Solution Manual for Global Marketing, 10th Edition

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GlobalMarketingTenthEditionMarkC.GreenWarrenJ.KeeganResource ManualforGlobal MarketingRevised by Kerry Walsh

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1-1CHAPTER 1INTRODUCTION TO GLOBAL MARKETINGSUMMARYA.Marketing is an organizational function and a set of processes for creating,communicating, and delivering value to customers and for managing customerrelationships in ways that benefit the organization and its stakeholders. A company thatengages in global marketing focuses resources on global market opportunities and threats.Successful global marketers such as Nestlé, Coca-Cola, and Honda use familiarmarketing mix elements–the four Ps–to create global marketing programs.B.Marketing, R&D, manufacturing, and other activities composea firm’s value chain. Thevalue equation (V =B/P) expresses the relationship between values and the marketingmix.C.Global companies also maintain strategic focus while pursuing competitive advantage.The marketing mix, value chain, competitive advantage, and focus are universal in theirapplicability, irrespective of whether a company does business only in its home countryor has a presence in many markets around the world. However, in a global industry,companies that fail to pursue global opportunities risk being pushed aside by strongerglobal competitors.D.A firm’s global marketing strategy (GMS) can enhance its worldwide performance. TheGMS addresses several issues. First is the nature of the marketing program in terms of thebalance between a standardization (extension) approach to the marketing mix elementsand a localization (adaptation) approach that is responsive to country or regionaldifferences. Second is theconcentration of marketing activitiesin a few countries or thedispersal of such activities across many countries. Companies that engage in globalmarketing can also engage incoordination of marketing activities. Finally, a firm’s GMSaddresses the issue ofglobal market participation.E.The importance of global marketing today can be seen in the company rankings compiledby theWall Street Journal, Fortune,Financial Times,and other publications. Whetherranked by revenues or some other measure, mostof the world’s major corporations areactive regionally or globally. The size of global markets for individual industries orproduct categories helps explain why companies “go global”. Global markets for someproduct categories represent hundreds of billions of dollars in annual sales; other marketsare much smaller. Whatever the size of the opportunity, successful industry competitorsfind that increasing revenues and profits means seeking markets outside the homecountry.

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1-2F.Company management can be classified in terms of its orientation toward the world:ethnocentric, polycentric, regiocentric, or geocentric. These terms reflect progressivelevels of development or evolution. An ethnocentric orientation characterizesdomesticandinternational companies;international companies pursue marketing opportunitiesoutside the home market by extending various elements of the marketing mix. Apolycentric worldview predominates at amultinational company,whose countrymanagers operate autonomously, adapt the marketing mix. When management moves tointegrate and coordinate activities on a regional basis, the decision reflects a regiocentricorientation. Managers atglobalandtransnational companiesare geocentric in theirorientation and pursue both extension and adaptation strategies in global markets.G.The dynamic interplay of several driving and restraining forces shapes the importance ofglobal marketing. Driving forces include market needs and wants, technology,transportation and communication improvements, product costs, quality, world economictrends, recognition of opportunities to develop leverage by operating globally, andinnovation and entreprenuershp. Restraining forces include market differences,management myopia, organizational culture, and national controls such as nontariffbarriers (NTBs).OUTLINE OF THE BOOKThe book is divided into five parts.Part 1: An overview of global marketing and the basic theory of global marketing.Part 2: The environment of global marketing.Part 3: Approaching global markets (global strategy)Part 4: The global context of marketing mix decisionsPart 5: Issues of corporate strategy and leadership in the 21stcentury.LEARNING OBJECTIVES1-1Use the product/market growth matrix to explain the various ways a company can expandglobally.1-2Describe how companies in global industries pursue competitive advantage.1-3Compare and contrast a single-country marketing strategy with a global marketing strategy(GMS).1-4Identify the companies at the top of the Global 500 rankings.

