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YARDSTICK INTERNATIONAL COLLEGE

ONLINE PROGRAM
MARKETING MANAGMENT
ASSIGNMENT ONE

Submitted by - ABEL DANIEL (ID MBAO/5206/15A)

Submitted to- Instructor Prof. Belete

June, 2023
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1. Discuss the political, social, economic, technological and other configurations that
support cross-border trade by giving examples of any multinational firms operating in
Ethiopia.

Answer:-

Cross-border trade is influenced by various factors, including political, social,

economic, and technological configurations. Here are some examples of each:

Political Factors:

Trade Agreements: Bilateral or multilateral agreements between countries can reduce

trade barriers and facilitate cross-border trade. For example, the North American Free
Trade Agreement (NAFTA) promoted trade between the United States, Canada, and
Mexico.

Customs and Tariffs: Governments can impose tariffs and customs duties on imported
goods, affecting the cost and feasibility of cross-border trade. The reduction of tariffs
through negotiations, such as the World Trade Organization (WTO) agreements, can
encourage trade.

Political Stability: Countries with stable political systems and favorable trade policies
create an environment conducive to cross-border trade. Political instability and
conflicts can hinder trade activities.

Social Factors:

Cultural Compatibility: Countries with cultural similarities or shared languages often

find it easier to engage in cross-border trade due to fewer communication and
understanding barriers.

Consumer Preferences: Social factors, such as consumer preferences and demands, play
a significant role in cross-border trade. For example, the popularity of certain products
or brands in one country can drive import demand from another country.

Economic Factors:

Market Size and Growth: Larger markets with significant consumer demand offer
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opportunities for cross-border trade. For instance, emerging economies like China and
India have attracted international trade due to their large consumer bases and growing
middle classes.

Comparative Advantage: Countries with specific resources, skills, or technological

expertise can specialize in producing certain goods or services and engage in cross-
border trade based on their comparative advantage.

Exchange Rates: Fluctuations in currency exchange rates impact cross-border trade. A

favorable exchange rate can make exports more competitive or increase the purchasing
power of imports.

Technological Factors:

Information and Communication Technology (ICT): Advances in ICT have

revolutionized cross-border trade by enabling faster and more efficient communication,
online transactions, and supply chain management. E-commerce platforms like Alibaba
and Amazon have facilitated cross-border trade for businesses and consumers.

Logistics and Transportation: Technological advancements in logistics and

transportation, such as containerization, GPS tracking, and efficient customs clearance
systems, have made cross-border trade more streamlined and cost-effective.

Other Factors:

Infrastructure Development: Adequate transportation networks, ports, and border

facilities are crucial for smooth cross-border trade. Infrastructure investments improve
connectivity and reduce trade barriers.

Intellectual Property Rights (IPR) Protection: Strong IPR protection encourages

innovation and cross-border trade by providing legal safeguards for intellectual
property, boosting confidence among businesses.

It's important to note that these factors can interact and influence each other. The combination
of favorable political, social, economic, and technological configurations enhances the
potential for cross-border trade by reducing barriers and creating opportunities for businesses
to engage in international commerce.

For example:-
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MENA water a company having office in Ethiopia and also Head office at Sharjah, UAE and
Germany. Is mostly engaged in Drinking and Waste Treatment plant and equipment supplier.

2. Explain the different modes of engagement with international markets and explore the
interconnectedness between these and the economic, legal, governmental, political,
regulatory, cultural and other environments in which expanding companies operate by
supporting practical examples of any multinational firms operating in Ethiopia.

Ans:-

When expanding into international markets, companies have several modes of engagement
available to them. These modes of engagement can vary in terms of the level of control, risk,
and investment required. Let's explore some common modes and their interconnectedness
with the economic, legal, governmental, political, regulatory, cultural, and other
environments:

Exporting:
Exporting involves selling goods or services produced in the home country to customers in
foreign markets.
Economic Environment: Exporting requires assessing market demand, pricing strategies, and
currency fluctuations to ensure profitability.
Legal and Regulatory Environment: Exporting involves complying with export regulations,
customs requirements, and international trade laws.
Governmental and Political Environment: Governments may provide support or incentives
for exporting activities, negotiate trade agreements, or impose trade barriers that impact
exporting.
Licensing:
Licensing allows a company to grant another entity in a foreign market the right to use its
intellectual property, such as patents, trademarks, or technology, in exchange for royalties or
fees.
Economic Environment: Licensing can be a cost-effective way to enter foreign markets and
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leverage the local partner's knowledge and resources.

Legal and Regulatory Environment: Licensing agreements require clear contractual terms to
protect intellectual property rights and address potential disputes.
Governmental and Political Environment: Governments may regulate licensing agreements
and enforce intellectual property laws to protect domestic and foreign companies' interests.
Joint Ventures and Strategic Alliances:
Joint ventures involve forming a separate entity with a local partner, while strategic alliances
involve collaboration between two or more companies to achieve a common goal in a foreign
market.
Economic Environment: Joint ventures and strategic alliances provide opportunities to share
costs, risks, and resources, and access local market knowledge and distribution networks.
Legal and Regulatory Environment: These arrangements require comprehensive legal
agreements that define the roles, responsibilities, and ownership structures of the partners.
Governmental and Political Environment: Governments may require approval or regulate
joint ventures and strategic alliances to ensure fair competition and protect national interests.
Foreign Direct Investment (FDI):
FDI involves establishing a physical presence, such as a subsidiary or branch, in a foreign
country to engage in business operations.
Economic Environment: FDI requires assessing market potential, economic stability, labor
costs, taxation, and infrastructure in the host country.
Legal and Regulatory Environment: Companies need to comply with local laws and
regulations, including company registration, employment, taxation, and intellectual property
protection.
Governmental and Political Environment: Governments play a significant role in
regulating and promoting FDI through incentives, policies, and regulations. Political stability
and governmental support influence the attractiveness of FDI destinations.
Cultural Environment:
Cultural factors significantly influence international business operations. Understanding local
customs, language, consumer preferences, and business practices is essential for successful
market entry.
Cultural Environment: Companies need to adapt their products, marketing strategies, and
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organizational practices to fit the cultural context of the target market.

Overall, the mode of engagement chosen by a company is intricately connected to the
economic conditions, legal and regulatory frameworks, governmental policies, political
stability, and cultural nuances of the target market. It is crucial for expanding companies to
conduct thorough market research and analysis to align their modes of engagement with the
specific environments they will be operating within.
The best example for this is MENA WATER FZC.