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University of California, Riverside
A.      Gary Anderson Graduate School of Management

SAMPLE FINAL EXAM 

SAMPLE ANSWERS

Part I:  Short Answers (Please answer ANY 6 of the following 8 questions.  If you answer more than six, only the first six questions will count toward your grade.  If you start on an answer and decide to abandon it, please make sure that your answer is crossed out.

1. Please discuss how discretionary product adaptations differ from mandatory product adaptations, giving an example of each.  What may be a consequence of the failure to implement discretionary product adaptations?

Mandatory product adaptations involve those that must be made in order for the product to work and/or be legal in a particular country.  For example, in order for a computer made in the U.S. to work in Europe, it must run on 220 volts.  "Discretionary" adaptations are those governments and nature do not force one to make, but modifications that are frequently necessary for the product to sell in another country.  For example, one can try to sell cars with steering wheels on the left side in Japan, but this is unlikely to be successful.  Since a number of competing, locally adapted, products usually exist, a product that does not receive "discretionary" adaptations is likely to fail.

2. According to the text, what were some problems experienced by foreign firms after they entered the newly opened Russian market? 

Western firms were initially very successful, but soon sales declined for several reasons.  Russian manufacturers had greatly improved their quality and efficiency while American firms had largely "dumped" low quality, surplus goods in Russia in order to get in quickly.  Further, American products were not adapted to differences in Russian tastes.

3. Rap singer Joyous J is planning the release of her new album X-Mas Gift ‘rappin’ in the U.S., Sweden, and South Africa.  Although J has some following in the U.S., she is virtually unknown in the other two countries.  Please discuss appropriate promotional objective(s).

In South African and Sweden, J must focus on awareness and possibly trial.  In the U.S., J can focus on higher level objectives such as trial and attitude toward the product.

4. According to the text, what are some characteristics of the Japanese channel structure? Specifically, in this context, what is the significance of the Large-Scale Retail Law? What is happening in its aftermath?

Japanese channels are typically relatively long and most sales are made by small, neighborhood retailers rather than the bigger stores that account for most sales in the U.S.  Intermediaries tend to have a great deal of bargaining power.  Traditionally, the Large-Scale Retail Store law made it very difficult to start large businesses since small local retailers could delay approval for a long time. Today, relaxations of the law and consumer demand have provided for an increasing presence of larger and cheaper retailers.

5. Please discuss the international product life cycle and its implications.

The International Product Life Cycle describes the sales of products in different countries over time.  Typically, more advanced countries such as the U.S. and Japan will first adopt new products--thus, a large share of DVDs are sold here.  Later on, sales will increase in other countries as the price of the product declines.  There is only a modest growth in color television sales in the U.S. now, for example, but there is large growth in Asia, Eastern Europe, and Latin America, as consumers there become more affluent.  The international PLC thus allows markets to grow when the home markets have become saturated.

6. Please discuss how “gray” markets (parallel distribution) come about and what manufacturers can do to ameliorate the effects of this phenomenon.

"Gray" markets come about when unauthorized parties buy up merchandise intended for sale in one part of the World and sell it where prices are higher.  For example, many goods are more expensive in Japan than they are in the U.S. (since Japanese are less price elastic, thus making the profit maximizing price higher), arbitrageurs will buy up merchandise here and ship it to Japan, undercutting authorized distributors there.  This phenomenon is difficult to control.  Aside eliminating the price disparity, the manufacturer can do little more than varying models, packaging, labeling, and language.  If products, such as premium golf clubs, have serial numbers, U.S. channel members that resell them can be cut off, but few products have this feature.

7. Please discuss differences between the attitudes of Japanese and U.S. consumers toward product branding.

While American consumers have been found to be receptive to brand names specific to a product category (e.g., Epson printers), Japanese consumers prefer for products to be "sponsored" by a major brand that encompasses a number of different product categories.  Thus, American specialty brands may want to attempt a partnership with an established Japanese firm which can lend its brand name to the product.

8. According to the text, how does the European eco-label work, and what is its significance?

In order for a product to be allowed to carry the "eco-label," it must meet EU guidelines on environmental impact throughout its lifetime--from manufacturing through use through disposal.  Only firms that meet established standards may use this label, which is used by many consumers in selecting products.  Thus, firms that meet the standards are likely to have higher sales.