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1-31-5Explain the stages a company goes through as its management orientation evolves fromdomestic and ethnocentric to global and geocentric.1-6Discuss the driving and restraining forces affecting global integration today.DISCUSSION QUESTIONS1-1. What are the basic goals of marketing? Are these goals relevant to global marketing?Marketing activities represent an organization’s efforts to satisfy customer wants andneeds by offering products and services that create value. These goals are relevant invirtually every part of the world; however, when an organization pursues marketopportunities outside of its home country (domestic) market, managers need anunderstanding of additional conceptual tools and guidelines in order to do business inthese other countries–in other words, to create value and satisfy consumer needs andwants.1-2.What is meant by “global localization?” Is Coca-Cola a global product? Explain.The phrase “global localization” represents an attempt to capture the spirit of the rallyingcry for organizations in the 21stcentury, namely, “think globally, act locally, and manageregionally.” Most students will agree that Coca-Cola is a global product by virtue of thefact that it is available in more than 195 countries in red cans bearing the distinctivesignature style. It must be noted, however, that customer service efforts are adapted to theneeds of particular markets (for example, vending machines in Japan). Thus, Coca-Colais both global and local.1-3. Acompany’s global marketing strategy (GMS) is a crucial, competitive tool. Discuss someof the global marketing strategies available to companies. Give examples of companies that usethe different strategies.Strategies include global branding (Coca-Cola, Apple), product design(McDonald’srestaurants and menu items), positioning (Harley-Davidson), packaging (Gillette Sensor),distribution (Benetton), customer service (Caterpillar), and sourcing (Toyota, Gap).1-4. UK-based Burberry is a luxury fashion brand that appeals to both genders and all ages. Toimprove Burberry’s competitiveness in the luxury goods market, CEOMarco Gobetti mustupdate the marketing program put in place by his predecessor. The strategy should address keymarkets that Burberry will participate in, as well as the integration and coordination of marketingactivities. Research recent articles about Burberry and write a brief summary that outlinesBurberry’s GMS.

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1-4Student answers will vary, but all should contain the new challengesto the company’sGMS including the declining popularity of department stores in the US and the slowingsales of luxury goods in China.1-5. Discuss the differences between the global marketing strategies of Harley-Davidson andToyota?Harley-Davidson motorcycles are known the world over as “the” all-Americanmotorcycle. Harley’s mystique and heritage are associated with America. The companybacks up this positioning with exports from two U.S. manufacturing locations. Bycontrast, Toyota builds some models (e.g. Camry) for the U.S. market in the U.S., a factthat Toyota stresses in its American advertising. Thus, Harley-Davidson serves globalmarkets while sourcing locally, while Toyota’s strategy calls for serving world marketsand using the world as a source of supply.1-6. Describe the differences between ethnocentric, polycentric, regiocentric, and geocentricmanagement orientations.The premise of an ethnocentric orientation is that home country products andmanagement processes are superior. An ethnocentric company that neither sources inputsfrom, nor seeks market opportunities in the world outside the home country may beclassified as an international company. A company that does business abroad while stillpresuming the superiority of the home country may be classified as an internationalcompany. Such a company would rely on an extension strategy whereby it would export,without adaptation, products designed for the domestic market.The polycentric orientation that predominates at a multinational company leads to a viewof the world in which each country market is different from the others. Local countrymanagers operating with a high degree of autonomy adapt the marketing mix in apolycentric, multinational company. Managers who are regiocentric or geocentric in theirorientations recognize both similarities and differences in world markets. Marketopportunities are pursued using both extension and adaptation strategies. The regiocentricand geocentric orientations are characteristic of global transnational companies.1-7. Identify and briefly describe some of the forces that have resulted in increased globalintegration and the growing importance of global marketing.The dynamic involving driving and restraining forces is shown diagrammatically inFigure 1-1. Driving forces include regional economic agreements such as NAFTA,converging market needs and wants, technology advances such as the Internet and globalTV networks, transportation improvements, the need to recoup high product developmentcosts in global markets, the need to improve quality through R&D investment, worldeconomic trends such as privatization and finally, opportunities to use leverage, corporateculture, and the continuing presence of national controls that create trade barriers.

