International Marketing and Business Environment

Posted on Aug 24, 2024 in Economy

Orientation International Marketing

Environmental/Cultural approach: Relate the foreign environment to the marketing process. Illustrate how culture influences the marketing task. The cultural environment within which the marketer must implement marketing plans can change dramatically from country to country.

Balance of Payments

Current account: A record of all merchandise exports, imports, and services plus unilateral transfers of funds.

Capital account: A record of direct investment, portfolio investment, and short-term capital movements to and from a country.

Reserves account: A record of exports and imports of gold, increases or decreases in foreign exchange, and increases or decreases in liabilities to foreign central banks. (Of the three, the current account is of primary interest to international businesses.)

Impact of Tariff Barriers

Tend to increase:

  • Inflationary pressures
  • Special interest privileges
  • Government control and political considerations in economic matters

Tend to weaken:

  • Balance of payments positions
  • Supply-and-demand patterns
  • International relations (they can start trade wars)

Tend to restrict:

  • Manufacturers’ supply sources
  • Choices available to consumers
  • Competition

Six Types of Non-Tariff Barriers

  1. Specific limitations on trade: Quotas, import licensing requirements, minimum import price limits, embargoes.
  2. Customs and administrative entry procedures: Valuation systems, antidumping practices, tariff classifications, fees.
  3. Standards: Standards disparities, intergovernmental acceptances of testing methods and standards, packaging, labeling, and marking.
  4. Government participation in trade: Government procurement policies, export subsidies, countervailing duties, domestic assistance programs.
  5. Charges on imports: Prior import deposit subsidies, administrative fees, variable levies, border taxes.
  6. Other: Voluntary export restraint, orderly marketing agreements.

Three Types of Monetary Barriers

Blocked currency: Blockage is accomplished by refusing to allow importers to exchange their national currency for the seller’s currency.

Differential exchange rates: This encourages the importation of goods the government deems desirable and discourages the importation of goods the government does not want by adjusting the exchange rate.

Government approval: In countries where there is a severe shortage of foreign exchange, an exchange permit to import foreign goods is required from the government.

Sources of Cultural Knowledge

Factual information: Obtained from others through communication, research, and education (regional integration, political situation, etc.).

Experiential knowledge: Acquired by being involved in a different culture than one’s own (assignments overseas, business travels, graduate courses, product acceptance).

Interpretive knowledge: Ability to understand and fully appreciate the differences in cultures over a long period of time.

Economic Risks

Governments can impose restraints on business activity to:

  • Protect national security
  • Protect an infant industry
  • Conserve scarce foreign exchange
  • Raise revenue
  • Retaliate against unfair trade practices

Exchange controls, local content laws, import restrictions, tax controls, price controls, and labor problems are all economic risks.

Dispute Resolution Methods

Conciliation, also known as mediation, is a friendly route to resolving disputes. It is a nonbinding agreement between parties to resolve disputes by asking a third party to mediate differences.

Arbitration: Involved parties select a disinterested and informed party or parties as referees to determine the merits of the case and make a judgment that both parties agree to honor.

Litigation: The ultimate legal method for settling controversies or disputes between and among persons, organizations, and the State.

Intellectual Property Rights

Inadequate Protection: Failing to adequately protect intellectual property rights can lead to the legal loss of rights in potentially profitable markets.

Prior Use: Whoever can establish first use is typically considered the rightful owner.

Registration: The first to register a trademark or other property right is considered the rightful owner.

International Conventions

Three major international conventions:

  • Paris Convention for the Protection of Industrial Property
  • Inter-American Convention
  • Madrid Arrangement

World Intellectual Property Organization (WIPO):

  • Responsible for the promotion of the protection of intellectual property and for the administration of the various multilateral treaties through cooperation among its member states
  • Patent Cooperation Treaty (PCT)
  • European Patent Convention (EPC)
  • The Trade-Related Aspects of Intellectual Property Rights (TRIPs)