1. BUILDING THE KNOWLEDGE BASE CHAPTER 12 Copyright © 2011 John Wiley & Sons Visit http://wileymanagementupdates.com/ for the latest in business news stories.http://wileymanagementupdates.com/

2. Chapter 12 Learning Objectives 1. Gain an understanding of the need for research 2. Explore the differences between domestic and international research 3. Learn where to find and how to use sources of secondary information 4. Gain insight into the gathering of primary data 5. Examine the need for international management information systems 6. Examine the role of international information systems for corporate decision processes and strategic planning 2 Czinkota: International Business, 8e Chapter 12

3. International and Domestic Research Chapter 12 Different Transportation Duties Different Modes of Operating Foreign Currencies International Documentation Tools and techniques are the same; the difference is in the environment to which they are applied New Parameters 3 Czinkota: International Business, 8e

4. International and Domestic Research Chapter 12 4 Czinkota: International Business, 8e Legal Issues Cultural Differences Level of Technology Political System and Level of Stability Differences in Societal Structure and Language New Environmental Factors Tools and techniques are the same; the difference is in the environment to which they are applied:

5. International and Domestic Research Chapter 12 Tools and techniques are the same; the difference is in the environment to which they are applied: 5 Czinkota: International Business, 8e Broader Definition of Competition Greater variety of competition Labor market may affect cost and pricing strategy The Number of Factors Involved Environmental relationships must be relearned upon entry to a new market Difficulties in coordination Comparison of results across countries Learning how to apply new lessons learned to different markets

6. International Business Research Ltd. Chapter 12 International Business Research (IBR) was established in 1993 to provide customers with top quality, international business-to-business and industrial market and marketing research services. IBR carries out a wide variety of research assignments for clients. The main issues researched within the company include: Customer attitudes and needs Customer satisfaction Distribution channels Market opportunities Marketing communications New product and service development Source: IBR web site: http://www.ibres.com/index.htmhttp://www.ibres.com/index.htm 6 Czinkota: International Business, 8e

7. Recognizing the Need for International Research Chapter 12 Research is as important internationally as it is domestically Reasons for reluctance to engage in international research:  Lack of sensitivity to differences in culture, consumer tastes, and market demands  Limited appreciation for different environments  Lack of familiarity with national and international data sources  Firms prefer to build international business activities gradually, and experience may then be used as a substitute for research 7 Czinkota: International Business, 8e

8. Chapter 12 Research helps management to:  Identify, evaluate, and compare potential business opportunities  Develop a business plan  Fine-tune various business activities  Anticipate events, take action, and prepare for global changes 8 Czinkota: International Business, 8e Recognizing the Need for International Research

9. Chapter 12 Foreign market opportunity analysis – Broad- based research to obtain information about the general variables of a target market Steps for going international:  Begin with cursory analysis of general variables of a country  Gather information on each country for preliminary evaluation  Select markets for in-depth evaluation Competitive assessment – Matching corporate strengths and providing an analysis of the best potential for specific offerings 9 Czinkota: International Business, 8e Going International - Exporting

10. Chapter 12 Importing  Shift from supplying to sourcing  Find details on foreign supplier  Find out about source country laws and rules  Understand domestic restrictions and legislation Market Expansion  Find more detailed information for expansion  Monitor political climate  Evaluate new business partners  Assess new technology 10 Czinkota: International Business, 8e Going International – Importing and Market Expansion

11. Chapter 12 Secondary data – Information originally collected to serve another purpose than the one in which the researcher is currently interested Sources of Secondary Data: 11 Czinkota: International Business, 8e Conducting Secondary Research International Organizations Government Directories and Newsletters Service Organizations Trade Associations Electronic Information Services

12. Macro Information Micro Information Chapter 12 Population trends Tariff information Export/import data Nontariff measures Data on government trade policy Agricultural production Local laws and regulations Size of market Local standards and specifications Distribution system Competitive activity Macro and Micro Information 12 Czinkota: International Business, 8e

13. Economists have learned that in an effort to improve Argentina’s economic reputation, Argentinean government officials may have provided false reports on the country’s inflation rates for the past 50 years. These disputes have decreased the trustworthiness of government in the eyes of Argentine citizens, and they may have also hurt the country’s creditability in terms of investments. Focus on Politics: Economists Dispute Argentinean Inflation Numbers 13 Chapter 12 Czinkota: International Business, 8e

14. Chapter 12 Selection  Evaluate based on quality, currency, and relevance Interpretation and Analysis  Once data are obtained, they must be converted into information  Proxy information – Data used as a substitute for more desirable data that are unobtainable  Use of creative inferences is often necessary 14 Czinkota: International Business, 8e Selection, Interpretation, and Analysis of Secondary Data

