Seven Forces of International Marketing Environment, Challenges and Opportunities in Australia for International Marketers - Example

International Marketing Environment Assessment in Australia Name Institution Course Tutor Date Executive Summary Brought together by satellite communications as well as global companies, consumers’ need for variety of goods is always increasing across the world. International trade is a significant economic activity. To realize even more benefits as a result of changes in international marketing environment, free trade must be encouraged throughout the international marketplace. This report provides an analysis of international marketing environment in Australia and constitutes three main parts; introduction, main body and conclusion. The international marketing environment is discussed in respect to the economic, financial, cultural, social, political, legal and technological forces. Australia has experienced economic growth for the past decades and its political situation is stable. Although, there are some trade restrictions in Australia, the country encourages foreign investment which has also contributed to economic growth. Australia is a multi-ethnic nation with different social groups. There is increased adaptation to new technologies within business sector and amount the population. International marketers are facing the challenges of reaching the multi-ethic population in Australia and adapting to its culture. However, there are several opportunities in Australia for international marketers which include prevalence of knew technologies, reduced tariffs, political stability and economic growth. Australia is open to international marketing and has the potential to attract more foreign investors. Table of Contents Executive Summary 2 Table of Contents 3 Introduction 3 Economic 4 Financial 5 Cultural 6 Social 7 Political 7 Legal 8 Technological forces 9 References 12 Introduction International marketing is defined as the performance of marketing activities on a globally, normally across two or more countries. International marketing does not often involve the physical movement of goods across borders; instead it occurs whenever marketing decisions that involve two or more countries are made (Marketing Association of Australia and New Zealand, 2010). However, the international marketing environment comprise of assemblages of demands and restriction which organizations face as they try to compete and grow. To discover customers’ value in international markets demands a refined understanding of differentiated expressions concerning customer needs that are often determined by culture. In addition, the duty of communicating these values as well as their delivery in global markets is complex, and requires a better understanding of environment as well as its impacts (Gogolova, 2008). This report involves an analysis of international marketing environment in Australia with focus on seven forces of international marketing environment. The report also discusses the challenges and opportunities that exist in Australia for international marketers. International marketing environment in Australia International marketing environment comprises of various elements and most of them exist outside the control of business organizations. However, these elements are normally discussed as well as integrated in the decision-making process of firms (Muhlbacher, Helmuth and Dahringer, 2006). The forces of international marketing environment in Australia include economic, financial, cultural, social, political, legal and technological factors which are analyzed in detail below. Economic Every international market is unique and consumption patterns always change relative to the wealth of consumers in different market segments (Czinkota, 2012). For firms planning to conduct business in Australia, they have to consider the economic environment in the country. Australia is considered as one of the leading nations in economic growth across the world. It is also a strong OECD performer as it conducted extensive economic reform as well as ensured that its macroeconomic policies are designed in an organized framework (Monger, 2003). Contrary to other industrialized countries, Australia’s domestic growth has not been affected by the international cyclical downtown. This is because the economy of Australia has been strengthened by strong terms of trade, low interest rates, and growth in productivity, high level of international business dealings as well as consumer confidence. Consumer price inflation has been maintained at the same level with the Reserve Bank of Australia and the level of unemployment has reduced considerably (Monger, 2003). In addition, Monger (2003) notes that the economy of Australia has experienced major reform over the past decades. Changes in Australian economy include reductions in tariffs as well as other trade barriers, deregulation of the financial system, privatization of enterprises, change from determining employee remuneration centrally, development of contestable markets in industries like transport and energy that were initially monopolized, and elimination of most restrictions relating to foreign investment. According to Baker Tilly International Limited (2013) Australia’s GDP per capita stands at US$40,800 as estimated in 2011, GDP real growth rate is 2.1% and unemployment of 5.1% all estimated in 2011. Financial Australia uses Australian dollar (AU$) as its formal currency. The currency is freely convertible as the rates of exchange are determined by the international demand and supply. Australia has an anti-money laundering body called AUSTRAC that also specializes in regulating counter-terrorism financing as well as acting as a specialist financial intelligence unit in Australia. Usually, international transfer of funds or transactions that involve cash of AU$10,000 and more as well as suspicious transactions are reported by reporting entities like banks to AUSTRAC. The Reserve Bank of Australia (RBA) manages the monetary policy and regulates payments system as well