Marketing 

refers to activities a company undertakes to promote the buying or selling of a product or

service.

Marketing includes advertising, selling, and delivering products to consumers or other businesses.

Some marketing is done by affiliates on behalf of a company.

Marketing is to identify the needs and demands the customer. (Kotler)

Marketing is meeting the needs and wants of a customer. (Andrew cohen)

Needs: A needs is a consumers desires for a product and services specific benefit whether that be
functional and emotional.

Example: Food is considered as consumer’s need.

Want: A consumer want is the desire for products or services that are not necessary but which consumer
wish for.

Demand: Demand describes a consumer’s desire willingness and ability to pay a price for a specific good
or service.

Customer: A person who buys goods or service from a shop or business.

Example: Baby pamper

Consumer: A person who purchases goods and services for personal use.

Example: Baby pamper purchase for her child.

Marketing Mix: The term 'marketing mix' is a foundation model for businesses, historically centered
around product, price, place, and promotion. The marketing mix has been defined as the "set of marketing
tools that the firm uses to pursue its marketing objectives in the target market".

The Four Ps (product, price, promotion and place) are four considerations known as a marketing
mix. Attention to these four factors is necessary for maximizing the chance a product will be recognized
and bought by customers.

Product: The item or service being sold must satisfy a consumers need or desire.

Example, a KFC chicken product will include the look of the food, the shiny red buckets with the
smiling face of Colonel Sanders, the wording on the combo pack like “Friendship Bucket,” “Triple
Treat.”

Price: An item should be sold at the correct price for consumer expectations; neither too low nor too
high.

Example: pricing strategies have been used by Jio Reliance company in India to get the deepest
penetration. It almost washed away all the mobile service providers out.
Promotion: The public needs to be informed about the product and its features in order to understand
how it fills their needs or desires.

Example, the Coke leveraged the World cup 2010 and K’naan’s theme song so much that, Coca Cola and
football have all become synonymous. 

Place: The location where the product can be purchased is important for optimizing sales. Examples:
Apple iPhones are found easily in renowned e-commerce stores like Amazon and not in Zepo and less
known stores.

International Marketing: is, as you'd imagine, marketing a product or service in multiple countries.

Some products or services are only designed to be sold locally, but others can be marketed anywhere. ...
Red Bull are a great example international marketing – it's easy to forget that they're an Austrian
company.

OR

International Marketing is a performance of business activities to design product, set price, promote and
distribute the companies goods and services in more than one country.

 International marketing environment is a set of controllable (internal) and uncontrollable (external)

forces or factors that affect international marketing. International marketing mix is prepared in light of

this environment.

2. International marketing environment consists of global forces, such as economic, social, cultural, legal,

and geographical and ecological forces, that affect international marketing decisions.

3. International marketing environment for any marketer consists of internal, domestic, and global

marketing forces affecting international marketing mix.

Domestic Factors: These factors are related to the economy of the nation and it includes economic,
social and cultural, demographic, political and legal, and other domestic aspects which constitute
domestic environment for international marketing. This environment affects international marketing mix
in several ways.

Main domestic factors include:

Demographic factors: 
Demographic forces do impact the different market segments, which includes region, country, age,
educational level, ethnicity, lifestyle, cultural norms and values.

Economic Factors:
The organization production and decision making process of customer also affected by the economic
environment.
Natural Factors:
The organisation must take into account the renewal of the natural resources of the earth such as
agricultural product, forest, marine resources etc. The organizations production can also be affected by
the non renewable resources which includes coal, oil mineral.

Technological Factors:
The organization must consider the technological factors as the knowledge and skills used in production
of goods. The technology and materials used in production of goods and services helps in smoothing the
process of business.

Political and Legal Factors:

The organization should take into consideration the political and legal development relating to market and
organization during decision-making process.

Social and Cultural Factors:

The impact of organization’s services and products on the society must be taken into consideration. If
there is any element used in production process or product that is harmful to society should be avoided
since it is a social responsibility of an organization. An example is of the organizations and sectors those
who have reviewed their services and products to be considered environment friendly.

