Impact of the Economic Environment on a Success of New Enterprise in a Country - Essay Example

? In appraising the international marketing environment, the economic environment of a country is the most important consideration for an enterprise.Discuss. Name Course Tutor’s Name 7th, January 2013 The international markets today keep fluctuating from time to time, in addition to the stiff competition that is experienced in these markets. This therefore makes the evaluation of international markets worthwhile. Globalization has played an important role in the formation of international markets today, as it breaks the barriers between different countries, hence enabling them to interact in business terms. This is evident as several companies across the world have international brands; these include Coca Cola Company, Microsoft, among others (Cavusgil, Ghauri & Agarwal, 2002). However, international marketing is faced with a variety of challenges as it is requires great strategies to achieve compatibility between different countries. This is in terms of the different needs of people in the different countries, as well as their regional differences (“Experts Column,” 2009). In appraising the international marketing environment, marketers should consider a variety of factors, including economic, cultural, legal, and political factors; however, culture is the most important factor, which needs special consideration for effective international marketing. In order to implement effective strategies in international marketing, cultures of the involved countries must be put in consideration. Since different countries have different cultures, the marketing strategies in all the involved countries cannot be similar, as different countries will have varying preferences, which are dependent on their cultures (“Experts Column,” 2009). For instance, the health and fitness companies today cannot get equal grounds in all their international marketing. This is because some countries such as those in Southern Asia do not prioritize health and fitness; therefore, such companies will only get stable marketing grounds in some western countries such as Canada, UK, and USA, which have rich families that embrace the aspect of health and fitness (Brady, 2010). Health and fitness companies such as those involved with Yoga therefore, have to come up with effective marketing strategies to counter this socio-cultural influence among countries, which believe that fitness is only important for the rich professionals and not the common man. By identifying themselves as alternatives to health, the fitness companies have managed to get an entrance into some of the countries that have this psychological attitude towards fitness. In addition, the McDonald’s Company has registered great success in different countries because of its cultural awareness in host countries. Mainly, this company adjusts its menus and diets to suit the dietary need and cultures of the people in the host countries (Francis, 2010). Apart from culture, the economic environment of countries is an important aspect for effective international marketing. This comprises a country’s GNP. GDP, as well as per capita income. These are essential in determining the power of consumer buying in a country. If these are high, it means the consumer buying power is also high. Business executives interested in international marketing can therefore, use these to determine the level of a country’s economic environment, as well as its market profitability (Kaynak, 1991). The economy of a country is a great influence in international marketing, as this comprises elements that are indicators of the height of market profitability in countries. It is therefore certain that the economic environment of a country is paramount in international marketing, given the important information it provides on wealth, consumer buying power, and income level, which are important market indicators (Muhlbacher, Leihs, & Dahringer, 2006). However, different studies have shown that most international companies do not put into consideration this aspect of a country’s economy when coming up with their business strategies. Such international companies still register success in their international markets, having disregarded the aspect of economic environment. This therefore, is a proof that economic environment of a country is not the most important consideration in international marketing, as there are more important aspects than this (Richardson, 2011). Culture therefore, remains the most important aspect to be considered in international marketing, as it has an influence, which is greater than that of economic environment in international marketing. Cultural perceptions of a country play a greater role in determining the buying decision of consumers, more than their economic status does. It is therefore important that company owners interested in international marketing learn about the cultures, customs, and history of the countries they are want to penetrate. Cultural aspects such as religion, business methods, diet, dressing styles, among others are important indicators of market and business, which vary among different countries (“Experts Column,” 2009). Therefore, an understanding of these cultural elements will boost the effectiveness and success of international marketing of companies. If an international company fails to put culture in consideration in its international marketing strategies, it is more likely that the business will register failure, and failure to achieve its business objectives, as culture is key to international marketing. International companies must therefore, ensure that before venturing into the international markets, they become familiar and knowledgeable about the business methods, social norms, religious beliefs, etiquette, and other cultural elements of a country, to ensure effective international marketing (“Experts Column,” 2009). The policy of a country is another important factor affecting international marketing. The policies regarding business are paramount as they determine the conduct international business. These therefore, mainly include the laws and regulations, which a country develops to control business operations in the country. These policies vary in different countries, as some are stricter than others are. If