International Business Assessment - Essay Example

Introduction to international business Name: Institution: Executive Summary International business has become a subject of interest amongst many across professions due to the numerous aspects involved in it. International business involves carrying out business activities beyond national boundaries. It is an extension of domestic business, which includes the transactions of economic resources such as goods, capital and services comprising of technology, skilled labour and transportation. It includes not only international trade of goods and services, but also foreign investment. Precisely, it is now a subject of global concern since it is relative to the most vibrant industries from which most countries generate income. With respect to the invention, this report explores the subject of international marketing as it regards the development strategies of commercialising DRYFEET Performance Footgear . Development herein refers to the inventor’s intentions of introducing the product into countries it is yet to establish itself in. The report purposes to provide the company with the necessary information, as a pre-business plan that it can use to amend or improve the marketing strategy. Therefore, the information availed in this report is necessary for the inventor to explore foreign markets. The objective of the report is to; Evaluate the importance of international marketing Analyse the various factors of international marketing Assess the international marketing environment of a suggested country Assess the risks and opportunities involved in international commercialization of DRYFEET Performance Footgear Recommend the necessary actions to be taken Company Background From a global point of view, the international economy continues to grow in all aspects from size to diversity in terms of the products introduced in the markets. The development of an organization or international company is, therefore, defined by the success of the marketing strategies employs. DRYFEET Performance Footgear is the world’s first ever all-weather footwear. It is an innovation by produced by the collaboration of Sport Innovation Centre and elite athletes in Canada. Sport Innovation Centre is a premier equipment and performance testing facility headquartered in Canada. The invention is yet to be commercialized on a global scale. Exploration of new foreign markets is thus necessary and almost inevitable to steer an organization to development in size, category and level of operation and respect attributions to it by the public. The gear uses the DRY technology which has been extensively tested and so the innovation is ready for global commercialization. Since the foot cover slips over rugby, soccer, and football cleats to keep your feet dry, warm, protected from wear and tear, it can be imported and exported to a country like Brazil, and Spain. Importance of Commercialization Apart from international recognition, pursue for substantial returns necessitates international marketing and thus makes it very vital for the global growth of DRYFEET Performance Footgear. Introduction of business in the global arena is a step that enhances expansion of that business. As theorised by Kotler, Armstrong, Wong and Saunders (2008), for a particular company to survive and participate effectively in the international market, efforts of improving management effectiveness are necessary. However, interest is in the marketing and business plans and strategies put in play. It is also necessary to put in efforts steered towards achieving marketing power, set goals and objectives. This is due to the fact that exploring a new international market means getting into new market regions in which the company’s products are yet to reach. Therefore, international marketing plays the important role of connecting an invention like with new customers as well as new raw materials. These raw materials may or may not be required in the current line of production. It thus makes it possible for a company to consider venturing into production of other goods, this implies business growth. Country viable for DRYFEET Performance Footgear International Expansion Businesses venture into economies that favour the production and supply of their products. Viewing the possible diversity in the lines of production that DRYFEET Performance Footgear engages in, Brazilian and Spanish markets are suitable regions for consideration in their expansion internationally. They provide an environment for good competition, which drives an industry. Researches by the World Bank (2011) indicate that Brazilians and Spanish people are informed in athletics. It is attributed to the enhanced Information and Technology sector. This is due to the fact that they have become conscious of what they consume. This is vital for DRYFEET Performance Footgear since introduction of the invention will not be of much hustle; the new consumers are most probably informed of the products even before availability in the market (Williamson, 2012). Opportunity and Risk Assessment Achieving competitive advantage is categorically a primary goal to every firm, organization or company that aims at advancing internationally. According to Kauffmann and Roesch (2012), this is achievable by designing and deploying marketing plans with ability to sense or realize and meet demands of customers. The environment created by international marketing is engulfed in various factors that influence the expansion of an organization. Some of these aspects enhance while others hold back expansion, growth and development. These aspects are in particular categories of issues so as to facilitate a detailed understanding of the global marketing environment. The Porter’s Five Force Model gives a better picture of the recommended countries. Social, cultural and demographic issues Areas of application for DRYFEET Performance Footgear have no much interaction with the social and cultural issues. However, internationalization process of a firm involves four basic stages; export stage, international stage, multinational stage and finally the global stage. These stages increase the interaction between the business and the social as well as cultural positions held by the new regions in which they venture. The variation of these two factors across the globe makes them central points of consideration in the development and implementation of international marketing strategies. This