Deals with International marketing environment

1. 1. Explain the role of government in international trade, the various levels of economic
integration, and the impact on international marketing.
2. Describe the economic and cultural elements of the international marketing environment and
explain how these factors affect marketing operations.
3. Summarize the major political and financial risks associated with international marketing.
4. Explain the strategic marketing planning process, strategies for entering foreign markets, and
considerations for subsequent market expansion.
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all
sides; APA format plus a reference page.
1. Integration would ensure high certainty of quality product because the
subsidiary companies have a common quality control system after the completion of
integration. This would result in the production of standard products and would
facilitate easier check for high quality. More investment can be allocated for quality
assurance activity and checks can be frequently carried out to reduce defects. It would
also lead to gains in the trade as it would lower the transaction cost between the
subsidiary companies, where the companies have centralized management and the
communication system is centralized, there by allowing it to be cheaper due to low
overhead expenses. Economy of scale is also experienced due to it and it leads to
reduction in marginal or incremental cost of operations. Global Strategic partnership
or GSP is the strategy adopted by many global business partners. It is different from
traditional Joint Venture JV in the way that GSP is an alliance between two global
partners and it is purely contractual relationship entered for strategic reason to gain
market share of the region. Unlike joint venture JV, there is no tie-up to develop
business internally. The GSP alliance takes place to share benefits by entering into a
co-operation from independent participants with every partner giving its share of
contribution either in terms of capital, technical know-how, marketing information etc.

2. The relationship between the partners is purely reciprocal and it is organized along
horizontal lines and not vertical one. This means that there is no scope for forward or
backward integration and alliance can take place on the line of horizontal integration. The
common drivers that influence GSP are: turbulence in markets, resource constraints,
uncertainty in markets, economies of scale, technological obsolescence, risk sharing and
consolidation of market position. . [Lorange ’91, Glaisler ’96 and Bennett ’97]
GSP firms are able to enhance cost efficiency by entering into strategic
alliances. This happens when relative efficiency of inputs and technology together
leverage the benefits of partnership. The partnership could be long lasting is it is tested on
the metrics of trust, risk and control. Once the trust and control are established the
partners can undertake far more risk to expand their business empire. [3] & [4]
[1] http://www.scribd.com/doc/33598505/Strategic-Partnership
[2] http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6W61-4M3BGVD-
2&_user=10&_coverDate=12%2F31%2F2007&_rdoc=1&_fmt=high&_orig=search&_sort
=d&_docanchor=&view=c&_searchStrId=1387768009&_rerunOrigin=google&_acct=C00
0050221&_version=1&_urlVersion=0&_userid=10&md5=9c432cc5c56cae81f5667cb53a
0d1e2a
2. The growth of International market is going to be phenomenal on all fronts and all round the
globe. In the field of Retail, Telecom, Processed foods, technology, consumer goods, global
market ids witnessing phenomenal growth. The growth of consumer durables and FMCG also is
not new to and lots of MNCs are already in the fray to serve their market especially Brazil,
Russia, India, and China (BRIC) Nations. It would be the economy with the highest rate of
growth in terms GDP. Presently, India is the economy with lowest organized retail outlets among
developing countries, but, within next decade or so, it would also be economy with highest rate

3. of growing organized Super Store and Malls in the world. The same is true for BRIC and
developing countries around the globe. All this can be attributed to the fastest growing neo rich
middle class phenomena in developing nations. Industrial growth rate of more than 8% per
annum should be the decision for MNCs to invest in global economy. While U.S and European
economy is pegged to grow at merely 2% - 3% annually, avenues have to be sought outside these
developed economies of the world.
The factor which had contributed to the growth of U.S economy since last few
years were influx of global talents and population due one of the best infrastructure available in
the world, seems to have reached the plateau. The population growth of just above 0% is not
helping this cause for the economy to grow at a fast pace. while Indian population growing more
than 2.1% is going to hold the largest numbers of youth in the world while would be known for
aging population, would require lots of talent to be imported from across the globe to even
sustain its current level of economic growth.
Cultural and Social environment: The cultural environment of U.S is one of the most
cosmopolitan and is responsible for growth of marketing environment for all sorts of items in
different product categories. To differentiate one culture from the other culture of rest of the world, it
is more important to understand whether the culture of the country is individualistic and highly
consumerist culture (U.S.A, Europe, Australia) or ethnic and group based culture (Asian countries).
The consumption per capita was so high in Western Countries until the crisis of 2008, that there was
power shows in terms of acquisition of latest electronic gazettes or for that matter consumer
durables. This culture can be called a culture where people believe in flaunting personal power and it
si very much characteristic of Western world. While Asian or Eastern cultural are more ethnic and of
late, it has started to move towards individualistic society. High consumption is new emerging

