information existing within its markets. This can be obtained via communication with suppliers, consumers or other bodies within a market.

Internal processes system The internal processes system catalogues all internal marketing processes within a firm.

Marketing research system This section of the overall system contains data from a firm's marketing research activities.

Analytical system The analytical system is the only sub-system which does not store data or information. It's function is to analyse and process data from the other three systems, into reliable, timely and relevant information for the perusal and use of marketing management.

Kinds of marketing research

Marketing research, as a sub-set aspect of marketing activities, can be divided into the following parts:

Primary research (also known as field research), which involves the conduction and compilation of research for the purpose is intended.

Secondary research (also referred to as desk research), is initially conducted for one purpose, but often used to support another purpose or end goal.

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By these definitions, an example of primary research would be market research conducted into health foods, which is used solely to ascertain the needs/wants of the target market for health foods. Secondary research, again according to the above definition, would be research pertaining to health foods, but used by a firm wishing to develop an unrelated product.

Primary research is often expensive to prepare, collect and interpret from data to information. Nonetheless, while secondary research is relatively inexpensive, it often can become outdated and outmoded, given it is used for a purpose other than for which is was intended. Primary research can also be broken down into quantitative research and qualitative research, which as the labels suggest, pertain to numerical and non-numerical research methods, techniques. The appropriateness of each mode of research depends on whether data can be quantified (quantitative research), or whether subjective, non-numeric or abstract concepts are required to be studied (qualitative research).

There also exist additional modes of marketing research, which are:

Exploratory research, pertaining to research that investigates an assumption. Descriptive research, which as the label suggests, describes "what is".

Predictive research, meaning research conducted to predict a future occurrence.

Conclusive research, for the purpose of deriving a conclusion via a research process.

Answer 4. (b) Role of Banks in Export Finance

A good produced in one country and sold to a customer in another country. Exports bring money into the producing country; for that reason, many economists believe that a nation's proper balance of trade means more exports are sold than imports bought. Exports may be difficult to sell in some countries, as the importers may put up various protectionist measures such as import quotas and tariffs. Most governments seek to promote exports, while they have differing positions on imports.

To sell goods or services to a company in another country. The level of exports helps to determine a countryÂ’s trade balance. If exports exceed the amount of imports, then the country has a trade surplus. If imports exceed exports, then the country has a trade deficit.

Financing New Export Ventures

As a exporter, you have access to a wide range of support and financing in support of new export ventures. Financing at this phase of business is usually needed for operating capital requirements in support of the export venture or strategy, or be more structural in nature, to assist your business in developing new products, or modifying existing products for new markets.

Main financing options

Type of Financing Definition or Example Key Characteristics

Bank Line or Facilities

Operating Line of Credit or Loan Familiar tool and application process Security requirements may be stringent Cost of borrowing may be significant

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Government Facilities

Financing, cost-sharing and others May be longer term Often comes with consulting or advice

Investment Capital (Equity or other)

Preferred shares, common equity, term loans from specialized Finance companies

Generally for medium to long-term May or may not involve some form of ownership in your business Generally expensive, but a way to share the development or start-up costs of your venture

Bank Lines / Facilities: Financing provided by banks and financial institutions can be used to fund the development of export business. Whether you seek a generic financing facility, or support for a longer-term export strategy, available financing will depend as much on the nature of the opportunity, as on the type of relationship you have with your bankers. It will also depend significantly on the type of Banker you are working with. There are generally three different sorts of bankers you could work with: Personal Bankers, Small Business Bankers and Commercial Account Managers or Commercial Bankers.

An additional point to note is that many credit unions and "caisses populaires" also offer very similar services to those offered by chartered banks. In most cases, they offer improved terms and more tailored support for smaller businesses. (A partial list of banks and credit unions is provided in the Useful Links section of this guide.)

Government Facilities: Government agencies are specifically mandated to assist Canadian firms pursuing business overseas. Several sources review proposals for funding activities that lead up to the close of an export transaction, and often precede the actual production of goods:

The Business Development Bank of Canada (BDC) offers flexible financing solutions to help exporters gear up for growth; long-term loans to cover the entire cost of additional plant space, new equipment and an increase in inventory. Its Consulting Services can help you create an export and marketing plan and even optimize your production processes for an improved bottom line.

International Trade Canada (ITCan) offers programs focused on specific market development objectives, such as the following:

o New Exporters to Overseas Program (NEXOS): This program introduces Canadian firms to the European market usually via a major international trade fair.

o New Exporters to Border States Program (NEBS): An export education tool targeting Canadian firms not yet exporting but seeking exposure to markets in U.S. Border States. NEBS Plus is an expansion of the NEBS program that serves Canadian firms already exporting to American Border States.

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Software Training Institute

Minor Parts

Technology Parks

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Answer 5. (a) Product Life Cycle

We define a product as "anything that is capable of satisfying customer needs. This definition includes both physical products (e.g. cars, washing machines, DVD players) as well as services (e.g. insurance, banking, private health care).

Businesses should manage their products carefully over time to ensure that they deliver products that continue to meet customer wants. The process of managing groups of brands and product lines is called portfolio planning.

The stages through which individual products develop over time is called commonly known as the "Product Life Cycle".

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The theory of a product life cycle was first introduced in the 1950s to explain the expected life cycle of a typical product from design to obsolescence. Writing in Marketing Tools, Carole Hedden observed that the cycle is represented by a curve that can be divided into four distinct phases: introduction, growth, maturity, and decline. The goal is to maximize the product's value and profitability at each stage. It is primarily considered a marketing theory.

