NOTES

Specialization Group: International Business (IB)

INTERNATIONAL BUSINESS MANAGEMENT

Code: KMBN IB 01
Unit 3 ( 8 hours)
International Marketing: Nature & significance, International Marketing Orientations,
International Segmentation, International Product Life Cycle International HRM:
International Staffing Approaches, Expatriate Management, International Labor Relations.
International marketing may be defined as an activity related to the sale of goods and
services of one country in the other, subject to the rules and regulations framed by the
countries concerned.
In simple words, it refers to marketing activities and operations among the countries of the
world following different political and economic systems.
International marketing is marketing abroad i.e., beyond the political boundaries of the
country. International marketing brings countries closer due to economic needs and
facilitates understanding and co-operation among them.
It is essentially a constructive economic and commercial activity which is useful and
beneficial to all participating countries. International marketing act as an instrument of
global growth and development.
What is International Marketing – Scope: Establishing, Joint Ventures and
Collaboration, Licensing Arrangements, Consultancy Services and a Few Others
The scope of international marketing essentially includes exporting of goods and services
in foreign markets. The exporter performs various activities, other than exporting the
goods and services.
. Establishing:
A branch in foreign market for processing, packaging or assembling the goods according to
the needs of the markets. Sometimes complete manufacturing is carried out by the branch
through direct investments.
2. Joint Ventures and Collaborations:

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International marketing includes establishing joint ventures and collaboration in foreign
countries with some foreign firms for manufacturing and/or marketing the product. Under
these arrangements, the company works in collaboration with the foreign firm in order to
exploit the foreign markets.
3. Licensing Arrangements:
The company, under the system, establishes licensing arrangements with the foreign term
whereby foreign enterprises are granted the right to use the exporting company’s know-
how, viz., patents, processes or trademarks according to the terms of agreement with or
without financial investment.
ADVERTISEMENTS:
4. Consultancy Services:
Offering consultancy services are also covered in international marketing scope. The
exporting company offers consultancy services by undertaking turnkey projects in foreign
countries. For this purpose, the exporting company sends its consultants and experts in
foreign countries who guide and direct the manufacturing activities on the spot.
5. Technical and Managerial Know-How:
The scope of international marketing also includes the technical and managerial know-how
provided by the exporting company to the importing company. The technicians and
managerial personnel of the exporting company guide and train the technicians and
managers of the importing company.

What is International Marketing – Characteristics: Different Legal System, Market

Characteristics, Monetary System and Procedure and Documentation
1. Different Legal System:
Every Country has its own legal system. Some of the countries follow English Common
Law while others follow the civil law. Some of the European countries are having their
own legal system. This difference in the legal system among different countries increases
the difficulties of businessmen.
It is not sure for the businessmen that which legal system will be applicable to their
business transactions. There must be uniform legal system. However some of the agencies
are trying to make it uniform for all countries. The United Nations Commission on

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International Trade Law is also supporting the opinion of uniformity and is doing, its
efforts to bring uniformity in International trade Law.
2. Market Characteristics:
The Market Characteristics of every Country is different due to the environmental factors,
demand patterns, Government Controls etc. In some countries like India and USA the
market characteristics are found different from state to state. It is because of all above
factors responsible for the market characteristics.
3. Monetary System:
The monetary system of each country is decided by the government of that country and the
exchange value of country’s currency is being determined by the forces of supply and
demand.
4. Procedure and Documentation:
Every country has its own procedure of documentation requirements for the purpose of
experts. Every business house has to comply with these rules and regulation for the
purposes of export and imports.

What is International Marketing – Significance: Survival, Growth of International

Market, Sales and Profits, Benefit from Diversification and a Few Others
The term International marketing refers to exchanges across national boundaries for the
satisfaction of human needs and wants. International Marketing affects consumers in many
ways, though its importance is neither well understood nor appreciated. The significance of
international marketing may be explicitly in order to dispel such nations.
1. Survival:
Most of the countries in the world are lacking of market size, resources and opportunities.
Therefore it is their compulsion to trade with other countries for their survival. Since the
European Countries are small in size therefore without overseas markets their firms would
not have sufficient economies of scale to be competitive with U.S. based firms. It is
pertinent to mention here that international competition may not be a matter of choice
when the survival is at stake.
Will Mitchell, J. Myles Shaver and Yeung Bernard conducted a study on “Performance
following changes in International Presence in Domestic and Transition Industries. In a