is because they influence all the behavioural aspects of a consumer or a buyer. Soccer is well embedded in the Brazilian culture, yet this innovation is directly applicable in the game. Same applies to Spain where soccer, football and other athletics are much celebrated. Some of the cultural factors to consider in international marketing include; language and dialect, religion, dress sense and clothe fashion, colour codes and meanings, living standards, level of education and literacy and population density, amongst others (Kruger, 2012). According to Welsh (2005), lack of consideration of the social and cultural aspects in decisions and marketing plans leads to poor response by customers to product promotions and heavily impact the public image or respect of the company. Customer power Customer power represents buyer’s bargaining power. An individual has access to a number of other products, this means that they can compare and determine the trends in each case. Nevertheless, DRYFEET Performance Footgear is the only one of its kind with no competitor. The buyer’s bargaining power influences the appropriation of the value created by the business environment. Brazil and Spain have an effectively large customer base, size and concentration on athletics products. They are also well informed to good percentage per group on such products. Articles show that it is often useful to distinguish potential buyer power from the buyer's willingness or incentive to use that power, willingness that derives mainly from the risk of failure associated with a product's use. This force is relatively high where there a few, large players in the market, as it is the case with retailers and other stores. Present where there is a large number of undifferentiated suppliers, such as industries supplying large ones. A low cost of switching between suppliers, such as from one fleet supplier of trucks to another. Economic and Political Stability The economic system is the driving tool that determines what to produce and the kind of products that a country accepts into its market from within or without. Brazil and Spain have relative economic and political stability. Much economic growth for DRYFEET Performance Footgear will be experienced in a politically calm region. It is vital for DRYFEET Performance Footgear to look at the current and future political system of the host country. In this way, the company can assess the political risks involved. Ellis and Singh (2010) mention that it is vital for a company to analyze all the kinds and types of political risks so as to predict the possibility and probability of any of them. There is not much politicizing of the economy by the countries’ political system. Market economies are under the impacts of supply and demand. The laws of supply and demand suggest that producers must find an equilibrium point at which the consumers are willing to pay the asking price and the company still makes profits as the consumers get services satisfactorily. A company’s involvement in the international marketing system from local positions can only mean economic growth (Goddard & Ajami, 200). This growth is enhanced by the global economic systems which increase economic stability and brings confidence, not only to interdependent nations but also to the firms involved. Political risks involved include: General political instability which may not be serious but it raises uncertainties Ownership risk when operations are threatened by government expropriation. Operations risks in which policies of the host country impede business operations Transfer risks which result when the exchange rate is affected adversely and thus, currency devaluation and economic downtime. The power of a supplier This refers to bargaining power of the producer of DRYFEET Performance Footgear. This may be considered as a result of quality service that is driven by how competitive a market is. The innovation does not face any direct competition in Brazil or Spain apart from one’s choice of using or not using the product. The supplier’s bargaining power is therefore essential in this region to ensure that the intended users are give good reason to consume the product. An analysis of supplier power typically focuses first on the relative size and concentration of suppliers relative to industry participants and second on the degree of differentiation in the inputs supplied. The ability to charge customers different prices in line with differences in the value created for each of those buyers usually indicates that the market is characterized by high supplier power and at the same time by low buyer power. Technological and sustainability aspects Globally viewing this, international marketing grows beyond just producing and promoting goods and services worldwide. The global perspective demands new innovative ways of thinking and delivery of the productions. The mode of operation and delivery almost commands the acceptance of a firm or company in the global arena. Technological advancements in communication, transportation and manufacture process contributes to reshaping of lifestyles and thus, technological revolution. Considering the production lines in which DRYFEET Performance Footgear is involved, appreciation of technology is inevitable. Technology makes acquisition of information much easier such that customers can easily access information about companies over the internet more easily. DRYFEET Performance Footgear should utilize this opening to avail as much information as possible about itself and its products through this media. By extension, production promotions as well as online sales are some of the advantages that technology brings to international marketing (Doole & Lowe, 2008). Technological advancement has made information a tool of power in the international industry. Competition In the inclusion of other reasons for internationalization, competitive advantage is sought by all firms. It is gained by seeking low production cost in location where the raw materials are, or close to. In such areas, the firms access cheaper labour and wider channels of distribution. The competitive advantage for DRYFEET Performance Footgear definitely under the influence of its position in the various countries in which it operates already. The approach of competitive advantage has merits inclusive of economies of scale which result from offering standard products in markets. The freedom of location that it also has