CHAPTER2 the International Environment
-
Upload
ambiga-ambi-biga -
Category
Documents
-
view
216 -
download
0
Transcript of CHAPTER2 the International Environment
-
7/31/2019 CHAPTER2 the International Environment
1/26
CHAPTER 2
THE INTERNATIONAL ENVIRONMENT: CULTURE
ECONOMIC
POLITICAL & LEGAL
COMPETITION
-
7/31/2019 CHAPTER2 the International Environment
2/26
Introduction
The foreign environment faced by theinternational marketing company has manydistinct components.
Major ones include economic forces,political/legal forces, socio-culturalforces, and competition.
-
7/31/2019 CHAPTER2 the International Environment
3/26
1.0 Socio-Cultural Environment
Socio-cultural environment influences thebehavior of customers, managers, andmarketing intermediaries.
Its influences the political/legalenvironment of the country, the wayeconomic system works and attitudes
towards competition.
-
7/31/2019 CHAPTER2 the International Environment
4/26
Cont..
So it is crucial to understands and dealing
effectively with the pervasive effect ofculture on export management.
Foreign consumers differ from domestic
consumers in all aspects of behavior i.e.the what, why, who, how, when and where.
Marketer need to understand the foreignculture, its differences and how its affects
the desires, objectives and behaviors ofpotential customers.
-
7/31/2019 CHAPTER2 the International Environment
5/26
1.1 Managing Cultural Differences
Sometimes viewed as a major obstacles.
However it is proven wrong by the successand well-known multinationals.
Better understanding on culturaldifferences as well as appropriatestrategies can be a competitive tools toexcel in foreign market.
-
7/31/2019 CHAPTER2 the International Environment
6/26
1.2 Managing Multiculturalism
a. Cultivate self-awareness
b. Work with differences
c. Communication stylesd. Cross-cultural conflict management
e. Be curious
-
7/31/2019 CHAPTER2 the International Environment
7/26
1.3 Nature of Culture
What is culture? In a real sense, culture is human-made.
It is learned and communicated from one
generation to another. Culture is a shared system of meanings,
it is learned and inherited.
-
7/31/2019 CHAPTER2 the International Environment
8/26
Cont..
To understand culture, one mustunderstand its origins, history, structureand functioning.
Culture change overtime; might be due to
outside pressure i.e. government or othergroups (race, religious and organization).
Culture provides norms for behavior ofbuyers, consumers and sellers.
-
7/31/2019 CHAPTER2 the International Environment
9/26
1.4 Cultural Dimensions
Value and Attitudes
Education
Religion
Politics
P/s: refer to table 3.2 pg. 122
Law
Language
Social Organization
Technology andmaterial culture
-
7/31/2019 CHAPTER2 the International Environment
10/26
1.5 Culture and Communication
Behavior itself is a form ofcommunication.
Each culture differ in way of attitudestowards time, space, relationship (calledsilent-language)
According to Hall (1960); five dimensions(time, space, things, friendship andagreements)
As a basis for real understanding of othercultures.
-
7/31/2019 CHAPTER2 the International Environment
11/26
1.6 Cultural Context
Important to understand differencesamong cultures in their reactions tocommunication and behavior.
2 types of cultural context
i. High context cultures
ii. Low context cultures
-
7/31/2019 CHAPTER2 the International Environment
12/26
High Context Cultures (Indirect Comm.)
The situation, relationships, and unspoken
understandings may carry more meaning andimportance than the words themselves.
Ex. Japan and most Asia countries.
Low Context Cultures (Direct Comm.) Meaning of messages can usually be wholly or
partially isolated from the context in whichthe message occurs.
Ex. US and mostly European countries.
-
7/31/2019 CHAPTER2 the International Environment
13/26
High Context: Things are left unsaid, letting the culture
explain. Collectivist, intuitive, and contemplative.
Low Context:
Logical, linear, individualistic, actionoriented.Japanese vs. American
We dont speak as much as you do here. When we say
one word, we understand ten, but you have to sayten to understand one.
-
7/31/2019 CHAPTER2 the International Environment
14/26
2.0 Economic Forces
Affect the market potentials. Also influences strongly in terms of
infrastructure i.e. communication, energyand transportation facilities.
Demand for products is affected both bypopulation size and distribution of incomeand wealth.