Internal or Organisational Factors:

These are internal and controllable factors. They are related to internal situation of the company dealing
with international trade. International marketer needs to use, adjust, and organize these factors to satisfy
needs and wants of the (international) target markets.
Difference between domestic marketing and international marketing

Comparison Chart

BASIS FOR
DOMESTIC MARKETING INTERNATIONAL MARKETING
COMPARISON

Meaning Domestic marketing refers to International marketing means the activities of

marketing within the production, promotion, distribution,
geographical boundaries of advertisement and selling are extend over the
the nation. geographical limits of the country.

Area served Small Large

Government Less Comparatively high

interference

Business operation In a single country More than one country

Use of technology Limited Sharing and use of latest technology.

Risk factor Low Very high

Capital requirement Less Huge

Nature of Almost same Variation in customer tastes and preferences.

customers

Research Required but not to a very Deep research of the market is required because
high level. of less knowledge about the foreign markets.

Key Differences Between Domestic and International Marketing

The significant differences between domestic and international marketing are explained below:

1. The activities of production, promotion, advertising, distribution, selling and customer

satisfaction within one’s own country is known as Domestic marketing. International marketing is
when the marketing activities are undertaken at the international level.

2. Domestic marketing caters a small area, whereas International marketing covers a large area.
 3. In domestic marketing, there is less government influence as compared to the international
marketing because the company has to deal with rules and regulations of numerous countries.

4. In domestic marketing, business operations are done in one country only. On the other hand, in
international marketing, the business operations conducted in multiple countries.

5. In international marketing, there is an advantage that the business organisation can have access to
the latest technology of several countries which is absent in case domestic countries.

6. The risk involved and challenges in case of international marketing are very high due to some
factors like socio-cultural differences, exchange rates, setting an international price for the
product and so on. The risk factor and challenges are comparatively less in the case of domestic
marketing.

7. International marketing requires huge capital investment, but domestic marketing requires less
investment for acquiring resources.

8. In domestic marketing, the executives face less problem while dealing with the people because of
similar nature. However, in the case of international marketing, it is quite difficult to deal with
customers of different tastes, habits, preferences, segments, etc.

9. International marketing seeks deep research on the foreign market due to lack of familiarity,
which is just opposite in the case of domestic marketing, where a small survey will prove helpful
to know the market conditions.

Domestic marketing comprises of the marketing strategies used by a company to attract customers and

compel them to purchase a product or service within a local market. The marketing activities
in domestic marketing are restricted to the local boundaries, and a limited number of customers are
served

International Marketing is defined as the performance of business activities designed to plan, price,
promote, and direct the flow of a company's goods and services to consumers or users in more than one
nation for a profit. ... No matter domestic or international the Marketing objective remains the same
for marketers.

Stages and challenges of international marketing involvement:

 No direct foreign marketing

 Infrequent foreign marketing
 Regular foreign marketing
 International marketing
 Global marketing

No direct marketing:

Products reach foreign markets indirectly

Trading companies

–Foreign customers who contact firm

–Wholesalers

–Distributors

–Web sites

•Foreign orders pique a company’s interest to seek additional international sales

Infrequent foreign marketing:

•Caused by temporary surpluses

–Variations in production levels

–Increases in demand

•Firm has little or no intention of maintaining continuous market representation–Foreign sales decline
when demand or surplus decreases

–May withdraw from international markets

•Little or no change in company organization or product lines

Regular foreign marketing:

•Firm has production capacity devoted to foreign markets

•Firm employs domestic or foreign intermediaries

–Uses its own sales force

–Sales subsidiaries in important markets

•Products allocated or adapted to foreign markets as demand grows

•Firm depends on profits from foreign markets

Global marketing:

•Company treats world, including home market as one market

•Market segmentation decisions no longer focused on national borders

–Defined by income levels, usage patterns, or other factors

•More than half of revenues come from abroad

•Organization takes on global perspective

Strategic Orientation:

