Global Economic Environment and Marketing - Essay Example

Global Economic Environment and Marketing Introduction Globalization and the growth of international relationship among nations have led to changes in the global economy. Global markets have emerged to utilize the emerging opportunities in the global economy and this has exposed local business people to the global competitors (Doole & Lowe, 2008). As a result, integration of the world economy has been experienced, specifically through the development of free trade. In essence, various changes have taken place in the world economic environment, taking different forms in the operations of the local business people (Chaffey & Smith, 2008). The changes that have taken place in the world economy have led to the replacement of the traditional trade methods by capital movements. It can be observed that the global economy has given the local economies only a subordinate role in the market operations (Kotler et al., 2012). Economic systems have changed from what was traditionally known to new systems, which have taken into consideration the areas that are affected by globalization. The areas considered in modern economic systems include governance in various countries operating in the global market, capital and trade flows, hierarchy of command in terms of transport and communication, services funded through taxes and many others (Masterton &Pickton, 2004).The field of marketing in the global economy has experienced dynamic changes as well. Therefore, companies operating in the global economy should put into consideration these aspects and employ changes that fit the requirement of marketing in the modem global economy. The report will focus on McDonald, which is a multinational corporation operating in the fast food industry and supplying millions of customers across the world. (Solomon, 2009). How changes in the global economy might impact marketing strategies and activities of McDonald Company The Macdonald Company has established its branches in almost all countries of the world. In this regard, the company experiences varied economic challenges and opportunities in different countries. With the current world economic state, the developing countries are struggling to better their economic status (Drummond et al., 2003).. In this case, the McDonald company experiences reduced economic gains in the developing countries compared to the developed nations. Another challenge that faces MacDonald Company in the global economy is the stiff competition in the developed economies. In this regard, it can be witnessed that operating in the international markets requires outstanding skills and knowledge since it involves dealing with high-level risk. Essentially, operating in a number of markets that are based in different geographical locations presents a basket of unforeseen risks (Egan, 2007). The issue of taxation is another challenge that faces the MacDonald Company. Different countries use different tax laws and policies. In this regard, complying with the tax policies in different countries poses a real challenge to the company. In addition to taxation challenges, the company faces the problem of inflation. Different countries experiences different inflation rates and, therefore, trading in the international market makes investing in some countries expensive than other countries. The global demand for MacDonald products have grown at a rapid rate, which has forced the country to increases its global economy. (Wilson 2006) states that increased demand is usually met by increased supply. Therefore, it can be observed that the MacDonald Company has employed this strategy in trying to reach the outer world. However, in order to survive in the global economy, appropriate marketing plans must be established. Establishing marketing strategies that are compatible with the modern global economy will see the company stand a better chance of achieving its set goals and objectives (Hooley et al., 2012). In this regard proper planning of the marketing mix model should be developed to fit in the various global economic settings. (Jobber, 2010). Since the company operates in a global market the marketing strategy requires some amendments to accommodate changes. Political unrest is another challenge in the global market. The recent years have been characterised by political upheavals in most parts of the world. In essence, political unrests have become quite common in the Middle East countries. In this regard, the operations of the company in the Middle East countries have received a big blow. As a result, the returns made by the company’s establishments in the Middle East countries and other war torn regions have significantly reduced. In essence, political unrest in some countries have led to the absence of intellectual property rights. Absence of intellectual property in the economy results in unhealthy market competition that might led to adverse financial performance of the companies in the industry. Research has shown that countries that have no intellectual property rights contribute a little percentage of the MacDonald Company annual returns. However, despite the unlimited political challenges, the company should concentrate on developing its presence in the global market (Schlosser, 2012). The level of company’s involvement in the international market largely influences its market performance (Hollensen, 2012). The level of involvement include export marketing, international marketing, and global persuasive campaigns (Jenkins, 2002).in essence, the McDonald Company should focus on exploiting the opportunities in the global market in order to develop a competitive advantage over the rival companies(Gault, 2010). Operating in the global market is usually more complex than in a domestic company. For instance, different countries have different operating standards and this present a business challenge in the global economy. (Paskal, 2010). Several models have been advanced to explain the environment in the international market. Analyzing the macro factors that affect the operations of MacDonald Company in the global economy can be very useful for future decision making. The PESTL model has be described as one of the best approach to analyze the macro factors that influence the operations of any business concern. (United Nations Industrial Development Organization 2014). The socio- cultural factors give an insight of international marketing environment in relation to religious beliefs, cultural beliefs, and social constructions of different communities in the world. For instance, the Muslims do not take pork, and therefore setting up pork business in Islamic countries has no economic benefits. In this regard, understanding the various socio-cultural factors in the global market can enable the company identify what type of fast food products to produce for which country or region of the world (World Trade Organization, 2015). Legal factors are other important consideration to make when operating in different countries and regions of the world. Most trading and business activities are controlled by the government in many countries. In this regard, it is important to evaluate the legal provisions of a country before establishing a company. (Sinkovics & Ghauri 2009). The legal environment is more complex in the international market than in the domestic market. In this regard the company should recognize the fact that international legal requirement are diverse and challenging to fulfil. According to Samanta (2014) the international legal policies are aimed at governing operation of the various participants operating in the international market. The global economic factors are also relevant to McDonald Company in that business expansion programs are mainly swayed by the economic conditions in the market (Pride & Ferrell 2010). Some economic policies such as quota systems in various countries affects the operations of the MacDonald Company. In addition, the company should consider the currency conversion rates when planning its operations. From existing studies, it can be observed that the McDonald Company has taken broad steps in solving the challenge of trading in different currencies (McDonald, 2007). However, more measures need to be taken to avoid the inconveniences caused by fluctuations in the foreign exchange rates. Another factor that McDonald should consider for effective operation in