gives a company the freedom of operating in the most advantageous region (John, 2006). The aspect of differentiation enables the company to provide their goods and services to multinational customers. Generally, competition is tool that ensures that the producers avail products of quality to the customers so they compete against each to make oneself the organization of choice to the consumer. Consequentially, the consumer has the Economic Motives A competitive market has beneficial potentials that stimulate innovative economic efficiency, greater productivity and almost exponential economic growth. The economic system is the driving tool that determines a government’s strength and the products and services it allows in its markets from within or without the borders. Market economies are under the impacts of supply and demand. The laws of supply and demand suggest that producers must find an equilibrium point at which the consumers are willing to pay the asking price and the company still makes profits as the consumers get services satisfactorily. A company’s involvement in the international marketing system from local positions can only mean economic growth (Goddard and Ajami 2006). This growth is enhanced by the global economic systems which increase economic stability and brings confidence, not only to interdependent nations but also to the firms involved. In economics, the government intervenes in international business to address non-competitive behaviours which cripple growth of the economy. There are various forms of such non-competitive practices such as monopoly, monopsony and the presence of middleman in the business industry (Ellis & Singh 2010). Monopoly is about a situation in which only one agent controls the supply of a good or a service. The agent therefore has the liberty to avail a good or a service at self-determined rates and at prices without regulation. On the other hand, monopsony is the situation in which one agent controls demand for a good while with middleman, one agent buys the product from the suppliers and sells to demanders. The major economic motive is to protect a small industry that is yet to spring out properly. The emerging industries need protection from international competition during development until they become competitive internationally. As put by Ellis and Singh (2010), it takes time for one industry to grow to global levels and before then, it can only compete locally. It would therefore be difficult to experience growth with stiff competitions from fully fledged and experiences international businesses. Protection can be removed after it gains the knowledge to become innovative, efficient, and competitive. The protection comes in terms of guiding their operation with different regulations that are not as restrictive as those governing international entities. Research shows that the other most evident economic motive is to pursue strategic trade policy. Current researches also indicate that government intervention helps firms take advantage of economies of scale and enjoy particular advantages (Doole & Lowe 2008). Most of these advantages are first-mover advantages which result because economies of scale limit the number of companies in an industry. It ensures that there a few companies, but with stiff competition hence better operation environment and economic growth. The benefit of this is that, with the first-mover advantages, companies earn profits and establish concrete market positions. As postulated earlier, it by extension helps companies survive poor economic times because of the wide range of industries in which they could have wanted to compete in. Conclusion International marketing is an essential indication of the development and growth of a particular organization. It also justifies the management, marketing and planning or decision-making strategies that the organization employs. DRYFEET Performance Footgear is a leading innovation of its own kind and its application cuts across all athletics. This makes expansion to global levels necessary and almost authentic, given the universal trends in the business sector. Internalization comes with a number factors or issues that require analysis before any decisions are taken. Accordingly, the report achieves the objective of establishing the importance of international marketing and analyzing the factors in the international market environment. Recommendation In view of the factors making up the international market and the economic state of the country deemed suitable for businesses expansion, an effective study of the social and cultural perspectives of the Brazil and Spain is recommended. This is of the basis that Brazil is inhabited by numerous communities with different cultural customs and social opinions. Liaising with local and international companies already in the country may serve sufficient to avail the necessary information. In addition, venturing in to new regions requires more employers. It is recommended that for such, the company should employ the locals of the new country or region in which they intend to introduce their business and products. References Kotler, P., Armstrong, G., Wong, V. and John, S. (2008). Principles of marketing. pearson education. United States: Prentice Hall. Kauffmann, L. and Roesch, J. F. (2012). Constraints of Building and Deploying Marketing Capabilities by Emerging Market Firms in Advanced Markets. Vol. 20, No. 4 Kruger, A. A. (2010). Top Cultural Factors to Consider for International Search retrieved from http://searchenginewatch.com/article/2067642/ Welsh, R. A. 2005. How Cultural Differences Affect Your Global Marketing Message. Retrieved from http://www.rawpowerwriting.com/article.asp?id=9 Goddard, G. J., and Ajami, R. A. 2006. International Business: Theory and Practice, New York: M.E. Sharpe Ellis, K. and Singh, R. 2010. Political economy factors affecting efficient functioning of markets. Trade Hot topics. 1(73). Doole, I. and Lowe, R. (2008). International Marketing Strategy: Analysis, Development and Implementation, Fifth Edition, Stamford: Cengage. John, K. (2006). African journal of business and economic research, London: Adonis & Abbey Publishers, 1(1). World Bank. (2011). State of Kenyan Economy. World Bank. Williamson, C. (2012). Back to the Basics: Business 101, Washington: CreateSpace. Ellis, K. and Singh, R. (2010). Political Economy Factors affecting efficient functioning of Markets. Trade Hot topics, 1(73). Read More