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study of five pharma-sector industries, he found that international expansion is necessary
when overseas firms enter a domestic market. He revealed that the firms having substantial
market share and international experience expanded their business activities successfully.
And all those firms disappeared that retrenched after an international expansion.”
2. Growth of International Market:
Despite having numerous problems like economic and marketing problems, the developing
nations are considered be an excellent market to do business. The vast potential of
international markets can never be ignored. According to one survey total world market is
four time longer in comparison to U.S. Market.
A slow growth of U.S. population and changing life style viewed the growth of other
markets with a critical eye. It is evident that Russian smokers show no concern about the
health risks. And International giants Philip Moris Co, R.J. Reynolds, Tobacco
International SA and British-American Tobacco Co. have entered the market very
aggressively.
3. Sales and Profits:
ADVERTISEMENTS:
It is clear that there is a large potential to sell the products in the international market. The
International Market constitutes a large amount of share of the total business of many
firms. Further it is evident that many large U.S. based companies have performed very well
in the overseas market. IBM and Compaq are the best examples in this regard.
Both of them have maximized their sales in abroad in comparison to their domestic market.
In case of coca-cola it is important to mention here that 80 percent of the total operating
profit is contributed by the international sales account of the company. Thus market is on
saturation level, where as there is still a great potential for its future growth in other
countries. Thus it can be concluded that international market provides huge potential to
increase sales value and profits of the firms.
4. Benefit from Diversification:
The investors can be benefited from global diversification. It is evident that the demand of
certain products is affected by cyclical factors like recession and seasonal factors like
climatic change. The sale of such products fluctuate adversely due to all these variables. It

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is the only solution for such kind of risks, to diversify a company’s risk and to consider
foreign market as only solution to overcome with variable demand.
Such markets can provide outlets for excess production capacity and can easily counter
such fluctuations. Seasonal factors, for instance, may affect consumption level of soft
drinks. And keeping in mind such limitation, the soft drink industries are spreading their
marketing activities throughout the global market. It has been observed that global selling
has enabled the company to carry on with production throughout the year and help the
companies to stabilize their business.
5. Inflation and Price Modernization:
The benefits of International trade are readily self-evident. Exports are always considered
beneficial to a country. On the other hand imports can also be highly beneficial to a
country. Because there is not any incentive for domestic firms to moderate these prices.
The lack of alternatives in imported products may compel consumers to pay more for the
products to local firms, resulting in inflation and excess profits for local firms.
It is evident that in Europe, when the prices of orange Juice were jumped up, their
customers switched over to other alternative drinks. Finally it took ten years for citrus
industry to win back these consumers. The U.S. orange growers finally compromised to
live with import as they found that alternative juice is able to keep consumers by
minimizing the price increases.
6. International Marketing and Standard of Living:
International marketing helps the countries and their citizens to increase their standard of
living. On the other hand without trade, there may be product shortage and which may
force people to pay more or less. International trade make easy for industries to get
specialization and gain access to raw materials.
And at the same time it foster competition and efficiency. In overall it leads to the
conclusion that international trade is helpful to provide their citizen higher standard of
living.

What is International Marketing – Factors Affecting: Social Factors, Economic

Factors, Competition, Political Factors, Legal Environment, Logistics and Risk 
It is important at this stage to discuss various factors affecting international marketing.

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These factors can be divided in two ways:
(1) Controllable factors
(2) Uncontrollable factors.
The controllable factors refer to those variables which are under the control of company’s
management. It includes the control and design of elements of marketing mix. The
Company is in a position to control and design product, price, place and promotion. All
marketing activities relating to these factors can be well controlled and managed by the
company’s management.
On the other hand uncontrollable factors are those, which are beyond the control of the
company. It consists of total environment in which the marketing mix elements operates.
Some of the relevant factors to international marketing are given as under:
1. Social Factors:
The social factors of a nation determine the value system of the society, which in turn
affect the International Marketing mix. Social factors are culture, caste, customs,
languages, life style, standard of living, climate and marketing infrastructure etc. The
demand for goods and services is affected by all these factors.
There is a lot of change in quality of life style of the people. They are willing to purchase
many consumer durables like T.V., Fridge, Computer etc., even when they cannot afford to
buy it. It became possible because of availability of hire purchase system or installment
basis.
Cultural factors also influence every aspect of International Marketing. International
marketing decisions are based on recognition of needs and wants of the customers. The
cultural factors help to understand the behaviour patterns and life style of the societies
culture, in which individual has grown up. Thus an individual’s perception is groomed and
influenced by cultural factors.
2. Economic Factors:
The economic factors are the most significant determinants of International Marketing.
They also affect the survival of a business organization and its success.
The economic factors can be studied under following categories:
(i) Exim Policy of the Country
(ii) Commercial Policy

