The idea of international business has been around for a while now. From the dawn of this century, business and trade activities with entities that are not within the political borders of a particular nation have been primary to the economy of all great nations. Along the lines of international business, the conception of globalization and liberalization has been a significant driver.
Expanding coordination with the world group, a passage of the household ventures into the outside business sectors and escalations of improvement of new structures of the universal business are the primary present inclinations of economic change for nations with transitive economies. These nations have as of late begun their incorporation into the arrangement of the world economy, and the way this procedure will take put, the productivity of further financial and social improvement of the states, as natural subsystems of the world economy depends on (Albaum, Albaum & Duerr, 2008).
The effectiveness of events in the world monetary framework is characterized by the proficiency of remote monetary movement of its business structures. The fruitful action of the undertakings in the outside business sectors is conceivable just at the handy utilization of gatherings and techniques for the global showcasing action (Campbell, Ferraro & Sands, 2014). Thought of a complex of inquiries of working and improvement of present-day arrangement of the global showcasing considering specifics of the nations with the transitive economy gives the structure of the offered manual. It contains the investigation of the general bases of global showcasing, financial, political, legitimate, social, social, educational, logical, statistical, and geographic condition of the nation (Aaboen & Löfsten, 2015).
The concept of international marketing comes from the niche that the various businesses that keep the economy of a country running need to gain access to newer trading arenas. The emergence of various international players in almost all emerging economies of the world resulted in competition among the various players in a given niche gets more intensified.
International marketing fundamentally refers to the part of any international business that involves the various businesses harnessing their true potential in the varying market conditions. According to Cavusgil et al, the presence of any business in a certain market condition can be a very subjective phenomenon that is influenced by several factors (Cavusgil et al., 2014). The microenvironmental factors such as the demand-supply dynamics in play, sourcing, and pricing of the various products and services in question, etc. that form the chief concerns for any major domestic business become only a part of the entire equation when it comes to international marketing and business (Sharma & Lambert, 2013).
Figure 1: International Marketing Concepts
Source: (Chen et al., 2015)
In the context of international marketing practices, Chen et al said that decisions and strategies that are followed in various industry domains, it must be understood that there are some fundamental MNCs, complex versatile frameworks that are installed in very dynamic what’s more, perpetually developing situations, speak to the key drivers of globalization. They cultivate an expanded reliance on national markets (Chen et al., 2015). Globalization might be characterized as the expanding coordination of national and provincial economies and the mastery of the world by MNCs. Globalization is likewise connected with the political mastery of few industrialized states, the combination of capital markets, around the world, the expanding omnipresence of correspondence and data around the globe, also, the spread of innovation to the most distant spans of our globe (Campbell, Ferraro & Sands, 2014).
As per Calatayud et al, organizations go global for a lot of reasons however the run of the run-of-the-mill objective is organization development or development. At the point when an organization procures universal workers or scans for new markets abroad, a global technique can help differentiate and grow a business (Calatayud et al., 2016).
Financial globalization is the procedure by which organizations quickly grow their business sectors to incorporate worldwide customers. Such development is conceivable to a limited extent because innovative leaps forward all through the twentieth century rendered worldwide correspondence less demanding. According to Doole, Alexandramm & Lowe, Air travel and email systems mean it is conceivable to deal with a business from a remote area. Presently organizations regularly have the choice of going worldwide; they evaluate a scope of contemplations before starting such development. Abroad operations are frequently alluring to administrators trying to lessen their financial plans to increment benefit. It is frequently less expensive to utilize a workforce in these nations since the average cost for basic items is lower (Doole, Alexandramm & Lowe, 2016). At the point when organizations encounter money-related emergencies, administrators here and there endeavor to spare what stays off the organization by reformulating the financial plan and moving abroad. Extended markets tempt numerous administrators to go worldwide.
Bigger showcases additionally mean the potential for more prominent benefits, so organizations go worldwide to look for new business openings and even to grow the scope of merchandise and ventures that they offer. Once in a while organizations grow to under-misused districts to pick up market strength before an industry contender ventures into the area Change is an exhibit aspect of business improvement. As per Eaton et al, Organizations exchange proprietorship, for the case, and wind up reformulating their whole business structures. Organizations employ outside advisors to exhort rebuilding amid monetary emergencies (Eaton et al., 2016). In some cases, the way that organizations go worldwide is the result of the unavoidable recurring pattern of trade. An abroad purchaser may exchange operations to the nation of origin. The larger part of an industry’s business may move abroad, making worldwide extension all the more.