trade laws of a country are harsh, this may impede the international marketing as these come with added costs (Cannon & McCarthy, 2008). Europe has a trade system with laws that are considered unique from other countries. This makes international business in Europe to have a different standing as compared to other countries. In as much as these trade laws in a country are important in international marketing, most of them have acted as an impediment to international business, mostly due to their complexity and conditions. Nonetheless, international businesses must fully understand and meet the requirement of the policies of their target countries, in order to fulfill the needs of the host government and authorities (“Political & Economic Factors Affecting International Business”). Unlike the policy of a country, the economy of most countries is more dynamic and tends to change from time to time. This shift in economic status therefore, can have significant effects on international marketing, and especially on the marketing plan and strategies of the international companies. This has the capability of lowering the value of a country’s currency, thereby altering consumer behavior and spending. Cannon & McCarthy (2008) argue that this incident can have adverse effects on the marketing plan of international companies, even if it was well planned, and served them best in previous years. The buying power of consumers is highly dependent on their country’s economy. If the economy is stable or experiencing considerable positive growth, the consumer buying power will in return increase, boosting spending and market profitability in international marketing. With regard to this, it can be argued that the economic aspects of a country are vital components, which must be considered in the assessment process of international marketing. Therefore, before an international company develops its marketing plan and before venturing into new international markets, it is imperative that they study and understand the economics of the host countries (“Wessex Publishing,” 2008). A country’s policy is all encompassing, and involves regulation of different factors in the country, including social, political, religious, trade, among others. Therefore, these are sensitive elements of a country, which determines the stability of a country. Conflict within a country may result due to a malfunction of a country’s policy. According to Czinkota (2009), internal conflicts result in political instability of a country, which is detrimental to the business health of the country, including the profitability and effectiveness of its market. This in return disables international marketing in such countries. Policies of a country emanate from the political and legal environments; hence, these play a bigger role in international marketing than economic factors only. During political instability in a country, international companies may lose their assets, business operations, as well as management. In addition, the country’s political system may collapse, meaning the international markets have to collapse too, thus, resulting in loses. This case was experienced in Thailand, where political instability resulted in loss of life and property, thus negatively affecting the business environment there (Melvin, 2007). Therefore, it is wiser for companies wanting to venture in international marketing to assess the legal and political environment of the host countries and determine their stability and probability of future disruptions in order to ensure secure business operations in the country (Czinkota, 2009). Conclusively, of all the factors to be considered in appraising for international marketing, culture stands out as the most important factor. International marketing is a way of bridging between various countries and a way of profit creation. Therefore, culture is important in bridging between countries. However, economic factors also play an important role in determining the purchasing power and decisions of consumers in a country. This way, wealthy countries are the best platforms for international marketing as the purchasing power of their consumers is high. Policies of a country from the legal and political environment too play a role in international marketing, as they control business operations and determine the business atmosphere in a country, including political stability, which is necessary for effective international marketing. Despite the fact that globalization is unifying the world economy, cultural differences between countries still persists. This shows that economic environment is not the only important factor in appraising international marketing, as international markets are complex, with other varying factors. References Anonymous. (n.d.). Political & Economic Factors Affecting International Business Retrieved 8th, January 2013, from http://www.dpcdsb.org/NR/rdonlyres/0535EFD9-639D-4D95-B7AA-461E34742340/68681/Chapter_92_NOTES1.pdf “Experts Column” (2009). Factors to consider before jumping in International Marketing. Retrieved 8th, January 2013, from http://expertscolumn.com/content/factors-need-consider-going-international-marketing “Wessex Publishing.” (2008). Fundamentals of International Business. New York: Wessex Publishing. Cannon & McCarthy, J. (2008). Basic Marketing- A Marketing Strategy Planning Approach. New York: McGraw-Hill. Cavusgil, T., Ghauri, P. & Agarwal, M. (2002). Doing Business in Emerging Markets: Entry and Negotiation Strategies. London: SAGE. Czinkota, M. (2009). Fundamentals of International Business. Sydney: John Wiley & Sons Australia. Ltd. Brady, D. (2010). Essentials of International Marketing. New Jersey: M.E. Sharpe Francis, C. (2010). International Business: Text and Cases, 5/e PB. New Jersey: PHI Learning Pvt. Ltd. Kaynak, K. (1991). International Marketing: Sociopolitical and Behavioral Aspects. New York: Routledge. Melvin, J. (2011). Conflict in Southern Thailand. Retrieved 8th, January 2013, from http://books.sipri.org/files/PP/SIPRIPP20.pdf Muhlbacher, H., Leihs, H. & Dahringer, L. (2006). International Marketing: A Global Perspective. London: Cengage Learning EMEA. Richardson, G. (2011). Social - Cultural Considerations. Retrieved 8th, January 2013, from http://www.witiger.com/internationalbusiness/culturalconsiderations.htm Read More