The Go International Decision Marketing Essay

Go international decision” means an Organizations is going to satisfy consumers in a different country by their product or service at First time. Organizations need to make, take and implement marketing strategy and marketing mix decisions across country boundaries in International marketing.

Most companies start their business activities domestically. Business successes will lead to “go international decisions” generally. Organization which does well locally may think “dealing with overseas is also an easy task”. Some companies who have the same product doing well in international market may think the same as above. They may take the “go international decision” by overnight.

Most probably this action will lead to dangers and risks.

In International marketing business activities of planning, pricing and promoting goods and services are undertaken in manner the end product is delivered to a consumer another country. Organizations should identify the main differences between domestic and international marketing. International marketing can be more complex and the business may be more diverse compared to domestic marketing.

Importance of rational approach in “go international decision”

Introducing a product or service into a foreign market presents numerous unfamiliar problems. Thus different strategies have to be adapted in order to counter act the uncertainty that comes with entering a foreign market.

Risks

There are various risks involved in international market due to various factors. Changes in those factors may lead the business in trouble. Some of the rogue countries may have all the natural minerals but the risks involved in doing business in those countries exceed the benefits. Some of the risks in international business are:

Political Risk – ex; Increment of tax

Economic Risk – ex; Economic instability

Social Risk- ex; cultural differentiations

Technological Risk- ex; inadequate technological facilities

Environmental Risk- ex; natural disasters

Legal risk- ex; different legal backgrounds

Financial losses

Domestic market entry and development may incur fewer amounts of investment when compare to international business. Investing in foreign markets without a rational approach will definitely lead to financial loss. Dealing with domestic market will result low risks and more secure returns but dealing with international market lead to high risks. It is too costly and difficult to reverse ones we implemented the “go international decision”.

Organizational culture

“Go international decision” objectives should not go beyond the organization’ vision and mission. Firm’s International marketing activities also should express organization’s beliefs and values.

It should not be taken by a one person or a group of the organization. All members of the company should agree to “go international decision” and must be aware of “what, when, how it is going to happen.

Organization needs good leadership involvements due to Critical decision to be taken for international market operations. Members of the organization should have greater teamwork practices in order to business success.

Cultural difference between countries always plays an important role in the international business. Especially, when an organization enters to a new market, cultural distance based on cultural difference will determine entry mode into the market.

Implementations of “go international decision” may absorb the recourses of existing domestic business and it may lead additional pressure on existing operations.

Failures due to irrational approaches

There are many mistakes that have been made in the past due to various reasons when companies try to enter and develop the foreign market.

When companies translate their names or slogans into a different language, Products were not bought due to what the slogans or names meant in other countries.

Coca-Cola name in China was first read as “Kekoukela”, meaning “Bite the Wax Tadpole” or “Female Horse Stuffed with Wax”, depending on the dialect. Coke then researched 40,000 characters to find a phonetic equivalent “kokoukole”, translating into “Happiness in the Mouth”.

Achieving the rational approach

Setting objectives

When an organization becomes a international marketer, it views the world as one market and creates products fit into overseas marketplace. Marketing decisions are made by consulting with

marketers that will be essential.

Planning is a systematized way of relating to the future. It is an attempt to manage the effects of external, uncontrollable factors on the firm’s strengths, weaknesses, objectives, and goals to attain a desired end. Further, it is a commitment of resources to a country market to achieve specific goals. In other words, planning is the jobs of making things happen that may not otherwise occur.

Setting Objectives for the overseas business ambition will be the first step for the “Go international decision”

“Go international decision” should have time lines for achievements. Therefore “Go international decision” must have SMART objectives.

Specific- Is it clear and well defined

Is it clear to anyone that has a basic knowledge of the work area

Measurable- Know if the goal is obtainable and how far away completion is

Know when it has been achieved

Attainable- Agreement with all the stakeholders what the goals should be

Is there a realistic path to achievement?

Realistic- Within the availability of resources, knowledge and time

Time based- Enough time to achieve the goal, is there a time limit

Not too much time, which can affect work performance?

These objectives should be aligning with the company vision and mission. After setting the objectives, management should find ways how to achieve the specified objectives.

Risk, motivation and control

When we enter to the international market it is need to consider what really motivating the “Go international decision”, level of risk to be taken and the level of control to be retained. Relationship of above statements can be shown as follows,

Another consideration to be taken is the level of involvement in international marketplace. The level of involvement will be depending on company objectives and organization’s existing abilities.

There are diverse channel of entry in to a foreign market. Some of the different modes are Internet, Exporting, International Distributors, Strategic Alliances, Joint Ventures, International Agents, Overseas Manufacture, Licensing, and International Sales Subsidiaries and Internationalization. The mode of entry in agreed upon country of origin and country to which the goods and services are sold to.

Eg: Some countries treat franchising as licensing while others consider it stand alone. This would be another factor for a marketer to consider when entering an international market.