International business and trading entities such as MNCs require world-class hierarchical capacities that can broaden center capabilities into numerous business sectors, coordinate the overall operations of exceptionally separated systems of members and backups, oversee budgetary exercises universally, and make political use in numerous nations and locales.
As per Gaston-Breton & Martín Martín, effective MNCs create or advance assets and capacities for exchanging such firm-particular information and for flawlessly joining it with area particular information in a backup or offshoot. MNCs are continually joining and recombining, and auxiliary parts are evolving. The benefit of creating assets and capacities may well be gotten from a remote backup as opposed to the parent organization (Gaston-Breton & Martín Martín, 2011). The application and improvement of abilities speak to a mind-boggling issue that lies in teaching short, authoritative abilities, and nearby conditions.
Some of the strategies that are employed in the case of the various international marketing strategies include rebranding in the new markets, collaboration with domestic players, acquisition, and merger with the current players in the particular domain.
According to Hofstede, Hofstede & Minkov, the particular approach that is adopted to place oneself in an overseas market depends on a lot of factors such as the nature and demand of the product in question, existing players in the same domain in the new market, level of competition and the resources and its distribution among the various domestic players (Hofstede, Hofstede & Minkov, 2010).
The business which usually expands into the newer markets makes a comprehensive study of all these parameters keeping in mind the advantages and disadvantages it may suffer in the changed market scenario.
The various environmental aspects of the social, political, cultural, legal, and economic parameters are vital to deciding what kind of effects they have on the various international marketing strategies and decisions. These parameters are known to have formulated as well as maintained the very fabric of international marketing and business.
As per Hollensen, the various socioeconomic, cultural, legal, and political factors that affect international marketing decisions form part of what is called the macro environment in the case of any business entity (Hollensen, 2007). They have a long-standing effect on international marketing practices and impact the overall nature, quality, and quantity of international business that is made in a given context.
In the current scenario that dictates the majority of the globalized world and the business and trade aspects of it that the various countries are indulged in, it is rather difficult to make a clear-cut difference between the developed, emerging, and developing markets. The difference between developing and emerging markets becomes especially blurred.
In developed markets such as the ones provided by most Western European countries and the US, economic growth sees a high value as compared to emerging or developing markets.
Leelapanyalert & Ghauri said that Markets such as the ones provided by China, India, and a couple of other developing nations are said to be emerging in the sense that the economic trends that each of them provides are usually optimistic and in an uptrend. It comes with the catch that an emerging economy unlike a developed economy has not reached its full potential (Leelapanyalert & Ghauri, 2006). The populations in such countries have a middle class that is constantly increasing in size and thus more and more people are added each year that have way more disposable income than before. The economic growth that is experienced by most emerging markets is to the tune of about 9 to 10 percent.
In the case of the developing economy, the markets even though are open to globalized entities such as MNCs and other international business enterprises are yet to make a significant stride in the direction of achieving high economic activity with a high volume and value of economic transaction on an annual basis (Lee, 1966).
When it comes to the existing financial systems that are in place in each of the developed, emerging markets, and developing markets, it is particularly high and more refined in the case of developed markets. The stakes that are held by the different subsystems of a developed economy are generally higher than those held by the various elements in the emerging and developing markets.
The emergence of globalization led to the growth of international business and also of companies in the international market. The international market provides the organization with various scopes as well as opportunities for its growth and success. López said that when any organization plans for its entry into any unknown market overseas at that time the company faces a variety of options. These options come from the variety of factors surrounding this decision to enter the overseas market (López, 2004). This is because entering the overseas market is the only process of international market expansion for the organizations. Along with that, the entry into foreign markets led the organizations to develop themselves in diverse conditions.
The market entry strategies for any organization, therefore, occur in three steps: Timing of entry, entry mode, and market selection. Fulfilling three criteria any company can have a successful entry into the market.
It is the perfect time at which time the company to start working on the decision of internationalization or market expansion. Next, any firm can establish itself in the new market either as an early entrant or a new entrant. Although both of these have their pros and cons early entrants always face a lot of opportunities to show their monopoly status but have less amount of competition within the market (Mitry & Smith, 2009).