Introduction

This is the stage where a product is conceptualized and first brought to market. The goal of any new product introduction is to meet consumer's needs with a quality product at the lowest possible cost in order to return the highest level of profit. The introduction of a new product can be broken down into five distinct parts:

Idea validation, which is when a company studies a market, looks for areas where needs are not being met by current products, and tries to think of new products that could meet that need. The company's marketing department is responsible for identifying market opportunities and defining who will buy the product, what the primary benefits of the product will be, and how the product will be used.

Conceptual design occurs when an idea has been approved and begins to take shape. The company has studied available materials, technology, and manufacturing capability and determined that the new product can be created. Once that is done, more thorough specifications are developed, including price and style. Marketing is responsible for minimum and maximum sales estimates, competition review, and market share estimates.

Specification and design is when the product is nearing release. Final design questions are answered and final product specs are determined so that a prototype can be created.

Prototype and testing occurs when the first version of a product is created and tested by engineers and by customers. A pilot production run might be made to ensure that engineering decisions made earlier in the process were correct, and to establish quality control. The marketing department is extremely important at this point. It is responsible for developing packaging for the product, conducting the consumer tests through focus groups and other feedback methods, and tracking customer responses to the product.

Manufacturing ramp-up is the final stage of new product introduction. This is also known as commercialization. This is when the product goes into full production for release to the market. Final checks are made on product reliability and variability.

In the introduction phase, sales may be slow as the company builds awareness of its product among potential customers. Advertising is crucial at this stage, so the marketing budget is often substantial. The type of advertising depends on the product. If the product is intended to reach a mass audience, than an advertising campaign built around one theme may be in order. If a product is specialized, or if a company's resources are limited, than smaller advertising campaigns can be used that target very specific audiences. As a product matures, the advertising budget associated with it will most likely shrink since audiences are already aware of the product.

Author Philip Kotler has found that marketing departments can choose from four strategies at the commercialization stage. The first is known as "rapid skimming." The rapid refers to the speed with which the company recovers its development costs on the product—the strategy calls for the new product to be launched at a high price and high promotion level. High prices mean high initial profits (provided the product is purchased at acceptable levels of course), and high promotion means high market recognition. This works best when the new product is unknown in the marketplace.

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The opposite method, "slow skimming," entails releasing the product at high price but with low promotion level. Again, the high price is designed to recover costs quickly, while the low promotion level keeps new costs down. This works best in a market that is made up of few major players or products—the small market means everyone already knows about the product when it is released.

The other two strategies involve low prices. The first is known as rapid penetration and involves low price combined with high promotion. This works best in large markets where competition is strong and consumers are price-conscious. The second is called slow penetration, and involves low price and low promotion. This would work in markets where price was an issue but the market was well-defined.

Besides the above marketing techniques, sales promotion is another important consideration when the product is in the introductory phase. According to Kotler and Armstrong in Principles of Marketing, "Sales promotion consists of short-term incentives to encourage purchase or sales of a product or service. Whereas advertising offers reasons to buy a product or service, sales promotion offers reason to buy now." Promotions can include free samples, rebates, and coupons.

Growth

The growth phase occurs when a product has survived its introduction and is beginning to be noticed in the marketplace. At this stage, a company can decide if it wants to go for increased market share or increased profitability. This is the boom time for any product. Production increases, leading to lower unit costs. Sales momentum builds as advertising campaigns target mass media audiences instead of specialized markets (if the product merits this). Competition grows as awareness of the product builds. Minor changes are made as more feedback is gathered or as new markets are targeted. The goal for any company is to stay in this phase as long as possible.

It is possible that the product will not succeed at this stage and move immediately past decline and straight to cancellation. That is a call the marketing staff has to make. It needs to evaluate just what costs the company can bear and what the product's chances for survival are. Tough choices need to be made—sticking with a losing product can be disastrous.

If the product is doing well and killing it is out of the question, then the marketing department has other responsibilities. Instead of just building awareness of the product, the goal is to build brand loyalty by adding first-time buyers and retaining repeat buyers. Sales, discounts, and advertising all play an important role in that process. For products that are well-established and further along in the growth phase, marketing options include creating variations of the initial product that appeal to additional audiences.

Maturity

At the maturity stage, sales growth has started to slow and is approaching the point where the inevitable decline will begin. Defending market share becomes the chief concern, as marketing staffs have to spend more and more on promotion to entice customers to buy the product. Additionally, more competitors have stepped forward to challenge the product at this stage, some of which may offer a higher quality version of the product at a lower price. This can touch off price wars, and lower prices mean lower profits, which will cause some companies to drop out of the market for that product altogether. The maturity stage is usually the longest of the four life cycle stages, and it is not uncommon for a product to be in the mature stage for several decades.

A savvy company will seek to lower unit costs as much as possible at the maturity stage so that profits can be maximized. The money earned from the mature products should then be used in research and development to come up with new product ideas to replace the maturing products. Operations should be streamlined, cost efficiencies sought, and hard decisions made.

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From a marketing standpoint, experts argue that the right promotion can make more of an impact at this stage than at any other. One popular theory postulates that there are two primary marketing strategies to utilize at this stage—offensive and defensive. Defensive strategies consist of special sales, promotions, cosmetic product changes, and other means of shoring up market share. It can also mean quite literally defending the quality and integrity of your product versus your competition. Marketing offensively means looking beyond current markets and attempting to gain brand new buyers. Relaunching the product is one option. Other offensive tactics include changing the price of a product (either higher or lower) to appeal to an entirely new audience or finding new applications for a product.

Decline

This occurs when the product peaks in the maturity stage and then begins a downward slide in sales. Eventually, revenues will drop to the point where it is no longer economically feasible to continue making the product. Investment is minimized. The product can simply be discontinued, or it can be sold to another company. A third option that combines those elements is also sometimes seen as viable, but comes to fruition only rarely. Under this scenario, the product is discontinued and stock is allowed to dwindle to zero, but the company sells the rights to supporting the product to another company, which then becomes responsible for servicing and maintaining the product.

