BUS615: International Marketing

1a. Identify current trends in global and international marketing

• What are the various environmental factors that companies must consider before entering a foreign market?
• What are the different ways a company can enter a foreign market?
• What is the role of the WTO (World Trade Organization)?
• What are some of the challenges multinational corporations may face?

Entering the international marketplace enables a company to increase profitability and expand their base of customers. However, there are many factors to consider before choosing a foreign market for expansion. These include the economic environment, the competitive environment, the cultural environment, the political/legal environment, the technological environment, and the ethical environment.
 
When companies enter a foreign market, they face competition from other foreign entries and companies that are native to that nation. As a result, companies may be at a disadvantage in those markets and must consider which entry strategy will provide them with the best opportunities for success. These entry strategies include exporting, licensing and franchising, joint ventures, direct investment, US Commercial Centers (for American companies), trade intermediaries, and alliances.
 
Foreign market entry can be difficult to navigate, especially given the differences between each country's social, political, and cultural environment. The WTO (World Trade Organization) helps regulate trade between nations and provides a platform from which companies can form agreements, resolve disputes, and ensure compliance. Some of the issues the WTO addresses include trade sanctions, trade barriers, and fair trade.
 
For multinational corporations (MNCs), there are a variety of challenges that may affect their ability to penetrate foreign marketplaces effectively. These include public relations, which impacts corporate image and branding; ethics, which should be at the highest levels in all marketplaces; organizational structure, which presents the challenge of balancing capital investment with value; and leadership, which necessitates talented managers with multicultural skills.
 
To review, see Introduction to International Marketing and Internationalization Theories for Global Marketers.

1b. Outline the decision sequence that marketers go through when deciding to move into an international market

• What are the differences between corporate-level, business-level, and functional-level activities when expanding into a foreign marketplace?
• What factors should be evaluated when conducting a situation analysis?
• What is the final step for functional-level activities?
  

Corporate-level activities begin with setting objectives and incorporating data about the markets under consideration. Decisions about entering a global market are made, with consideration given to all stakeholder expectations.
 
Business-level activities include selecting the mode of entry, a situation analysis, and setting marketing objectives.
 
Functional-level activities include selecting target markets, identifying marketing strategies and tactics, organizing and allocating resources, and making corrections.
 
A situation analysis is quite in-depth and involves several steps. A thorough analysis of the external environment is needed, including information about the cultural and political environment, technology, culture, consumer preferences, competition, and the economy. The company must take a serious look at their level of commitment for that marketplace and determine the available level of resources and ability to operate in that location.
 
One of the most important steps in any marketing strategy is the last one, which involves an evaluation of the plan. The final step for the functional activities of an organization is to ensure that the plan is under control throughout the process. This is where changes can occur to ensure that the plan is on target and that corrections are made where needed.
 
To review, see Introduction to International Marketing.

1c. Classify a given country's economy as a developed, emerging, or developing market

• What are the characteristics of a developed market?
• Why are there inconsistencies associated with defining an emerging market?
• What are some of the developing markets in the world, and what are the characteristics that define these nations?
  

Developed markets are also known as advanced economies and are considered post-industrial nations. A developed market is generally one with a democratically elected government. Per capita income is relatively high, there is high-quality healthcare, and life expectancies tend to be long. The population has equal access to education, and income levels tend to be high. Some of the major developed markets of the world include the United States, countries in Western Europe, Japan, South Korea, and Australia. Even though these countries have transitioned from manufacturing to service industries, manufacturing still plays a role in their economic structure.
 
The definition of an emerging market depends on who is doing the defining. For example, a private business may view an emerging market differently from a financial institution, the WTO, the United Nations, or other global organizations. However, there are also common characteristics that can help a company determine whether or not that market is suitable for expansion and has the potential for marketing success. Some of these characteristics include the size of the population, trade and regulatory policies, education, and the overall well-being of the people. Generally, an emerging market is one where the society is moving toward a free-market economy, a growing middle class, and improvements in the standard of living.
 
Developing markets are those with poor infrastructures, high levels of poverty, and low income levels. Industries in those nations tend to be focused on natural resources and agriculture.
 
The Middle East encompasses several nations that are quite wealthy, but the uncompetitive marketplace and unequal access to goods and services can provide opportunities for global business. The UAE is an oil-rich area with great wealth from these resources. However, the population consists of migrant workers from many nations, and there are many issues associated with the rights of women, children, and minorities.
 
Africa continues to present obstacles to growth. There is a weak infrastructure with associated high energy costs. Tariffs continue to deter new investments, and consumer spending power is limited due to most people living below the poverty line. Additionally, corruption is ongoing throughout the continent, as well as political unrest.
 
Nigeria's challenges are evident in its ongoing civil wars, military rule, and violence. The country is also divided between different ethnicities and religions. The country's main industries include a variety of natural resources, textiles, food products, construction materials, and chemicals. However, violence in the oil-producing Niger Delta region, coupled with government corruption, poverty, and poor infrastructure, continues to present challenges to nations that choose to enter this global marketplace.
 
To review, see Economic Development in the World.

1d. Describe the role of international organizations and trade agreements in international marketing 

• What are the four components of Porter's Competitive Advantage Theory?
• What was the overall principle of The General Agreement on Tariffs and Trade (GATT)?
• What is the purpose of the World Trade Organization (WTO)?
• How does the UN Global Compact impact global trade?
  

