Going International Reasons For The Internationalization Of Business Marketing Essay

A basic concept needs to be clarified before any discussion, that is, the definition of “International Marketing”. Many scholars have tried to explain what “International Marketing” is referring to. According to Czinkota and Ronkainen (2007), “international marketing” indicates the activities of enterprises to plan, price, promote and guide in the process of commodities and labour flowing into more than one country in order to gain profits. The American Marketing Association (AMA) generalized the definitions of “International Marketing” as a multinational activity concerning implementing the construct, pricing, promotion and allotment of thoughts, products and services so as to attain business objectives.

Internationalisation being an inevitable trend, has gained wide recognition in today’s business world. The advancement of means of communications and electronic business has made it possible for growing numbers of companies to have a global presence (Knight & Kim, 2009). As worldwide businesses are expanding at an unprecedented pace, firms have to actively engage in international marketing. The reason for different business organizations going international may vary greatly. The motivation is based on specific developmental requirements and influenced by various factors. Whatever the causes are, international marketing is implemented by enterprises basically from the consideration of an overall strategy, namely, seeking competitive edge in a maximum range.

The direct motive of enterprises to operate their business internationally is to expand overseas markets, seeking new customers for their products and services. As the present market is tend to be saturated, companies feel need to bring their commodities into broader markets. Only in this way can they develop their businesses further and survive the fierce competition in business world.

The development of productivity requests firms to internationalise. Over the past decades, the world trade system has been gradually established and completed, setting in motion the process of economic globalization. The economic developmental level and science & technology being improved, the marketing division and expansion should be deepened. Therefore, the conversion from domestic market division into cross-national division is enhanced. For the purpose of promoting trade, multinationals need to organize their manufacture and marketing across different countries through worldwide resources allocation (Jones & Khanna, 2006). Business organizations will be able to obtain resources of better quality and lower price. Subsequently, the production cost is reduced and more profits are obtained.

The core competitiveness is the source of success for enterprises without which they could not have any edge over their competitors. Through expanding markets overseas, firms will have the opportunities to acquire new techniques, management strategies and understanding customer demands so as to create core competitiveness (Kotler, 2000).

The information an organization would use prior to making a decision

The key to success in international business lies in the adaptation to a constantly changing and unfamiliar environment. The internationalised marketing environment is much more complicated and changeable, which is caused by various issues such as political, economic and social factors. Therefore, business organizations must attach great importance to those influential parameters and formulate strategies accordingly. Enterprises owners should have an excellent command over such background information so as to run an excellent international business.

Political and legal factors

Managers of any multinationals should recognize the truth that politics imposes a great impact on economic activities. The political environment of a market is an issue of both significance and complexity. The policies and attitudes of a government towards foreign businessmen reflect its basic thoughts about improving national interests (Craig & Douglas, 2005). For this reason, enterprises need to be politically sensitive and never ignore any minor factors. Moreover, a good understanding of the laws and regulations regarding international business will help to avoid unnecessary losses and risks. Before entering an overseas market, enterprises should try to assess the political and legal environment of the concerning country.

International marketers should understand the government structure of the target country as well as its policies towards foreign businessmen. Evidently, sustained friendly policies will be advantageous to the long-term development of multinationals. The stability of government structure and policies will directly influence the marketing strategies of international corporations (Johansson, 1997). For this reason, a sound analysis of the political climax of the target country is beneficial to strategy making of international firms before any big steps. However, a fact has to be recognized that no nations will tolerate overseas companies endlessly penetrating their market and economy, especially when the target country feels that foreign businessmen do not consider its developmental requirements. Such nationalism is greatly influential on international marketing nowadays, which tells international marketers to take into account what contribution they could make to the economy of the target country.

Apart from political factors, the legal system of the target country is also crucial to understand, because it is tightly connected to whether the international business could run successfully. Many nations have made specific laws and regulations, such as the standards for processing, restrictions on advertisements, to protect domestic markets and create employment opportunities (Schuster & Harris, 2009). Besides, there are international economic rules made to regulate relations between nations so as to maintain a stable international marketing environment and promote international marketing activities. To operate international business smoothly and safely, international businessmen must be very familiar with related laws and regulations not only to avoid disputes but also protect their business lest any unfavourable situation occur.