Corporate confidence to “Go international decision”

The level of involvement will be the most important factor in “Go international decision” because it will determine all other activities with regard to international market entry and future expansions.

After Setting objectives need to consider main elements of international market entry and developments (risk, control, and motivation).then it is need to evaluate future ambitions of the company with the existing abilities.

Organization needs confidence to implement the “Go international decision” after it is made. Conducting Internal and external audits is the key to make the confidence and identifying the critical success factors in international marketing.

“Go international decision” Risk

Control Motivation

The Level of Involvement

Go international decision

Corporate confidence

Critical success factors

Internal audit and external audit

There are controllable and uncontrollable factors that affect entry into a foreign market. The uncontrollable elements are legal restraints, competition, government rules and regulations, government policies, climate, consumer preference, cultural perceptions are a few. These have a direct impact on profitability of an organization. The market is unable to influence uncontrollable elements. Even though the marketing concepts are the same world over, every organization that goes international faces problems created by different environmental. This has become a primary concern for most marketers.

Then there are the controllable elements such as product, price, promotion, distribution, and research. These are factors working within the uncontrollable factors of laws, politics, consumer behavior, ect. Organization set their target based on the above mentioned controllable factors.

The solution to a problem in one country cannot be applied to another country. This is another matter marketers must take into consideration when launching a product in to an international market.

Marketers need to adjust culturally when moving into an international market. This is a difficult task but a necessity, as failure to do so may lead to misunderstanding and eventually cost the organization its profit.

Different environmental factor need to be considered if an organization is to be profitable in another country.

To overcome problems and to succeed the international business organization need conduct proper internal and external audits.

Internal audit

Purpose of internal audit is to identify organization’s position in order to “Go international decision”. SWOT (“Strengths, Opportunities, Weaknesses, and Threats”) is the most applicable tool to analyze “is organization in the correct position for international entry?”

External audit

Characteristics of effective audits

Stages of audit

Marketers need to adjust culturally when moving into an international market. This is a difficult task but a necessity, as failure to do so may lead to misunderstanding and eventually cost the organization its profit.

Different environmental factor need to be considered if an organization is to be profitable in another country.

Critical success factor for international marketing

Foreign market Entry and the development can be depending on specific conditions in time to time. Identifying these critical success factors is essential for the international marketing planning and business success. These factors can be identified as internal as well as external.

Launching innovative products to satisfy the target customer by continuous researching and monitoring the market movements is a internal factor. Be prepared for uncontrollable changes such as political, economic, and technological are external factors.

Communication facilities are developing rapidly and international trade barriers are decreasing. It allows international marketing activities more effective and highly competitive than ever before. Firms need to identify proper competitive strategies for business success and it is also important to monitor what types of strategy might competitors adopt.

Example:

McDonald’s is Adapting to cultural differentiations in International Markets as a critical success factor.

When going abroad, it is important for a business to realize that there are differences in international markets. While McDonald’s is consistently recognizable around the world, the company alters its menu slightly in every market. In the Netherlands, McDonald’s offers a specialty called the McKroket; in parts of Canada the chain serves a dish known as “poutine;” and in India McDonald’s offers a beef-free version of the Big Mac called the Maharaja Mac. This strategy allows McDonald’s to maintain an international brand and offer local foods that people want.

Critical International Success Factors | eHow.com http://www.ehow.com/list_7232261_critical-international-success-factors.html#ixzz264P57aBy

Financial considerations for international marketing

Organization needs a sound financial background for International marketing and the financial model will depend on the level of involvement of the overseas market. There are two main financial considerations as venture capital and working capital.

Venture capital – This means the Cost need to formation of the business. Part of these costs can be sunk cost.

Working capital – Capital need to operate the business is known as working capital.

Financial considerations for international marketing are effected by various factors as follows.

Venture Capital

Source and duration of funding

Financial information system

Opportunity costing and cost benefit analysis

Financial considerations for international marketing

Financial control, policies and systems

Financial management mind set

Financial exposure

Working Capital

Taxation

Foreign exchange exposure

Selecting a country for international business

Country attractiveness

Country options

To make a justified choice in international market a number of countries should be considered.

Criteria for evaluation

There are criteria factors to be considered when evaluating the country option. We can use a process including simple factors and can establish a scoring system for the country selection.

Barriers to entry

Competitiveness

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Cultural assessment

Need to consider cultural similarities and differences in order to assess the potential for cross cultural affinity both at business to business, business to government and government to customer levels.

Screening procedures

The process of international marketing development will require the use of business screening to understand the new territory.

Comparative analysis

This can be achieved with the use of set of objectives “hard” criteria as well as “soft factors”. This cannot make a complete scientific management solution, but could be use to remove some country options from the decision matrix.