•Domestic market extension orientation

•Multi domestic market orientation

•Global market orientation

Domestic Market orientation:

•International operations viewed as secondary

•Prime motive is to market excess domestic production

•Firm’s orientation remains basically domestic

•Minimal efforts are made to adapt product or marketing mix to foreign markets •Firms with this
approach are classified as ethnocentric

Once a company has decided to go international, it has to decide the degree of marketing involvement and
commitment it is prepared to make. These decisions should reflect considerable study and analysis of
market potential and company capabilities – a process not always followed. Many companies begin
tentatively in international marketing, growing as they again experience and gradually changing strategy
and tactics as they become more committed. Others enter international marketing after much research and
with fully developed long range plans, prepared to make investments to acquire a market position and
often evincing bursts of international activities.

Regardless of the means employed to gain entry into foreign market, a company may make little or no
actual; market investment – that is, its marketing involvement may be limited to selling a product with
little or no thought given to development of market control. Alternatively, a company may become totally
involved and invest large sums of money and effort to capture and maintain a permanent, specific position
in the market. In general, one of five (sometimes overlapping) stages can describe the international
marketing involvement of a company. Although the stages of international are presented here in a linear
order, the reader should not infer that a firm progresses from one stage to another; quite to the contrary, a
firm may begin its international involvement at any one stage or be in more than one stage
simultaneously. For example, because of a short product life cycle and a thin but widespread market for
many technology products, many high tech companies large and small see the entire world, including
their home market, as a single market and strive to reach all possible customers as rapidly as possible.

No direct foreign marketing:

A company in this stage does not actively cultivate customers outside national boundaries; however this
company’s products may reach foreign markets. Sales may be made to trading companies as well as
foreign customers who come directly to the firm. Or products may reach foreign markets via domestic
wholesalers or distributors who sell abroad without explicit encouragement or even knowledge of the
producer. As companies develop web sites on the internet, many receive orders from international Web
surfers. Often an unsolicited order from a foreign is what piques the interest of a company to seek
additional international sales.

Infrequent Foreign marketing:

Temporary surpluses caused by variations in production levels or demand may result in infrequent
marketing overseas. The surpluses are characterized by their temporary nature; therefore sales to foreign
markets are made as goods are available, with little or no intention of maintaining continuous market
representation. As domestic demand increases and absorbs surpluses, foreign sales activity is withdrawn.
In this stage, little or no change is seen in company organization or product lines. However, few
companies today fit this model because customers around the world increasingly seek long term
commercial relationships. Further, evidence exists that financial returns from initial international
expansions are limited.

Benetton, one of the largest clothing manufacturers in Italy has a global presence across 120 countries and
more than 5,000 stores.

While it is initial few years of operation witnessed expansion within Italy, the company ventured outside
Italy for the first time in 1969 when it opened its store in Paris.

Benetton entered India in 1991-92 as a joint venture with DCM Group, now a 100 per cent subsidiary.
Brand United Colors of Benetton is present across 106 stores in 45 cities and brand Sisley was launched
in India in 2006.

Regular Foreign marketing:

At this level, the firm has permanent productive capacity devoted to the production of goods to be
marketed in foreign markets. A firm may employ foreign or domestic overseas intermediaries or it may
have its own sales force or sales subsidiaries in important markets. The primary focus of operations and
production is to service domestic market needs. However, as overseas demand grows, production is
allocated for foreign markets, and products may be adapted to meet the needs of individual foreign
markets. Profit expectations from foreign markets move from being seen as a bonus to regular domestic
profits to a position in which the company becomes dependent on foreign sales and profits to meet its
goals.

Meter Man, a small company (25 employees) in southern Minnesota that manufactures agricultural
measuring devices, is a good example of a company in this stage. In 1989, the 35 year old company began
exploring the idea of exporting; by 1992 the company was shipping product to Europe. Today, a third of
Meter Man’s sales are in 365 countries, and soon the company expects international sales to account for
about half of its business. When you start exporting you say to yourself this will be icing on the cake, says
the director of sales and marketing. But now going international has become critical to existence.

