International Marketing

Management
Chapter I
 A. International Business and Marketing

Transactions carried out across national borders to satisfy

objectives of individuals, companies or organisations is called
International Business.

-- Business (domestic or international ) comprise of a number of

functions like manufacturing, marketing, procuring, finance, HR,
finance, R&D etc. when one or more of these functions are
carried out beyond the home country, it is called International
Business.

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 Types of International Business

1. International Trade ( Foreign Trade ) -- Comprises of

imports and exports i.e., buying and/or selling products and
services abroad to fulfill needs and objectives of company.

2. International Investment – When a company applies

capital beyond home country for production and/or other
functions to earn profit, it is called International
Investment.

3. International Marketing -- When a company identifies

and fulfills need and wants of customers abroad through
suitable products or services at profit for company, it is
called International Marketing.
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 Role of International Business / Marketing

* International business puts an end to economic isolation of

nations, thereby improve national income and standard of
living.

* It facilitates mobility of ‘factors of production’ excepting land

and it opens up competition.

* Like Janus (the two faced Roman God), international business

deliver opportunities and benefits out of imports and exports to

nations.

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 B. Silk Route trade to Globalisation
-- Selling and buying of goods beyond national frontiers is
thousands of years old. From India, clothing, silk, spices etc.
used to be traded with Egypt, Persia, Rome from more than
five thousand years
-- Trading between India, China, Rome, Greece etc. were
established before Christian era which was the major
reason of their prosperity in those days.
-- World trade and investments gradually assumed increasing
proportion to the betterment of national income and living.

-- Finally in last century, appeared multinational corporations

in the scene carrying out manufacturing, marketing and other
functions in nations globally.
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 Paradigm shifts
-- From latter half of last century international business
underwent major changes when large companies from U.S.,
Europe, Japan started expanding their operation beyond their
home countries.
-- These companies started identifying needs and wants of
customers in different nations and then provided them with
suitable products and service to satisfy; known as
multinational approach by firms like IBM, GM, Bayer,
Unilever, Toyota, Suzuki etc.
-- Next, with advent of newer technologies in telecom,
transportation and travel, national markets started integrating
with each other, thus same products and services started
finding their way into different country markets called
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 These trans-border transactions came to be segregated as :
International Trade -- When products, service, technology,
capital etc. flow across national borders for profit, it is called
international trade with orientation called ethnocentric.

International Marketing -- When company’s objective is to

satisfy customers ‘needs and wants’ at profit, it is called
international marketing; it embraces polycentric orientation e.g.
MNCs like Ranbaxy, HLL, Samsung, Petronas etc.
Global Marketing -- A global company standardises its
marketing mix elements as far as possible to deliver
maximum value to customers. It treats whole world as a
single market e.g., Harley Davidson, Sony’s Walkman,
Walmart etc. Orientation of Global companies is mixed of
ethnocentric and polycentric orientation.
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 Glocal Operations -- Global companies are increasingly
adopting structure and strategies to suit global operations for
greater value addition for customers all over but with focus on
local environments, in order to maximise satisfaction of those
local customers.
-- For example, Nokia is marketing mobile handsets in India
that provides SMS facility in Hindi and other Indian languages at
competitive prices.
-- Of course it increases marketing and other operational
complexities for company.

-- Strategy of these companies is to ‘Think Global but Act

Local’ so called Glocal.

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 C. Opportunities & Challenges of International Marketing

-- It is well known that international business creates wealth

for individuals, companies and nations. Formation and also
decline of Roman empire was linked to international
business.
Rise of British empire to eminence in nineteenth and decline
Opportunities
in twentieth century was again due to international business.
-- Firms go global broadly because of TWO reasons :
1. Pull Factors -- it comprises of proactive reasons that pull
the firm to foreign transactions for
* Profit -- Generally international marketing is more profitable

comparedGrowth
* Top-line to domestic.
-- At times of domestic recession, foreign
sales keeps company going.
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 * Economy of Scale in operations.

* Spreading of risks -- Foreign markets reduce dependence of

firm on domestic market, as China is thriving now on U.S.
and Europe market.

* Uniqueness of product or service -- Unique attributes may

offer enormous opportunity and very less competition abroad,
e.g. Indian herbal medicines, Chinese Tiger-balm etc.

* Stage in lifecycle

* Cheaper cost of factors of production -- like cheap raw

material, labour, land etc.

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 2. Push Factors -- drives the firm to explore opportunities like

* Home & Host Govt. Policies – Tax benefits, subsidies etc.

* Spin-off Benefits – Success in foreign markets boost

company’s image in home market, also helps in introducing
newer products and services with enhanced brand image.

* Sharing of R&D costs -- MNCs can embark into ambitious

R&D projects compared to single-country companies as their
research expenses are shared between various country markets

* Competition -- Intense competition in home markets push

companies out to markets abroad.

