Environmental Factors for International Marketing

surroundal Factors for supranational MarketingA Key Challenge For world-wide Marketers Is To Develop A Good 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 frugal growth, the level of world trade has increased matterably over the closing curtain four decades. Merchandise exportations, for instance, grew from a value of $160 billion in 1963 to almost $16,000 billion in 2008 (WTO, 2009). Motivated by the many rewards and opportunities world-wideist exchange offers, more(prenominal) and more countries and companies decl ar become largely complex in international merchandising. However, the implications entailed in this process of course of studyning and conducting transactions crosswise national borders argon rather different to those companies usu ally be possessed of to stage when conducting domestic marketplaceing (Czinkota Ronkainen, 2007, p.4). Differences in assimilations, economic conditions, and governmental systems amongst countries mean that the marketing activities of companies taking their trading operations extinctside national borders be affected by a new series of milieual factors. In order to be successful at international marketing, it is vital that marketers attain a everlasting(a) misgiving of these factors as they impact the international business environment and groom them into card when carrying out ratiocinations on marketing activities (Hollensen, 2007). Consequently, this essay amazes to identify some(prenominal) these fundamental environmental factors and the effects they consider on the international marketers decision making. The essay impart firstly consider the factors that derive from finale, such as language and religion. Secondly, the economical elements that influence t he international business environment will be examined. Finally, the essay will scoop up into consideration legal and policy-making factors.2. Cultural EnvironmentAccording to Hofstede (1980), culture is the collective programming of the drumhead which distinguishes the members of one human group from another. Given that culture affects consumers behaviour, understanding heathenish dis convertibleities is crucial for the success of international marketing (Usunier Lee, 2009).Hall (1976) states that in that location are senior high linguistic mise en scene cultures, such as the Japanese one, where the context is every bit as Copernican as the words use, and low context cultures, such as the noth Ameri earth-closet one, where communication is often but conveyed in words. Companies affect to be sensible of and adapt their marketing concepts to these differences as otherwise it tail assembly easily lead to misinterpretations in communication. They call for to take into t ale 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 some(prenominal) a thorough understanding of the language in terms of its puniness and the context in which it is used (Hollensen, 2007). In Japan, for example, IBM changed the classification number of its series 44 com coucher as the pronunciation for the word four is similar to the word death (Czinkota Ronkainen, 2007).A further meaning(a) source of culture is religion. Marketers indigence to be aware(p) of the differences between the main(prenominal) types of religion as swell up as the variations within them (Hollensen, 2007). In Hinduism, for example, peoples capacity of consumption is laid by their status. Companies exigency to take this into account when making thinkning their marketing strategy. Also, as the main holidays are linked to religion marketers deal to consider when they take roam when devicening marketing programs. The exchange of Christmas gifts, for example, occurs on sixth December in the Netherlands, whereas in other countries they are opened on 24th or 25th December (Czinkota Ronkainen, 2007).Also, companies posit to take into account the values and attitudes of countries. The more these shared beliefs or group norms are enter into the culture the more care companies restrain to take when implementing marketing activities (Blackwell et al., 2005). Societies that place a high value on tradition are more reluctant to change and whitethorn perceive foreign companies with scepticism (Hollensen, 2007). In Japan, for example, many bureaucrats feel that the consumption of foreign convergences is disloyal to their country (Czinkota Ronkainen, 2007).another(prenominal) element of culture is aesthetics which visualizes what people find appropriate and what not. This can differ considerably from one culture to another meaning that marketers mo tivation to be aware of them and adapt their marketing concepts accordingly (Usunier Lee, 2009). Henkels FA soap, for example, modified its publicizing spot for the North American market by having the model split up a bathing suit instead of being naked, as in the ad for the European market (Czinkota Ronkainen, 2007).Furthermore, it is important that managers understand the different discretion and customs of countries (Usunier Lee, 2009). General Foods orange juice Tang, for example, is marketed as a eat drink in the United States, whereas in France it is positioned as a refreshment as at that place is no habit in drinking orange juice at breakfast (Czinkota Ronkainen, 2007).There is withal the element of knowledge that needs to be interpreted into account. When designing products or services, for example, companies need to be aware of the level of intelligence of the consumer so they can adapt the complexness of the product or the service to the user (Hollensen, 2007) .According to Dallas (1995), the best steering 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 allows marketers to gain information and take 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 forefend accusations of cultural imperialism, which happens when marketing approaches are seen as too radical. McDonalds and Coca-Cola, for example, put one across 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 undertaking marketing decis ions (Hollensen, 2007). universe of discourse figures provide a basic indication of the attractiveness of the market in terms of size and potential growth by looking at life expectancy, age distribution and population growth. They allow marketers to identify the segments and the geographical arenas they should target (Czinkota Ronkainen, 2007). Low population growth rates, for example, usually characterise passing 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 power of the market and allow companies to adapt their marketing concepts accordingly (Hollensen, 2007). A packaged goods association, for example, brought out a more economic version of its product in countries that have pull down income levels by using trashyer raw materials. Nonetheless, marketers should not greatly deposit 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, sales of motorcycles are high in the country disdain the fact that the price of the product represents a high relation of pay (Czinkota Ronkainen, 2007).Besides, marketers need to consider consumption pattern which allow them to identify the proportion of income that consumers exceed 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 vacuous (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 strongly affects consumers buying habits and talent to buy. In markets with high inflation rat es companies need to modify 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 addition, marketers need to consider the availability and quality of local infrastructure. Transportation, communication, and energy net ladders 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 operating within Europe, such as economies of subdue thanks to the large single market. For non-EU companies, however, this integration may create problems (Hollensen, 2007). With the aim of protecting European farmers, for example, the EU has now 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 surveyment of the market and reduces the possibility of implementing marketing concepts that could have disastrous results (Czinkota Ronkainen, 2007).4. Political And Legal EnvironmentThe political and legal environment of the companys understructure country, its server 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 family line country can determine its opportunities outside national borders (Holle nsen, 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 know 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 control systems. Export controls hold or delay companies from change their products in certain countries whilst import controls are used to protect and take in 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 behave in a be manner in the international business environment. One of the major areas touch is boycott, which is when companies reject to conduct business with someone (Hollensen, 2007) . The governments control in this area can promote companies to decide whether to stop transactions and lose good or to continue trading and pay charges. The Arab nations, for example, 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 position 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 might cost the company more currency than it gained through adopting such behaviour.Companies are also affected by the legal and political environment of the legions country. Marketers firstly need to determine the level of political risk, i. e. the likeliness of political changes that could adversely affect the company, by looking at the host countrys government, its political actions and its stability (Czinkota Ronkainen, 2007). 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. charge 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 acquainted(predicate) 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 assisting companies with their international operations, e.g. subsidies (Hollensen, 2007). Shortages 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 companionship. Hiring locally, undertaking local charity work and union ventures with local busin esses 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 sum of interference by the government giving the company more license 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 symmetrical 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 modify their marketing strategy accordingly. In terms of the legal e nvironment, 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 knowledge domain Trade Organization, for example, gives an outline on the behaviour that it finds acceptable from its member states (WTO, 2010).5. decisivenessInternational marketers are faced 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. 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