Reactive marketing is marketing or advertising that places your product or service in the places where
people are already actively looking. As you can imagine, there is less of a gamble of your marketing or
advertising efforts converting into a sale if they see your product or service where they are already
looking.

Example: Hot sauce

Reactive Marketing Channel 1: Search Engines
If you are looking for a product or service you want or need, you will most likely be looking for it on a
search engine such as Google, Yahoo, or Bing. Next, you will research what business to buy from based
on the results displayed on the search engine results pages (SERPs) by entering in the appropriate
keywords. Depending on your business model and what products or service you offer, it may be
important to rank on search engines in the following areas.

Paid ads are located on the very top of the page and, at the time of this writing, there is a maximum of
four ads. If you do not rank in the organic search or map listings area, this is the best solution to use until
you do. Even if you do rank, it’s not a bad strategy to have a paid ad running, because your business will
show up more places on the front page of search engines, where your clients or customers are already
looking. Although search engines make it easy to set up a paid ad, it is also very easy to waste all your
paid ad budget without having a single conversion or sale. If you are using Google’s Ad platform, I would
recommend having your Google Ads campaign developed and managed by an agency that is a Google
Partner. It will increase opportunities to make you profitable and save you money compared to trying to
do it yourself.

Local search is the Maps listings just below the paid ads. Sometimes there will not be a pack of local
map listings (called the local pack) for the keywords your clients or customers type into the search engine
but if there are, you’re in luck. The local pack is the best converting place on the first page of Google and
other search engines. There are only three listings that show up on the front page of Google, so if you
want to organically rank in them, you should find an agency that specializes in Local Search
Optimization (LSO). Because there are only three listings on the map pack, LSO is highly competitive.

The organic search results are located below the paid ads (if there are paid ads) and the map pack
section (if there is one). There are typically ten listings per page, so your chances of ranking are higher
than in the map pack. The organic search results convert very well, and the higher you are at the top of the
page, the better chance you have for conversions. There are more than 200 factors that go into ranking in
this section of Google, so you are going to need to find an agency that is very experienced in Search
Engine Optimization (SEO). Do your homework and ask for references from other clients they have
ranked because a lot of agencies say they offer this service in-house but use an offshore vendor to
perform their SEO. A company that doesn’t have SEO in-house will end up costing you ten times more
time and money than one that does.

Reactive Marketing Channel 2: Directory Websites

Dedicated directory websites such as OpenTable and TripAdvisor are the authority in their business
category. They are the top-of-mind place people go when they are interested in what these websites offer.
If you are a restaurant, you need to be listed in OpenTable. If you are a hotel, you need to be listed in
TripAdvisor. If there is a website that is an authority in your business’s niche, you need to be listed on it,
because that is where people are already looking for what your company has to offer.

Reactive Marketing Channel 3: Phone Book

The phone book was the ultimate form of reactive marketing. Entire business strategies were built around
being in the phone book and on top of the listing for your business category. Today, though, the phone
book is barely used by anyone, and its use will continue to decline until it stops being published
altogether. The same goes for the online version because unlike websites such as OpenTable or
TripAdvisor, the online versions of the phone book are not the authority in their space for online searches
of products or services; Google is the current authority.

What is Proactive Marketing

Proactive marketing is marketing or advertising that places your product or service in the places where
people are not already looking. The people looking for your product or service are performing another
activity, such as reading the Sunday paper, watching the local news on TV, or scrolling through a social
media feed. Even though these people may be your target demographic, they need to be disrupted by an
ad that is powerful enough to pull them away from their original intent and make them act on your ad by
calling your phone number, typing in your domain name, or clicking a button that takes them to your
website. Because of this disruption, proactive marketing will not have as high of a conversion rate as your
reactive marketing efforts. Proactive marketing is very powerful, though, because it can reach people that
are not already looking for your products or services, and that number is typically going to be larger than
the ones that are looking for your services. Proactive marketing can create awareness about your product
or service and seduce people into a consideration stage until they are ultimately ready to make a
purchasing decision. Proactive marketing also creates a top-of-mind awareness for your brand and that is
what you want people to remember when it is the time for them to buy.