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1-51-8. Defineleverageand explain the different types of leverage utilized by companies withglobal operations.Webster’sNew World Dictionarydefines “leverage” as an“increased means ofaccomplishing some purpose.” A global company can take advantage of several types ofleverage in pursuit of corporate goals such as profit or revenue growth. These includeexperience transfers, scale economies, enhanced resource utilization, and global strategy.1-9. Each July,Fortunepublishes its Global 500 listing of the world’s largest companies.You can find the current rankings online at: www.fortune.com/global500. Alternatively, you canconsult the print edition ofFortune. Browse through the list and choose any company thatinterests you. Compare its 2017ranking with the most recent ranking. Has the company’sranking changed? Consult additional sources (e.g., magazine articles, annual reports, thecompany’s Web site) toget a better understanding of the factors and forces that contributed tothe company’smove up or down in the rankings. Write a brief summary of your findings.Each student’s answer will vary based upon the company they chose.1-10. There’s a saying in the business world that “nothing fails like success”. Take Gap, forexample. How can a fashion retailer that was oncethesource for wardrobe staples such as chinosand white T-shirts suddenly lose its marketing edge? Motorola has also fallen victim to its ownsuccess. The company’s Razr cell phone was a huge hit, but Motorola struggled toleverage thatsuccess. Google acquired Motorola Mobility but then sold it to Lenovo in 2014. Recently,Starbucks CEO Howard Shultz warned that his company and brand risk becomingcommoditized. And, as noted in Case 1-3, some industry observers are saying that Apple has“lost its cool”.If you were to make separate recommendations to management at each of thesecompanies, what would you say?Each student’s answer will vary but their answers should incorporate such terms as globalmarketing, marketing mix strategy, value chain, V = B/P, strategic focus, globalmarketing strategy, extension, adaption, ethnocentric, polycentric, regiocentric, orgeocentric orientations in their responses. Perhaps, a phrase that could be said to each ofthese chief executives is “think globally, act locally”.OVERVIEWThe growing importance of global marketing is one aspect of a sweeping transformation that hasprofoundly affected the people and industries of many nations during the past 160 years.Four decades ago, the phraseglobal marketingdid not even exist. Today businesspeople utilizeglobal marketing to realize their companies’ full commercial potential. However, there isanother, even more critical reason why companies need to take global marketing seriously:survival. A management team that fails to understand the importance of global marketing riskslosing its domestic business to competitors with lower costs, more experience, and betterproducts.

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1-6But what is global marketing? How does it differ from “regular” marketing? Marketingcan bedefined as the activity, set of institutions, and processes for creating, communicating, anddelivering value for customers, clients, partners, and society at large.Marketing activities center on an organization’s efforts to satisfy customer wants and needs withproducts and services that offer competitive value and for managing customer relationships inways that benefit the organization and its stakeholders. The marketing mix (product, price, place,and promotion) comprises a contemporary marketer’s primary tools. Marketing is a universaldiscipline–as applicable in Argentina as it is in Zimbabwe.(Learning Objective #1)This book is aboutglobal marketing.An organization that engages in global marketing focusesits resources and competencies on global market opportunities and threats. A fundamentaldifference between regular marketing and global marketing is the scope of activities. A companythat engages in global marketing conducts important business activities outside the home-countrymarket. The scope issue can be conceptualized in terms of the familiar product/market matrix ofgrowth strategies (see Table 1-1). Some companies pursue amarket development strategy; thisinvolves seeking new customers by introducing existing products or services to a new marketsegment or to a new geographical market.Global marketing can also take the form of adiversification strategyin which a company createsnew product or service offerings targeting a new segment, a new country, or a new region. Fourof the growth strategies shown in Table 1-1:(Chapter 1, Page 4)Four Stages - StarbucksMarket penetration: Starbucks is building on its loyalty card and rewards program inthe United States with a smartphone app that enables customers to pay for purchaseselectronically. The app displays a bar code that the customer can scan.Market development: Starbucks is entering Italy in 201, starting with a 25,000-square-foot flagship Reserve Roastery in Milan. Walking distance from the landmarkDuomo, the Roastery will offer pastries by local bakery Princi as well as the apertivobeverages that are so poplular throughout Italy.Product development: Starbucks created a brand of instant-coffee brand, Via, toenable its customers to enjoy coffee at the office and other locations where brewedcoffee is not available. After a successful launch in the United States, Starbucksrolled out Via in Great Britain, Japan, South Korea, and several other Asian countries.Starbucks also introduced its first coffee machine. The Versimo allows Starbucks’customers to “prepare their favorite beverages at home.”Diversification:In 2011, Starbucks dropped the word “Coffee” from its logo. Itrecently acquired a juice maker, Evolution Fresh; the Bay Bread Bakery, and tea

