Chapter 18, Problem 1CTD

Summary Introduction

To determine: The objectives for the given situation and the reason for wrong decision.

Introduction:

The interchange of goods and services between many countries for business purpose is known as international business.

Explanation of Solution

The objectives of the given situation are as follows:

• Product D serves the similar function in all the countries and the technical standards of the product might be same.
• The advertising approach must be changed from one country to other country based on their practices and culture. Similarly, in some countries, it is liberal to advertise men changing Product D for babies but in few countries this message would be misunderstood.
• The noise level for advertising should differ from one country to other country because the sound effects will vary. For example, in Country B, the noise level will vary from the other countries.

Reason for taking wrong decision on price is as follows:

• In Country B, demand for the products and price elasticity will play a major role, and the local manager alone cannot take the price decision.
• The pricing decision of one country will have effect on the pricing and competition on the other country’s markets.

Therefore, Person X should not allow the local manager alone to decide the price of the product. She as to analyse the other markets’ condition and their competitors while deciding the price of the product.