International Business Environment - Introduction (IM 19 Nov 2020)

International Business Environment - Introduction

“A company’s marketing environment consists of the factors and forces outside of marketing that affect marketing management ability to build and maintain successful relationships with target customers”. – Philip Kotler

International marketing environment consists of global forces, such as economic, social, cultural, legal, and geographical and ecological forces, that affect international marketing decisions.

International marketing environment for any marketer consists of internal, domestic, and global marketing forces affecting international marketing mix.

 

Factors of International Marketing Environment

Factors of International Marketing Environment can be classified into three categories namely:

Global Factors (International Uncontrollable Environment), Domestic Factors (Domestic Uncontrollable Environment) and Organizational Factors (Internal Marketing Environment).

International Marketing Decisions revolve around 4P's (Product, Price, Place and Promotion)

For Ex: A manager who deals with international marketing has to design his marketing mix and marketing mix strategies in accordance with these forces. He also has to keep in mind about the impact of such forces on his marketing decisions and also the levels of opportunities and threats needs to be taken into consideration.

People and businesses make decisions for resource allocation and prices for services and goods which are part of Microeconomics. The governmental regulations and tax policies are also taken into consideration.

Microeconomics solely focuses on marketing environmental forces that determine the level of price, supply and demand in an economy. For e.g. microeconomic factors look into how a company would do to maximize the production and capacity in order to lower the prices of its products and to compete in the industry in better and efficient way.

Macroeconomics, on the other hand, is the study of whole economy which includes the study of complete industry, not just of a specific company. This involves the phenomenon such as Gross National Product (GDP) and how changes in the economic factors such as national income, unemployment, growth rate and level of price affects it. For instance, the impact of net- exports on nation’s capital account or effect of unemployment rate on GDP.

The macro and micro economics is considered as the study of two diverse divisions of economy. Whereas there are several issues that make them inter-dependent on each other. For instance, the price of end product would increase with the increase of inflation rate, the price of raw material will increase that will end up with increase in price of finished goods.

The microeconomics adopts the bottom-up approach whereas macroeconomics has a top-down approach.

Macroeconomic factors and microeconomic factors concurrently plays a vital role in establishing a successful business as it provides important means for professionals to operate the business in an efficient and effective way to generate sound revenue.

Global Factors are related to the world economy. Every aspect of marketing decision is also influenced by global factors. The main global factors include Micro and Macro Environment.

 

Customers:
The success of marketing strategy also depends on the customers of company’s product. The nature of customer such as b2c (Business to Customer), b2b (Business to Business), international or local and the reason for buying the product will play a role in establishing the marketing strategy of company and how they approach the customers and serve them.

The satisfaction of general public is a duty of organization. Company must take decisions while taking the perspective of general public into consideration and how they will get affected by their decision. The customers hold the power to make a win-win situation for a company by helping it reach the goals.

 

Competition:
Market competition exists when two or more firms sell same or similar products and services. The companies must take into account the way they approach the customers and sell their products to the customer, what price and product differentiation they have for their customer. These factors can be taken into account to get edge over their competitors.

 

Suppliers:
Business success depends on the suppliers when they enjoy an authority. The supplier of a company holds the power when they are the only one in the market or when they are the largest supplier of the goods. The buyer is not essential to the supplier’s business, as the supplier’s good is the core ingredient of the finished product of buyer.

 

Resellers:
The success of companies marketing strategy also depends on resellers if the finished goods of a company are taken to market by market intermediaries or any other third party. These forces include wholesaler, retailers etc. For example, If the retail seller holds a reputable name in the market then their reputation can impact the marketing of company’s product.

 

Other Global factors include:

Global relations among nations and degree of the worldwide peace, Geographic/ecological/climate-related factors, functioning of international organizations like UNO, World Bank, WTO, etc., Availability of marketing facilities and functioning of international agencies, etc.