Environmental Factors for International Marketing

Environmental Factors for International merchandiseA Key Challenge For International Marketers Is To Develop A veracious Understanding Of The International Business Environment. Identify The Key Environmental Factors That Are Of Importance To The Success Of International Marketing And Discuss Their Impacts On International Marketing Decisions.1. IntroductionDue to technological advances and rapid economic festering, the level of world trade has increased tump overably over the last four decades. Merchandise exports, for instance, grew from a repute of $160 billion in 1963 to almost $16,000 billion in 2008 (WTO, 2009). Motivated by the many rewards and opportunities internationalistic exchange offers, more(prenominal) and more countries and companies endure become largely involved in international tradeing. However, the implications entailed in this process of planning and conducting transactions across national borders atomic number 18 rather contrastive to those companie s normally wargon to face when conducting domestic trade (Czinkota Ronkainen, 2007, p.4). Differences in cultures, economic conditions, and governmental systems amongst countries mean that the foodstuffing activities of companies taking their trading operations outside national borders atomic number 18 alter by a new series of purlieual factors. In order to be successful at international marketing, it is vital that marketers let on a pure(a) understanding of these factors as they impact the international business environment and back away them into bank note when carrying out decisions on marketing activities (Hollensen, 2007). Consequently, this essay aims to identify both these profound environmental factors and the effects they have on the international marketers decision making. The essay will first off consider the factors that derive from culture, much(prenominal) as language and religion. Secondly, the frugal ingredients that influence the international busin ess environment will be examined. Finally, the essay will take into consideration legal and political factors.2. Cultural Environmentharmonize to Hofstede (1980), culture is the collective programming of the mind which distinguishes the members of one human group from another. Given that culture affects consumers behaviour, understanding cultural dissimilarities is crucial for the success of international marketing (Usunier Lee, 2009).Hall (1976) states that in that respect are high setting cultures, such as the Japanese one, where the context is equally as important as the wrangling utilise, and low context cultures, such as the North American one, where communication is often solely conveyed in words. Companies drive to be sensible of and adapt their marketing concepts to these differences as otherwise it can easily lead to misinterpretations in communication. They get hold of to take into account the element of language which consists of a verbal (the words used and how they are spoken) and a non-verbal part (e.g. gestures and eye contact). The challenge for them is to attain both a thorough understanding of the language in terms of its technicality and the context in which it is used (Hollensen, 2007). In Japan, for example, IBM changed the classification number of its series 44 computer as the pronunciation for the word four is similar to the word final stage (Czinkota Ronkainen, 2007).A further important source of culture is religion. Marketers remove to be conscious of the differences between the briny types of religion as well as the variations indoors them (Hollensen, 2007). In Hinduism, for example, peoples capacity of inhalation is determined by their status. Companies need to take this into account when making planning their marketing strategy. Also, as the main holidays are linked to religion marketers need to consider when they take place when planning marketing programs. The exchange of Christmas gifts, for example, occurs on 6th December in the Netherlands, whereas in other countries they are opened on 24th or 25th December (Czinkota Ronkainen, 2007).Also, companies need to take into account the values and attitudes of countries. The more these shared beliefs or group norms are embedded into the culture the more care companies have to take when implementing marketing activities (Blackwell et al., 2005). Societies that place a high value on tradition are more reluctant to change and may perceive foreign companies with scepticism (Hollensen, 2007). In Japan, for example, many bureaucrats feel that the consumption of foreign products is disloyal to their country (Czinkota Ronkainen, 2007).Another element of culture is aesthetics which determines what people find appropriate and what not. This can differ considerably from one culture to another meaning that marketers need to be aware of them and adapt their marketing concepts accordingly (Usunier Lee, 2009). Henkels FA soap, for example, modified its advert isement spot for the North American market by having the model wear a bathing befit instead of being naked, as in the ad for the European market (Czinkota Ronkainen, 2007).Furthermore, it is important that managers understand the different manners and customs of countries (Usunier Lee, 2009). General Foods orange juice Tang, for example, is marketed as a breakfast drink in the United States, whereas in France it is positioned as a refreshment as in that respect is no habit in drinking orange juice at breakfast (Czinkota Ronkainen, 2007).There is also the element of education that needs to be taken into account. When designing products or function, for example, companies need to be aware of the level of intelligence of the consumer so they can adapt the complexity of the product or the service to the user (Hollensen, 2007).According to Dallas (1995), the best elan for companies to overcome these cultural obstacles is to embrace the local culture. They need to take a localised approach by adjusting