Problems with the Product Life Cycle Theory

While the product life cycle theory is widely accepted, it does have critics who say that the theory has so many exceptions and so few rules that it is meaningless. Among the holes in the theory that these critics highlight:

There is no set amount of time that a product must stay in any stage; each product is different and moves through the stages at different times. Also, the four stages are not the same time period in length, which is often overlooked.

There is no real proof that all products must die. Some products have been seen to go from maturity back to a period of rapid growth thanks to some improvement or re-design. Some argue that by saying in advance that a product must reach the end of life stage, it becomes a self-fulfilling prophecy that companies subscribe to. Critics say that some businesses interpret the first downturn in sales to mean that a product has reached decline and should be killed, thus terminating some still-viable products prematurely.

The theory can lead to an over-emphasis on new product releases at the expense of mature products, when in fact the greater profits could possibly be derived from the mature product if a little work was done on revamping the product.

The theory emphasizes individual products instead of taking larger brands into account.

The theory does not adequately account for product redesign and/or reinvention.

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Answer 5. (b) Role of Advertising and Communication in International Marketing.

International Marketing: A Global Marketplace

Trade is increasingly global in scope today. There are several reasons for this. One significant

reason is technological—because of improved transportation and communication opportunities today,

trade is now more practical. Thus, consumers and businesses now have access to the very best products

from many different countries. Increasingly rapid technology lifecycles also increases 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).

Some forces in international trade.

Trade between countries is beneficial because these countries differ in their relative economic

strengths—some have more advanced technology and some have lower costs. Products tend to be adopted

more quickly in the United States and Japan, for example, so once the demand for a product (say, VCRs)

is in the decline in these markets, an increasing market potential might exist in other countries (e.g.,

Europe and the rest of Asia). Internalization/transaction costs refers to the fact that developing certain

very large scale projects, such as an automobile intended for the World market, may entail such large

costs that these must be spread over several countries.

Advertising

Advertising is a persuasive communication attempt to change or reinforce ones’ prior attitude that is

predictable of future behavior.

Historical Milestones In Advertising

Advertising goes back to the very beginnings of recorded history. Archaeologists working in the

countries around the Mediterranean sea have dug up signs announcing various events and offers. An early

form of advertising was the town crier. Another early advertising form was the mark that trades people

placed on their goods, such as pottery. As the person’s reputation spread by word of mouth, buyers began

to look for his special mark, just as trademarks and brand names are used today. As production became

more centralized and markets became more distant, the mark became more important. The turning point

in the history of advertising came in he year 1450 when Johann Gutenberg invented the printing press.

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English language appeared in 1478. In 1622, advertising got a big boost with the launching of the first

English newspaper, The Weekly News. Advertising had its greatest growth in the United States. Ben

Franklin has been called the father of American advertising because his Gazette, first published in

1729,had the largest circulation and advertising volume of any paper in colonial America. The invention

of radio and, later, television created two more amazing media for the spread of advertising.

Advertising's Two Important Virtues

You have complete control. Unlike public relations efforts, you determine exactly where, when

and how often your message will appear, how it will look, and what it will say. You can target

your audience more readily and aim at very specific geographic areas.

You can be consistent, presenting your company's image and sales message repeatedly to build

awareness and trust. A distinctive identity will eventually become clearly associated with your

company, like McDonald's golden arches. Customers will recognize you quickly and easily - in

ads, mailers, packaging or signs - if you present yourself consistently.

What Advertising Can Do For Your Business

Remind customers and prospects about the benefits of your product or service

Establish and maintain your distinct identity

Enhance your reputation

Encourage existing customers to buy more of what you sell

Attract new customers and replace lost ones

Slowly build sales to boost your bottom line

Promote business to customers, investors

Advertising Plan

The manager needs to engage in situation analysis with respect to the market conditions that are

operating at the time and to assess the consumer/market, competitive, facilitating agency, and social legal,

and global factors that will affect decision making and the development of the plan. It is vital that the

advertising plan be developed so as to mesh with and support the various components of the marketing

and communications mix such as personal selling, pricing, public relation, and promotion. The

advertising manager also needs to know the major areas of his or her planning and decision-making

responsibilities.

There are three areas of major importance:

Objective And Target Selection,

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Consideration,

Message Strategy And Tactics,

Media Strategy And Tactics.

Advertising Communication System

Advertising communication always involves a perception process and four of the elements shown in

the model: the source, a message, a communication channel, and a receiver. In addition, the receiver will

sometimes become a source of information by talking to friends or associates. This type of

communication is termed word-of-mouth communication, and it involves social interactions between two

or more people and the important ideas of group influence and the diffusion of information.

An advertising message can have a variety of effects upon the receiver. It can

Create awareness

Communicate information about attributes and benefits

Develop or change an image or personality

Associate a brand with feelings and emotions

Create group norms

Precipitate behavior

Message Strategy and Tactics

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The actual development of an advertising campaign involves several distinct steps. First, the

advertising manager must decide what the advertising is meant to communicate by way of benefits,

feeling, brand personality, or action content. Once the content of the campaign has been decided,

decisions must be made on the best and most effective ways to communicate that content.

Media Strategy

Although there are many rules of thumb often used to decide how much money to spend on

advertising, the soundest rules involve beginning with a detailed specification of what a corporation is

attempting to accomplish with advertising, and the resources necessary. It is only when the job to be done

is well specified that the amount and nature of the effort the amount of money to be invested in

advertising can be really determined

International advertising

It entails dissemination of a commercial message to target audiences in more than one country.

