Global Marketing - Internalization as a Result of Globalization - Essay Example

A good example of a firm practicing internalization as a result of globalization is KFC Limited (Kentucky fried chicken) which has opened eateries in Europe, Asia, and Africa yet its home country is the USA.

Key drivers of globalization have been linked to internalization with regards to marketing in that they might have positive and negative effects on marketing. Some of the key drivers of globalization are as presented by Daniel Traca in his article(International Trade) are lower transport and communication costs, development of international institutions, and political decisions towards deregulation and liberation of trade and FDI(Foreign Direct Investment) regulations.

Lower transport and communication costs have especially propelled marketing standards by firms. This has led to healthier marketing competition and reduced monopoly by some major firms. It has also widened their market base and resulted in increased revenues. Customer services and goods delivery has also improved due to this.

Daniel Traca outlines that the development of international institutions such as the World Trade Organization (WTO) and regional trade agreements between continental blocks and countries has greatly lead to internalization benefits by major firms. Though some regulations and rules that are governed by WTO have added towards marketing internalization, some are restrictive and are not favorable to all participants.

Regional trade agreements have also lead to better products and services by firms in these regions. This is as a result of favorable marketing conditions such as reduced taxes, large market sizes, and the setting up of Export Processing Zones that foster growth of trade and marketing.

Political decisions towards deregulation and liberation of trade and FDI regulations have resulted in better marketing standards. This has enabled firms to directly market themselves globally by getting involved in community programs such as the building of public amenities in developing countries. This has in turn turned out to be a reliable marketing strategy since such firms are given priorities when it comes to government contracts or any other service-providing activities.

Qn.1b)

International marketing takes place when a business directs its products and services towards consumers in a country other than the one in which it is located. This definition is given by Sletten, Eric. How to Succeed in Exporting and Doing Business Internationally. Wiley, 1994. Even though the concept of marketing is globalized, (i.e., the concept is the same worldwide, from country to country and region to region.) international marketing tends to experience some major challenges as a result of different environmental conditions.

The difference between countries hence is always an uphill task for firms when it comes to marketing their products. These differences are brought about by differences in, demographic and physical environment, economic environment, social and cultural environment, legal environment, and political environment. These are further made up by individual factors under each of the.

Under demographic and physical environment we have the population size of the given market destination. The population size determines the market size hence the revenue to be generated by the firm. Population growth and distribution also determine the market network. Climatic factors are also grouped here; they could impact the business either positively by promoting a product or service or negatively by providing logistic challenges to the firm.

The difference in economic environment between countries can be presented by, disposable income and expenditure patterns, per capita income and distributions, currency stability, inflation amongst others. In a market in which the economic environment is stable with all the good indicators, it is almost certain that the introduction of a new product or service will be successful in every aspect. This does not hold for a market in which the economic conditions are not favorable at all.

Social and cultural environments also pose a huge challenge to marketing in that the difference of this condition in two given countries may result in loss or gain of market. It is the most confusing factor and includes literacy rates, general education levels, language, religion, ethics, social values, and social organization. This may be a problem when it comes to the way information is delivered. Hiam and Schewe observed that cultures differ in their values towards every aspect of life. They further observed that even business practices differ from person to person.

The legal environment also plays a major role when it comes to international marketing. The difference in the legal environment can be displayed under, limitations of trade through imposing tariffs or trade quotas. It may also include documentation and import regulations, taxation, and patent and trademark protections. It is usually wise to research and know of any of these factors before embarking on international marketing so as to avoid legal run-ins with involved authorities.

The most important factor of all for international marketing is the political environment. These include the system of government in the targeted market, political stability, dominant ideology, and national economic priorities. Cases of dominant ideologies may result in huge losses for foreigners in case the government decides to favor its local industries or come up with measures that will limit foreign firms from providing some services and products to its citizens. As cited by Gowa, Joanne. Allies, Adversaries, and International trade. Princeton University Press, 1994, political environment matters most when it comes to international marketing.

In general, international marketing is always prone to social, political, cultural, and environmental factors. These factors may affect the market either by favoring it or by restricting its availability to foreigners as a result of the differences in countries, regions, or continents.