Part II:  Case. Part II.  “Issue spotter” case   Please apply course concepts to one of the two cases below.  You must (1) identify which course issues are relevant and important to the firm and then (2) apply those concepts to the specific situation of the firm.  Grading will be based on:

• the significance to the firm of the issues that you identify (you must decide which issues are applicable and are genuinely important for the specific firm);

• how well you relate the ideas to the specific situation of the firm in question (merely regurgitating class notes in the abstract will yield no credit);

• the extent to which in-depth knowledge of the ideas applied is expressed (note that your reasoning must be evident and explicit); and 

•  the extent to which the answer is well organized.

PLEASE BE SURE THAT YOU RELATE YOUR ANSWERS TO THE SPECIFICS OF THE FIRM—GENERAL ANSWERS ARE NOT OF INTEREST!  

There will be no credit for:

• “No brainer” observations, such as the need for the firm to take culture into consideration (you must discuss likely cultural influences in context of the firm situation) or the need to do research (you must justify the issues and methods that you explicitly indicate);

• Outside knowledge (what you happen to know about this particular firm, beyond what was covered in class, readings, or in the case);

• Ideas which are too vague to be meaningful;

• Ideas not related to issues discussed in this course (e.g., issues not of international significance);

• “Buzz” words whose meaning is not discussed; or

• General ideas not tailored to the needs of the specific firm.

A.   Guilliano Fine Men’s Wear manufactures clothing in Italy.  Although Guilliano’s sells at modest prices, research has shown that most U.S. consumers, when examining the clothing, consider it to be stylish and of high quality.  In Japan, where Gulliano’s suits sell for nearly three times as much as they do in the U.S., the suits are considered to be stylish, but not quite as high in quality, in part because they are not optimized for the slightly different body shapes of Japanese consumers.  Being a relatively small business with annual World wide sales of only twelve million dollars, Guilliano’s does not have the same brand recognition as many larger manufacturers.

Guilliano's may benefit from the country-of-origin effect associated with textiles made in Italy.  The firm could face a serious problem with "gray" markets, since it may be advantageous for unauthorized importers to buy up the clothing in the U.S. or Europe and then resell it in Japan where prices are higher.  To minimize this threat, Guilliano's might want to manufacture different versions of the clothing for sale in Japan and clearly label the products in the language of the country where they are for sale. Further, although changing the "fit" of the clothing is technically a "discretionary" adaptation, modifying the suits to fit Japanese body shapes is essential.  Since Guilliano's needs to have brand recognition and image in order to sell its products at higher prices, promotional objectives in countries where the brand is not yet well known must be aimed at awareness.  In countries where the brand is better known, promotional objectives should focus on attitude and preference.  Different positioning strategies may be appropriate for different countries--e.g., in the U.S., the Italian origin may be emphasized, while in Europe, some other aspect of the line may be stressed.  Given greater competition on quality in Japan, positioning a bit "lower" there and emphasizing relative price more may be appropriate.

B.   McDonald’s is fearing that it is heading toward limited growth in Europe.  Although many Europeans are intrigued by American food, McDonald’s hamburgers and fries are yesterday’s news, and the chain has begun aggressive price competition in most European markets.  Recognizing a steady demand for fast, convenient food in Europe, McDonald’s is quite willing to devote a substantial amount of money to advertising and promotion if this would appear to be a good investment. In recent years, McDonald’s has been able to develop burgers and fries that tend to contain less fat than those of most local fast food joints, although few consumers know this.  Confidential research has shown that  many Europeans are getting tired of conventional hamburgers and would be interested in such foods as Tex-Mex and the spicy kind of fried chicken popular in the American south.  Also, European consumers’ higher environmental consciousness has made the chain’s relatively wasteful packaging somewhat unappealing. Research has also found that preferences for condiments differ greatly between European countries.

McDonald's is moving along the International Product Life Cycle, now arriving at the maturity phase of traditional fast food in Europe, a stage that has been reached for a long time in the U.S.  It is no longer enough to have the mystique of the American country of origin--now it may be time to adapt more to European tastes.  A new positioning strategy may also be appropriate, and McDonald's may want to try to differentiate itself more from other fast food chains.  Working on the attitude and belief promotional objectives, McDonald's may want to promote healthier foods.  Primary research on product adaptations to fit European tastes along with test marketing would be useful.  McDonald's may need to engage in short term promotions to increase short term sales, which will usually be based on price promotion.  Europe is running behind the U.S. in the adoption of new products such as Tex Mex food, but may now be ready, so a subsidiary to offer these foods may be a worthwhile investment.