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1-7retailer Teavana Holdings. Next up: Revamping stores so they can serve as wine barsand attract new customers in the evening.Companies that engage in global marketing frequently encounter unique or unfamiliar features inspecific countries or regions of the world. In some regions of the world, bribery and corruptionare deeply entrenched. A successful global marketer understands specific concepts and has abroadand deep understanding of the world’s varied business environments.The global marketeralso must understand the strategies that, when skillfully implemented in conjunction withuniversal marketing fundamentals, increase the likelihood of market success.ANNOTATED LECTURE/OUTLINEPrinciples of Marketing: A ReviewMarketing is one of the functional areas of business–distinct from finance and operations.Marketing is the set of activities and processes that (along with product design, manufacturing,and transportation) composes a firm’s value chain.Decisions at every stage of the process–from idea conceptualization to customer support afterthe sale–should be assessed in terms of their ability to create value for customers.The core of marketing is to surpass the competition in creating perceived value for customers.The value equation is the guide to this task:Value = Benefits / Price (money, time, effort, etc.)The marketing mix is integral to the value equation because benefits are a combination of theproduct, promotion, and distribution components of the mix.Value to the customer can be increased in two ways–1) an improved bundle of benefits or 2) alower price (or both):1)Marketers may improve the product, design new channels of distribution, communicatebetter–or a combination of all three.2)Marketers may seek ways to cut costs and prices. Nonmonetary costs may be lowered bydecreasing the time and effort customers must expend to learn about or acquire a product.If a company is able to offer a combination of superior product, distribution, and promotion ofthe benefits AND offer lower prices than its competition, it should enjoy an extremelyadvantageous position. Recall the definition of a market:people or organizations that are bothable and willing to buy.In order to achieve market success, a product or brand must measure upto a threshold of acceptable quality and be consistent with buyer behavior, expectations, andpreferences.

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1-8Competitive Advantage, Globalization, and Global Industries(Learning Objective #2)When a company succeeds in creating more value for customers than its competitors, thatcompany is said to enjoy competitive advantage in an industry. Competitive advantage ismeasuredrelative torivals with whom you compete in the industry–whether that is on a local,national, or global level.Global marketing is essential if a company competes in a global industry or one that isglobalizing.The process ofglobalizationis the transformation of formerly local or national industries intoglobal ones.From a marketing point of view, globalization presents companies with tantalizingopportunities—and challenges—as executives decide whether to offer their products and serviceseverywhere.As defined by management guru Michael Porter, a global industryis one in which competitiveadvantage can be achieved by integrating and leveraging operations on a worldwide scale. Putanother way, anindustry is global to the extent that a company’s industry position in one countryis interdependent with its industry position in other countries. Indicators of globalization includethe ratio of cross-border trade to total worldwide production, the ratio of cross-border investmentto total capital investment, and the proportion of industry revenue generated by companies thatcompete in all key world regions. One way to determine the degree of globalization in anindustry sector is to calculate the ratio of the annual value of global trade in the sector—including components shipped to various countries during the production process—to the annualvalue of industry sales.Achieving competitive advantage in a global industry requires executives and managers tomaintain a well-defined strategic focus. Focusis simply the concentration of attention on a corebusiness or competence. Companies that understand and engage in global marketing can offermore overall value to customers than companies that do not have that understanding.Value, competitive advantage, and the focus required to achieve them are universal in theirrelevance, and they should guide marketing efforts in any part of the world. Global marketingrequires attention to these issues on a worldwide basis and utilization of a business intelligencesystem capable of monitoring the globe for opportunities and threats. A fundamental premise ofthis book can be stated as follows: Companies that understand and engage in global marketingcan offer more overall value to customers than companies that do not have that understanding.