Proactive Marketing Channel 1: Social Media Marketing

I’m a huge fan of social media marketing because of how large an opportunity it can be if you use it
correctly. With social media marketing, you need to create exceptional content that speaks to your current
followers; however, the largest opportunity comes from developing an ad and pushing it out to your
future target audience. Even with the recent Facebook algorithm change, it is still the most cost-effective
way to reach your target audience but remember: The content needs to be exceptional. It needs to be
exceptional because your audience is not on social media to have ads presented to them. They are on
social networks to be entertained or learn about their industry. Your ad is proactively reaching out to your
target audience, asking them to stop what they are doing, and pivot to click on your content to read or
watch it. Social media has a very low point of entry for marketers to be able to post their content, and that
is what makes it so approachable. However, it is very complicated to execute correctly, which makes it
easy to lose all the money and time you have invested without a single return. Remember, great social
media marketing ads, such as Squatty Potty’s Pooing Unicorn, don’t disrupt the user and ask them to
pivot from being entertained, they simply shift the user from being entertained from the post they are
currently reading to the one the marketer wants them to view. When that happens flawlessly, you have a
successful social media ad campaign.

Proactive Marketing Channel 2: Display Advertising

Unless it is used for retargeting purposes, display advertising is one of the most disruptive forms of
marketing available. Imagine that while reading an online news publication on your mobile device, you
are fed an ad that is not remotely related to what you are currently reading. The ad wants you to click it
and be taken off the platform you’re on to another website or application so you can learn more about the
product or service the ad is pushing, all in the hopes of you making a purchase. If this sounds like a
stretch, you are correct. Display ads have one of the lowest forms of conversions of all marketing types.
On top of display ads already having a low conversion rate, it seems like everyone is pushing this type of
advertising. I have recently noticed traditional advertising outlets such as TV, radio, billboard, and the
Yellow Pages advertisers offering display advertising. I have even seen American Express offering
display advertising. Just like social media, it may be easy to get a display ad live, but it takes an agency
that knows what they’re doing to make it profitable. If developed and managed correctly, though, it is a
great top-of-the-funnel lead acquisition channel. This is because of the proactive reach that display
advertising can have to your target audience. Imagine wanting to reach out to all mobile device users in
the USA with an ad about your new dating application that is straight out of Black Mirror. That is where
display advertising holds its power.

Proactive Marketing Channel 3: Television and Radio

I have seen television and radio advertising work effectively for many advertisers. It has a wide proactive
reach and is perfect for getting and keeping your name out in front of your current and future customers,
and it is especially effective in local markets. What makes it dangerous is that some media companies will
gladly accept payment for your commercial and help you produce it so you can get it live. What many of
them lack is knowing what the goal of your commercial is and being able to prove the return on your
investment. From my experience, very few TV and radio advertisers know where their marketing fits into
a potential customer’s buying journey and take the time to make sure their advertising is trackable
throughout that journey until you gain a customer and make a sale. If you are selling media, you have an
obligation to show a return on your client’s investment, and that is your goal. The goal is not to “sell
media.” TV and radio advertising are very expensive compared to digital marketing, but if you want to
cover a market, TV is one of the best forms of marketing available. The secret is finding a media
consultant that wants to prove their return on your investment by working with your other marketing
vendors to demonstrate key performance indicators (KPIs) such as visitors they sent to your website, how
long they stayed on your website, and if they made a purchase or contacted your business.