Target audiences differ from country to country in terms of how they perceive or interpret symbols or

stimuli, respond to humor or emotional appeals, as well as in levels of literacy and languages spoken.

How the advertising function is organized also varies.

International advertising can, therefore, be viewed as a communication process that takes place in

multiple cultures that differ in terms of values, communication styles, and consumption patterns.

International advertising is also a business activity involving advertisers and the advertising agencies that

create ads and buy media in different countries. The sum total of these activities constitutes a worldwide

industry that is growing in importance. International advertising is also a major force that both reflects

social values, and propagates certain values worldwide.

The Communication Process

The process of communication in international markets involves a number of steps. First, the

advertiser determines the appropriate message for the target audience. Next, the message is encoded so

that it will be clearly understood in different cultural contexts. The message is then sent through media

channels to the audience who then decodes and reacts to the message. At each stage in the process,

cultural barriers may hamper effective transmission of the message and result in miscommunication.

International Advertising as a Business Practice

International advertising can also be viewed as a business activity through which a firm

attempts to inform target audiences in multiple countries about itself and its product or service offerings.

In some cases the advertising message relates to the firm and its activities, i.e. its corporate image. In

other cases, the message relates to a specific product or service marketed by the firm. In either case, the

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firm will use the services of an advertising agency to determine the appropriate message, advertising copy

and make the media placement.

Answer 7. (a) W.T.O. and its Impact on Indian Business:

The World Trade Organization (WTO) is an international organization designed by its founders to supervise and liberalize international capital trade. The organization officially commenced on January 1, 1995 under the Marrakesh Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1947. The World Trade Organization deals with regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliaments. Most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay Round (1986-1994). The organization is currently endeavoring to persist with a trade negotiation called the Doha Development Agenda (or Doha Round), which was launched in 2001 to enhance equitable participation of poorer countries which represent a majority of the world's population. However, the negotiation has been dogged by "disagreement between exporters of agricultural bulk commodities and countries with large numbers of subsistence farmers on the precise terms of a 'special safeguard measure' to protect farmers from surges in imports. At this time, the future of the Doha Round is uncertain."

The WTO has 153 members, representing more than 95% of total world trade and 30 observers, most seeking membership. The WTO is governed by a ministerial conference, meeting every two years; a general council, which implements the conference's policy decisions and is responsible for day-to-day administration; and a director-general, who is appointed by the ministerial conference. The WTO's headquarters is at the Centre William Rappard, Geneva, Switzerland.

Principles of the trading system

The WTO establishes a framework for trade policies; it does not define or specify outcomes. That is, it is concerned with setting the rules of the trade policy games. [34] Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO:

1. Non-Discrimination. It has two major components: the most favoured nation (MFN) rule, and the national treatment policy. Both are embedded in the main WTO rules on goods, services, and intellectual property, but their precise scope and nature differ across these areas. The MFN rule requires that a WTO member must apply the same conditions on all trade with other WTO members, i.e. a WTO member has to grant the most favorable conditions under which it allows trade in a certain product type to all other WTO members. "Grant someone a special favour and you have to do the same for all other WTO members." National treatment means that imported and should be treated no less favorably than domestically-produced goods (at least after the foreign goods have entered the market) and was introduced to tackle non-tariff barriers to trade (e.g. technical standards, security standards et al. discriminating against imported goods).

2. Reciprocity. It reflects both a desire to limit the scope of free-riding that may arise because of the MFN rule, and a desire to obtain better access to foreign markets. A related point is that for a nation to negotiate, it is necessary that the gain from doing so be greater than the gain available from unilateral liberalization; reciprocal concessions intend to ensure that such gains will materialise.

3. Binding and enforceable commitments. The tariff commitments made by WTO members in a multilateral trade negotiation and on accession are enumerated in a schedule (list) of concessions. These schedules establish "ceiling bindings": a country can change its bindings, but only after

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negotiating with its trading partners, which could mean compensating them for loss of trade. If satisfaction is not obtained, the complaining country may invoke the WTO dispute settlement procedures.

4. Transparency. The WTO members are required to publish their trade regulations, to maintain institutions allowing for the review of administrative decisions affecting trade, to respond to requests for information by other members, and to notify changes in trade policies to the WTO. These internal transparency requirements are supplemented and facilitated by periodic country-specific reports (trade policy reviews) through the Trade Policy Review Mechanism (TPRM). The WTO system tries also to improve predictability and stability, discouraging the use of quotas and other measures used to set limits on quantities of imports.

5. Safety valves. In specific circumstances, governments are able to restrict trade. There are three types of provisions in this direction: articles allowing for the use of trade measures to attain noneconomic objectives; articles aimed at ensuring "fair competition"; and provisions permitting intervention in trade for economic reasons. Exceptions to the MFN principle also allow for preferential treatment of developing countries, regional free trade areas and customs unions.

Abstract:

One of the most dramatic events that have taken place in later part of 20 th century was culmination of GATT 1947 into WTO (The world Trade organization), which came into being on 1 st January 2005. This WTO has set expectations high in various member countries (by now 149 including latest addition of Saudi Arabia) regarding spurt in world trade where India has insignificant share in the pie-Only 0.75% at the most. Even in IT exports the share of Indian exporters is just peanuts in view of overall world market.

Since formation of WTO there have been regular meetings of Ministerial Conferences (Highest Policy level body of WTO) religiously every 2 years and 5 such meetings have taken place while world prepares for the Hong Kong meeting to take place shortly, the sixth one.

While 5th meet at Cancun, Mexico was more or less failure, the earlier one at Seattle, USA was received with brickbats from environmentalist and Labor union Groups protesting against WTO regime.

It is statistical fact that world trade has definitely grown since 1995 thereby giving indicators that international trade reforms do play important role in boosting economic development of various countries.

