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 allsides; 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.
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.  &  http://www.scribd.com/doc/33598505/Strategic-Partnership 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 0d1e2a2. The growth of International market is going to be phenomenal on all fronts and all round theglobe. In the field of Retail, Telecom, Processed foods, technology, consumer goods, globalmarket ids witnessing phenomenal growth. The growth of consumer durables and FMCG also isnot 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 ofgrowth in terms GDP. Presently, India is the economy with lowest organized retail outlets amongdeveloping countries, but, within next decade or so, it would also be economy with highest rate
of growing organized Super Store and Malls in the world. The same is true for BRIC anddeveloping countries around the globe. All this can be attributed to the fastest growing neo richmiddle class phenomena in developing nations. Industrial growth rate of more than 8% perannum should be the decision for MNCs to invest in global economy. While U.S and Europeaneconomy is pegged to grow at merely 2% - 3% annually, avenues have to be sought outside thesedeveloped economies of the world. The factor which had contributed to the growth of U.S economy since last fewyears were influx of global talents and population due one of the best infrastructure available inthe world, seems to have reached the plateau. The population growth of just above 0% is nothelping this cause for the economy to grow at a fast pace. while Indian population growing morethan 2.1% is going to hold the largest numbers of youth in the world while would be known foraging population, would require lots of talent to be imported from across the globe to evensustain its current level of economic growth.Cultural and Social environment: The cultural environment of U.S is one of the mostcosmopolitan and is responsible for growth of marketing environment for all sorts of items indifferent product categories. To differentiate one culture from the other culture of rest of the world, itis more important to understand whether the culture of the country is individualistic and highlyconsumerist 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 waspower shows in terms of acquisition of latest electronic gazettes or for that matter consumerdurables. This culture can be called a culture where people believe in flaunting personal power and itsi very much characteristic of Western world. While Asian or Eastern cultural are more ethnic and oflate, it has started to move towards individualistic society. High consumption is new emerging
phenomenon, and global marketers need to view this discernible phenomenon in the countries likeChina, India, Brazil, Argentina etc. But, the society by and large puts lots of emphasis on savings forthe 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 morevalue 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 westernphenomenon. With proliferation of higher education across the global boundary and large numbersof MNCs operating across the global boundaries has transformed the culture of at least middle classof developing world to a certain extent to that of western style. One of the most recent happenings inmetros and other big cities is number of a call centers, where employees converse with U.Scustomers live. It has brought culture close to understanding the U.S. clients and has evolved crosscultural phenomenon, wherein both citizen and U.S are being influenced and influencing the othernorms 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 riskswhich include commercial risks, political regulatory risks, Exchange Rate risks (what are theexchange rates between the countries and future expectation of losses makes the decision morerisky and inflation risk. Countries in political turmoil or where countries are in constant conflictor with unstable government (N. Korea, Myanmar) involves a greater amount of risks. Interestrates charged by banks and financial institutions can also greatly affect the business prospects ina country. Even more important is the changes in these rates. Libor when combined withchanging exchange rates can affect the bottom line of businesses.
http://smallbusiness.chron.com/significant-financial-risks-conducting-business-internationally-4129.html Political risks are the risks involving change in political environment. Ifthe tenure of a political rule in a country is volatile, it may adversely affect businessactivity. This political risk can be of local governance or due to federal government at thecentre. There can ownership risk, wherein the property of the firm is threatened throughExpropriation (seizure of foreign assets by the government with payment ofcompensation to the owners, where final amount to be transferred takes time and could beless than the actual amount) Domestication (there is partial ownership transfer andcompanies are urged to prioritize local production and large share of profits are requiredto be retained within the country) or Confiscation (It is involuntary transfer of property tothe host country where no compensation is paid and thus poses as one of the most riskysituation for the investing firm). Similarly, there could be operating risk for the firm, ifthe ongoing operations are threatened through changes in laws, environmentalstandards, tax codes, terrorism, arms insurrection or wars. Transfer risk arises, when thegovernment of a particular country interferes with a firm’s ability to shift funds into andout of the country. This is one of the reasons for many Multi-National firms to enterChina but India has not been able to draw similar response. Although, both the country issimilarly placed on growth fronts.http://www.memoireonline.com/08/09/2610/Impact-of-political-risks-in-international-marketing-the-case-of-West-Africa.html
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 marketingactivities. For the entry into global market, there are basically three stages which strategicchallenges for entry. At the initial stage, it is the international market expansion where
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 theproduct or would go for the adaptation as per the global market needs of the individualcountry. In the second stage, the company starts looking for the new directions for growthand expansion. The focus in this stage is to build market penetration in countries wherethe company is already located. At this stage expansion efforts are guided mainly by localmanagement on a country by country or national perspective basis. The third phase istaken country by country approach, where markets are viewed as a set of interrelated andinterdependent entities. Strategically, global market are becoming integrated andinterlinked (Douglas Craig, 1989) “Global marketing is not a blind adherence to standardization of allmarketing elements for its own sake, but a different, global approachto developing marketing strategy and programs that blends flexibilitywith uniformity (Yip, 1992).