Proactive Marketing Channel 4: Print Advertising

Print advertising is like social media marketing in a physical format. There are lots of articles to read, but
you are constantly being disrupted by ads that are trying to incite an emotion within you that makes you
take action on their advertisement. The advertiser wants you to give them a moment of your time to hear
what they have to say about their product or service. Some print publications are niche industry specific,
so your target audience is there for a very specific topic. Other publications are more general, so your
audience may be there for education or entertainment. The more general the topic, the more disruptive the
ad needs to be to grab their attention. Print advertising is proactive marketing because even though the
target audience is there for a specific reason, they are not consuming the publication with the intention of
buying products or services. They are picking it up to be educated or entertained. Just like TV and radio,
there needs to be a goal and key performance indicators of the ad. The advertiser should be aware of these
goals and KPIs and should work towards helping you accomplish them. If they are not interested in your
goals, they are probably not the best partner for you to work with.

Planning process:

PESTEL analysis is an important and widely used tool that helps show the big picture of a firm’s external
environment, particularly as related to foreign markets. PESTEL is an acronym for the political,
economic, sociocultural, technological, environmental, and legal contexts in which a firm operates.

PESTEL Analysis

1. Political

o How stable is the political environment in the prospective country?

o What are the local taxation policies? How do these affect your business?

o Is the government involved in trading agreements, such as the European Union (EU), the North
American Free Trade Agreement (NAFTA), or the Association of Southeast Asian Nations (ASEAN)?

o What are the country’s foreign-trade regulations?

o What are the country’s social-welfare policies?

2. Economic

o What are the current and forecast interest rates?

o What is the current level of inflation in the prospective country? What is it forecast to be? How does
this affect the possible growth of your market?
o What are local employment levels per capita, and how are they changing?

o What are the long-term prospects for the country’s economy, gross domestic product (GDP) per capita,
and other economic factors?

o What are the current exchange rates between critical markets, and how will they affect production and
distribution of your goods?

3. Sociocultural

o What are the local lifestyle trends?

o What are the country’s current demographics, and how are they changing?

o What is the level and distribution of education and income?

o What are the dominant local religions, and what influence do they have on consumer attitudes and
opinions?

o What is the level of consumerism, and what are the popular attitudes toward it?

o What pending legislation could affect corporate social policies (e.g., domestic-partner benefits or
maternity and paternity leave)?

o What are the attitudes toward work and leisure?

4. Technological

o To what level do the local government and industry fund research, and are those levels changing?

o What is the local government’s and industry’s level of interest and focus on technology?

o How mature is the technology?

o What is the status of intellectual property issues in the local environment?

o Are potentially disruptive technologies in adjacent industries creeping in at the edges of the focal
industry?

5. Environmental

o What are the local environmental issues?

o Are there any pending ecological or environmental issues relevant to your industry?

o How do the activities of international activist groups (e.g., Greenpeace, Earth First!, and People for the
Ethical Treatment of Animals [PETA]) affect your business?

o Are there environmental-protection laws?

o What are the regulations regarding waste disposal and energy consumption?

6. Legal

o What are the local government’s regulations regarding monopolies and private property?

o Does intellectual property have legal protections?

o Are there relevant consumer laws?

o What is the status of employment, health and safety, and product safety laws?

Political Factors

The political environment can have a significant influence on businesses. In addition, political factors
affect consumer confidence and consumer and business spending. For instance, how stable is the political
environment? This is particularly important for companies entering new markets. Government policies on
regulation and taxation can vary from state to state and across national boundaries. Political
considerations also encompass trade treaties, such as NAFTA, ASEAN, and EU. Such treaties tend to
favor trade among the member countries but impose penalties or less favorable trade terms on
nonmembers.

Economic Factors

Managers also need to consider macroeconomic factors that will have near-term and long-term effects on
the success of their strategy. Inflation rates, interest rates, tariffs, the growth of the local and foreign
national economies, and exchange rates are critical. Unemployment, availability of critical labor, and the
local cost of labor also have a strong bearing on strategy, particularly as related to the location of
disparate business functions and facilities.