as system stability. In addition, commercial banks that operates in Australia gives majority of both short and medium-term financing. Banks in Australia are free to involve in almost all types of financial services (Baker Tilly International Limited, 2013). Cultural Culture, according to Gogolova (2008) is defined as the standards of perception, evaluation, beliefs as well as behaviour common to members of a particular social setting. However, the traditional definition of culture revolves around the opinion that culture comprise of rituals, symbols, values, thoughts and beliefs learned and shared by members of a social group, and are passed on from one generation to another. The official language in Australia is considered to be English. Many people who speak English often assume that understanding Australian dialect may not take them time, but they find it difficult to always comprehend or even assimilate the hybrid English version developed in Australia over several years. It has to be noted that Australia was settled mainly by the British and therefore the Roman Catholic and Anglican faiths dominates the Australian religious sector. However, other religious groups include Atheism or agnosticism, Muslim, Buddhist and other Christian (Baker Tilly International Limited, 2013). There also exist aboriginal inhabitants in Australia who are commonly called Aboriginals and Torres Straits Islanders who migrated in the country around 40,000 years ago. Most of them speak different languages. On the other hand, Aussies speak an English dialect referred to as ‘Strine’. Generally, men are not allowed to touch or hug fellow men and handshake is considered the right form of physical contact among this group. It is a common practice for strangers in Australia to greet each other and engage in a lively conversation. Social According to Marketing Association of Australia and New Zealand (2010) social factors are considered to be less predictable influences the international marketing environment. As a result, they have always frustrated several international marketers. In Australia, social institutions like religion, family, the media, government, school and corporations affect the ways in which Australians relate to each other. They help people in Australia organize their activities to be able to live in agreement with one another and also teach acceptable behaviour among the Australians (Bradley, 2005). Australians often do not discriminate on grounds of social classes and this is why tipping is considered offensive. A person who tips is perceived to imply to be on a higher social class than the person. The tipping rule is applicable to hotel staff, sky caps, cab drivers and restaurant servers. However, it is known that Westerners are used to giving tips especially in the United States as well as other countries, thus tips offered by tourists in Australia are gratefully accepted (Monger, 2003). The business attire for men in Australia is dark suits and ties and not sport coats and trousers but this is put on depending on the weather. On the other hand, women are expected to wear suits of professional dresses. However, business dress could be less formal in tropical regions unlike in cities. Political The political system of nations is an important consideration in international marketing. Usually, powerful groups of stakeholders within a nation and sometimes outside the borders of a country influences how the country is governed, the policies the government follows and to some extent the legal regulations that result from such policies (Gogolova, 2008). Australia’s political situation is characterized by a parliamentary democratic system that consists of three levels of government, which are the Federal, State and Local government. At the federal level government, there are two houses of parliament that include the Senate and the House of Representative. The government of Australia is headed by the Prime Minister, the party leader of the party with majority seats in the House of Representatives. However, the head of state in Australia is the Queen and is represented by the Governor-General (Baker Tilly International Limited, 2013). Australia has a history of stable political transition which makes its environment favorable for foreign investment. Legal Legal restrictions have to be considered when developing an international marketing strategy. For instance, product standards provided by the local governments have to be observed. Tariffs as well as taxes may need adjusting pricing. In addition, specific restrictions may affect international marketing decisions (Marketing Association of Australia and New Zealand, 2010). According to Australian Timber Importers Federation (2008) customs authorities in Australia enforce strict regulations regarding temporary importation from countries that supply agricultural as well as wood products. It also imposes extremely strict quarantine standards for different products, pets and animals. In addition, the Fair Work Act 2009 offers minimum terms as well as conditions of employment in Australia which has to be conducted through the National Employment Standards (NES). Being a member of the World Trade Organization (WTO), Australia is set not to increase tariffs to levels above those agreed in trade discussions. Thus, tariffs that are imposed on goods imported from other countries are normally lower than commissioned by WTO (Baker Tilly International Limited, 2013). Technological forces There has been increase in diffusion of technology into major business processes as well as into consumers’ lifestyles more so in industrialized countries like Australia (Gogolova, 2008). Firms in Australia are users as well as great adapters of major technologies and can be referred to as system integrators. This provides capability for Australia to add value to the economy by integrating resources, systems and technologies. Most of this technology is used in project management, financial and risk assessment, problem solving, logistics and adaptation of certain applications. However, the adaptation