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(iii) Financial system
(iv) Monetary system
(v) Currency restrictions
(vi) Inflation/ Deflation.
The decision regarding international marketing mix is taken by keeping in mind the above
stated economic factors which determine the economic environment of a country.
Therefore before going for export business or before going for any decision regarding
international marketing mix, it is necessary to examine the economic factors, which
determines the economic environment of a country.
3. Competition:
Competition is an important determinant of international marketing mix. The business firm
has to face competition in his home market as well as in the international market. The
international marketing mix is decided by keeping in mind the strategies of the competitors
for the product, price, place and promotion.
4. Political Factors:
The International Marketing mix is strongly affected by the political environment of the
country. A marketer has to operate its business activities in a given political factors. The
business operations are greatly affected by the political constraints at different levels. The
change in political scenario leads to change in the government policies.
The following impact is associated with the political factors- (i) If the government is
stable, it leads to stable policies relating to the business (ii) If frequent changes are there in
the government, then it leads to frequent changes in the policies of the government relating
to the business operations.
The political factors play a major role in deciding the operation of a business organization
in the international business. Thus a business organization has to study and analyse the
political environment of a particular country, if it has decided to carry out its business
operations.
Before going for any decision relating to the International business the business
organization has to carry out swot analysis and cost benefit analysis of International
marketing mix. It must be analysed, keeping in mind the political scenario of a particular
country. The government policy of a country must be assessed and the role of private

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 sector, small scale industry is also important. Finally it must be analysed that what
significant role of Multinational Corporation is there in the national economy.
5. Legal Environment:
International Marketing decisions are influenced by legal environment pertaining to
competition, price setting, taxation, law etc. The legal system of a particular country
should be studied well before doing business with that country.
6. Logistics:
International Marketing mix is influenced by the Logistics. It includes mode of
transportation, cost of transportation, inventory management, material handling and
warehousing etc. It is necessary to study all these factors, before go in for any decision
regarding international marketing mix.
7. Risks:
The analysis of the risk factor is an important task to b

Market Orientations of International Marketing

Different attitudes towards company’s involvement in international marketing process are
called international marketing orientations. The EPRG framework addresses the way
strategic decisions are made and how the relationship between headquarters and its
subsidiaries is established. There are four broad types of orientation of a firm towards
foreign marketing:
ETHNOCENTRIC:
 The ethnocentric orientation of a firm considers that the products, marketing strategies and
techniques applicable in the home market are similar to that in the overseas market.
 In such a firm, all foreign marketing operations are planned and carried out with little or no
difference in product formulation and specifications, pricing strategy, distribution and
promotion measures.
 For example, Walmart’s offerings remain the same throughout.
REGIOCENTRIC:
 In regiocentric approach, the firm accepts a regional marketing policy covering a group of
countries which have comparable market characteristics such as economic, cultural or

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 political similarities and formulates operational strategies based on region instead of
countries.
 For example, countries like Pakistan, India and Bangladesh are very similar. They possess
a strong regional identity.
GEOCENTRIC:
 In geocentric orientation, the firms accept a worldwide approach to marketing and target
“global consumers” with similar tastes.
 There are similarities between geocentric and regiocentric approaches in the international
market except that the geocentric approach calls for a much greater scale of operation.
 For example, Nokia offers products to a similar kind of consumer worldwide.
POLYCENTRIC:
 When a firm adopts polycentric approach to overseas markets, it attempts to organize its
international marketing activities on a country to country basis.
 Polycentric approach works better among countries which have significant economic,
political and cultural differences.
 For example, McDonald’s tailoring its offerings to the country of operation such as
Maharaja Mac in India, McItaly in Italy, McLobster in Canada.
International Segmentation
There are three types of international segmentation – global, regional and unique. Global
segmentation is used when there is a group of consumers with common needs that cross
national borders; regional segmentation is required when the similarity of consumers’
needs and preferences only spans across the region or several countries, and unique
segmentation is when consumer preferences are localised to a single country.
International segmentation allows companies to decide on their positioning strategy. Some
key benefits of segmenting the international market are: it allows generalisation of market
research conclusions; samples can be taken from several segments instead of every market;
customers’ needs can be better understood; growth opportunities can be discovered and
marketing communications can be better targeted. In order to realise these benefits,
segments must be as homogenous as possible.