At the same time, the early entrants have a lot of advantages over a late entrant in building reputation as well as in technological leadership. On the contrary, the late entrants have to do less research on the market and usually learn from the mistakes of the early entrants. The late entrants have a lower amount of business risks and more chances of direct investment returns (Czinkota & Ronkainen, 2013).
Further, the company needs a strong strategic process to enter a new foreign market with the implementation of three types of rules. These three rules apply to different types of modes of entry. The Naive rule is the specific process by which the company uses a particular type of entry to enter all foreign markets (Samiee, Chabowski & Hult, 2015). Similarly, the Pragmatic rule is the process that makes the company formulate a specific workable entry to enter any specific market. In this process, the market entry is quite different for each of the companies. The companies who choose the pragmatic rule generally make their start with the low-risk modes of entry. The last one is the strategy rules (Nachum, 1994).
This method is more important any the previous two because in this rule all the possible alternative modes are evaluated and compared keenly before taking any type of decision. It will always result in a successful entry of the organization into the foreign market because with prior evaluation and comparison the company will be prepared for every type of challenge. The strategy rule will evaluate the market objectives with their experience as well as their expertise (Park & Sternquist, 2008). Later the organization must also evaluate its financial and human capital resources before expansion. The market size and potential will help the experts measure the existing condition as well as the future of the business in the chosen market. For example, the takeover of the Walmart chain to Wal-Mart by the US retailers was opposed by South Africa. This internationalization brings opposition that dragged political involvement within the action (Skarmeas, Zeriti & Baltas, 2016).
The global marketing strategies include various processes by which the organization can make its entry into the foreign market. There are two types, externalization and internationalization. Externalization is the easiest process that organizations acquire that involves the export mode which creates a high amount of flexibility for the organization with a low amount of control and risk (Morschett, Schramm-Klein & Zentes, 2015).
Similarly, internationalization involves contractual and wholly-owned subsidiaries. The contractual mode further has licensing or franchising, foreign contract manufacturing, and joint ventures. The wholly-owned subsidiaries involve the acquisition and organic growth.
It is the method in international marketing that involves the manufacturing of the product in one firm that is further transferred directly or indirectly to the host market. In this process, the organization has to decide regarding the functions of it as well as the external agents. The exports are further indirect, direct, and cooperative. It is the first mode of entry and enables many big companies like Renault, Toyota, Ford, etc. to open their plants in many countries and open the export channels to nearby countries what will the effect of export can be seen in Appendix I.
The indirect export of the production takes place in one country it is then sold to the domestic country which is afterward purchased by the foreign customer. On the contrary direct export shows the direct selling of the product from the manufacturing plant to the foreign customers. The manufacturing company itself manages the documentation, physical delivery as well and pricing along with other processes (Roth, 1995). Similarly, in cooperative export, there is low investment along with the specialization and aim at immediate sales. For that reason, in cooperative sales, two to three companies carry out the production and collaboratively sell the product to the foreign customer. However, it can also result in a lack of commitment due to the limited amount of resources. Direct export also sometimes lacks internal communication due to less amount of direct investment in sales (Felzensztein et al., 2014).
It is the process in which the product of a company is manufactured in a foreign market by another producing organization. Most importantly the foreign market only does the manufacturing not marketing. For example, the manufacturing of electronics, clothing, cigarettes, and pharmaceuticals takes place in an organization where no full ownership is involved. This ownership and control are further shared between the local partner and the firms.
The contractual marketing is further divided into licensing, franchising, and joint ventures. The global pharmaceutical manufacturing is working to increase pharmaceutical production. In this production the US is stable but gradually decreasing the global share by 35% whereas India is one of the growing markets which are exceeding 10% of global volumes. IKEA is a company that works with a contractual network including many small overseas manufacturers (Mathews et al., 2016).
It is the process where an independent organization takes the brand name of a branded organization and sells its products. In return, the franchisor undergoes an agreement where the franchisee has to pay the franchisor. The franchising occurs in two ways product as well as trade name franchising and business format franchising. The Alshaya brands run with its products with 55 brands in 3400 stores serving 47,000 people. Moreover, the MENA region prefers franchising as the major business for growth. The major advantage is it helps in quick internationalization by generating good economies (Venaik & Brewer, 2013).
