International trade, economic integration and international marketing - Essay Example

International trade, economic integration and international marketing Various markets around the world provide new opportunities for industrial and agricultural producers. It is often beyond the capability of individual agents or firms to access the potential of various markets. Hence, the government plays an important role in providing market research, technical know-how, infrastructure support and promotion to enable the producers to make a mark in the international market (Nelson, 2007). The government can ensure an early entry into foreign emerging markets and gain a first mover advantage. The government must also make efforts to develop long term relationships with other countries in this regard. These steps may incur costs in the early period but help in reducing significant expenditures and putting off the competition in the longer term. The governments play a major role in international trade and marketing. They decide whether the trade has to be free or managed. Generally governments do intervene in trade within and outside their countries in order to cater to interests of various groups. These may include local industries, defense, job protection, pricing, political pressures, balance of payments and regulations. The governments exercise this control by means of trade barriers such as tariffs and quotas. The governments have also a great role to play in economic integration. This has become more important in the modern age of globalization. As a result of economic integration, a group of countries get together to make trade between them easier and free of barriers. This results in the formation of trade blocs and Free Trade Areas. European Union is the best example of economic integration which has been successful due to collaborative efforts taken by the governments in European nations. Such an arrangement has led to a win-win situation for everybody. 1. Economic and cultural elements of international marketing and their impact Wide-scale technological changes have made international marketing a reality. The increasing competition and removal of trade barriers have encouraged firms to look for foreign avenues to market and sell their products. This has also led to the emergence of multi-national corporations (Geiersbatch, 2010). Today a large number of organizations carry out international marketing campaigns. This saves considerable costs as well as drives a global message. This has been supported by the use of social networking sites such as Facebook and Twitter for marketing which absolutely remove the international communication barriers. However, there are also several cultural impacts of international marketing. Either a firm has to adapt itself to the culture of the various international markets or it has to make sure that the consumers worldwide are able to connect to its marketing tools. When Chevrolet launched Chevy Nova in Mexico, it was rejected because of a negative meaning in the Spanish language. The same was the case with American Motors’ Matador. Therefore, it is important to respect the culture and language of the target countries in order to make a cultural impact on them. 2. Political and Financial risks in international marketing There are considerable risks in international marketing especially in emerging economies. The economic scenario and performance in such countries is highly unpredictable. Therefore, a company may actually spend millions of dollars in its marketing efforts but its products may simply fail because of external economic factors not under its control. Thus, market research becomes extremely important for marketing in international markets. The financial risks in international marketing & operations are also dependent upon the level of control of a firm. Therefore, a firm involved only in exporting goods or services has the minimum risk from that point of view. The barriers would be less and so will be the sunk costs. However, the low degree of control may impact effectiveness of marketing. If a firm is in joint venture with a local firm, the risk increases. The risk is maximum in case of direct investment by a firm in the international markets. There are a number of political risks as well which may sometimes be more hazardous to a firm than financial risks. There are many countries where the governments are quite unstable (Holburn, 2001). Libya, Afghanistan, Iraq would qualify for such markets. There are other markets where the governments are stable but lobbying, corruption, red tape and bureaucracy hold the key to key to success as compared to pure merit. Many South Asian countries would qualify in this category. The ability to take risks depends from firm to firm. However, in general, it has been found that in power generation sector, big organizations tend to avoid politically hazardous international markets. 3. Strategic marketing planning process and market entry strategies Strategic marketing planning deals with the overall direction of the business in line with marketing. It is the role of marketing to establish links between the business and the customers. A marketing planning process helps in differentiating from the customers by identifying a sustainable competitive advantage. It measures the performance against a set of pre-decided objectives and goals. Forms use various strategies to enter international markets. One of them is the technical innovation strategy where they exhibit technically superior products as compared to competitors in international markets. Other firms may prefer a product adaptation strategy where only modifications and upgrades are made to existing products and services. Some firms follow availability and security strategy for entry into international markets. They do this by designing an efficient supply chain and transportation network. Many firms also follow a low pricing strategy where the aim is to penetrate the market as early as possible. Lastly a firm may completely copy an existing product for conformity to acceptable standards. 4. References Nelson, Alex W. (2007). Role for State Government in International Trade. The Journal of Regional Analysis & Policy Geiersbach, Niki. (2010). The impact of International Business on The Global Economy. Business Intelligence Journal, July, 2010, Vol. 3, No.2 Holburn, Guy. (2001). Political Risk, Political Capabilities and International Investment Strategy: Evidence from Power generation industry. Read More