Problems facing India in WTO & its Implementation:

But there are several problems facing these Multilateral Trade agreements:

- Predominance of developed nations in negotiations extracting more benefits from developing and least developed countries

- Resource and skill limitations of smaller countries to understand and negotiate under rules of various agreements under WTO

- Incompatibility of developed and developing countries resource sizes thereby causing distortions in implementing various decisions

- Questionable effectiveness in implementation of agreements reached in past and sincerity

- Non-tariff barriers being created by developed nations.

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- Regional cooperation groups posing threat to utility of WTO agreement itself, which is multilateral encompassing all member countries

- Poor implementation of Doha Development Agenda

- Agriculture seems to be bone of contention for all types of countries where France, Japan and some countries are just not willing to budge downwards in matter of domestic support and export assistance to farmers and exporters of agriculture produce.

- Dismantling of MFA (Multi Fiber Agreement) and its likely impact on countries like India

- Under TRIPS question of high cost of Technology transfer, Bio Diversity protection, protection of Traditional Knowledge and Folk arts, protection of Bio Diversities and geographical Indications of origin, for example Basmati, Mysore Dosa or Champagne. The protection has been given so far in wines and spirits that suit US and European countries.

Implications for India

It appears that India does not stand to gain much by shouting for agriculture reforms in developed countries because the overall tariff is lower in those countries. India will have to tart major reforms in agriculture sector in India to make Agriculture globally competitive. Same way it is questionable if India will be major beneficiary in dismantling of quotas, which were available under MFA for market access in US and some EU countries. It is likely that China, Germany, North African countries, Mexico and such others may reap benefit in textiles and Clothing areas unless India embarks upon major reforms in modernization and up gradation of textile sector including apparels.

Some of Singapore issues are also important like Government procure, Trade and Investment, Trade facilitation and market access mechanism.

In Pharma-sector there is need for major investments in R &D and mergers and restructuring of companies to make them world class to take advantage. India has already amended patent Act and both product and Process are now patented in India. However, the large number of patents going off in USA recently, gives the Indian Drug companies windfall opportunities, if tapped intelligently. Some companies in India have organized themselves for this.

Excerpts from Speech of Ramkrishna Hegde, the then Minister, at Geneva in 1998-

"In order to make WTO an effective multilateral body, which serves the objectives for which it was set up, it is necessary to go back to the basic principles. The Uruguay Round negotiators had stated their intentions quite clearly in the Preamble to the Marrakesh Agreement establishing the WTO. They recognised "that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development. They recognized also "that there is need for positive efforts designed to ensure that developing countries, and especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development".

The Objective of WTO Reiterated:

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It is very clear that the intention of the negotiators was to use trade as an instrument for development, to raise standards of living, expand production, keeping in view, particularly, the needs of developing countries and least-developed countries. The WTO must never lose sight of this basic principle. Every act of implementation and of negotiation, every legal decision, has to be viewed in this context. Trade, as an instrument for development, should be the cornerstone of all our deliberations, decisions and actions. Besides, the system should be seen to be equitable and fair. It must be used in such a manner that the letter and spirit of the Agreements is fully observed. The WTO Members must mutually support and encourage each other to achieve the final goal. It must be recognized that all Members should assume a negotiating rather than an adversarial posture. It should also be recognized that different economies have different features and structures, different problems, different cultures. The pace of change must be carefully calibrated to take into account such differences. All Members should guard against unilateral action that cuts at the root of multilateral agreement and consensus.

Developing countries have generally been apprehensive in particular about the implementation of special and differential treatment provisions (S&D) in various Uruguay Round Agreements. Full benefits of these provisions have not accrued to the developing countries, as clear guidelines have not been laid down on how these are to be implemented. "

The first Ministerial Conference held in 1996 in Singapore saw the commencement of pressures to enlarge the agenda of WTO. Pressures were generated to introduce new Agreements on Investment, Competition Policy, Transparency in Government Procurement and Trade Facilitation. The concept of Core Labor Standards was also taken up for introduction.

 India and the developing countries, which were already under the burden of fulfilling the commitments undertaken through the Uruguay Round Agreements, and who also perceived many of the new issues to be non-trade issues, resisted the introduction of these new subjects into WTO. They were partly successful. The Singapore Ministerial Conference (SMC) set up open-ended Work Program to study the relationship between Trade and Investment; Trade and Competition Policy; to conduct a study on Transparency in Government Procurement practices; and do analytical work on simplification of trade procedures (Trade Facilitation).

Most importantly the SMC clearly declared on the Trade-Labor linkage as follows:

“We reject the use of labor standards for protectionist purposes, and agree that the comparative advantage of countries, particularly low-wage developing countries, must in no way be put into question. In this regard we note that the WTO and ILO Secretariat will continue their existing collaboration".

Not many people in this country are aware that there is a dispute settlement system in the WTO. This is at the heart of the WTO and sets it apart from the earlier GATT. Countries like the USA and the European Union have brought cases against us and won these cases like in pharmaceutical patents. India too has complained against the US and Europe and it too has won its fair share of disputes in areas like textiles. India must effectively use this mechanism to extract fair share in world markets.

It would be advantageous for India to give concrete shape to SAARC economic forum or Free market and align itself with ASEAN.

What India should do?

The most important things for India to address are speed up internal reforms in building up world-class infrastructure like roads, ports and electricity supply. India should also focus on original knowledge generation in important fields like Pharmaceutical molecules, textiles, IT high end products, processed food, installation of cold chain and agricultural logistics to tap opportunities of globalization under WTO regime.

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India's ranking in recent Global Competitiveness report is not very encouraging due to infrastructure problems, poor governance, poor legal system and poor market access provided by India.