Economic factors

Prominent of the necessary information an international business organization needs to obtain is the economic climax of the target country. The economic environment of the target country serves as the most important factor influencing the differentiation of international marketing strategies.

Understanding the developmental stage of a country is prior to the identification of potential market (Hewett & Bearden, 2001). For example, developing countries have an economy composed of both modernized and backward formation. Therefore, marketing strategies must be very flexible in markets of those countries. In different phases of development, the income of citizens may vary to a large extent. Thus, consumers will have specific demands for products, which will directly or indirectly influence international marketing. In terms of distribution, large scale-retail business such as hypermarkets, big shopping centres are suitable for highly-developed countries, while small-scale or family-style ones such as convenient stores are better for undeveloped nations. Viewing from the consumer markets, marketing strategies for developed countries should emphasize the style, features and innovation. By contrast, consumers in less developed areas would pay more attention to the function and price.

The economic structure is also helpful for international business organizations to seek market opportunities. The analysis of a nation’s economic structure serves as a primary basis for firms to select target markets. In some countries, economy is governed by traditional agricultural patterns. There will be rare opportunities to enter such market. Some countries are abundant in natural resources and thus require technical devices and transportations tools. Other highly developed countries are strong in industry and capital. They are in need of large amount of raw materials and labour intensive products. Therefore, due to the huge consumer market, those highly developed countries are the main targets for international marketing.

Population is another important determinant of international marketing strategy. The total number of people in a nation directly constitutes the market and indicates the potential of the market (Radford & Hunt, 2008). For example, the reason for Japanese enterprises constantly expanding global market lies right in its small population and high productivity. The only way to survive is to seek markets overseas.

The income, to be more specific, the disposable income of a nation’s citizens reflects the purchasing power of its market. Consumers with more income tend to require more products with higher quality. Likewise, only those with high income and rich savings will be likely to buy commodities other than daily necessities. Such information will be effective for international marketers to decide the types of products to provide for the target country.

Social and cultural factors

Culture is a system of communication, the sum of lifestyles. Culture brings with it many standards and principles, which enhance the survival and development of members of the society. International marketing as a social management activity, is inevitably influenced by social and culture factors. To gain the recognition of and be accepted by consumers in a target country, international markers are obliged to acquire a comprehensive knowledge about the characteristics of target culture and society.

The educational level directly impacts life attitude, purchasing behaviour and reaction to promotion, etc. of the target country. Consumers of higher educational level have a stronger ability of identifying products and tend to pursue high quality. Comparatively, in those countries where the educational level is low, commodities should be easy to use and repair.

Religious beliefs and regional customs also should not be ignored before entering a foreign market. In the process of designing and packing products, businessmen must take into consideration the preferences and taboos of the target region. Respect and trust is mutual in this exchange.

The difference in values also matters in international marketing (Ross et al., 2008). Some nations uphold simplicity, while others prefer luxuries. Some enjoy showing up their wealth, while others hide their status. Such different values impose impacts on consumption trend and the quality of products.

The benefits associated with doing business overseas

The implementation of international marketing is beneficial for business organizations to seek new advantageous markets. In some industries, the market has been saturated. There is very rare chance to expand their production scale if they limit consumer market within their own country. The only way to break through is to develop overseas markets. Along with the expansion of foreign markets, multinationals may have the opportunity to utilize preferable factor conditions for the same type of product (Hitt et al., 2008). For instance, the political situation is very stable in some countries where the labour cost is low, technical workers are adequate, citizens have strong purchasing ability. Besides, such countries are willing to provide excellent environment for foreign business. Without doubt, multinationals will not hesitate to target them. By the utilization of favourable conditions, cross-national enterprises will stand to gain very much.

