International Marketing

• The marketing of goods and services across national

frontiers.

• It is the marketing function of multinational companies.

 Special problems in International Marketing

• Political and Legal differences

• Cultural differences

• Economic differences

• Differences in the Currency

• Differences in the languages

• Differences in the Marketing Infrastructure

• Trade Restrictions

• High costs of Distance

• Differences in Trade practices

 Objectives of International Business

• To sell out the surplus

• To achieve sales and production stability
• To pay for Imports
• To contribute to national goals
• To achieve growth and Development
• To lower costs of business
• To improve company image
• Nature of business
• Political reasons
• Economic incentives
 International Marketing Decisions

• International Marketing Decisions

• Market Selection Decision

• Entry and Operating Decision

• Marketing Mix Decision

• Marketing Organization Decision

 International Marketing

Look at the international marketing environment

Decide whether to enter
Decide which markets to enter
Decide how to enter
Plan marketing programs
Plan marketing organization

….the real issue here is what role national boundaries play

in a firm’s strategic planning process.
 International Marketing

Physical Environment
Climate, topography, resources
US has big products…

Economic Environment
Population, industry structure, stage of development
Lack of wholesalers in developing countries
 International Marketing

Political-Legal Environment

Advertising restrictions

Tariffs/non-tariff barriers

Patents/Trademark protection
 International Marketing

Cultural Environment
Language
Attitudes
Time Concepts
Space Concepts
How business is conducted
Friendship
 International Marketing

What influences the decision to enter?

Stability of government
Stability of currency
Tariffs/non-tariff barriers
Crime/corruption
Protection of property rights/technology
 International Marketing

How to enter:

Exporting
Export excess capacity
Simplest, most direct

Licensing/joint venture
Firm in foreign market produces, distributes
 International Marketing

How to enter (cont.):

Subsidiaries
Partly own firm in foreign market

Multinational
As foreign investments grow, firm loses home country identity

Key is volume growth

 International Marketing

Which markets?
Current market potential
Future market potential
…versus risk
Russia….?

Marketing Plan
Standardize versus adapt for each market
 International Marketing

Marketing Organization

Based on entry strategy

Requirement for in-country participation

 FDI (Foreign Direct Investment)

Policy on Foreign Direct Investment

India has among the most liberal and transparent policies on FDI
among the emerging economies. FDI up to 100% is allowed under the
automatic route in all activities/sectors except the following, which
require prior approval of the Government:-
1. Sectors prohibited for FDI
2. Activities/items that require an industrial license
3. Proposals in which the foreign collaborator has an existing
financial/technical collaboration in India in the same field
4. Proposals for acquisitions of shares in an existing Indian company in
financial service sector and where Securities and Exchange Board of
India (substantial acquisition of shares and takeovers) regulations,
1997 is attracted
5. All proposals falling outside notified sectoral policy/CAPS under
sectors in which FDI is not permitted
• Most of the sectors fall under the automatic route for FDI. In
these sectors, investment could be made without approval
of the central government. The sectors that are not in the
automatic route, investment requires prior approval of the
Central Government. The approval in granted by Foreign
Investment Promotion Board (FIPB). In few sectors, FDI is
not allowed.

• After the grant of approval for FDI by FIPB or for the sectors
falling under automatic route, FDI could take place after
taking necessary regulatory approvals form the state
governments and local authorities for construction of
building, water, environmental clearance, etc.