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1-9Global Marketing: What It Is and What It Isn’tThe discipline of marketing is universal. It is natural, however, that marketing practices willvary from country to country, for the simple reason that the countries and peoples of the worldare different. A successful marketing approach in one country may notnecessarilysucceed inanother. Customer preferences, competitors, channels of distribution, and communication mediamay differ. An important managerial task in global marketing is learning to recognize the extentto which it is possible to extend marketing plans and programs worldwide, as well as the extentto which adaptation is required.(Learning Objective #3)The way a company addresses this task is a manifestation of its global marketing strategy(GMS). In single-country marketing, strategy development addresses two fundamental issues:choosing a target market and developing a marketing mix. The same two issues are at the heartofa firm’s GMS, although they are viewed from a somewhat different perspective (see Table 1-3).THE CULTURAL CONTEXT“1-2-3-4!” 40 Years of Punk Rock,1976 - 2016In 1976, a new sound emerged. Punk Rock was both a musical and a cultural movement. Punkalso offered an outlet for voices of disenfranchised young people and an opportunity to rebelagainst the establishment.In the United Kingdom in the mid-1970’s, the country’s economic stagnation meant there werefew job opportunities for young people–as well as their elders. During the same period, NewYork City was in social and economic decline. Across America, the energy crisis meant risingprices for gasoline and shortages.It was in this musical and economic context that young people in both the United States and theUnited Kingdom discovered that it was relatively easy to learn to play two or three guitar chords.Who needs technique? Who cares what the notes are?Vivian Goldman, a former features editor who covered punk for Sounds, a weekly British musicpaper, notes that punk’s relevance and impact continue today. “In Indonesia, Russia, SouthAfrica, and elsewhere, people use punk to rage against the system,” she said recently. “Punk’srebel consciousness represents a flag for a new way of thinking.”a)Global market participation–is the extent to which a company has operations in majorworld markets.b)Standardization versus adaptation–is the extent to which each marketing mix elementcan be standardized (used the same way) or must be adapted (used in different ways) indifferent country markets.

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1-10c)Concentration of marketing activities–is the extent to which activities related to themarketing mix (such as pricing decisions) are performed in one or only a few countrylocations.d)Coordination of marketing activities–is the extent to which marketing activities relatedto the mix are planned and executed interdependently around the globe.e)Integration of competitive moves–the extent to which a firm’s competitive marketingtactics in different parts of the world are interdependent.The decision to enter one or more particular markets outside the home country depends on acompany’s resources, its managerial mind-set, and the nature of opportunities and threats.The five emerging markets of Brazil, Russia, India, China, and South Africa represent significantgrowth opportunities. They are known as BRICS. Mexico, Indonesia, Nigeria, and Turkey—theso-called MINTs—also hold great potential.We can use Burberry as a case study in global marketing strategy. The U.K.-based luxury brandis available in scores of countries, and Burberry’s current expansion plans emphasizeseveralgeographical areas. First are the BRICS nations and the second is the United States.Burberry’smarketing mix strategy includes the following:Product:Boost sales of handbags, belts, and accessories—products whose sales are less cyclicalthan clothing.Price:More expensivethan Coach, less expensive than Prada. “Affordable luxury” iscentral tothe value proposition.Place:Burberry intends to open more independent stores in the United States as well asexpansion in London and Hong Kong.Promotion:Encourage advocacy and sharing social media and online channels such as Twitter,Instagram, and www.artofthetrench.com. Launch Burberry Acoustic to enhance brand relevanceand to provide exposure for emerging music talent via www.burberry.com/acoustic.The issue of standardization versus adaption has been at the center of a long-standingcontroversy among both academicians and business practitioners. Much of the controversy datesback to the days of Theodore Levitt’s (1983)article “The Globalization of the Markets.”Levittenvisioned a global community where standardized, high-quality world products would bemarketed in a standardized manner.The “homogenized global market” view didn’t work. Even those companies that have becomeglobal successes have not done so through total standardization of the product.Global marketing made Coke a worldwide success. However, that success wasnotbased on atotal standardization of marketing mix elements.