By doing foreign business, enterprises are able to introduce advanced techniques and make use of foreign capitals. The foreign exchange made by international business could be used to purchase new devices, etc. Moreover, as the competition on global market is much fiercer, multinationals are urged to be qualified for international level, by which they are stimulated to improve their techniques and managerial level.

Developing overseas markets is also helpful to protect export market and supply of raw materials. Some countries set very strict restrictions to imports by high tariffs or low quota so that they can maintain their own industries. For this reason, it will be very difficult to import products to those countries. However, if factories are built inside those countries, the manufacture and sales of products could be protected and the export market can be expanded.

Another benefit but not the least, through international marketing activities the communication between countries is enhanced. Establishing business in a foreign country will definitely involve exchanges in many aspects. The enterprises will have a better understanding of the culture in the target country. Meanwhile, they will provide the image of their own country to their foreign customers through their behaviours. Multinationals tend to employ local workers, which can help not only reduce human resources cost but also create employment opportunities for the target country (Ross et al., 2008). This kind of win-win cooperation will surely enhance the friendly relationship between their countries.

The risks associated with doing business overseas

Though there seem to be many benefits through running a business internationally, there are also great risks come along with them. In the process of managing overseas business, losses might possibly be caused by changes of market environment, production capability, sales channels, etc. Because of the complexity of overseas business in its management and environment, multinationals are confronted with greater and more complicated risks. Before making international marketing strategies, these risks should be always taken into consideration.

With the development and expansion, international corporations tend to be dispersed geographically, which makes the exchanges of human resources, capital, and materials more inconvenient (Lazer & Shaw, 2000). Such dispersibility imposes challenges for management and regulation and brings about managerial and administrative risks.

Besides, the changes of global political and economic environment influence and restrict international marketing activities. The political, economic and diplomatic relations directly determine the time and space condition for overseas businesses. The economic gap between regions will influence the effects and outcome of international marketing. Evidently, international companies are faced with many political and economic challenges.

Lastly, cultural risks can never be overlooked. Regional cultural characteristics are greatly influential on the design, style, and packing of products. Lack of understanding the target culture may prevent enterprises achieving their management goals. Furthermore, when conflicts occur local people will instinctively have feelings of rejection. Generally, people believe that their own behaviour styles are superior to those of a foreign. If international enterprises are too confident in their management pattern to modify them to a foreign country, they will be very likely to suffer losses.

Conclusion

International Marketing refers to activities of corporations related to the executing, promotion and distribution of products and services for the purpose of achieving sales goals. Nowadays, going international has become a prevailing trend for business organizations. There are various reasons explaining why corporations need to internationalize, among which the basic one is to maintain a competitive advantage in the widest scope. Besides, enterprises need to expand their market so as to survive and go further in the business world. Internationalization is also stimulated by the rapid development of productivity. Market division is enhanced to change from domestic pattern to a multinational one. Enterprises need to create their own core competitiveness through managing overseas business.

Before formulating international marketing strategies, corporations need to obtain some necessary information. Political and legal factors are the foundation for multinational managers to make decisions. International marketers need to evaluate the political and legal climax of the target country before taking any steps. Only through understanding of the political and legal system of the target country can international businesses avoid losses and risks. Also, managers should have a good command over the economic environment of the target country, including its population, citizens’ average income, etc. so as to correctly position the target consumer market. Social and cultural factors cannot be ignored. The understanding of target culture and customs will be helpful to avoid misunderstandings and conflicts.

There are many beneficial aspects brought about by doing overseas business, such as expanding industry scale, lowering production cost, introducing new techniques and ideas, promoting managerial skills and enhancing relationships between countries. However, risks also come along with international marketing. The dispersibility of multinationals may bring about challenges in the field of management and administration. The unpredictability of political, economic, diplomatic relations makes it difficult to maintain stable in operation. Cultural conflicts between nations are hard to avoid. Such risks must be considered before implementing international marketing activities. All in all, doing business overseas is beneficial but also challenging. Corporations must acquire systematic marketing principles and apply them into the real world in order to be successful in their business.