INTERNATIONAL MARKETING ENVIRONMENT Your name …………………. …………. 1. Explain the role of government in international trade, the various levels of economic integration, and the impact on international marketing…
19). In order favorable balance of payment to be achieved, governments do subsidize the exports and impose quotas and high tariffs on imports. Though different countries adopt different strategies to increase the inflow of foreign currency through exporting, most countries facilitate shipping through forwarding agents and provide loans and other facilities as well. Some countries impose navigation policies as well to maximize the inflow of foreign currency and to add up to favorable balance of payment. Trade bloc member countries often enjoy free-trade so that each country can export and import to each other without any barrier to trade like quota, tariff and embargoes. As economist viewed, there can be several levels of economic integration within the free-trade area such as least integrated to most integrated (Hill, 2004, p. 270). Some times, member countries in a free trade area are allowed to determine its own trade policies since all the barriers to trade of goods and services are removed. The major four levels of economic integration are – 1) Free-trade area, 2) Customs Union, 3) Common market and 4) Complete economic integration. 1-Free trade area, Tariffs are fully removed from the members of the free-trade area and each member country maintains its own external tariffs. 2- Customs Union in which a member-country adds a common external tariff to the Free trade form. 3- Common Market, which is the custom union plus the abolition of restrictions on the mobility of services, people, and capital among member countries. 4- Complete economic integration, in which members nations surrender certain elements of their sovereignty and involves high degree of economic integration (Ball et al 2005, p. 128- 129). 2. Describe the economic and cultural elements of the international marketing environment and explain how these factors affect marketing operations. Socio-cultural and economic elements do normally impact the international business environment as is normally evident in the home trade as well. Culture is the sum total of beliefs, rules, techniques, institutions and artifacts that can characterize human populations (Ball, 2005, p. 176). When it comes to international marketing, the culture in different marketing landscape is a critical element that would largely influence the business and its success. While going global, it is highly important that the business should know well all the whereabouts of the culture and socio-cultural elements prevailing in the market in order to understand customer’s specific as well as common attitudes, requirements and approaches to a particular goods or service. In international trade arena, economic elements are perhaps most uncontrollable forces for businesses. Though businesses depend on economic forecasting and other indicators, economic forces have generally been found to be highly fluctuating and more often economic crisis may create greater challenges on the business. GDP, Income distribution, GNI, unit cost per labor and the general economic conditions do normally impact the international trade. A marketer going globally is required to assess the economic conditions in the country and structure his marketing operations accordingly. 3. Summarize the major political and financial risks associated with international marketing. Hill (2004, p79) defined political risk as the likelihood that political forces cause changes in a country’ ...
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19). In order favorable balance of payment to be achieved, governments do subsidize the exports and impose quotas and high tariffs on imports. Though different countries adopt different strategies to increase the inflow
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