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 In essence, if findings from several markets present substantially similar results, they can
form a segment. As a result, market research findings from one market can be applied to
the rest of the segment too.
People use international segmentation for various reasons, some of which are:
understanding international customers; identifying similarities and/or differences across
international markets and ascertaining what role they play in an international customers’
fashion retail repertoire.
An international segmentation may require a multi-domestic strategy where each country
represents a separate segment – this approach is sufficient where products are produced
locally and is tailored to satisfy local requirements. However, a pan-global approach is
adopted when global organisations recognise that groups of customers in different
countries can have more in common with one another than with consumers in the same
country. This enables organisations to adopt a framework for offering the same products
and/or marketing across different countries by targeting the same customer segments in
different markets.
The international product lifecycle (IPL) is an abstract model briefing how a company
evolves over time and across national borders. This theory shows the development of a
company’s marketing program on both domestic and foreign platforms. International
product lifecycle includes economic principles and standards like market development and
economies of scale, with product lifecycle marketing and other standard business models.
The four key elements of the international product lifecycle theory are −
 The layout of the demand for the product
 Manufacturing the product
 Competitions in international market
 Marketing strategy
The marketing strategy of a company is responsible for inventing or innovating any new
product or idea. These elements are classified based on the product’s stage in the
traditional product lifecycle. These stages are introduction, growth, maturity, saturation,
and decline.

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IPL Stages
The lifecycle of a product is based on sales volume, introduction and growth. These remain
constant for marketing internationally and involves the effects of outsourcing and foreign
production. The different stages of the lifecycle of a product in the international market are
given below −
Stage one (Introduction)
In this stage, a new product is launched in a target market where the intended consumers
are not well aware of its presence. Customers who acknowledge the presence of the
product may be willing to pay a higher price in the greed to acquire high quality goods or
services. With this consistent change in manufacturing methods, production completely
relies on skilled laborers.
Competition at international level is absent during the introduction stage of the
international product lifecycle. Competition comes into picture during the growth stage,
when developed markets start copying the product and sell it in the domestic market. These
competitors may also transform from being importers to exporters to the same country that
once introduced the product.
Stage two (Growth)
An effectively marketed product meets the requirements in its target market. The exporter
of the product conducts market surveys, analyze and identify the market size and
composition. In this stage, the competition is still low. Sales volume grows rapidly in the
growth stage. This stage of the product lifecycle is marked by fluctuating increase in
prices, high profits and promotion of the product on a huge scale.
Stage three (Maturity)
In this level of the product lifecycle, the level of product demand and sales volumes
increase slowly. Duplicate products are reported in foreign markets marking a decline in
export sales. In order to maintain market share and accompany sales, the original exporter
reduces prices. There is a decrease in profit margins, but the business remains tempting as
sales volumes soar high.
Stage four (Saturation)
In this level, the sales of the product reach the peak and there is no further possibility for
further increase. This stage is characterized by Saturation of sales. (at the early part of this

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stage sales remain stable then it starts falling). The sales continue until substitutes enter
into the market. Marketer must try to develop new and alternative uses of product.
Stage five (Decline)
This is the final stage of the product lifecycle. In this stage sales volumes decrease and
many such products are removed or their usage is discontinued. The economies of other
countries that have developed similar and better products than the original one export their
products to the original exporter's home market. This has a negative impact on the sales
and price structure of the original product. The original exporter can play a safe game by
selling the remaining products at discontinued items prices.
International Human Resource Management: Meaning, Need, Challenges and Issues
International Human Resource Management – Introduction
International human resource management bears both functional and strategic resemblance
to human resource management. Functionally it performs almost the same set of activities
as human resource management – recruitment, selection, performance management,
compensation, training, industrial relations, career management etc. Strategically
international HRM is closely linked to the business strategy of the organization.
Hence international human resource management can be defined as the set of activities
involved in hiring, managing performance, compensation, training and relations with
employees hired to manage internal operations of a company, with a view to ensure the
success of their international business and strategies.
International human resource management differs from domestic human resource
management primarily in terms of the complexity associated with managing people across
national boundaries.
International human resource management deals with at least three types of
employees based on their country of origin:
1. Parent-Country Nationals (PCNs) – Employees belonging to the country where a
company’s headquarters are located are called as parent-country nationals or home country
nationals.
2. Host-Country Nationals (HCNs) – Employees belonging to country where the company
has set up a subsidiary or a manufacturing facility are called host- country nationals.

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3. Third-Country Nationals (TCNs) – Employees who work in the home or host country
facility of the company but are not nationals of either are called third- country nationals.
International HRM also means dealing with issues related to different countries,
expatriation, repatriation, cross-cultural issues etc.
International Staffing Approaches

There are four primary approaches that multinational companies use in staffing decisions,
including ethnocentric, polycentric, geocentric, and regiocentric approaches.