Porter's Competitive Advantage Theory seeks to explain why some nations are more competitive in certain industries than others. These factors include local market resources and capabilities, local market demand conditions, local suppliers and related industries, and local firm characteristics. Evaluating local market resources and capabilities includes investments in labor, education, technology, and infrastructure. Local market demand conditions facilitate innovation, trends, and sustainable competitive advantages. By centering in one area, related industries can take advantage of the suppliers that are present and strengthen an entire industry and related industries. The characteristics that describe local firms include strategies, industry structure, and rivalry within an industry, encouraging innovation and competitiveness. Along with other theories about how companies operate, Porter also notes that governments play a role in how competitive a foreign company may be in any given nation. This theory helps companies better understand international trends.
 
GATT comprised a set of rules that governed trade, mainly through the reduction of tariffs. The principle of GATT was that trade should be free and equal and that countries should not show preferential treatment toward any of the other member nations.
 
As trade became more widespread and complex, the World Trade Organization (WTO) was created. The organization's main purpose is to enable member countries to dispute, discuss, and debate issues related to global trade. While there are no formal agreements in place, this provides countries with a forum to explore global trade issues. As economies have developed and expanded, the WTO seeks to address service industries, intellectual property, and counterfeit goods.
 
The UN Global Compact is a partnership created by the UN that is outside of the boundaries of traditional diplomacy. There are ten principles of this pact, including Human Rights, Labor, the Environment, and Anti-Corruption. Companies can further enhance the value they provide to their customers through these actions while also demonstrating that they are good global citizens. Doing so enables organizations to meet the needs of their customers, suppliers, investors, and other stakeholders, in addition to governments and non-government entities.
 
To review, see International Business and Trade.
 

1e. Use the PESTEL business thinking model to assess global marketing environments for short and long-term decision-making 

• What are the components of an organization's environment, and why does it matter?
• What are the three steps associated with conducting a PESTEL analysis?
• What does PESTEL stand for, and how do these factors help companies make effective business decisions?
  

A company's environment consists of two components. These are the macroenvironment, which includes social and technological trends, demographics, and economic factors; and the competitive environment, which comprises all the organizations within the same industry and those industries that can be considered substitutes.
 
These factors are important because they help companies identify the resources they will need to produce their goods and services. They also enable the company to identify available opportunities and any threats that may exist in a marketplace. Understanding these factors can also help a company shape the decisions they make for entering a new market and the goals they set for the organization.
 
The first step in conducting a PESTEL analysis is to consider the importance of each factor within the context of the organization's offerings and position in the marketplace.
 
The second step is to identify the relevant information and categorize the data as it applies to each factor. The final step is to collect and analyze the data and come to conclusions about how the information is meaningful to the organization. Before decisions are made, however, companies should consider the impact of each factor and evaluate the different outcomes of any actions taken.
 
The PESTEL analysis is a useful business tool that explores Political, Economic, Social, Technological, Environmental, and Legal factors. Since these factors can influence whether a company will achieve success or failure, it is important to understand trends and be prepared to address any issues that might arise. Advanced knowledge and preparation are key.

• An evaluation of the political factors includes tax policies, trade restrictions and tariffs, and the levels of government stability.
• The economic factors include interest and inflation rates, GDP, unemployment rates, disposable income levels, and economic status.
• The social factors include demographics, cultural trends, and levels of consumer activism.
• The technology factors explore new product development, automation, and the evolution of service industries.
• The environmental factors include weather patterns and significant events like natural disasters that might have occurred.
• Finally, legal factors include laws regarding employment, health and safety, antitrust, and discrimination.

To review, see PESTEL Analysis and the Global Environment and PESTEL Analysis and Global Opportunities.

1f. Assess how changing technology influences international marketing 

• How does social media fit into other aspects of a company's marketing efforts?
• What are some of the marketing objectives that are common across social media platforms?
• What are some of the challenges associated with social media marketing activities?
  

Social media activities are an important part of an integrated marketing communications (IMC) strategy.
 
Social media advertising can help a company gain awareness of their products and services and help generate sales. It can drive traffic to the company's website and other online platforms where a company has a presence. Foot traffic to brick-and-mortar stores can also be encouraged, as can other activities that are not online-oriented.
 
While different social media platforms appeal to specific segments of the population, many of the goals and objectives for having a presence on those sites are common across the medium. For example, building brand awareness is a primary objective across the social media environment. This enables a company to expand their message to wider audiences and achieve higher sales levels. User engagement is a desired goal, as well. More and more, interacting with consumers enables companies to create personal connections with their customers, which leads to greater customer loyalty. Lead generation is essential for success, as well. Creating a pipeline of potential customers enables companies to increase their customer base while also replacing customers that may have been lost. Finally, companies seek to increase conversion rates, which relate to how well the company meets the needs and desires of the consumer.
 
As with all marketing activities, social media is not an exact science. Many of the challenges of traditional marketing activities apply to social media marketing efforts, as well. For example, a great deal of time and effort is needed to create an effective campaign that will connect with the audience. Content must be consistent and of high quality. As with all marketing messages, consumers may not respond positively, and the platform on which the message is distributed might not be appropriate for reaching the target market. Finally, it is challenging to make connections between marketing activities and ROI. This applies to all marketing activities, whether through traditional or digital outlets.
 
To review, see The Impact of Social Media.
 

Unit 1 Vocabulary

This vocabulary list includes the terms that you will need to know to successfully complete the final exam.

• business-level activities
• corporate-level activities
• developed market
• developing market
• economic factors
• emerging market
• entry strategies
• environmental factors
• functional-level activities
• GATT
• integrated marketing communications (IMC) strategy
• legal factors
• multinational corporations (MNCs)
• PESTEL analysis
• political factors
• Porter's Competitive Advantage Theory
• situation analysis
• social factors
• technology factors
• UN Global Compact
• WTO (World Trade Organization)