and development of knowledge related to technologies as well as its application varies considerably. Evidence suggests that most firms in Australia actively search for new technologies. It is also suggested that Australians are ranked among the top intensive as well as rapid users of current technologies (Scott-Kemmis, 2004). Econometric analysis conducted by Dowrick and Day approximated that around half of the productivity growth in Australia’s market sector was attributed to international technology transfer (Dowrick and Day 2003; cited in Scott-Kemmis, 2004). Current challenges for international marketers While many international companies are realizing the potential that Australia market possess, there are possible challenges the international marketers are likely to encounter as they perform their marketing activities in Australia. International marketers encounter challenge in accessing a multi-ethnic Australia that has he potential for huge returns (Chan and Ahmed, 2006). This is in consideration of the fact that ethnic marketing is yet to mature in Australia. If effectively conducted, ethnic marketing has the potential to establish new approaches that uphold Australian diversity as their similarities are enjoyed. Generally, international marketers must establish an ongoing relationship with ethnic minorities which requires long-term commitments. Also, to some extent international marketers whose first language is not English may get it challenging to reach the target market in Australia. This is because the official language in Australia is English is commonly used by Australians (Monger, 2003). Australia has different culture from other countries and it is obvious that international marketers seeking to establish business in Australia are likely to experience cultural shock. Adapting to new culture might be very challenging as Australians have their own values, beliefs and norms in regards to how the conduct business which are different from other countries. Opportunities for international marketers There are various opportunities for international marketers in Australia according to the above international marketing environment. Although, it has been indicated that international marketers who are familiar with English may encounter problems relating with Australian population, the issue of language barrier is not strongly manifested. In fact, most countries that deal do business dealings have knowledge about English language. Australia is situated in the region that experiences faster growth across the world. In addition, Australia experiences economic stability and growth which is evidenced in the increase in GDP (Baker Tilly International Limited, 2013). This is one of the greatest opportunities for international marketers as they are able to predict trends in market more accurately to make informed marketing decisions for their countries. The international marketing environment analysis indicates that the government of Australia imposes low tariffs to imports which increase trade relations with other countries (Marketing Association of Australia and New Zealand, 2010). International marketers can use this opportunity to build strong relationships with customers in Australia which may benefit their businesses in the long-run. The stable political environment in Australia is also an opportunity to international marketers. With such political situation, it is absolutely favourable to conduct marketing activities as the target population is free from political risks and business dealings are performed without any fear if instability in the country. Another opportunity the international marketers have in Australia is adaption of new technologies among the Australian population. The biggest population in Australia uses internet services and other modern technologies which can be used to pass marketing information to the target market. Conclusion In conclusion, Australia is a country that is open to international trade relationships given its location. The international marketing environment analysis shows that Australia’s economy has tremendously grown with a high level of GDP. People in Australia exhibit friendly social life with less emphasis on social class. Australia experiences political stability and is based on a parliamentary democratic system that comprise of eth Federal, State and Local governments. The legal system in Australia is flexible and the governments’ regulations are designed to encourage free trade. The country has embraced new technology in its business industry which has increased opportunity for international marketers. Although, there are some challenges for international marketers like accessing multi-ethnic Australian market and cultural differences, the possible opportunities to international marketers in Australia include reduced language barrier, strategic location of Australia, political stability and low tariffs. Therefore, Australia suited for international marketing. References Australia Timber Importers Federation, 2008 “International Timber Trade Federation Day–Responding to changing market requirements”. Australian situation report. Baker Tilly International, 2013 “Doing Business in Australia”. Bradley, F 2005 “International Marketing Strategy. Firth edition, Prentice Hall University College Dublin”, ISBN: 978-0-273-68688-0. Chan, A.M, & Ahmed, F 2006 “Ethnic Marketing in Australia”, international Review of Business Research Papers”, 2(4), pp.10-12. Czinkota, M. R 2012 “International marketing”, Cengage Learning. Gogolova, M 2008 “International Marketing Environment”, University of Zilina, Slovak Republic. Marketing Association of Australia and New Zealand, 2010 “International Marketing and International Marketing Management”. Monger, B 2003 “International Marketing: Doing Business in Australia”, The Maanz Marketing Skills Program. Muhlbacher, Helmuth, L. & Dahringer, L 2006 “International Marketing: A Global Perspective. 3rd Ed. London: Thomson Learning, ISBN: 1-84480-132-2. Scott-Kemmis, D. (2004). Innovation systems in Australia. Growth, (53), 45. Read More