Our tariffs are still high compared to Developed countries and there will be pressure to reduce them further and faster.

India has solid strength, at least for midterm (5-7 years) in services sector primarily in IT sector, which should be tapped and further strengthened.

India would do well to reorganize its Protective Agricultural policy in name of rural poverty and Food security and try to capitalize on globalization of agriculture markets. It should rather focus on Textile industry modernization and developing international Marketing muscle and expertise, developing of Brand India image, use its traditional arts and designs intelligently to give competitive edge, capitalize on drug sector opportunities, and develop selective engineering sector industries like automobiles & forgings & castings, processed foods industry and the high end outsourcing services.

India must improve legal and administrative infrastructure, improve trade facilitation through cutting down bureaucracy and delays and further ease its financial markets.

India has to downsize non-plan expenditure in Subsidies (which are highly ineffective and wrongly applied) and Government salaries and perquisites like pensions and administrative expenditures.

Corruption will also have to be checked by bringing in fast remedial public grievance system, legal system and information dissemination by using e-governance.

The petroleum sector has to be boosted to tap crude oil and gas resources within Indian boundaries and entering into multinational contracts to source oil reserves.

It won’t be a bad idea if Indian textile and garment Industry go multinational setting their foot in western Europe, North Africa, Mexico and other such strategically located areas for large US and European markets.

The performance of India in attracting major FDI has also been poor and certainly needs boost up, if India has to develop globally competitive infrastructure and facilities in its sectors of interest for world trade.

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Answer 7. (b) Future of Marketing in the World

Marketing is the process associated with promoted for sale goods or services. It is considered a "social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and values with others." It is an integrated process through which companies create value for customers and build strong customer relationships in order to capture value from customers in return.

Marketing is used to create the customer, to keep the customer and to satisfy the customer. With the customer as the focus of its activities, it can be concluded that marketing management is one of the major components of business management. The evolution of marketing was caused due to mature markets and overcapacities in the last decades. Companies then shifted the focus from production more to the customer in order to stay profitable.

The term marketing concept holds that achieving organisational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions. It proposes that in order to satisfy its organizational objectives, an organization should anticipate the needs and wants of consumers and satisfy these more effectively than competitors.

The Future of Marketing

New consumer values will demand a new approach to marketing

Get ready for the greatest shift in consumer values for fifty years Fundamental attitude / fashion changes are about to sweep through society

More powerful than internet, biotech and globalisation combined

Accelerated dramatically by recent events, chaos and uncertainty

Huge future impact on all marketing activity, business and personal decisions

Became obvious to me as a Futurist as well as a physician

Big questions about the value of "progress"

The revolution began shortly before the Millennium - the New Dawn We've never had so much, consumed so much, enjoyed so much

A century of science, medicine and technology has improved our lives

Yet it's left us time-hungry, seeking greater work-life balance and meaning

Deep issues remain untouched in our families and neighbourhoods

We created a global village without knowing how to live together inside it

Opened the doors to designer life, cloned babies, biotech war and more

Result: people asking questions - does more always mean better?

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The ultimate marketing slogan or advertising banner

We build a better world for you - the greatest claim of all A better future for you, your business and your world

It also happens to be the reason for everything that people buy and do

Improving something, in some way, somewhere, for themselves /someone else

People like to feel the world is a better place with them living in it

That's why 60% of Americans enthusiastically give a total 20 billion hours a year to worthy causes - equivalent in value to 4% of the entire US economy

They want to feel good about what they do and buy

One simple truth is the key to all marketing in future

Building a Better World is the big value, the key to selling in future Four Corners of the Human Heart motivate us, but marketers focus on one

Satisfy Individuals - basis of most advertising campaigns

Support Family - your inner circle of special people

Strengthen Community - your neighborhood, city, nation

Sustain The World - life on earth, environment, your own world

Connect with all the passions people have and they'll follow you to the ends of the earth to support your business. They'll spread goodwill, work hard for you - buy your products, your services and your stock with pride. You'll attract the best people, form highly motivated teams, sell the strongest brands with greatest purpose and highest values, promising all a better future.

Marketing isn’t what it used to be. In 2003, advertising spending across the world increased on average by 3.6% - however the returns from that spend decreased by 3.4%. Not a surprising fact considering that the average consumer who’s reached the ripe old age of 65 in Britain would have been exposed to at least one million television commercials. And the number in the U.S. and Australia is even higher. When you stop and do the sums, this equates to watching television commercials for eight hours every day, seven days a week for a mind-boggling three years! 

Given the low return on advertising investment, we are forced to conclude that advertising, as we know it, no longer works. Something new is required. I’m suggesting three new pathways. 

Sensory Branding

The world of advertising needs to go back to basics. Today 99% of all communication is based on what we see and what we hear. One may ask about what we smell, taste and feel – particularly in light of the fact that 75% of our emotions are connected to what we smell rather than what we see and hear. Marketing seems to have generally neglected this very important sense at its own peril considering that branding is all about building emotional relationships between a product and the consumer.

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I call this concept of appealing to all the senses Sensory Branding – a topic you’ll hear much more about as I share the findings from the world’s largest study ever conducted on brands and our five senses as part of project BRAND sense. The results are nothing short of startling, and for the first time they offer proof that in order to survive, branding has to expand its two-dimension approach and become a five-dimensional concept.

Brand communities

Think Tupperware, Atkins or Weight Watchers. They all have one thing in common. Brand communities support these three enormously successful brands. In a world where advertising is losing credibility, consumers are looking for other sources of trust – communities provide an answer. Friendship is one of the strongest bonds of trust. We trust our friends’ recommendations, advice and experience. Think about the last movie you saw, restaurant you ate at or book that you read.  Chances are a friend recommended them, and you may very likely recommend them to another.