4. phenomenon, and global marketers need to view this discernible phenomenon in the countries like
China, India, Brazil, Argentina etc. But, the society by and large puts lots of emphasis on savings for
the future. The change in culture has to be watched with rise in level of education and income.
Consumers in developing economies are now willing to pay more for a product which gives more
value to their money. The rise in phenomenon like retailization, EMI, ULIPS (Financial products) E-
Commerce etc. are new to this neo culture, and are slowly becoming part of the entire western
phenomenon. With proliferation of higher education across the global boundary and large numbers
of MNCs operating across the global boundaries has transformed the culture of at least middle class
of developing world to a certain extent to that of western style. One of the most recent happenings in
metros and other big cities is number of a call centers, where employees converse with U.S
customers live. It has brought culture close to understanding the U.S. clients and has evolved cross
cultural phenomenon, wherein both citizen and U.S are being influenced and influencing the other
norms of the society in developing and even third world countries.
(http://zjrg.com/schedule-customs-import-duties/schedule-customs-import-
duties/1/0/3/1/sggjp/view.html)
3. When doing international business, mangers face several types of financial risks
which include commercial risks, political regulatory risks, Exchange Rate risks (what are the
exchange rates between the countries and future expectation of losses makes the decision more
risky and inflation risk. Countries in political turmoil or where countries are in constant conflict
or with unstable government (N. Korea, Myanmar) involves a greater amount of risks. Interest
rates charged by banks and financial institutions can also greatly affect the business prospects in
a country. Even more important is the changes in these rates. Libor when combined with
changing exchange rates can affect the bottom line of businesses.

5. http://smallbusiness.chron.com/significant-financial-risks-conducting-business-
internationally-4129.html
Political risks are the risks involving change in political environment. If
the tenure of a political rule in a country is volatile, it may adversely affect business
activity. This political risk can be of local governance or due to federal government at the
centre. There can ownership risk, wherein the property of the firm is threatened through
Expropriation (seizure of foreign assets by the government with payment of
compensation to the owners, where final amount to be transferred takes time and could be
less than the actual amount) Domestication (there is partial ownership transfer and
companies are urged to prioritize local production and large share of profits are required
to be retained within the country) or Confiscation (It is involuntary transfer of property to
the host country where no compensation is paid and thus poses as one of the most risky
situation for the investing firm). Similarly, there could be operating risk for the firm, if
the ongoing operations are threatened through changes in laws, environmental
standards, tax codes, terrorism, arms insurrection or wars. Transfer risk arises, when the
government of a particular country interferes with a firm’s ability to shift funds into and
out of the country. This is one of the reasons for many Multi-National firms to enter
China but India has not been able to draw similar response. Although, both the country is
similarly placed on growth fronts.
http://www.memoireonline.com/08/09/2610/Impact-of-political-risks-in-international-
marketing-the-case-of-West-Africa.html

6. 4 The four stages in global marketing strategy are:
Defining the global marketing mission: Global mission defines the major target
markets to be attacked, the way these markets are to be segmented and then
competitive position to be adopted in each market. The mission establishes the
parameters within which global marketing strategic decisions are to be made.
Segmentation strategies: It chooses among three alternatives. One is to develop
Global market segment, where markets are segmented according to variables that
ignore national boundaries. The strategy concentrates more on identifying
similarities in customer needs across countries rather than emphasizing on country
differences. The second alternative involves serving the same market segments in
multiple markets but on a national basis. Here, the segmentation is carried out on
the basis of geography/nationality/region. The basis of differentiation is culture
rather than similarities between countries. And lastly, it could be the mixed
market segment strategy, which is the combination of the two strategies
mentioned. It happens because the national market of country may be large
enough for the company to go for individualization. Other small countries can
also be clustered into similar market segments.
Competitive positioning: Competitive positioning within each market
and marketing mix:
Global marketing strategy must incorporate an appropriate an appropriate degree of co-
ordination and integration of geographically dispersed or concentrated marketing
activities. For the entry into global market, there are basically three stages which strategic
challenges for entry. At the initial stage, it is the international market expansion where

7. the main strategic thrust for the business is to include the choice of the country to enter,
mode of entry adopted and the extent to which the firm would decide to standardize the
product or would go for the adaptation as per the global market needs of the individual
country. In the second stage, the company starts looking for the new directions for growth
and expansion. The focus in this stage is to build market penetration in countries where
the company is already located. At this stage expansion efforts are guided mainly by local
management on a country by country or national perspective basis. The third phase is
taken country by country approach, where markets are viewed as a set of interrelated and
interdependent entities. Strategically, global market are becoming integrated and
interlinked (Douglas Craig, 1989)
“Global marketing is not a blind adherence to standardization of all
marketing elements for its own sake, but a different, global approach
to developing marketing strategy and programs that blends flexibility
with uniformity (Yip, 1992).