International Marketing Environment - Essay Example

? INTERNATIONAL MARKETING ENVIRONMENT …………………. …………….. Explain the role of government in international trade, the various levels of economic integration, and the impact on international marketing. Achieving favorable balance of payment is always the critical key determinant of governments’ intervention of all the countries in international trade. Governments normally attempt to control international trade with specific policies in order to maximize the likelihood of surplus balance of payment (Appleyard, Field and Cobb, 2005, p. 19). In order favorable balance of payment to be achieved, governments do subsidize the exports and impose quotas and high tariffs on imports. Though different countries adopt different strategies to increase the inflow of foreign currency through exporting, most countries facilitate shipping through forwarding agents and provide loans and other facilities as well. Some countries impose navigation policies as well to maximize the inflow of foreign currency and to add up to favorable balance of payment. Trade bloc member countries often enjoy free-trade so that each country can export and import to each other without any barrier to trade like quota, tariff and embargoes. As economist viewed, there can be several levels of economic integration within the free-trade area such as least integrated to most integrated (Hill, 2004, p. 270). Some times, member countries in a free trade area are allowed to determine its own trade policies since all the barriers to trade of goods and services are removed. The major four levels of economic integration are – 1) Free-trade area, 2) Customs Union, 3) Common market and 4) Complete economic integration. 1-Free trade area, Tariffs are fully removed from the members of the free-trade area and each member country maintains its own external tariffs. 2- Customs Union in which a member-country adds a common external tariff to the Free trade form. 3- Common Market, which is the custom union plus the abolition of restrictions on the mobility of services, people, and capital among member countries. 4- Complete economic integration, in which members nations surrender certain elements of their sovereignty and involves high degree of economic integration (Ball et al 2005, p. 128- 129). 2. Describe the economic and cultural elements of the international marketing environment and explain how these factors affect marketing operations. Socio-cultural and economic elements do normally impact the international business environment as is normally evident in the home trade as well. Culture is the sum total of beliefs, rules, techniques, institutions and artifacts that can characterize human populations (Ball, 2005, p. 176). When it comes to international marketing, the culture in different marketing landscape is a critical element that would largely influence the business and its success. While going global, it is highly important that the business should know well all the whereabouts of the culture and socio-cultural elements prevailing in the market in order to understand customer’s specific as well as common attitudes, requirements and approaches to a particular goods or service. In international trade arena, economic elements are perhaps most uncontrollable forces for businesses. Though businesses depend on economic forecasting and other indicators, economic forces have generally been found to be highly fluctuating and more often economic crisis may create greater challenges on the business. GDP, Income distribution, GNI, unit cost per labor and the general economic conditions do normally impact the international trade. A marketer going globally is required to assess the economic conditions in the country and structure his marketing operations accordingly. 3. Summarize the major political and financial risks associated with international marketing. Hill (2004, p79) defined political risk as the likelihood that political forces cause changes in a country’s business environment and it affects adversely the profit and other goals of the particular business enterprise. Political forces cause financial risks and that in turn cause financial risks too. Country’s sovereignty, different political philosophy and nationalism are some of the major determinants in a host country’s actions that enhance political risks of global marketing. In relation to these elements, risks may be of different forms such as confiscation, import restriction, price control etc (Cateora and Graham, 2007, p. 166). More specifically, social as well as political groups and people belonging to specific political background may provoke the governments in to some actions that are harmful to business. In some cases, the equity may require to be transferred to the governed and this seems to be one of the greatest political risks associated with international trade. One of the most critical political risks is Confiscation by which a company’s assets may be seized without payment. Similarly, when the government seizes the investment on some reimbursements of the asses, another severe political risks occurs termed as expropriation. Domestication is another risk in which the host countries gradually cause the transfer of foreign investment to national control (Cateora and Graham, 2007, p. 166). Various financial elements such as loan, interest rate, government regulation regarding investment and bank saving or deposits directly impact the operation of international business. Variable interest rates may cause shifting the financial risk to the borrower and this requires him to be more careful about the borrowing. In an international business arena, interest rate, borrowing, investment and bank regulations etc cause financial risks on the business opportunities of the international trader. 4. Explain the strategic marketing planning process, strategies for entering foreign markets, and considerations for subsequent market expansion. International business strategy is concerned with the way firms make critical choice about developing and deploying the scarce resources in international marketing contexts. Most businesses design and develop unique strategies to help them achieve sustainable competitive advantage in its marketing. A global strategic marketing planning is a tool that firms implement a specific strategic and tactical marketing decision, usually developed on an annual basis and look at policies over multiple years (Kotabe and Helsen, 2008, p.570). When it comes to the international marketing, a strategic planning is considered to be extremely critical to the success since the international marketing contexts have greatly been changing over the last few years due to drastic impacts of globalization, competition, technology advance etc. A strategic planning, if it is effectively designed, developed and implemented, helps the firm achieve competitive advantage and survive in international marketing. Kotabe and Helsen (2008, p.570) listed two major types of strategies, namely top-down and bottom-up strategic planning. With top-down planning, corporate headquarters guide the planning process for the international marketing. With bottom-up planning, the local subsidiaries guide the planning process and thus enjoys the benefits embracing local responsiveness. Both top-down and bottom-up planning would be successful strategies for market expansion if they are effectively implemented. References Appleyard, D.R, Field, A.J and Cobb, S.L, 2005, International Economics, Fifth edition, McGraw Hill Companies Ball, D.A, McCulloch, W.H and Frantz P.L, 2005, International business: the challenge of global competition, Tenth edition, McGraw Hill Companies Cateora, P.R and Graham, J.L 2007, International Marketing, Thirteenth Edition, McGraw Hill Companies Hill, C.W, 2004, International Business, Competing in the Global market place, Fifth edition, McGraw Hill Companies Kotabe,M and Helsen, K, 2008, Global Marketing Management, Fourth Edition, John Wiley and Sons Read More