Sociocultural Factors

The social and cultural influences on business vary from country to country. Depending on the type of
business, factors such as the local languages, the dominant religions, the cultural views toward leisure
time, and the age and lifespan demographics may be critical. Local sociocultural characteristics also
include attitudes toward consumerism, environmentalism, and the roles of men and women in society. For
example, Coca-Cola and PepsiCo have grown in international markets due to the increasing level of
consumerism outside the United States.

Making assumptions about local norms derived from experiences in your home market is a common
cause for early failure when entering new markets. However, even home-market norms can change over
time, often caused by shifting demographics due to immigration or aging populations.

Technological Factors

The critical role of technology is discussed in more detail later in this section. For now, suffice it to say
that technological factors have a major bearing on the threats and opportunities firms encounter. For
example, new technology may make it possible for products and services to be made more cheaply and to
a better standard of quality. New technology may also provide the opportunity for more innovative
products and services, such as online stock trading and remote working. Such changes have the potential
to change the face of the business landscape.

Environmental Factors

The environment has long been a factor in firm strategy, primarily from the standpoint of access to raw
materials. Increasingly, this factor is best viewed as both a direct and indirect cost for the firm.

Environmental factors are also evaluated on the footprint left by a firm on its respective surroundings. For
consumer-product companies like PepsiCo, for instance, this can encompass the waste-management and
organic-farming practices used in the countries where raw materials are obtained. Similarly, in consumer
markets, it may refer to the degree to which packaging is biodegradable or recyclable.

Legal Factors

Finally, legal factors reflect the laws and regulations relevant to the region and the organization. Legal
factors can include whether the rule of law is well established, how easily or quickly laws and regulations
may change, and what the costs of regulatory compliance are. For example, Coca-Cola’s market share in
Europe is greater than 50 percent; as a result, regulators have asked that the company give shelf space in
its coolers to competitive products in order to provide greater consumer choice.2

Many of the PESTEL factors are interrelated. For instance, the legal environment is often related to the
political environment, where laws and regulations can only change when they’re consistent with the
political will.

PESTEL and Globalization

Over the past decade, new markets have been opened to foreign competitors, whole industries have been
deregulated, and state-run enterprises have been privatized. So, globalization has become a fact of life in
almost every industry.3 This entails much more than companies simply exporting products to another
country. Some industries that aren’t normally considered global do, in fact, have strictly domestic players.
But these companies often compete alongside firms with operations in multiple countries; in many cases,
both sets of firms are doing equally well. In contrast, in a truly global industry, the core product is
standardized, the marketing approach is relatively uniform, and competitive strategies are integrated in
different international markets.4 In these industries, competitive advantage clearly belongs to the firms
that can compete globally.

A number of factors reveal whether an industry has globalized or is in the process of globalizing. The
sidebar below groups globalization factors into four categories: markets, costs, governments,
and competition. These dimensions correspond well to Thomas Friedman’s flatteners (as described in his
book The World Is Flat), though they are not exhaustive.5

Factors Favoring Industry Globalization

1. Markets

o Homogeneous customer needs

o Global customer needs

o Global channels

o Transferable marketing approaches

2. Costs

o Large-scale and large-scope economies

o Learning and experience

o Sourcing efficiencies

o Favorable logistics

o Arbitrage opportunities

o High research-and-development (R&D) costs

3. Governments

o Favorable trade policies

o Common technological standards

o Common manufacturing and marketing regulations

4. Competition

o Interdependent countries

o Global competitors6

Markets

The more similar markets in different regions are, the greater the pressure for an industry to globalize.
Coca-Cola and PepsiCo, for example, are fairly uniform around the world because the demand for soft
drinks is largely the same in every country. The airframe-manufacturing industry, dominated by Boeing
and Airbus, also has a highly uniform market for its products; airlines all over the world have the same
needs when it comes to large commercial jets.