products to the markets, building relationships with locals and employing them. This admits marketers to gain information and experience at firsthand, attain an in-depth understanding of what influence consumer behaviour in the market, and cooperate efficiently with employees, the government, and other local partners (Usunier Lee, 2009). This would also allow companies to avoid accusations of cultural imperialism, which happens when marketing approaches are seen as too radical. McDonalds and Coca-Cola, for example, have been accused of forcing American standpoints into other cultures and consequently had to deal with boycotts from consumers (Czinkota Ronkainen, 2007).3. Economic EnvironmentInternational marketers equally need to be aware of economic factors when parturiency marketing decisions (Hollensen, 2007).Population figures provide a basic indication of the attractiveness of the market in terms of size and potential growth by looking at life expectan cy, age distribution and population growth. They allow marketers to identify the segments and the geographical areas they should target (Czinkota Ronkainen, 2007). Low population growth rates, for example, normally characterise highly economically developed countries with good disposal income (Bradley, 1999).Also, income levels need to be taken into account as they provide an indication of the purchasing force of the market and allow companies to adapt their marketing concepts accordingly (Hollensen, 2007). A packaged goods company, for example, brought out a more economic version of its product in countries that have lower income levels by using cheaper raw materials. Nonetheless, marketers should not greatly rely on this indicator as there are certain types of products that because of the high value they create for the consumer are not affected by income levels. In China, for example, due to being a good upgrade for bicycles and a cheap alternative for cars, gross revenue of mot orcycles are high in the country despite the fact that the price of the product represents a high proportion of salary (Czinkota Ronkainen, 2007).Besides, marketers need to consider consumption pattern which allow them to identify the proportion of income that consumers spend on necessities, including food and rent, and consequently the proportion that is left to spend on less important areas of consumption, such as household goods and leisure (Bradley, 1999 Hollensen, 2007). Given that purchases in these areas can be cancelled or postponed unexpectedly, companies can determine the level of confidence in the market (Czinkota Ronkainen, 2007).Another important economical element is inflation as it backbreakingly affects consumers buying habits and ability to buy. In markets with high inflation rates companies need to transfer their product making it less expensive to produce so that they can lower their prices to respond to customer needs and sustain demand (Hollensen, 2007).In a ddition, marketers need to consider the availability and quality of local infrastructure. Transportation, communication, and energy networks have an important effect on the companys functions. They also provide an indication for the demand of industrial products and services (Bradley, 1999 Hollensen, 2007). The fact that two billion people live without electricity and that the access to a telephone is very limited in Asia, for example, informs industrial products and services companies that there are important marketing opportunities for them there (Czinkota Ronkainen, 2007).Furthermore, companies need to consider regional economic integrations as they can create both opportunities and benefits, and threats and problems for them. The European Union, for example, provides many benefits to companies operate within Europe, such as economies of scale thanks to the large single market. For non-EU companies, however, this integration may create problems (Hollensen, 2007). With the aim o f protecting European farmers, for example, the EU has without delay and again imposed restrictions on the inflow of certain agricultural goods from the U.S. (Czinkota Ronkainen, 2007).A thorough understanding of these factors allows companies to obtain a good assessment of the market and reduces the orifice of implementing marketing concepts that could have disastrous results (Czinkota Ronkainen, 2007).4. Political And Legal EnvironmentThe political and legal environment of the companys base of operations country, its host country and the general international environment also has important effects on the marketing activities of international companies (Hollensen, 2007).The politics and regulations of the companys home country can determine its opportunities outside national borders (Hollensen, 2007). One of the main types of regulation that international marketers need to be aware of are embargoes and sanctions which are used to distort the free flow of trade. They need to kn ow where they are applicable and take them into account when planning marketing activities so that they do not breach them and face subsequent sanctions (Czinkota Ronkainen, 2007). Governments also employ export and import run into systems. Export tames prevent or delay companies from selling their products in certain countries whilst import reserves are used to protect and stimulate the domestic market. Marketers need to take them into account so they know where the company can do business and where it can obtain its supply from. Finally, governments may induct special measures to ensure that their companies turn out in a correct manner in the international business environment. One of the major areas concerned is boycott, which is when companies reject to conduct business with someone (Hollensen, 2007). The governments control in this area can force companies to judge whether to stop transactions and lose profit or to continue trading and pay charges. The Arab nations, for e xample, have blacklisted a number of companies who conduct