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1-11Coca-Cola succeeded through the application of global localization. What does theterm “globallocalization” really mean? Global localization:A successful global marketer must have theability to “think globally and act locally.” See Table 1-4.a)For example, Cinnabon’s customers in Central and South America prefer dulce de leche.Products developed in those regions being introduced in the U.S., where the Hispanicpopulation is a key segment.b)Starbucks opened an experimental store in Amsterdam that serves as a testing ground fornew design concepts such as locally sourced and recycled building materials.c)Kraft’s Tang powder became a $1 billion brand as regional managers in Latin Americanand the Middle East moved beyond orange (the top-seller) into popular local flavors suchas mango and pineapple. Kraft plans to use these lessons learned on the U.S. market.Global marketing may include a combination of standard and nonstandard approaches. Globalmarketing requires marketers to think and act in a way that is both globalandlocal byresponding to similarities and differences in world markets.The particular approach to global marketing that a company employs will depend on industryconditions and its sources of competitive advantage.For example, McDonald’s global marketing strategy is based on a combination of global andlocal marketing mix elements (refer to Table 1-5).a)For example, Harley-Davidson’smotorcycles are perceived around the world as the All-American bike. Theircompetitive advantage is based in part on “Made in the USA.”Moving production to a low-wage country would tarnish its image.b)Toyota’s and Honda’s success in the US has come through its ability to transfer world-class manufacturing skills to the America, Asia, and Europe. Each year Honda exportstens of thousands of Accords and Civics from U.S. plants to Japan and dozens of othercountries.c)Uniqlo, a division of Japan’s Fast Retail operates about 850 stores in Japan and 300stores in 12 overseas countries. Uniqlo currently has 46 stores in the U.S. but plans callfor a total of 200 stores by 2020.The Importance of Global MarketingThe largest single market in the world in terms of national income is The United States,representing roughly 25 percent of the total world market for all products and services.U.S. companies that wish to achieve maximum growth potential must “go global” because 75percent of the world market potential is outside of their home country.Non-US companies have an even greater incentive to “go global;” their potential markets includethe 325 million people in the US.

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1-12Management Orientations(Learning Objective #5)The form and substance of a company’s response to global market opportunities will dependgreatly on itsmanagement’s assumptions and beliefs –both conscious and unconscious - aboutthe nature of the world.The worldviewof a company’s personnel can be described as ethnocentric, polycentric,regiocentric, and geocentric. The orientations are collectively known as the EPRG framework.Ethnocentric Orientation:a)A person who assumes that his/her home country is superior to the rest of the world.b)Associated with national arrogance or feelings of national superiority.c)At some companies, the ethnocentric orientation means that opportunities outside of thehome country are routinely ignored (domesticcompanies).d)Ethnocentric companies that conduct business outside their home country are known asinternationalcompanies–they believe products that succeed in the home country aresuperior.e)Leads to a standardized or extension approach–the belief that products can be soldeverywhere without adaptation.f)Foreign operations or markets are viewed as inferior or subordinate to the home market.g)Headquarters knowledge is applied everywhere; local knowledge is viewed asunnecessary.Polycentric Orientation:a)The opposite view of ethnocentrism.b)The belief that each country in which you do business is unique.c)This assumption allows each subsidiary to develop its own unique marketing strategies soas to succeed.d)The termmultinational companyis often used to describe such a structure.e)Leads to a localized or adaptation view that assumes products MUST be adapted tosucceed.Regiocentric Orientation:a)The region becomes the relevant geographic unit.b)Management’s goal is to develop a regionally integrated strategy (e.g. NAFTA or theEU).c)May be viewed as a variant of the multinational view (polycentric).Geocentric Orientation:a)Views the entire world as a potential market and strives to develop integrated globalstrategies.b)These companies are known asglobalortransnationalcompanies.c)Serves world markets from a single country or sources globally for the purposes offocusing on specific country markets.