15. Scientific knowledge for infectious disease, water purification, genetic crop modification, and similar issues have largely been viewed as information for the public good that should be shared within the global community for the betterment of humanity. However, issues of data ownership, security concerns, and general lack of consensus have erected barriers that prohibit the free flow of scientific information around the world. Focus on Ethics To Share, or Not to Share, That is the Question 15 Chapter 12 Czinkota: International Business, 8e

16. Chapter 12 The attitude of society toward obtaining and using both secondary and primary data must be taken into account Data privacy – restricting use of data according to laws and preferences of the subjects Legal restrictions may exist Personal privacy, particularly in the context of business contacts, is a growing concern 16 Czinkota: International Business, 8e Data Privacy

17. Protecting Data Privacy with IBM Optim Chapter 12 At IBM, safeguarding the data privacy of clients is not just a good business practice - in many cases, it’s the law. IBM® Optim™ delivers data transformation capabilities to mask personal information and make use of technology safer for consumers. IBM works with clients to ensure that test environments are safe by applying data masking techniques or transformation algorithms. The company also offers webinars in areas such as “Essentials of Data Privacy” and “Strategies for Successful Data Governance”. Source: IBM Web Site: http://www-01.ibm.com/software/data/data-management/optim-solutions/data-privacy.htmlhttp://www-01.ibm.com/software/data/data-management/optim-solutions/data-privacy.html 17 Czinkota: International Business, 8e

18. Chapter 12 Primary data - Obtained directly for a specific research purpose Requires:  Clear idea of what the population under study should be and where it is located before deciding on the country or region to investigate Industrial versus Consumer Sources of Data  The researcher must decide whether research is to be conducted in the consumer or industrial product area 18 Czinkota: International Business, 8e Conducting Primary Research

19. Chapter 12 Is the data objective of subjective? Does the research use structured or unstructured questions? Is information collected in the real world or in a controlled environment? Is the research based on collection of historical facts or information about future developments? 19 Czinkota: International Business, 8e Determining the Research Technique

20. Evolution of Organizational Structures Chapter 12 Face-to-face research tool to obtain in- depth information Representatives of a target audience participate in an unstructured discussion Subjects’ activity and behavior are scrutinized Questionnaires used to obtain quantifiable research information Web-based research and e-mail-based surveys 20 Czinkota: International Business, 8e Interviews Focus Groups Observation Surveys Web Technology

21. Advertising mistakes typically occur when a company translates its advertising into foreign languages. When such mistakes occur in the research phase however, the results can be disastrous. Research findings are often used to determine a firm’s strategy for new product development. A translation blunder that goes undiscovered could set a company on the wrong track entirely. Focus on Culture: The Business Tower of Babel 21 Chapter 12 Czinkota: International Business, 8e

22. The International Information System Chapter 12 Daily decisions must be made for which there is neither time nor money for special research Information system – The systematic and continuous gathering, analysis, and reporting of data for decision- making purposes Export complaint system – Allows customers to contact the supplier to inquire about products, make suggestions, or present complaints 22 Czinkota: International Business, 8e

23. Positive Aspects of Information Chapter 12 Information should be: 23 Czinkota: International Business, 8e RelevantTimelyFlexible AccurateExhaustive ConvenientConsistent

24. Environmental Scanning Chapter 12 Environmental scanning provides continuous information on political, social, and economic affairs Involves obtaining factual input on a wide variety of demographic, social, and economic characteristics of foreign countries Content analysis – Systematic evaluation of communication for frequency of expressions 24 Czinkota: International Business, 8e

25. Delphi Studies Chapter 12 A research tool using a group of experts to rank major future developments Groups of about 30 well-chosen participants who assess expertise in an area of concern Particularly valuable because it uses mail, fax, or electronic communication to bridge large distances 25 Czinkota: International Business, 8e

26. About the Delphi Method Chapter 12 The Delphi Method is an exercise in group communication among a panel of geographically dispersed experts. The technique allows experts to deal systematically with a complex problem or task. Three features of the Delphi procedure: Anonymity – Necessary to reduce the influence of any dominant group members Controlled feedback – Rounds of questionnaires are analyzed and communicated back to participants Statistical group response – Used to ensure that every member's opinion is represented in the final response. Source: Delphi Study web site: http://www.delphistudy.org/index.htmlhttp://www.delphistudy.org/index.html 26 Czinkota: International Business, 8e

27. Scenario Building Chapter 12 Development of a series of plausible scenarios from trends observed Formally reviewing assumptions built into existing business plans and positions Joint occurrences – Shifts affecting the business environment in several locations simultaneously 27 Czinkota: International Business, 8e