Globalization in the Perspective of International Marketing - Coursework Example

Globalisation Today: In the perspective of International Marketing Table of contents 3 Summary 3 Issues 3 Background 3 Globalization Today 4 Changes in the International Market place 4 Impact of Globalization 4 Concept of comparative advantage 5 Diversity in Globalization and marketing strategies of international firms 5 Influence on International Marketing 6 Changes in the Global Business practices 7 Conclusion 8 Reference List 9 Additional Reading 11 Subject Globalisation today: What it is and what it means for international marketing. Summary This study focuses on the advent of globalization and how it has influenced the international marketing. International trade has been made easier by the process of globalization as it has brought several economies together. However, the firms that are involved in overseas trading are affected by several factors brought by cultural difference among the countries. Therefore, they need to address the cultural differences in order to perform successfully in the international market. Moreover, addressing the cross cultural differences also helps the company to design their marketing activities specific to the host countries. Issues The issues discussed in this paper highlights the operational changes that a firm needs to make in order to successfully implement the international marketing strategies. It also covers the different issues faced the firms of both host and domestic countries that arises out of globalization. Background Since 1980s, the concept of globalization has evolved as worldwide trend. Globalization is the interdependence of several economies all across the world which enables them to leverage the comparative advantages of each other (IMF, 2008). Globalization has opened up the global business market so that different nations can make easy trades with each other. The advent of technology and improved transportation system has eased overseas trading, thereby helping the organizations to expand its business across the national border. Thus Globalization has helped several firms to make global expansion which has also helped to improve the economic conditions of several developing countries (National Geographic, 2015). The integration of trade, economies, finance, and business market across the national borders are the primary characteristics of Globalization (Ritzer, 2008). The concept of Globalization is not a new one, however it has been evolving over the years has made the global business market more connected than before. The economic and social structure of several nations has been improved by the impact of globalization which as a result has positively influenced the international trading. However, there are also some negative effects of globalization as well that has inflicted certain long term effects on trade activities (Ritzer, 2008). Globalization Today Changes in the International Market place Globalization signifies the world as an individual space, where the nations can interact freely and involve into different business activities. The definition of International Marketing has been redesigned by the advent of globalization. Previously, international marketing was only limited to import and export of products across border (WHO, 2014). However, the advent of globalization has broadened our view of overseas trade and the concept of Foreign Direct Investment and foreign market penetration has evolved. The changes brought about by the globalization are partly voluntary and partly autonomous. Globalization has created a worldwide market place which is dominated by powerful nations and they often influence the business activities of other developing nations. Thus it can be stated that the control of the international trading has shifted towards the powerful nations due to globalization. Although the globalization is supposed to make the global market an open and freely tradable place, but the inescapable effects of globalization often creates adverse effects on the business of smaller economies (Stiglitz, 2012). Impact of Globalization The impact of globalization has always been a debatable issue. On one hand, globalization has improved the trade of the developing countries while on the other hand it has also allowed the financially powerful firms to virtually overtake the poorer nations (Ritzer, 2008). Thus the overseas business activities which are supposed to be mutually beneficial are actually lucrative for the powerful countries. The idea of foreign direct investment (FDI) allows a company to penetrate into a different nation and expand its business there. This as a result increases the customer base of the company as well as its revenue generation. The company also leverages the labour market of the host country to run its business operations and at the same time it has also improved its economic condition. The economic condition of a host country acts as a major determinant that attracts several other foreign firms to commence their marketing activities. Establishing a new business also helps the local suppliers to improve their businesses (IMF, 2008). Therefore, apparently it can be stated that FDI improves the economic structure of the host countries. On the other hand, it also has certain adverse effects. Due to the introduction of a financially strong firm in a relatively weaker economy, certain imbalance of power exists. The foreign company has the financial capacity of offering high quality products at a lower price, which as a result shifts the customers’ focus from the domestically produced goods to the newly introduced high quality products by the foreign company. This sudden shift of consumption behaviour negatively affects the local companies who cannot cope up with the marketing strategies of a financially strong firm (Stiglitz, 2012). Concept of comparative advantage The concept of comparative advantage highlights that different nations specialize in producing a particular product or services or it might have a particular resource in abundance than the others. Since Globalization has made the global business market a more open and easily tradable place, so the comparative advantage of one country can be leveraged by the other. The production processes are often outsourced to different countries based on their availability of low cost labour. (Rowntree, Price and Veregin, 2015). This as result reduces the operating cost of the company and at the same time the employment condition of the host country also improves. Diversity in Globalization and marketing