• Manual for FDI brought out by the Department of Industrial

Policy
• Procedure under Government Approval
FDI in activities not covered under the automatic route require
prior government approval. Approvals of all such proposals
including composite proposals involving foreign investment/foreign
technical collaboration is granted on the recommendations of
Foreign Investment Promotion Board (FIPB).
Application for all FDI cases, except Non-Resident Indian (NRI)
investments and 100% Export Oriented Units (EOUs), should be
submitted to the FIPB Unit, Department of Economic Affairs
(DEA), Ministry of Finance.
Application for NRI and 100% EOU cases should be presented to
SIA in Department of Industrial Policy and Promotion.
Application can be made in Form FC-IL. Plain paper applications
carrying all relevant details are also accepted. No fee is payable.
The guidelines for consideration of FDI proposals by the FIPB are
at Annexure-III of the Manual for FDI.
• Prohibited Sectors

The extant policy does not permit FDI in the following cases:

i. Gambling and betting

ii. Lottery Business
iii. Atomic Energy
iv. Retail Trading
v. Agricultural or plantation activities of Agriculture
(excluding Floriculture, Horticulture, Development of Seeds,
Animal Husbandry, Pisiculture and Cultivation of
Vegetables, Mushrooms etc., under controlled conditions
and services related to agro and allied sectors) and
Plantations (other than Tea Plantations)
• General permission of RBI under FEMA

Indian companies having foreign investment approval

through FIPB route do no require any further clearance from
RBI for receiving inward remittance and issue of shares to
the foreign investors.

The companies are required to notify the concerned

Regional Office of the RBI of receipt of inward remittances
within 30 days of such receipt and within 30 days of issue of
shares to the foreign investors or NRIs
• Industrial Licensing
With progressive liberalization and deregulation of the economy,
industrial license is required in very few cases. Industrial licenses are
regulated under the Industries (Development and Regulation) Act 1951.
At present, industrial license is required only for the following: -

• Industries retained under compulsory licensing

• Manufacture of items reserved for small scale sector by larger units
• When the proposed location attracts locational restriction
The following industries require compulsory license: -

• Alcoholics drinks
• Cigarettes and tobacco products
• Electronic aerospace and defense equipment
• Explosives
• Hazardous chemicals such as hydrocyanic acid, phosgene, isocynates
and di-isocynates of hydro carbon and derivatives
• Procedure for obtaining an industrial license

Industrial license is granted by the Secretariat for Industrial Assistance

in Department of Industrial Policy and Promotion, Government of India.
Application for industrial license is required to be submitted in Form
FC-IL to Department of Industrial Policy and Promotion.

• Locational restrictions

Industrial undertakings to be located within 25 kms of the standard

urban area limit of 23 cities having a population of 1 million as per
1991 census require an industrial license. Industrial license even in
these cases is not required if a unit is located in an area designated as
an industrial area before 1991 or non-polluting industries such as
electronics, computer software, printing and other specified industries
 Environmental Clearances

• Entrepreneurs are required to obtain Statutory clearances, relating to

Pollution Control and Environment as may be necessary, for setting up
an industrial project for 31 categories of industries in terms of
Notification S.O. 60(E) dated 27.1.94 as amended from time to time,
issued by the Ministry of Environment and Forests under The
Environment (Protection) Act 1986. This list includes petrochemicals
complexes, petroleum refineries, cement, thermal power plants, bulk
drugs, fertilizers, dyes, papers etc.,

• However, if investment in the project is less than Rs.1 billion (appox. $

22.2 million), such Environmental clearance is not necessary, except in
cases of pesticides, bulk drugs and pharmaceuticals, asbestos and
asbestos products, integrated paint complexes, mining projects, tourism
projects of certain parameters, tarred roads in Himalayan areas,
distilleries, dyes, foundries and electroplating industries.
Setting up industries in certain locations considered ecologically fragile
(e.g. Aravalli Range, coastal areas, Doon Valley, Dahanu etc.) are
guided by separate guidelines issues by the Ministry of Environment and
Forests.
 SAARC ( South Asian Association for Regional Cooperation)

• SAARC involves 7 countries namely India, Bangladesh, Pakistan,

Nepal, Bhutan, Sri Lanka & Maldives

• The participants of the Summit affirmed that the birth of SAARC was a
logical response to the problems facing the region.

• Mr. Rajiv Gandhi, PM of India described the opening day of the SAARC
summit in December 1985 as an important day in the history of
resurgent Asia.