business with Israel. In response, the United States imposed several laws to prevent U.S. companies from complying with the Arab boycott as it has political ties with Israel. Companies may lose out to firms whose home country does not employ such measures (Czinkota Ronkainen, 2007). Nonetheless, according to Czinkota and Ronkainen (2007), it is best to avoid adopting inappropriate behaviour as it may lead to damages to the companys reputation, boycotts by consumers and cancellation of transactions. This ability cost the company more money than it gained through adopting such behaviour.Companies are also affected by the legal and political environment of the host country. Marketers firstly need to determine the level of political risk, i.e. the likelihood of political changes that could adversely affect the company, by looking at the host countrys government, its political actions and its stability (Czinkota Ronkainen, 200 7). U.S. companies, for example, who are a major target for terrorist attacks because of their home countrys actions and capitalistic image, need to particularly take into account the stability of the host country (Harvey, 1993). Marketers also need to be aware of the actions of the host countrys government. Price controls, for example, which are used by the government to respond to inflation, can put international companies into a difficult situation where it has to decide whether to stop their operations or to carry on in the hope that the controls will be changed and they can regain the sacrificed profits (Frank, 1984). Companies also need to be familiar with the laws of the host country and the restraints they place on their operations. In France, Canada, Brazil, and Indonesia, for example, there are laws that restrict imports of U.S. entertainment to protect and preserve their cultural industries (Czinkota Ronkainen, 2007). However there are also laws that are aimed at assisti ng companies with their international operations, e.g. subsidies (Hollensen, 2007). shortsightedages of regulations can also create problems for companies, e.g. the lack of intellectual property rights in China (Czinkota Ronkainen, 2007). Therefore, companies need to attain a good understanding of how the countrys legal and political systems work to reduce the impact of the problems they cause. By undertaking in-depth research on the countrys history, culture and political setting before entering it allows companies to avoid making investments that could have disastrous outcomes. An in-depth knowledge of the country would also allow the company to anticipate, plan and adapt into the local community. Hiring locally, undertaking local charity work and joint ventures with local businesses show the government that the company cares about the local community and does not just see it as an object it can exploit. This reduces the amount of interference by the government giving the compan y more freedom in its operations (Czinkota Ronkainen, 2007 Hollensen, 2007).Marketers must also consider the overall international business environment. Relations between countries and governments have important effects on the operations of international companies. The U.S. governments differences with South Africa, for example, forced U.S. companies to leave their operations in the country. Relations between home and host countries are governed by bilateral agreements, as well as by multilateral ones between sets of countries (Hollensen, 2007). Marketers need to continuously monitor the international political environment keeping up to date with political affairs so that they can anticipate changes and plan and diversify their marketing strategy accordingly. In terms of the legal environment, managers need to be aware of certain laws and treaties which because of the respect they receive from many countries have a strong influence on the way companies operate (Czinkota Ronkainen , 2007). The World Trade Organization, for example, gives an outline on the behaviour that it finds acceptable from its member states (WTO, 2010).5. ConclusionInternational marketers are set about with quite many and quite a range of factors in the international business environment that can have profound effects on their marketing activities. They need to be aware of the main sources of culture, such as religion, language, education, values and attitudes, aesthetics, and customs and manners. Given that they are embedded into societies and individuals it is necessary for companies to adapt their marketing activities to the market and not force a different standpoint on the consumer. International marketers also need to consider economical factors, such as population, income, inflation, economic integrations and infrastructure. They allow them to assess the attractiveness of the market and identify the segments and the geographical areas they should target. This reduces the risk of investing money in marketing activities in markets that are unprofitable. Finally, companies need to take into account the legal and political factors affecting the home country, the host country, as well as the overall international business environment. They need to be aware of the different governments, their political actions, their stability, and their relation with other countries, and constantly monitor them by keeping up to date with economic affairs around the world. This allows them to determine the level of political risk so that they can anticipate and plan for threats and take advantage of opportunities political changes offer them.6. BibliographyBlackwell, R. D., Miniard, P. W. and Engel, J. F. (2000). Consumer Behaviour. London Thomson-South WesternBradley, F. (1999). International Marketing Strategy. London apprentice Hall.Czinkota, M.R. and Ronkainen, I.A. (2007). International Marketing. London Thomson-South Western.Dallas, S. (15 May 1995). Rule no. 1 Dont diss t he locals. Business Week online. 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