It is the process of formal permission to a firm through the agreement to make the use of its resources as well as technology which again demands payment in return. It can be another favorable process for a firm to establish local production in foreign markets by using a trademark or name (Felzensztein et al., 2014). It helps in protecting the patents as well as securing government contracts. For example, Red Bull is carrying out its manufacturing worldwide with its trademark in various foreign countries (Leelapanyalert & Ghauri, 2006).
This involves two or more organizations forming a venture with a new independent company by sharing all the equity as well as the management voice. Most importantly companies have their variable amount of equity shares depending upon their contribution. McDonald’s and Walmart involve their marketing strategy through joint ventures.
It involves the acquisition and organic growth. The Acquisition is the process that selects the foreign company and merges itself with that company for more growth and success by entering the international business. Wal-Mart took the acquisition of ASDA both carried out the retail business with quite ease and both benefitted as well. Similar is the case of Tesco and DHL. Ford also sells itself to Jaguar and Land Rover for $1 billion.
Another part is organic growth which shows the process where there is the growth and establishment of the company without any kind of help from any partner (Gaston-Breton & Martín Martín, 2011). It involves 100% ownership as well as a high level of commitment. They carry their own business with quite ease with a high level of experience like the process carried in Tesco and Hyundai.
From the above section, it is quite clear that entry into the foreign market needs export, franchising, licensing, acquisitions, and many more methods. All these help in the expansion of the business in the chosen foreign market by any of these means. Therefore it is necessary to know specific tools and techniques that will help the business to establish in the foreign market (Doole, Alexandramm & Lowe, 2016). Those are the four Ps (Shown in Appendix II), branding, research, repetition, social media, and SEO. These techniques help attract customers and enable the growth of the business.
It is an essential marketing tool that gives the idea of four characters, price, product, position, and place. The knowledge of these four parameters helps in modifying the career and future of the company in the international market. Keeping these four in equal amounts will help the company in satisfying the customers which will be beneficial for the growth of the company in the foreign market.
The brand name only shows the real picture of the company. Therefore the company must create the proper brand name of its product for the customers in the foreign market. With a perfect brand image, the company can be able to increase its customer preference as well as loyalty in foreign markets. Just because of the brand customers can know that the brand has specific benefits or quality or any other intrinsic value.
It is one of the major promotion channels in current times that help the company to promote its products worldwide very easily. Facebook and Twitter help more and more and more view the product page and see all the specifications available on the page. As shown in below figure 2, Social is a powerful tool to increase sales.
Figure 2: Benefits of Social Media Marketing
Source: (Aaboen & Löfsten, 2015)
It is another vital part because it directly gives the ideas or feedback of the customers. By this, the company can be able to get to know about the needs and demands of the customers. Further depending on their views the company will design the product, price, positions as well and sales location. Considering their views the company can be able to know the real scenario of the international marketplace (Aaboen & Löfsten, 2015).
For any organization to be successful in the global business needs effective international marketing. However, international marketing is supposed to be carried out by global managers who have the responsibility of handling various situations to establish their brand in the foreign market. For that reason, the global manager must be efficient with some distinctive competencies that will result in the success of the business.
The best global leaders who take the company up to heights must be something different that will define their behavior as well as competency. Therefore to achieve successful international marketing these global leaders must have a strategic perspective and should understand to keep the focus on the customers for the accomplishment of the goals as well as objectives (Cavusgil et al., 2014). The leader must look forward with a long-term view of the business with a broad strategy that will help in the fulfillment of the goals. These individuals are such type that the customers will trust them and eventually the customers will develop their trust in the business.
Most importantly global leaders must have the efficient ability to spot the ongoing trends and connect every possible dot that will affect the business. The international market contains a lot of variations in the field of finances, manufacturing, etc., which are changing with time. So the leader must be competent to identify the issue and make the decision whether it is important or not and take action as per the situation. Again the global leader must be engrossed with a committed and engaged team who can take any kind of risk as when required. This will help the manager to take requisite action as per the demand of the situation without any second thought. Therefore this nature of a global leader or manager mostly helps the organization in making its clear footstep in the international market (Chen et al., 2015).
The basic elements highlighted in this write-up focus on international business as well as international marketing. For that reason, the report includes the details of the various strategies needed during the expansion in the international markets with the study of its external factors. Therefore the study of the external factors as well as the necessary tools and techniques relating to the international markets help in developing the core competencies that will aid to the fulfill the concept of international marketing.
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