Reference no: EM132942572

This question has become more important in recent years as developed nations reach out in a variety of ways to lesser-developed ones. Examples include the G-20 nations providing the International Monetary Fund with $1 trillion in April of 2009 to assist developing nations experiencing economic problems and the United States supplying greater levels of economic aid to developing nations in Africa.

POINT: Companies in developed nations have a noblesse oblige to improve the standard of living for people in developing countries that are less fortunate than people in developed countries. Aside from this argument, if the standard of living in poorer nations is improved, more income is needed to purchase more products from companies in developed nations charging lower prices. In addition, if the products include prescription drugs, life expectancies in developed countries will also be improved.

COUNTERPOINT:  Companies have a significant obligation to their stockholders, not to individuals in developing countries. Stockholders benefit if the prices of the stocks they hold the increase in value. This is most likely to occur if profits are increased. Charging lower prices may jeopardize a company's profits; lower prices may lead to allegations of dumping. Another option may be to give the products away. With the tax savings achieved, the company's profits may exceed those obtained by selling the products at lower prices in a developing market

Question: Should Companies Marketing Their Products to International Markets Charge Lower Prices in Developing Markets than They Do in Developed Markets based on the following criteria:

• Distinguish between terms used in HRM to identify parts of a company's workforce.
• Define the conflicts that might arise between a company's culture and the local culture.
• Determine how a company can capitalize on a product's life cycle in global markets.
• Analyze the benefits and risks of location selection for companies.
• Appraise the effects of investment instruments on currencies and cash flows.
• Explain stock returns models.
• Differentiate between GAAP standards among countries.
• Define the effect of a country's taxation system on decisions related to investment and relocation of operations.