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 Challenges
-- Difference in environment, competition, national income etc.
give rise to formidable challenges in international marketing

* Political and Legal challenges – Generally political and

legal framework differs from country to country so
marketing approach is required to be tailored accordingly.

* Cultural Environment -- Behaviour pattern, liking and

disliking of customers differ from nation to nation, these are
to be accounted in assorting marketing mix elements.

* Economic Environment -- Marketing strategy at host country

should be designed keeping in mind host markets’ nature of
economy, scenario and other policies.
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 * Demographic and Technological Factors -- Population, its
growth rate, composition and level of technological
advancement influences marketing strategy in host nations.

* Business Infrastructure -- Availability of suitable banking

system, stock exchanges, market research & advertising
agencies, intermediaries are to be viewed in advance.
* Money and Monetary System – Exchange rate of currencies,
its perpetual fluctuation offer major challenges in marketing
planning.

* Logistic Support System -- Availability of transport, its cost,

time, warehousing , inventory management and their expenses
are matters of serious concern.

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 D. Internationalisation of Emerging market trades

-- Business operation of firms both in philosophy and style

undergo change as those emerge to occupy salient positions
in
global trade.
-- Their focus and strategy changes in specific stages as under
Stage I -- Domestic Companies
-- Majority of companies start operation in their home country.
Their focus, vision and activities remain limited.
-- These companies focus upon domestic market, domestic
supplies and domestic competitors.
-- Mindset of these companies is ‘If it is not happening in
home country , it is not happening anywhere, neither it is worth
happening’. It is called ethnocentric orientation.
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 Stage II -- International Companies

-- On being attracted by opportunities abroad or otherwise,

these companies then extend one or more of their functions like
marketing, procurement, manufacture etc. to foreign countries
to
provide greater value to customers. Thus it becomes a second
stage International company.

-- But the company adopts same products, policies and

strategies as they follow in their home country.

--
-- Its
So orientation continue
for all practical to remain
purposes, ethnocentric.
International operations are
extension of domestic operation.

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 Stage III – Multinational Companies

-- Next the company identifies difference in environments and

demand pattern in host countries.
-- So learns to change their approach, marketing mix elements
and strategies to satisfy different country customers.
-- Thus company’s overall strategy comprises of a collection of
individual strategies called multidomestic approach.
-- This type of operation is called Multinational operation.
Mindset of company also changes to Polycentric orientation.

-- “Multinational companies respond to different environment in

host countries and evolve different strategies to deliver
satisfaction to customers at profit.
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 -- That is why, McDonald’s market McAlu Tikki in India in
place of Big Mc with beef or ham as in U.S. and Europe.

-- MNCs view the World as coglomoration of markets which

individually are different. So MNCs make strategy for each
nation as necessary.

-- That is, MNCs assort marketing mix elements like product

(service), price, path and promotion in a manner to satisfy local
customers.

-- Overall strategy of MNCs is to generate competitive

advantage over other players through:
• Manufacturing at lowest cost
• Differentiation of product (service) from competitors
• Evolving and exploiting market protection.
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 Stage IV – Global Companies

-- Next, the company attempts to add greater value to their

product or service for enhanced satisfaction to customers.
-- By focusing on either global sourcing or global marketing
approach but not both. It is referred to as Global Operation.

-- So, Global companies try to satisfy customers located all

over globe by sourcing products from home country. As is
done by Sony’s Walkman or Harley Davidson motorcycles.

-- In the process, Sony or Harley Davidson introduce benefits

of ‘Economy of Scale’ leading to low cost manufacture at one
location at Japan or U.S., compared to competitors.

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 -- Similarly, Walmart procures value-added products from all
over world to provide greatest satisfaction to US customers at
lower price through more than13000 retail outlets by harnessing
global sourcing & logistics strategy.

-- In Global companies, key activities are ‘logistics and

marketing or sourcing’. The suppliers and customers maintain a
“hub and periphery” relationship among themselves.

-- Orientation of Global companies is mixed of ethnocentric and

polycentric mindsets.

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 Stage V – Transnational Companies

-- Next, companies integrate global resources with global

markets at profit carried out through transnational operation
without consideration of national borders.
-- Philosophy of a Transnational company is “to add best value
to product or service by using resources from wherever those are
best and economical globally so as to provide greatest
satisfaction to customers universally”.
-- For example, News Corporation (I) Ltd. (Star TV of Rupert
Murdoch), Caterpillars Ltd. and most of automobile giants are
shifting from MNC to the TNC way.

-- Orientation of TNCs is Geocentric i.e. ‘vasudaiva

kutumbakam’ meaning that ‘whole world is my family’.
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