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1-13d)Tend to maintain their association with a particular headquarters country. (Harley-Davidson and Waterford serve world markets from the US and Ireland, respectively.)e)Transnational companies serve global markets and utilize global supply chains.f)Transnational companies both serve global markets and utilize global supply chains andoften have a blurring of national identity. A true transnational would bestateless. (Toyotaand Honda are examples of companies that exhibit key characteristics of transnationality.g)A key factor that distinguishes global and transnational companies from international ormultinational companies ismind-set:At global and transnational companies, decisionsregarding extension and adaptation are not based on assumptions but rather on made onthe basis of ongoing research into market needs and wants.h)It is a synthesis of ethnocentrism and polycentrism–it is a “world view.”i)Seeks to build a global strategy that is responsive to local needs and wants.It is a positive sign that, at many companies, management realizes the need to adopt a geocentricorientation. However, the transition to new structures and organizational forms can take time tobear fruit.A global company can be further described as one that pursues either a strategy of serving worldmarkets from a single country or one that sources globally for the purposes of focusing onspecific country markets. In addition, global companies tend to retain their association with aparticular headquarters country. At global and transnational companies, management uses acombination of standardized (extension) and localized (adaptation) elements in the marketingprogram.One way to assess a company’s “degree of transnationality” is to compute an average ofthreefigures: (1) sales outside the home country to total sales, (2) assets outside the home country tototal assets, and (3) employees outside the home country to total employees. Viewed in terms ofthese metrics, Nestlé, Unilever, Royal Philips Electronics, GlaxoSmithKline, and the NewsCorporation can also be categorized as transnational companies.Each is headquartered in a relatively small home country market, a fact of life that has compelledmanagement to adopt regiocentric or geocentric orientations to achieve revenue and profitgrowth.The geocentric orientation represents a synthesis of ethnocentrism and polycentrism; it is a“worldview” that sees similarities and differences in markets and countries and seeks to create aglobal strategy that is fully responsive to local needs and wants.A regiocentric manager might be said to have a worldview on a regional scale; the world outsidethe region of interest will be viewed with an ethnocentric or a polycentric orientation, or acombination of the two.However, recent research suggests that many companies are seeking to strengthen their regionalcompetitiveness rather than moving directly to develop global responses to changes in thecompetitive environment

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1-14The ethnocentric company is centralized in its marketing management; the polycentric companyis decentralized; and the regiocentric and geocentric companies are integrated on a regional andglobal scale, respectively. A crucial difference between the orientations is the underlyingassumption for each.The ethnocentric orientation is based on a belief in home-country superiority. The underlyingassumption of the polycentric approach is that there are so many differences in cultural,economic, and marketing conditions in the world that it is futile to attempt to transfer experienceacross national boundaries.A key challenge facing organizational leaders today is managing a company’s evolution beyondan ethnocentric, polycentric, or regiocentric orientation to a geocentric one. As noted in onehighly regarded book on global business,“The multinationalsolution encounters problems by ignoring a number of organizationalimpediments to the implementation of a global strategy and underestimating the impact of globalcompetition.”Entrepreneurship Leadership, Creative Thinking, and the Global StartupKevin Systrom and Mike Krieger, InstagramKevin Systrom and Mike Krieger are entrepreneurs. They developed an innovative product,created a brand, and cofounded a company to market it. By applying the basic tools andprinciples of modern marketing, the two Stanford University graduates have achievedremarkable success.As is true with many entrepreneurs, Systrom’s idea was based on his recognition of a problemthat needed to be solved and his own wants and needs.Krieger liked Systrom’s idea but the twoagreed “There has to be a better way.” In October 2010, Systrom and Krieger launchedInstagram on Apple’s App Store. Within two years, the photo-filtering and photo-sharing apphad 30 million users. In 2012, Facebook acquired Instagram for $1 billion. Today, Instagram hasover 600 million users who upload approximately 100 million photographs and videos each day;only 20 percent of users are in the United States. In 2016, Instagram generated more than $1.5billion in revenues from mobile ads.Nearly two-thirds of Instagram users use the app to learn about products and brands.According to Nielsen, Instagram users spend more time listening to music and are likely to payfor streaming music services than nonusers. Artists use Stories and Live to announce newreleases and tours, and to provide behind-the-scenes looks at the creative process. Popular postscan quickly go viral, allowing record companies and the artists themselves to see the impact onmusic sales.

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