strategies of international firms Globalization has also influenced the social structure of the nations. Although the rise of globalization and technology has brought all the economies together, but there exists a certain level of diversity among the nations. In order to improve the international marketing activities the firms need to address the social structure of the nation. This in turn will help the foreign companies to target their promotional activities and develop their products and services based on that complements the social structure of the nation. This presence of diversity among several societies creates certain challenges to the multinational firms when it comes to penetrating into new foreign market. The diversity is mostly on the grounds of cultural background and consumption patterns (Matthews and Thakkar, 2012). In the light of international marketing, a company needs to be knowledgeable about the cultural differences between the host and home country. The cultural difference indicates that people belonging to different cultures react differently to same stimuli. Therefore, introducing a new product and service to a foreign country needs a different marketing strategy than what was employed in the home country. Moreover, the product category and product design may also play the determining factor of company’s success. The company needs to identify the consumption pattern and consumer preferences of the customers in the host country, depending on which the products or services as well as the promotional activities needs to be designed. The rise of globalization has changed the marketing approach of the firms. Previously, the approach was mostly on the grounds of product development using mass production techniques. However, with the rise of product differentiation, the focus was moved to the customers’ needs. Therefore, in order to commence a successful business, the firms must understand the needs of the host countries. (Rowntree, Price and Veregin, 2015). Influence on International Marketing The globalization has opened new opportunities for business collaboration between overseas firms. The rate of mergers and acquisitions has increased severely over the last two decades. International firms have realized that in order to enter into a new foreign market, it needs to have certain advantages or expertise of the market scenario. This can be achieved by creating business collaboration with established companies of the host country (Jiang and Wei, 2012). This as a result allows the company to gain access to new distribution channels and knowledge about the customers’ purchase behaviour. Moreover, often at times the companies gain more preference in the host countries when they are associated with a known local brand. It is mostly because the consumers can easily trust the new brand when it is associated with a previously trusted one. Moreover, making strategic acquisitions of overseas companies also allows firms to enter into a foreign market (Matthews and Thakkar, 2012). In order to ensure an appropriate interdependence of several economies, the multinational companies should make sure that the adverse effects of cross border business operations are suppressed and the positive effects are utilized. According to Hofstede’s model, different nations have different cultures and their population bears different psychological profile. In order to commence international marketing activities, the firms need to be efficient in managing cross cultural communication (Geert-Hofstede, 2014). Globalization can only be utilized in favour of effective cross border trade, if the firms recognize and address the cultural and psychographic differences. The firms willing to enter in a new market must recognize the cultural profile of the region. In case of a merger between two companies belonging from different cultural background, the companies must respect each other’s cultural practices and customs. This can be achieved by sharing a common goal and knowledge area which will allow the firms to streamline their focus on the organizational vision. Foreign direct investments often fail to produce the desired result because the firms fail to make a proper cross cultural communication (Roberts, 2014). Changes in the Global Business practices Owing to the advent of globalization dramatic changes has taken place in the global business practices. Multinational firms like Intel, Microsoft, IBM, etc, have outsourced employees and operational activities from different corners of the world. This as a result has lead to shifting of jobs and certain changes in the organizational structures (IMF, 2008). Several business alliances among international firms have taken place which has changed how an organization operates its business activities. The firms have adapted themselves bases on the opportunities and threats posed by globalization. The organizations that have successfully recognized the changing trends of the global market scenario have been able to leverage the influence of globalization and have successfully improved their performance (Griffith and Yalcinkaya, 2010). The undeniable effect of the globalization has improved the international relationship as well. In order to improve the marketing performance in the era of globalization the multinational firms has focused on building relationship with their business partners, customers, suppliers and every entity in the value chain. Thus the marketing activities have shifted towards a customer centric approach (Stiglitz, 2012). Moreover, globalization has compelled the multinational firms to focus on relationship marketing and cross cultural communication. The strategic alliance between the organizations has led to formation of a lateral partnership between the market competitors. It has also led to the relationship build up within the organizations (Akaka and Alden, 2010). The relational exchanges involved in the relational marketing in case of in case of international trade can be distinguished in to four categories which are supplier partnership, lateral partnership, buyer partnership and internal partnership. The supplier partnership is focused on building up a good transactional relationship with the suppliers of the host countries. This not only improves the marketing and business activities of the firm but also improves the financial condition of the supplier firms (Lechner and Boli, 2014). The Lateral relationship is the business partnership and alliances between different firms operating in the same industry. This as a result helps the companies to focus on mutual