Costs

In both of these industries, costs favor globalization. Coca-Cola and PepsiCo realize economies of scope
and scale because they make such huge investments in marketing and promotion. Since they’re promoting
coherent images and brands, they can leverage their marketing dollars around the world. Similarly,
Boeing and Airbus can invest millions in new-product R&D only because the global market for their
products is so large.

Governments and Competition

Obviously, favorable trade policies encourage the globalization of markets and industries. Governments,
however, can also play a critical role in globalization by determining and regulating technological
standards. Railroad gauge—the distance between the two steel tracks—would seem to favor a simple
technological standard. In Spain, however, the gauge is wider than in France. Why? Because back in the
1850s, when Spain and neighboring France were hostile to one another, the Spanish government decided
that making Spanish railways incompatible with French railways would hinder any French invasion.

These are a few key drivers of industry change. However, there are particular implications of
technological and business-model breakthroughs for both the pace and extent of industry change.
The rate of change may vary significantly from one industry to the next; for instance, the computing
industry changes much faster than the steel industry. Nevertheless, change in both fields has prompted
complete reconfigurations of industry structure and the competitive positions of various players. The idea
that all industries change over time and that business environments are in a constant state of flux is
relatively intuitive. As a strategic decision maker, you need to ask yourself this question: how accurately
does current industry structure (which is relatively easy to identify) predict future industry conditions?

Importing as a Stealth Form of Internationalization

 Ironically, the drivers of globalization have also given rise to a greater level of imports. Globalization in
this sense is a very strong flattener. Importing involves the sale of products or services in one country that
are sourced in another country. In many ways, importing is a stealth form of internationalization. Firms
often claim that they have no international operations and yet—directly or indirectly—base their
production or services on inputs obtained from outside their home country. Firms that engage in
importing must learn about customs requirements, informed compliance with customs regulations, entry
of goods, invoices, classification and value, determination and assessment of duty, special requirements,
fraud, marketing, trade finance and insurance, and foreign trade zones. Importing can take many forms—
from the sourcing of components, machinery, and raw materials to the purchase of finished goods for
domestic resale and the outsourcing of production or services to nondomestic providers.

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.

Strengths and weaknesses are internal to your company—things that you have some control over and can
change. Examples include who is on your team, your patents and intellectual property, and your location.

Opportunities and threats are external—things that are going on outside your company, in the larger
market. You can take advantage of opportunities and protect against threats, but you can’t change them.
Examples include competitors, prices of raw materials, and customer shopping trends.

A SWOT analysis organizes your top strengths, weaknesses, opportunities, and threats into an organized
list and is usually presented in a simple two-by-two grid. Go ahead and download our free template if you
just want to dive right in and get started.

Strengths

Strengths are internal, positive attributes of your company. These are things that are within your control.

 What business processes are successful?

 What assets do you have in your team, such as knowledge, education, network, skills, and
reputation?

 What physical assets do you have, such as customers, equipment, technology, cash, and patents?

 What competitive advantages do you have over your competition?

Weaknesses

Weaknesses are negative factors that detract from your strengths. These are things that you might need to
improve on to be competitive.

 Are there things that your business needs to be competitive?

 What business processes need improvement?

 Are there tangible assets that your company needs, such as money or equipment?
 Are there gaps on your team?

 Is your location ideal for your success?

Opportunities

Opportunities are external factors in your business environment that are likely to contribute to your
success.

 Is your market growing and are there trends that will encourage people to buy more of what you
are selling?

 Are there upcoming events that your company may be able to take advantage of to grow the
business?

 Are there upcoming changes to regulations that might impact your company positively?

 If your business is up and running, do customers think highly of you?

Threats

Threats are external factors that you have no control over. You may want to consider putting in place
contingency plans for dealing them if they occur.

 Do you have potential competitors who may enter your market?

 Will suppliers always be able to supply the raw materials you need at the prices you need?

 Could future developments in technology change how you do business?

 Is consumer behavior changing in a way that could negatively impact your business?

 Are there market trends that could become a threat?