Country selection

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Assessing countries and markets

International marketing plan-

Planning is a systematized way of relating to the future. It is an attempt to manage the effects of external, uncontrollable factors on the firm’s strengths, weaknesses, objectives, and goals to attain a desired end. Further, it is a commitment of resources to a country market to achieve specific goals. In other words, planning is the jobs of making things happen that may not otherwise occur. International market planning includes two stages.

Market entry planning

Market development planning

Entry-strategy evaluation

Selecting the foreign market entry mode will be a critical decision to be made in international marketing. This will affect the business for many years ahead. There are number of entry modes

This will depend on factors such as risk, control and motivators. And also should consider the criteria’s based company, market and marketing.

There are two basic options for foreign market entry.

Indirect market entry

Direct market entry

Firms who focus on international trade with limited resources and low level of involvement may consider indirect market entry modes such as domestic purchasing, trading companies, piggybacking and export management companies or export houses.

Direct market entry modes can be illustrated as follows,

Factor

Level

Risk of losing Resources Control

Proprietary

Information

Direct investment

Direct investment

Exporting (own staff)

High

Joint venture

Licensing

Exporting (own staff)

Joint venture

Joint venture

Licensing

Medium

Exporting (own staff)

Exporting (middlemen)

Direct investment

Licensing

Exporting (middlemen)

Exporting (middlemen)

Low

Development

International marketing mix

When launching a product into foreign markets firms can use a standard marketing mix or adapt the marketing mix, to suit the country they are carrying out their business activities in. This article talks you through each element of the marketing mix and the arguments for and against adapting it suit each foreign market.

Product is the key element in marketing mix which comes first.

Product

Basic marketing concepts tell us that we will sell more of a product if we aim to meet the needs of our target market. In international markets this will involve taking into consideration a number of different factors including consumer’s cultural backgrounds, religion, buying habits and levels of personal disposable income. In many circumstances a company will have to adapt their product and marketing mix strategy to meet local “needs and wants” that cannot be changed. Mcdonald is a global player however, their burgers are adapted to local needs. In India where a cow is a sacred animal their burgers contain chicken or fish instead of beef. In Mexico McDonalds burgers come with chilli sauce. Coca-cola is some parts of the world taste sweeter than in other places.

The arguments for standardisation state that the process of adapting the product to local markets does little more than add to the overall cost of producing the product and weakens the brand on the global scale. In today’s global world, where consumers travel more, watch satellite television, communicate and shop internationally over the internet, the world is a smaller than it used to be. Because of this there is no need to adapt products to local markets. Brands such as MTV, Nike, Levis are all successful global brands where they have a standardised approach to their marketing mix, all these products are targeted at similar groups globally.

As you can see both strategies; using a standard product and an customised product can work just as well. The right approach for each organisation will depend on their product, strength of the brand and the foreign market that the marketing is aimed at.

Promotion

As with international product decisions an organisation can either adapt or standardise their promotional strategy and message. Advertising messages in countries may have to be adapted because of language, political climate, cultural attitudes and religious practices. For example a promotional strategy in one country could cause offence in another. Every aspect of promotional detail will require research and planning one example is the use of colour; red is lucky in China and worm by brides in India, whilst white is worn by mourners in india and China and brides in the United Kingdom. Many organisation adapt promotion strategies to suit local markets as cultural backgrounds and practices affect what appeals to consumers.

The level of media development and availability will also need to be taken into account. Is commercial television well established in your host country? What is the level of television penetration? How much control does the government have over advertising on TV, radio and Internet? Is print media more popular than TV?

Before designing promotional activity for a foreign market it would be expedient to complete a PEST analysis so that you have a complete understanding of the factors operating in the foreign market you would like to enter.

Pricing

Pricing on an international scale is a complex task. As well as taking into account traditional price considerations such as fixed and variable costs, competition and target groups (click here for further information about marketing mix pricing) an organisation needs to consider additional factor such as

the cost of transport

tariffs or import duties

exchange rate fluctuations

personal disposal incomes of the target market

the currency they want to be paid in and

the general economic situation of the country and how this will influence pricing.

The internet has created further challenges as customers can view global prices and purchase items from around the world. This has increased the level of competition and with it pricing pressures, as global competitors may have lower operating costs.

International Marketing Mix: Place

The place element of the marketing mix is about distributing a product or service to the customer, at the right place and at the right time. Distribution in national markets such as the United Kingdom will probably involve goods being moved in a chain from the manufacturer to wholesalers and onto retailers for consumers to buy from. In an overseas market there will be more parties involved because the goods need to be moved around a foreign market where business practices will be different to national markets. For example in Japan there are approximately five different types of wholesaler involved in the distribution chain. Businesses will need to investigate distribution chains for each country they would like to operate in. They will also need to investigate who they would like to sell their products and services to businesses, retailers, wholesaler or directly to consumers. The distribution strategy for each country a business operates in could be different due to profit margins and transportation costs.

Criteria for channel selection