International Marketing

Environments in International Marketing

International Business Environment Socio-Cultural Environment Political environment

Legal-Regulatory environment
Technological environment Economic environment

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International Business Environment

Environment- the surrounding within which someone/something exists

It influences the business in more ways than one

Types of international business environment Internal and External

Internal factors (Controllable): Personnel, physical facilities, etc External Factors (Uncontrollable)- Socio-cultural factors, government policies, demographic factors, economic conditions etc

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Definition: Business environment consists of all internal and external factors that influence the complex interaction of the market, production and finance- the three basic components of our business world

Characteristics of International Business Environment:

Complex and dynamic Far reaching impact on business Needs minute study Not influenced by individuals Creates framework for business

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Factors like an ongoing war, terrorism, political relationship between countries, changes in the economic policies of the nations affect the international environment

Trade blocs, trade agreements, international economic institutions try to make the environment favorable for the member nations

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Socio-Cultural Environment
It includes religious aspects, customs, traditions, beliefs, taboos, tastes and preferences It changes with growing awareness among social groups, changing needs, expectations etc

Business needs cooperation from the social groups

Any changes in the environment need to be absorbed by the business and tapped in time High and Low context cultures Examples

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It deals with issues like

1. What is the dominant religion? 2. What are attitudes to foreign products and services? 3. Does language impact upon the diffusion of products onto markets? 4. How much time do consumers have for leisure? 5. What are the roles of men and women within society? 6. How long are the population living? Are the older generations wealthy? 7. Do the population have a strong/weak opinion on green issues?

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Political Environment

Refers to influence by political institutions

It is very sensitive and flexible Includes-Characteristics and policies of political parties, political stability, law and order situation, party in power, role of opposition party Changes in political environment creates problems/opportunities for the business It is closely connected with the economic environment

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Examples: Arab nations did not do business with countries/firms having dealings with Israel Doordarshan (India) does not allow advertisements for tobacco, alcohol etc (Policies/regulations)

Few countries ban use of children in advertisements

Developing countries did not encourage foreign capital until recently Government policies changed post liberalisation (Many important industries were allowed to be privatised)

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Legal/Regulatory Environment
Includes various laws, rules, regulations and procedures by the government that affect the formation and operations of the business Business needs to operate within the legal framework and hence the environment must be fair for business, consumers and the ecology too Excessive control or too less control will affect the business environment of the country Need to study international laws and regulations affecting business, before entering the markets E.g.: Indian retail sector & cap on FDI %

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Technological Environment
Includes the technology used in business firms, new methods, new techniques introduced as a result of developments in the field A firm unable to cope with technological changes may find it hard to survive New developments render plants and products obsolete, very quickly R&D plays a major role in bringing about changes in this environment

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Firms in developed countries can afford the investment in R&D and latest technology Developing countries imitate rather than innovate

Firms need to study the infrastructure and availability of necessary technology, before entering the foreign markets

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1. Does technology allow for products and services to be made more cheaply and to a better standard of quality? 2. Do the technologies offer consumers and businesses more innovative products and services such as Internet banking, new generation mobile telephones, etc? 3. How is distribution changed by new technologies e.g. books via the Internet, flight tickets, auctions, etc? 4. Does technology offer companies a new way to communicate with consumers e.g. banners, CRM etc?

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Economic environment
Size of the market population & demographics National income Purchasing power Availability of credit Interest rates Level of inflation Employment level