International Marketing Environment - Research Paper Example

? International Marketing Environment International Marketing Environment I. The role of the government Government and trade are interdependent, and the interdependency has been at its best with regard to international trade. The strategies of the local government have great impacts on any trade or business undertaking. In the same way, the government has a great role to play in the development of international trade market. The international trade barriers raised by governments include restrictions on business expansion, higher taxes and formalities, and the long delay for the licensing and permission. Evidently, all these constraints affect the flexibility of doing international trade. A country while exporting its domestic products is benefited by the foreign exchange income as well as by the new employment opportunities. On the other hand, while importing goods from other countries, a ‘consumer surplus’ is being created when the consumers are benefited by the availability of better products at a lesser price. Utilizing the both benefits, government has the ethical responsibility to facilitate international trade to those who are willing to invest in the international markets. However, when considerations about the local market come to the surface, the introduction of the international trade becomes a job that is easier said than done. To illustrate, the victims of the international trade are the local businesses that are not able to compete with foreign products. In such situation, the role of the government becomes more critical on taking appropriate actions which will not badly affect both the groups. The foremost five levels of economic integration are Free trade area, Customs union, Common market, Economic union, and Political union. As the international trade is widening and more countries are ready and willing to invest in it, the level of economic integration has to be refurnished between various groups of nations. It is not practicable to think that all countries would follow the precise pattern of economic integration, but we can expect for the development of basic arrangements such as lowering and abolishing the hurdles to trade and creating an economical environment. New economic integration techniques must be brought up to cope up with the new international trade needs. As Holden (2003) points out, a most mentioned example for this is the European Union, which has evolved from a collection of autarkical nations to develop into a completely integrated economic unit. At the outbreak of globalization, economic integration had been one of the forces behind the international trade making. We can sort that fact out from the performance of the multinational organizations that have developed into the most profitable business concerns in the recent years. An organization must be aware of the culture and language of the country where it is going to make its huge investment. With the successful take off, international business will rely more towards the economic integration for its future achievements on the global scale. II. Economical and Cultural elements of International Marketing Environment Economic, cultural, political, technological, social, and legal elements are most important for the international marketing environment (The legal, political/ trade environment). Many write down the importance of economic element as, “With money all things are possible, without money many things are impossible”. The economic element plays a vital role in the international marketing environment. A technologically advanced industrial product requires a technologically advanced buyer. In the same way, luxury products are not meant to be sold to low-income consumers. Therefore, international market for high-priced luxury items of food, furniture and durable products need large support of consumers who have the capacity to make large purchase from these hypermarkets. However, the global economic growth today has been at pace comparing to that of the previous year. In the same way, the cultural elements have many impacts on the success of the international marketing. The American culture is not the Australian culture. Nations’ failure to understand and respect the culture of other’s has highly impeded the growth of the international marketing. When a business concern formulates strategies to invest in the international markets, it should take geographical, cultural and legal aspects into consideration together with the consumer preferences. When entering into a foreign developing market, one of the significant challenges faced by the marketers is that the preference the consumers make are based on their cultural background. The cultural background is depended on numerous elements, including language, education, attitude, social association, aesthetics, and values. The overall understanding of the culture is the only key to establish the foreign market. Culture has always been an important element in the international market as its elements have impacts on the way consumers think. III. Political and financial risks associated with the international marketing Risks, especially the financial risks are inherent in doing the business in the international market. Financial risks are unavoidable in the foreign trade while trying to ingratiate the business into the foreign culture. In the same way, as the globalization enlarged, so as the risks too did when trying too make use of the advantages of globalization. It has increased the risks of contagion, the adverse economic events of a country which will in turn create an international financial panic. In such a situation the foreign country business holdings and investment selection would lose its significant value. Political risks normally are considered to be non-commercial risks. They refer to the changes in a political environment which creates adverse effects on the operation of a business organization. These political risks have great impact on the international trade as the political environment of the host country is a significant factor. As Andoh (2007) reminds, many of the political risk factors are not within the governments’ accountability, like war, revolutions, strikes, terrorism, etc; and some of the risk factors within the control of the government include expropriation, confiscation and domestication. Apart form the economical and political risks, the international trade is also faced with many other risks like, longer payment cycle, changing tariffs and other trade barriers, etc. IV. Strategies A business organization should constantly watch the political and economical situations in the country where it operates. It should consult with the local staff and embassy officials to preserve the organization from the unexpected alterations in the international markets. The firm should have a risk management team which is bestowed with the duty of closely monitoring the international market based upon the built indicators and determinants for economical and political alterations. At the time of entering into contracts for the international trade, the agreement between the foreign country and the host country should clearly define the rights and obligations of both the countries. The resolutions should not only include the effects of the risk but also the means to overcome the risks. The responsibility on both the parties should be clearly defined through an outstanding reasonable process. The process must be supported by the arbitration courts to make it corruption and threats free. The contracts must include the legal provisions of the host country as well as of the foreign country, and the country in which the issues should be resolved. The firm also should be specific about the technique to be used to resolve the argument regarding the arbitrations, negotiations, and litigations. The strategy must also comprise the methods on how the settlements be enforced. In total, some sorts of political and economical risks exist in every country, posing a hurdle in the growth of international trade. These risks factors must be assessed efficiently and most suitable business decisions must be taken in time, by closely monitoring the global conditions in order to keep up with the changes in the international markets. By forming suitable strategies and by creating a world wide support for the brand, the organization can remain constant in the international market conditions. References Andoh, S. Y. (2007). Impact of political risks in international marketing: the case of West Africa. Memoire Online.com. Retrieved from http://www.memoireonline.com/08/09/2610/Impact-of-political-risks-in-international-marketing-the-case-of-West-Africa.html Holden, M. (Feb 2003). Stages of economic integration: From autarchy to economic union. In Brief: Parliamentary Research Branch. Retrieved from http://dsp-psd.pwgsc.gc.ca/Collection-R/LoPBdP/EB-e/prb0249-e.pdf The legal, political/ trade environment. (n.d). FAO Corporate Document Repository, Agriculture and Consumer protection. Retrieved from http://www.fao.org/docrep/W5973E/w5973e08.htm Read More