The ethnocentric staffing approach heavily focuses on the norms and practices of the
parent company where upper management positions are typically held by corporate
personnel from the home country.  These managers are considered parent company
nationals, or PCNs.  Japanese and Korean firms follow this approach quite often.  

The polycentric staffing approach heavily focuses on the norms and practices of the host
company where upper management positions are typically held by corporate personnel
from the local country.  These managers are considered host country nationals, or HCNs.
European firms often follow this approach.  

The geocentric staffing approach does not focus on one nationality over the other.
Instead, upper level management positions are held by the most qualified employees
selected form a global pool of candidates.  These managers are considered third country
nationals, or TCNs  The most qualified candidates are selected, but no single nationality is
stressed.  

The regiocentric staffing approach, a more recently identified approach, is where upper

level management positions are held by employees from a particular region (North
American region, European Region, Asian region, etc.).  This approach is similar to the
polycentric approach, but it reflects a specific region rather than a specific country.  For
instance, a U.S. company in Mexico may consider hiring an employee from Canada to fill
a management role.  

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 Expatriate Management
Processes HR departments can put in place to help expat employees settle in to their
new life overseas.
In most industries, a global approach with feet on the ground is no longer just a sign of
success, it is a necessity to compete effectively. Sending employees to work abroad for
operational and strategic reasons is becoming normal practice. PwC estimate a 50%
increase in global mobility by 2020. For HR departments, managing expatriates abroad
throws up a whole host of issues with the expense of expatriate failure looming large. As a
HR director or manager there are processes that you can put in place to help your expat
employees settle in to their new life:
Pre-departure training
A comprehensive orientation programme for expatriates will greatly increase their chances
of success. Unfortunately, it is unlikely a one size fits all approach will work on this
occasion as pre-departure training will need to consider the unique:
 Culture of their new home
 Situation of each employee
However, it may be useful to have some general guides to:
 Culture
 Language
 Safety and security
 Family life including choosing schools for children
On every destination, you send expats to. 
Local support for non-work administration
Many expats find having local support in their destination more beneficial than contact
with HR or other colleagues in their base office. If you don’t have someone, consider
outsourcing this role to a specialist who can help new expats settle. A local will understand
‘how things work’ and can assist with advice or practical help on a wide range of issues
that can potentially confuse someone new to a country. Such as:
 Accommodation
 Utilities

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 Language
 Schools
 Personal tax
This can free up time and reduce stress for families who are making the journey over-seas.
Help building a social network
Research shows psychological wellbeing while working as an expat is strongly linked to
expatriate success. There are many things HR can do to help this process, including:
 Arrange informal introductions to colleagues before the employees go on assignment
 Encourage employees to use social media to build relationships with colleagues
 Organise an employee-centric activity for them on arrival, for example if they move with
their family, facilitate an opportunity for them to meet other expat families working in your
organisation
 Take a look at spouse expat information groups or check out our trailing spouse guide for
other ideas
Ongoing support
Even when an expat may appear to be settled in their new role and home, it is important to
maintain contact. Regular check-ins are a good idea to discuss any issues that may be
underlying that could be nipped in the bud early. A simple call could stop a more serious
issue down the line.
Healthcare
Access to quality healthcare is vital not only for maintaining the health and well-being of
your employees but also for their families. Do your research and ensure you choose
an international health insurance group plan that offers the assistance and protection they
need. Expat mental health is as important as physical health when working abroad.
Moving, settling and starting a new role in to a foreign country can aggravate stress. Which
is why depression and culture shock are relatively common amongst the expat community.
Provide your expats the professional support they need with an expat assistance
programme.
international Labor Relations
international Labor Relations is a highly specialized firm. Our core belief is that employees
and employers should maintain a direct relationship. This is done through positive

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employee relations training. Being union free is not a right. It is something the employer
must earn. We are a large group of former union officials, former NLRB Board Agents,
and labor attorneys who have dedicated our expertise to aggressively educate employees
about the pros and cons of unionization. We work with clients from a variety of industries:
transportation, healthcare, gaming, communications, distribution, security, manufacturing,
hospitality, fast food, energy, shipping, and so on. We work directly with management and
employees to mediate and consult on best practices. We believe the most effective and
efficient way to communicate is face to face. Our professional consultants have the ability
to connect quickly with employees and communicate legally the information which is
critical to help guide the employees to make an informed decision. It also gives the
employees a chance to ask questions and interact so that they can have all their questions
instantly answered. In addition to NLRB campaign elections, we are an industry leader in
proactive positive employee management relations training. We also offer employee audits
and pre-petition inoculation training for upper management and supervisor

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