Brand communities have always existed, but as traditional marketing loses its strength, focusing on the brand community has proved to be an effective strategy.  The future of those brands who take their market seriously and question the influence of traditional above-the-line advertising, will be considering establishing a brand community where word-of-mouth will do the talking. These personal testimonials will guarantee the results, and media money will be spent on people rather than on creating ads and commercials. It will require more than a website to achieve this, and a consistent well thought-through approach will be essential for success.

Situation placement

Close to 60% of the tween population in the UK play a computer game every day according to the BRAND child study. The numbers are astounding. The Hollywood movie-making machine is only half as big as the computer gaming industry. But in a mere three years time, it’s predicted to be a third. The future power of the computer gaming industry is set to become an extremely important channel for advertisers.

No wonder companies like Toyota, LEGO and McDonald’s have begun integrating commercial messages into games. It also comes as no surprise that energy drinks like Red Bull have succeeded after placing their first commercial message – “Need More Energy” in Play Station 1. This is not an easy game. Where do you go? Who do you ask for advice? There’s not much of an infrastructure that can help you. No media agencies to book space. No advertising agencies to secure placement. And things are changing quickly. If you are smart – you can be first. The prices of securing space in the virtual world are quite low. The value is high.  Brands in a virtual world are still as rare as seats on a space flight.

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Answer 8. (b) Forward Market

Market dealing in commodities, currencies, and securities for future (forward) delivery at prices agreed-upon today (date of making the contract). In commodity and currency markets, forward trading is used as a means of hedging against sharp fluctuations in their prices. See also futures market.

Market where dealers agree to deliver currency, commodities, or financial instruments at a fixed price at a

specified future date. Most forward contracts are made for delivery at specific future dates, for example,

one week from the transaction date, one month, and so on. Longer term contracts are more speculative in

nature, and are substantially more risky.

The forward market is the over-the-counter financial market in contracts for future delivery, so called forward contracts. Forward contracts are personalized between parties (i.e., delivery time and amount are determined between seller and customer). The forward market is a general term used to describe the informal market by which these contracts are entered into. Standardized forward contracts are called futures contracts and traded on a futures exchange.

Forward contracts are personalized between parties and therefore not frequently traded on exchanges. The forward market is a general term used to refer to the informal market in which these contracts are entered and exited.

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Answer 8. (c) Export Documentation

Certain documentation takes place while exporting from India. Special documents may be required depending on the type of product or destination. Certain export products may require a quality control inspection certificate from the Export Inspection Agency. Some food and pharmaceutical product may require a health or sanitary certificate for export.

Shipping Bill/ Bill of Export is the main document required by the Customs Authority for allowing shipment. Usually the Shipping Bill is of four types and the major distinction lies with regard to the goods being subject to certain conditions which are mentioned below:

Export duty/ cess Free of duty/ cess

Entitlement of duty drawback

Entitlement of credit of duty under DEPB Scheme

Re-export of imported goods

Documents Required for Post Parcel Customs Clearance

In case of Post Parcel, no Shipping Bill is required. The relevant documents are mentioned below:

Customs Declaration Form - It is prescribed by the Universal Postal Union (UPU) and international apex body coordinating activities of national postal administration. It is known by the code number CP2/ CP3 and to be prepared in quadruplicate, signed by the sender.

Despatch Note, also known as CP2. It is filled by the sender to specify the action to be taken by the postal department at the destination in case the address is non-traceable or the parcel is refused to be accepted.

Prescriptions regarding the minimum and maximum sizes of the parcel with its maximum weight :Minimum size: Total surface area not less than 140 mm X 90 mm.Maximum size: Lengthwise not over 1.05 m. Measurement of any other side of circumference 0.9 m./ 2.00 m.Maximum weight: 10 kg usually, 20 kg for some destinations.

Commercial invoice - Issued by the seller for the full realisable amount of goods as per trade term.

Consular Invoice - Mainly needed for the countries like Kenya, Uganda, Tanzania, Mauritius, New Zealand, Burma, Iraq, Ausatralia, Fiji, Cyprus, Nigeria, Ghana, Zanzibar etc. It is prepared in the prescribed format and is signed/ certified by the counsel of the importing country located in the country of export.

Customs Invoice - Mainly needed for the countries like USA, Canada, etc. It is prepared on a special form being presented by the Customs authorities of the importing country. It facilitates entry of goods in the importing country at preferential tariff rate.

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Legalised/ Visaed Invoice - This shows the seller's genuineness before the appropriate consulate/ chamber of commerce/ embassy. It do not have any prescribed form.

Certified Invoice - It is required when the exporter needs to certify on the invoice that the goods are of a particular origin or manufactured/ packed at a particular place and in accordance with specific contract. Sight Draft and Usance Draft are available for this. Sight Draft is required when the exporter expects immediate payment and Usance Draft is required for credit delivery.

Packing List - It shows the details of goods contained in each parcel/ shipment.

Certificate of Inspection - It shows that goods have been inspected before shipment.

Black List Certificate - It is required for countries which have strained political relation. It certifies that the ship or the aircraft carrying the goods has not touched those country(s).

Weight Note - Required to confirm the packets or bales or other form are of a stipulated weight.

Manufacturer's/ Supplier's Quality/ Inspection Certificate.

Manufacturer's Certificate - It is required in addition to the Certificate of Origin for few countries to show that the goods shipped have actually been manufactured and are available.

Certificate of Chemical Analysis - It is required to ensure the quality and grade of certain items such as metallic ores, pigments, etc.

Certificate of Shipment - It signifies that a certain lot of goods have been shipped.

Health/ Veterinary/ Sanitary Certification - Required for export of foodstuffs, marine products, hides, livestock etc.