benefits by creating a symbiotic relationship. The lateral partnership also exists between the firms and the local government. The government is always concerned about the impact of the international marketing on the local economy and culture (Murray and Overton, 2014). Therefore a good relationship with the government will allow the firms to achieve a sustainable business operation in the host nation. The buyer partnership involves addressing the needs of the customers by recognizing the different consumption and behavioural patterns in them. The internal partnership suggests that the company must maintain a good relationship with the foreign subsidiaries and various offshore departments to ensure a seamless running of business activities (Eriksen, T. H., 2014). Conclusion Globalization has opened up new opportunities for firms to access the global business market and expand their business through overseas operations. The concept of FDI has allowed the firms to make overseas investments and shift business operations to foreign countries. This as a result increases the revenue generation of the company and improves the employment status of the host country (Ritzer and Dean, 2014). However, it also induces certain negative effects like job displacement form the home country and cannibalization of the local firms of the host country. Therefore overseas activities need to be commenced while maintaining a proper balance so that both the homes as well as the host country are benefited. Modern International marketing strategies developed under the influence of Globalization focuses on the cross cultural management (Alimien and Kuvykait, 2008). Although different countries are brought closer due to globalization, but they still differ on the grounds of cultural variation. Therefore, it is imperative that the multinational firms should recognize and address the cultural background of the host countries which will allow them to design their marketing activities specific to that cultural background. This as a result will ensure growth and long term sustainability for the company. Reference List Akaka, M.A. and Alden, D.L., 2010, Global brand positioning and perceptions: international advertising and global consumer culture, International Journal of Advertising, 29(12), pp.37-56. Alimien, M. and Kuvykait, R., 2008. Standardization/Adaptation of Marketing Solutions in Companies Operating in Foreign Markets: An Integrated Approach. Engineering Economics, 56 (1), pp. 37-47. Eriksen, T. H., 2014. Globalization: the key concepts. Edinburgh: A&C Black. Geert-Hofstede, 2014. Organisational Culture & Change Management. [online] Available at: [Accessed on 17 February 2015] Griffith, D.A. and Yalcinkaya, G., 2010. Resource-advantage theory: a foundation for new insights into global advertising research. International Journal of Advertising, 29(1), pp. 15-36. IMF, 2008. Globalization: A Brief Overview. Issues Brief, 2 Jiang, J. and Wei, R., 2012. Influences of culture and market convergence on the international advertising strategies of multinational corporations in North America, Europe and Asia. International Marketing Review, 29(3), pp. 597-622. Lechner, F. J., and Boli, J., 2014. The globalization reader. New Jersey: John Wiley & Sons. Matthews, L.C. and Thakkar, B., 2012. The Impact of Globalization on Cross-Cultural Communication. Globalization – Education and Management Agendas, 13, pp.325-338. Minor, M. S., 2015. The Geographical Focus of International Marketing Research, 1982–1991. In Proceedings of the 1993 Academy of Marketing Science (AMS) Annual Conference. pp. 199-202. Murray, W. E., and Overton, J., 2014. Geographies of globalization. London: Routledge. National Geographic, 2015. Globalization. [online] Available at: [Accessed on 17 February 2015] Ritzer, G. and Dean, P., 2014. Globalization: A basic text. New Jersey: John Wiley & Son Ritzer, G., 2008. The Blackwell Companion to Globalization. New York: John Wiley & Sons. Roberts, R. E., 2014. Introduction to International Marketing; Case study 1: Using social networking tools for International marketing. New Jersey: John Wiley & Sons. Rowntree, L., Price, W. and Veregin, H., (2015). Diversity amid globalization. World Regions. 45-60. Soares, A.M., Farhangmehr, M. and Shoham, A., 2006. Hofstedes dimensions of culture in international marketing studies. Journal of Business Research, 60, pp.277–284. Stiglitz, J., 2012. Globalization and its Discontents. New Delhi: Penguin. WHO, 2014. Globalization. [online] Available at: [Accessed on 17 February 2015] Additional Reading 1) Abeles, T.P., 2001.The Impact of Globalization, On the Horizon, 9 (2) pp.2-4 This paper is based on the impact of globalization on the educational institutes and how the institutes have adapted to the changing market environment. 2) Ali, A.J., 2014. Globalization and inequalities, International Journal of Commerce and Management, 24(2), pp.114 – 118 The main purpose of this article is to highlight the relationship between globalization and income inequalities. The paper investigates briefly the forces that make income inequalities within a nation or between advanced and developing countries a lingering problem. 3) Ali, A.J., 2008. Globalization: where do we go from here?, International Journal of Commerce and Management, 18 (4) This paper highlights the current global business events and the severity of the credit crisis to prove with certainty that the market mechanism is not as beneficial as it was once thought. It focuses on the relevancy of Adam Smith’s “invisible hand” in the modern global business environment. 4) Gorodnichenko, Y., Svejnar, J. And Terrell, K., 2008. Globalization and Innovation in Emerging Markets. Institute for the Study of Labor. January. Globalization brings opportunities and pressures for domestic firms in emerging market economies to innovate and improve their competitive position. Using recent data on firms in 27 transition economies, the authors have tested for the effects of globalization through the impact of increased competition and foreign direct investment on domestic firms’ efforts to raise their capability (innovate) by upgrading their technology or their product/service (improving quality or developing a new one), taking into account firm heterogeneity. 5) Piasecki, R., and Wolnicki, M., 2004. The evolution of development economics and globalization, International Journal of Social Economics, 31 (3), pp.300 – 314 This paper is based on historical data that highlights the procedural approach of the evolution of globalization over the past few decades. Read More