the global economy is the political factors in the global environment. Political structures in different countries affect decision making (Harrison, 2013). The company should consider the relationships between different governments when making long term decisions. In essence, company should be aware of the political temperatures in various countries to avoid adverse effects (Glowik & Smyczek 2011; Czinkota & Ronkainen 2013). There are various organizations that govern the operations of companies in the market. For this reason, the company should assess the political structures and requirements of the counties in which it operates in order to determine potential economic and political risks (Shankar & Carpenter, 2012). Technology is an import factor of consideration in the global market economy. Modern technology has taken over the various activities carried out in the global market. For instance, the MacDonald Company has established a multibillion structure that facilitates effective use of the modern technology. In essence, technology is a basic requirement for operation towards attaining the requirements of a global marketplace (Sinkovics & Ghauri, 2009). Advancement in technology has contribute to the development of unique and competitive marketing strategies. Actually, technology has eased business transaction across the world and made Advances have been made technologically concerning the expansion of business operation in the international arena very effective. In addition, the modern technology has played a significant role in developing a reliable market intelligent system. Through technology, research has been made easy and activities such as data collection and communication of important information regarding international market trends has been simplified. Information need to be availed for companies operating in the global economic environment to ensure that they make the right marketing strategies and decisions (Alsamydai, 2013). Adopting the modern technology enables companies to access useful information concerning the market. By considering those factors, the company will be in a position to assess the global economic trends and plan for the appropriate marketing strategies. Generally, the different factors will necessitate planning and development of the various marketing strategies in the international marketing environment (Cant 2006). Competitive Advantage Competitive advantage refers to the privileges enjoyed by a company offer its competitors because of offering differentiated products or services as per the customers need and specification. The much success of the MacDonald Company can be attributed to the differentiated products and services it offers to its customers. In essence, companies require to have some unique differentiation techniques to survive in the competitive global economy. Another factor that offers the MacDonald Company a competitive advantage is providing customers with a variety of products to choose from. The company offers its fast food products in a variety of flavors. In essence, the company has utilized the statement that customers have varied tastes and preferences. Actually, the company provides products that meet over 80% of fast food customers specifications. It has been observed that almost all customers can have a product that meets their specification or preference once they visit any outlet selling MacDonald Company’s products. The practice of meeting consumer’s requirements has given the company an upper hand in the global market compared to its competitors. The company’s advertisement and positioning strategies are other factors that keep it ahead of the game. The company has established impressive advertisement campaigns in various media. For instance, the company advertises its products in various social media platforms and websites. Apart from comprehensive advertising, the company has ensured that all its outlets are located in strategic positions that are easily accessible. In essence, some customers are lured to visit the company’s fast food outlets due to location. It is imperative to note that the location of a business is very important when it comes to selling and buying. In this regard, companies should establish businesses in areas that are easily accessible by the target customers. After evaluating the various factors, the McDonald Company can come up with the most appropriate strategy for undertaking the marketing activities for its food products in the international market .Planning will involve the company considering its current position, its anticipated position and its aim of getting to the anticipated position. The first stage is the unplanned stage and in this stage, the business activities are unplanned and unpredictable. The activities that occur in this stage are different from those in the other stages( Morschett et al., 2009).The budgeting stage is the next stage and annual budgeting follows whereby a more elaborate and formal budgeting process is undertaken. Strategic planning is the final stage in which long-term planning is carried out (Czinkota & Ronkainen 2013).This enables the involved employees of the company to work towards attaining some future goals and having a vision and mission of what they expect to attain. The strategic planning stage however is usually affected by the unplanned events such as political and environmental factors. The process will also involve consideration of the expectations of the stakeholders. There are many stakeholders in the international marketing environment considering its complex nature. The expectations of the different stakeholders will be different (Gillespie & Hennessey 2011). The stakeholders will include local and multinational competitors, employees, customers, distributors and retailers, shareholders, government of the home country, government of the host and politicians. The international public relations available in the international marketing environment help in taking care of the expectations of the stakeholders and this is of benefit to McDonald Company’s stakeholders. The different expectations by different stakeholders in different companies result to formation of different marketing strategies (Mooij, 2010). Difference in the results obtained from situation analysis that is conducted by various companies result to the implementation of different marketing strategies in the international marketing environment. This is because different firms respond differently to the uncertainties in the market and will obtain different results from the analysis. The strategies by McDonald therefore will be different from those undertaken by other companies. Analyzing the resource capability is another important aspect in the planning process (Gopalaswamy 2010).The resources available to a company will determine the strategies as well as the marketing activities it is able to undertake. The levels of resource capability of different companies in the international economic environment are different and, therefore, will result to implementation of different marketing strategies. Knowledge management is another aspect that has been facilitated by emerging technologies in the global economic environment. This will facilitate the levels of acquiring information in the market and based on this different companies will implement different marketing strategies. Corporate objectives is another basis for implementing different marketing strategies. These are based on the different expectations of the stakeholders in different companies (Pride & Ferrell 2010). Conclusion In conclusion, there are different factors that affect the operation of companies in the global economic environment. These factors will lead to formation of different structures of operation by the different companies in the international market. The report has considered McDonald in this case and how the various factors affect its operation and strategies of marketing. The aspects considered in the planning process for operation in the international market. Reference list: Alsamydai M.J. et al (2013). The Impact of Organizational Change on the Marketing Strategies of Change. Retrieved on 30th April 2015 from: http://www.zuj.edu.jo/wp-content/staff-research/economic/dr.mohmood-Jasim/4.pdf Cant, M. C. (2006). Marketing management. Cape Town, South Africa: Juta. Chaffey, D. & Smith, and P.R. 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