Influences the whole business environmentin a country.
-
7/31/2019 CHAPTER2 the International Environment
15/26
2.1 Market Development
Economic development of market influencesthe lines of business and methods by whichbusiness can be carried out.
Foreign markets are at different stage of
economic development. Economic development of a country isclassified into developed, developing andnewly industrialized.
Big emerging markets known as BEMs maypresent major marketing opportunities.(China, India, Indonesia, Korea, Brazil)
-
7/31/2019 CHAPTER2 the International Environment
16/26
Cont..
Countries also differ widely in risk tobusiness profitability.
Index of Operational Risk-based on
categories of risks such as security,political stability; governmenteffectiveness, legal and regulatory,macroeconomic, foreign trade and
payments, tax policy, labor market as wellas infrastructure.
-
7/31/2019 CHAPTER2 the International Environment
17/26
3.0 Political/Legal Environment
The government provides the political/legalenvironment, though not all factors thataffect businesses are part of formalgovernment policy (i.e. Nationalism).
Nationalism or protectionism may result inbehavior by government officials or otherbusinesses even though they are not specifiedby law (e.g. the traditionally strong, thoughnow declining, preference of Japanese
companies buying from other Japanesecompanies).
-
7/31/2019 CHAPTER2 the International Environment
18/26
3.1 Role of Government
Government act as a participator, planner,controller or simulator.
Basically, Gov. involve in three main activities:
i. Promote encourage/facilitate export
marketing transaction;
ii. Those that impedesuch transactions;
iii. Government competewith private
firms
-
7/31/2019 CHAPTER2 the International Environment
19/26
3.2 Government Control
Government may impedes export marketingactivities by imposing restrictions andcontrols.
The restrictions and controls specifically focus
on imports and exports. Such controls affecttypes and amount of
products that can be im/ex.
Restrictions affecttrading relationships suchas transactions advisability/profitability.
-
7/31/2019 CHAPTER2 the International Environment
20/26
Controls specifically addressing
international activities such as:a. License requirementb. Tariffs (protective and revenue)c. Anti-dumping dutiesd. Quotase. Extra taxesf. Qualitative controls
g. Exchange controls
-
7/31/2019 CHAPTER2 the International Environment
21/26
Cont.. Export controls may be placed on certain
products or services, usually those relatedto national defense. Packaging and recycling requirements for
materials are being increased, leading toredesigns, some changes in transportationrequirements, and some new businessactivities.
The growth of the Internet and the WorldWide Web, and the increases in e-
commerce, are leading to new legislationand regulations.
-
7/31/2019 CHAPTER2 the International Environment
22/26
3.3 Other Types ofLegal/Regulatory Activities
a. Environmental:greenhouse gases,packaging, environmentally friendlyproducts;
b. Labor rights;c. Protection of intellectual property;d. Tax policy;e. Antitrust regulations, mergers, pricing,
business practices; andf. Corruption.
-
7/31/2019 CHAPTER2 the International Environment
23/26
4.0 Competition
One of the most dynamic forces affectingmarketing strategy.
Differential advantage gives an individual
firm an edge over others. Effective use of information gives tacticalcompetitive advantage.
Competition is not always fair: bribes and
political activities.
-
7/31/2019 CHAPTER2 the International Environment
24/26
4.1 Nature of Competition
Export marketing require a knowledge of:
1.Structure of Competition: Number andtypes of competitors.
2.Actions of Competitors: Product, channel,price, promotion.
3.Competition from AcceptableSubstitutes: Aspirin, razor blades, soft
drinks, automobiles.
-
7/31/2019 CHAPTER2 the International Environment
25/26
4.2 Factors Influencing Competition
Type of Product: Homogeneous have intensecompetition on price; Differentiatedproducts use non-price competition.
Prices of homogeneous products tend to beforced down to average unit costs.
Overall, competition is influencedlargely by:a. General business conditions; culture,economic and social conditionsb. costs;
c. laws and regulations; andd. actions of competitors.
-
7/31/2019 CHAPTER2 the International Environment
26/26
Conclusion
Each of the major components in theinternational environment discussed(economic, socio-cultural, political-legal,competitive) has a distinct effect on
competition, it could also interact witheach others.
International marketer or exporter mustunderstand/consider for each component
so that they could compete efficiently inthe foreign market.