• The participants of the summit affirmed that the birth of SAARC was a
logical response to the problems facing the region.

• The fundamental goal of SAARC is to accelerate economic and social

development through optimum utilization of their human and material
resources.
According to Article I of the charter of the SAARC, the objectives of
the Association are:
• To promote the welfare of the people of South Asia & to improve their
quality of life.
• To accelerate economic growth, social progress and cultural
development in the region & to provide all individuals the opportunity to
live in dignity & to realize their full potentials.
• To promote & Strengthen collective self-reliance among the countries of
South Asia.
• To contribute to mutual trust, understanding & appreciation of one
another’s problems.
• To promote active collaboration and mutual assistance in the economic,
social, cultural, technical and scientific fields.
• To strengthen cooperative with other developing countries
• To strengthen cooperation among themselves in international forums on
matters of common interests, and
• To cooperate with international and regional organizations with similar
aims and purposes.
 International Monetary Fund (IMF)

• The IMF established on December 27,1945 with 29 countries and which

began financial operations on March 1, 1947.

• The IMF is an organization of countries that seeks to promote

international monetary cooperation, facilitate the expansion of trade,
and thus, to contribute towards increased employment and improved
economic conditions in all member countries.

• Membership in the IMF is open to every country that controls its foreign
relations and is able and prepared to fulfill the obligations of
membership.

• The IMF had a membership of 182 countries as on September 1, 2000.

 The primary purposes of IMF are the following

• Promote international monetary cooperation

• Facilitate the expansion and balanced growth of international trade

• Promote exchange stability and maintain orderly exchange

arrangements among members.

• Assist in establishing a multilateral system of payments in respect of

current transactions between member countries and assist in eliminating
foreign exchange restrictions that hamper the growth of world trade.

• Make available to members the IMP’S general resources on a

temporary basis to enable them to correct balance of payments
problems without resorting to measures that would harm national or
international prosperity.

• Shorten the duration and lessen the degree of disequilibrium in the

international balances of payments of members.
 GATT (General Agreement on Trade & Tariffs)
• The GATT, the predecessor of WTO was born in 1948

• The GATT was transformed into a World Trade Organization (WTO)

with effect from January, 1995.

• The establishment of an International Trade Organization (ITO) had also

been recommended by the Bretton woods Conference of 1944 which
had recommended the IMF and World Bank.

• The international trading system since 1948 was, at least in principle,

guided by the rules and procedures agreed to by the signatories to the
GATT which was an agreement signed by the contracting nations which
were admitted on the basis of their willingness to accept the GATT
disciplines.

• India is one of the founder members of the IMF, World Bank, GATT and
the WTO
 Objectives of GATT

• The primary objective of GATT was to expand international

trade by liberalizing trade so as to bring about all round
economic prosperity.

• Raising standard of living

• Ensuring full employment and a large and steadily growing

volume of real income and effective demand.

• Developing full use of the resources of the world.

• Expansion of production and international trade

 GATT embodied certain conventions and general principles
governing international trade among countries that adhere
to the agreement. The rules or conventions of GATT
required that: ----

• Any proposed change in the tariff, or other type of

commercial policy of a member country should not be
undertaken without consultation of other parties to the
agreement

• The countries that adhere to GATT should work towards

the reduction of tariffs and other barriers to international
trade, which should be negotiated within the framework of
GATT.
For the realization of its objectives, GATT adopted the
following principles -

• Non-discrimination

• Prohibition of quantitative restrictions

• consultation
 An Evaluation of GATT

• When the GATT was signed in 1947, only 23 nations were

party to it.

• It increased to 99 by the time of the seventh round and 117

countries participated in the next, i.e., the Uruguay round.

• In July 1995, there were 128 signatory with further 25

countries formally seeking accession to the WTO.

• One of the principal achievement of GATT was the

establishment of a forum for continuing consultations.