reviewed the World Trade Organization\'s (WTO) website and found some interestin
ID: 463587 • Letter: R
Question
reviewed the World Trade Organization's (WTO) website and found some interesting information that I was not aware of. A "mission-type statement" is as follows: "The World Trade Organization -- the WTO -- is the international organization whose primary purpose is to open trade for the benefit of all." In graduate business school, I spent an entire semester learning about organizations such as the WTO and International Monetary Fund (IMF) and how they impact business. It was fairly dense material, but I also found it enlightening. What I learned, similar to this mission statement, is that the WTO's primary goal is to provide liberal, secure and predictable access to foreign markets for the goods and services of exporting enterprises. This allows business enterprises to work within the parameters of clearly identified arrangements. Looking at this from the focus of this course, how do you and others think this would impact marketing for an international organization?
Explanation / Answer
International marketing occurs when a business directs its products and services toward consumers in more than one country. While the overall concept of marketing is the same worldwide, the environment within which the marketing plan is implemented can be drastically different. Common marketing concerns—such as input costs, price, advertising, and distribution—are likely to differ dramatically in the countries in which a firm elects to market. Furthermore, many elements outside the control of managers, both at home and abroad, are likely to have a large impact on business decisions. The key to successful international marketing is the ability to adapt, manage, and coordinate a marketing plan in an unfamiliar and often unstable foreign environment.
Businesses choose to explore foreign markets for a host of sound reasons. Commonly, firms initially explore foreign markets in response to unsolicited orders from consumers in those markets. In the absence of these orders, companies often begin to export to: establish a business that will absorb overhead costs at home; seek new markets when the domestic market is saturated; and to make quick profits. Marketing abroad can also spread corporate risk and minimize the impact of undesirable domestic situations, such as recessions.
Economic conditions, per capita gross national product (GNP), and levels of economic development vary widely around the world. Before entering a market, firms marketing abroad must be aware of the economic situation there; the economy—not to mention individual standards of living—has a huge impact on the size and affluence of a particular target market. Furthermore, marketers must educate themselves on any trade agreements existing between countries as well as on local and regional economic conditions. Being aware of economic conditions and the likely direction that those conditions will take can help marketers better understand the profitability of potential markets
domestic market are often able to react to many market uncertainties correctly and automatically because they intuitively understand the culture and the impact of changing conditions. In foreign markets, however, this is not the case. Because they were not raised in the country in which they are trying establish a market, managers abroad often do not fully understand the culture and lack the proper frame of reference. Thus, decisions that they would make automatically at home could be dramatically incorrect when operating abroad. Unless special efforts are made to understand the cultural meanings for activities in each foreign market, managers will likely misinterpret the events taking place and risk making the wrong decisions
Market forces
Market forces are those that affect the supply, demand, and price of products, and they come in many forms. The competitive intelligence (CI) team commonly monitors and analyzes
Technological forces
Technological forces impact everything from how a product is produced to how a customer uses it and may affect every function in an organization, including what products are developed, how marketing reaches consumers, and how sales are tracked and managed. Technological changes even provide new and more effective ways to handle shipping and logistics. The CI team can play an important role in your company by tracking technological forces and providing insight into how they affect each area of the company.
Economic forces
All sorts of economic events may impact a business, from an economic downturn to sequestration to the government deciding to invest in solar energy. The CI team must continually monitor for such events so your organization isn’t blindsided by something that negatively affects its bottom line and doesn’t completely miss out on a golden opportunity.
Ideological forces
To compete in the global marketplace, you need to account for differences in ideologies. In some countries, for example, bribery is not only an accepted but an expected business practice. Certain practices that are acceptable in capitalist economies are shunned in communist or socialist states. In addition, religious beliefs may affect purchase decisions in a particular country or region. Competitive intelligence can play a key role in ensuring that an organization enters an area without committing a major faux pas.
Political and governmental forces
In the United States, the government plays a major role in determining how businesses operate, especially in relation to international trade, taxation, and regulations. If your business has government contracts, these forces may have an even bigger impact. The CI team needs to keep an eye on any government and political issues that may affect your organization.
Media forces
The media, including social media, can make or break a company. A bad-news story can go viral in a matter of minutes, and if your organization fails to deliver an acceptable response, the repercussions can last for months or even years. If the bad news is about a competitor, that could be good news for you, so be prepared to jump on such opportunities. The CI team can help monitor the media so your organization isn’t caught off guard in either situation.
Psychological/sociological forces
Psychological and sociological forces often drive what consumers buy and where and how they buy it. More and more consumers, for example, are purchasing products online and reading reviews before making a purchase. As consumer behavior evolves, your organization needs to adapt to serve developing needs and preferences
Moral/ethical forces
The safest approach to dealing with moral and ethical forces that impact business is to operate beyond reproach so that consumers hold your organization in the highest regard. Hire quality people to work for you, associate only with reputable organizations, hold everyone in your organization to the highest standards, and always treat everyone (customers, suppliers, distributors, and even competitors) with respect.
Competitive intelligence can help your organization gain insight into what’s expected and identify behaviors that can get organizations into trouble. It can also help leaders recognize problems in the organization that need to be corrected.
Weather and other environmental forces
Environmental issues relate to weather, natural disasters, climate change, pollution, and anything else that could impact business. A hurricane or tornado can completely wipe out businesses. Major environmental events can disrupt supply chains and increase the costs of raw materials. Part of the CI team’s job is to monitor for events that could impact your organization and help develop contingency plans in response to such events.
Legal/regulatory forces
National, state, and local laws and regulations may impact everything from where you can set up shop to how much you have to pay your employees and the measures you must take to ensure their safety. Some regulations can be very costly, and failing to honor the regulations may be even more costly. Competitive intelligence can help your organization monitor for changes rules and regulations so its leaders are prepared to make the necessary adjustments.
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