Certificate of Conditioning - It is issued by the competent office to certify compliance of humidity factor, dry weight, etc.

Antiquity Measurement - Issued by Archaeological Survey of India in case of antiques.

Transhipment Bill - It is used for goods imported into a customs port/ airport intended for transhipment.

Shipping Order - Issued by the Shipping (Conference) Line which intimates the exporter about the reservation of space of shipment of cargo through the specific vessel from a specified port and on a specified date.

Cart/ Lorry Ticket - It is prepared for admittance of the cargo through the port gate and includes the shipper's name, cart/ lorry No., marks on packages, quantity, etc.

Shut Out Advice - It is a statement of packages which are shut out by a ship and is prepared by the concerned shed and is sent to the exporter.

Short Shipment Form - It is an application to the customs authorities at port which advises short shipment of goods and required for claiming the return.

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Shipping Advice - It is prepared in aligned document to be used to inform the overseas customer about the shipment of goods.

Answer 8. (d) Business use of Internet

While traditional industries like manufacturing are shrinking, new industries are growing — especially the «information industries».

You can use the internet to find your customers and business partners worldwide.

Your customers and partners can find you on the internet.

You can use the internet to build a strong relationship with your customers especially via email.

You can use the internet to market your products and services.

You can use the internet to acquire all the information, training and qualifications you need for your business.

You can set up a business with a very small marketing budget, something almost impossible in the «real world».

You can certainly list even more reasons why it is possible for anybody with a computer and access to the Internet to establish their own business. At the same time the reality is that only a very small percentage of people who do have a computer and access to the Internet, establish and run their own business. Why is this? The answer is very simple. Most people anywhere in the world spend too much time thinking about things they do not want, instead of thinking about things they do want. As a result there are only a few people who have their own company and they usually earn more money than somebody with a regular job.Owners of companies usually have more personal and financial freedom than people with regular jobs. But what exactly do you need in order to own a company? Money? A University degree? The «right» friends? Well, maybe some of these things can help you with your business but then they are not essential and are no guarantee of success. We have analyzed a number of successful online business people and here is a list of important characteristics all of them possessed.

We know that the following qualities are essential for success as a businessperson so you should take the time to go through them and check whether or not you have them. All the information about how to set up a website, how to run an email newsletter, how to get a high ranking at Google, how to generate huge traffic to your website etc. will be worth nothing if you don't have most of the following skills and qualities.

Answer 8. (f) Cancun round of W.T.O.

The World Trade Organization’s (WTO) Fifth Ministerial Conference took place in Cancun, Mexico from September 10 to 14, 2003. These meetings are some of the most important to the world due to the various issues discussed that can impact, positively and negatively, various countries, especially poor ones, and their economic futures.

Over 10,000 people are thought to have attended the meeting: among them 3,000 journalists, 2,000 NGOs and 5,000 government delegates (including trade ministers and other ministers of agriculture, environment, finance and development).

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“We are told that trade can provide a ladder to a better life and deliver us from poverty and despair... Sadly, the reality of the international trading system today does not match the rhetoric.”

— Kofi Annan, Secretary General, United Nations. (In a statement read at the opening session of the WTO meeting.)

But these talks collapsed.

Richer countries wanted to talk about newer issues that mostly they themselves would have benefited from. (This is part of the free trade and liberalization ideas that they promote, which have been under increasing criticism from many angles in recent years.)

Poorer countries wanted to finish older issues mostly on agriculture that affected them the most, especially the impact of European and U.S. subsidies on their own agriculture and lack of access to those markets. (This actually goes against the free trade ideas that these two regions especially promote.)

This impasse led to the end of the talks for now but for the first time showed the developing countries make a successful and united stand to represent their concerns.

“The Cancun round of WTO talks is a chance for developing countries to get a fairer deal. But don’t count on that happening.”— Joseph Stiglitz, Trade imbalances, The Guardian, August 15, 2003

Answer 8. (e) Quantitative Restrictions

Explicit limits, or quotas, on the physical amounts of particular commodities that can be imported or exported during a specified time period, usually measured by volume but sometimes by value. The quota may be applied on a selective basis, with varying limits set according to the country of origin or destination, or on a quantitative global basis that only specifies the total limit and thus tends to benefit more efficient suppliers.

Article XI of the GATT generally prohibits quantitative restrictions on the importation or the exportation of any product, by stating "[n]o prohibitions or restrictions other than duties, taxes or other charges shall be instituted or maintained by any Member..." One reason for this prohibition is that quantitative restrictions are considered to have a greater protective effect than tariff measures and are more likely to distort free trade. When a trading partner uses tariffs to restrict imports, it is still possible to increase exports as long as foreign products become price competitive enough to overcome the barriers created by the tariff. When a trading partner uses quantitative restrictions, however, it is impossible to export in excess of the quota no matter how price competitive foreign products may be. Thus, quantitative restrictions are considered to have such a greater distortional effect on trade than tariffs that their prohibition is one of the fundamental principles of the GATT.

However, the GATT provides exceptions to this fundamental principle. These exceptional rules permit the imposition of quantitative measures under limited conditions and only if they are taken on policy grounds justifiable under the GATT such as critical shortages of foodstuffs and balance of payment. As long as these exceptions are invoked formally in accordance with GATT provisions, they cannot be criticized as unfair trade measures.

Measures at issue: India's import restrictions that India claimed were maintained to protect its balance-of payments(BOP) situation under GATT Art. XVIII: import licensing system, imports canalization through

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government agencies and actual user requirement for import licences. Products at issue: Imported products subject to India's import restrictions: 2,714 tariff lines within the eight-digit level of the HS (710 out of which were agricultural products).

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