MBCM765D International Marketing Management Ebook

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Course Design
Advisory Council
Chairman
Mr. Sharad Mehra
UP
Members
Dr. S J Chopra Dr. Deependra Kumar Jha Dr. Veena Dutta
Chancellor Vice Chancellor Registrar
Dr. Kamal Bansal Ms. Deepa Verma Mr. Ashok Sahu

Dean-Academics Sr. Director-IA Head Online Business
SLM Development Team
Dr. Raju Ganesh Sunder Dr. Rajesh Gupta

Professor & Head-Academic Unit Sr. Associate Professor
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Mr. Tarun Batra Mr. Rahul Sharma Mr. Shantanu Trivedi
Asst. Director-Product Development Lecturer Lecturer
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Author
Dr. Debasish Rout, Co Author Dr. Arvind Kumar Jain

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Course Code: MBCM-765D

Course Name: International Marketing Management
Version: July 2019
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Contents
Unit 1 Introduction to International Marketing ....................................................................01
Unit 2 Opportunities and Challenges in International Marketing ......................................16
Unit 3 Cultural Environment of Global Markets ...................................................................25
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Unit 4 International Marketing Implications ........................................................................40
Unit 5 International Economic Environment .......................................................................64
Unit 6 Dynamics of International Trade Objectives ............................................................108
Unit 7 ....................................................................................121
International Market Analysis
Unit 8 ..............................................................................131
International Marketing Research
Unit 9 Product Strategy for International Markets .............................................................144
Unit 10 Branding in International Markets ...........................................................................159
Unit 11 ...........................................................................................................169
Pricing Decisions
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Unit 12 Personal Selling and Sales Management ..................................................................180
Unit 13 Entering International Markets ................................................................................196

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Unit 14 International Logistics and Distribution ...................................................................205
Unit 15 International Marketing Channels ...........................................................................220
Unit 16 International Export-Import Policy ...........................................................................230
Unit 17 Communication Decisions for International Markets ..............................................244
Unit 18 Integrated Marketing Communication and International Advertising ...................256
Unit 19 Global Promotional Strategies ...................................................................................268
Unit 20 Global E-Commerce ....................................................................................................279

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Unit 1 1
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Notes
Introduction to International
Marketing
Objectives
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After completing this unit, students will be aware of the following topics:
 Free Trade at Global Level
 Attempt to bring all the Countries Together for the Purpose of Trading
 Increase in Globalisation by Integrating the Economies of Different
Countries
 Achieving World Peace by Building Trade Relations among Different
Nations
 Promote Social and Cultural Exchange among the Nations
 Sustainable Management of Resources Globally
 Propel Export and Import of Goods Globally
 Distribute the Profit among all Participating Countries
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 Maintain Free and Fair Trade
Introduction
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International marketing is the performance, of business activities

that direct the flow of a company's goods and services to consumers
or users for a profit. It is the human activity directed for satisfying
consumer needs and wants through an exchange process across
national boundaries. This definition differs from domestic
marketing in that international marketing involves marketing
in more than one country. The marketing processes and concepts
are universally accepted when marketing in a domestic or foreign
country.
Globalisation: Evolution and Overview

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“GLOBALISATION” has become the buzzword since the last two

decades. The sudden increase in the exchange of knowledge, trade
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and capital around the world as well as technological innovation

happening from the internet to digital marketing, thrust the term
into the limelight.
According to Amartya Sen, a Nobel-Prize winning economist,

International Marketing Management
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globalisation “has enriched the world scientifically and culturally
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and benefited many people economically as well”. The United
Nations has even predicted that the forces of globalisation may
have the power to eradicate poverty in the 21st century.
Early economists would certainly have been familiar with the

general concept that markets and people around the world were
becoming more integrated over time. Although Adam Smith
himself never used the word, globalisation is a key theme in the
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Wealth of Nations. His description of economic development has
as its underlying principle the integration of markets over time.
As the division of labour enables output to expand, the search for
specialisation expands trade and gradually brings communities
from disparate parts of the world together.
Some modern economic historians dispute Smith’s argument

that the discovery of the Americas, by Christopher Columbus in
1492, accelerated the process of globalisation. Kevin O’Rourke
and Jeffrey Williamson argued in a 2002 paper that globalisation
only really began in the nineteenth century when a sudden drop
in transport costs allowed the prices of commodities in Europe and
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Asia to converge. Columbus' discovery of America and Vasco Da
Gama’s discovery of the route to Asia around the Cape of Good
Hope had very little impact on commodity prices, they argue.
The rapid convergence of the silver market in early modern period

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is only one example of “globalisation”, some historians argue. The

German historical economist, Andre Gunder Frank, has argued
that the start of globalisation can be traced back to the growth
of trade and market integration between the Sumer and Indus
civilisations of the third millennium BC.
Trade links between China and Europe first grew during the
Hellenistic Age, with further increases in global market convergence
occurring when transport costs dropped in the sixteenth century
and more rapidly in the modern era of globalisation, which Mssrs
O’Rourke and Williamson describe as after 1750s. Global historians
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such as Tony Hopkins and Christopher Bayly have also stressed

the importance of the exchange of not only trade but also ideas and
knowledge during periods of pre-modern globalisation.
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Globalisation has not always been a one-way process. There

is evidence that there was also market disintegration (or de-
globalisation) in periods as varied as the –
Unit 1: Introduction to International Marketing
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• Dark Ages
Notes
• The seventeenth century
• The interwar period in the twentieth
There is some evidence that globalisation has retreated in the

current crisis since 2007. But it is clear that globalisation is not
simply a process that started in the last two decades or even the
last two centuries. It has a history that stretches thousands of
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years, starting with Smith’s primitive hunter-gatherers trading
with the next village and eventually developing into the globally
interconnected societies of today. Whether you think globalisation
is a “good thing” or “not”, it appears to be an essential elementary
part of the economic history of mankind.
The Concept
Globalisation is manifested in the growth of world trade as a
proportion of output (the ratio of world imports to gross world
product, ”GWP”, has grown from some 7% in 1938 to about 10%
in 1970 to over 18% in 1996. It is reflected in the explosion of
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foreign direct investment (FDI), which in developing countries has
increased from $2.2 billion in 1970 to $154 billion in 1997. It has
resulted also in national capital markets becoming increasingly
integrated, to the point where some $1.3 trillion per day crosses
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the foreign exchange markets of the world, of which less than 2%

is directly attributable to trade transactions.
However, there are areas where globalisation is incomplete, even

in the economic sphere. In particular, migration is very far from
being free. Highly skilled professionals have a relatively high
degree of mobility, but those without skills often face obstacles
in migrating to higher-wage countries. Despite the difficulties,
substantial proportions of the labour forces of some countries are
in fact working abroad: for example, around 10% of the Sri Lankan
labour force is now abroad.
Causes
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What explains this globalisation? It is certainly not attributable to

conquest, the source of most previous historical episodes where a
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single economic system held sway over a vast geographical terrain.
The source lies instead in the development of technology. The costs

of transport, of travel and above all the costs of communicating
information that have fallen dramatically in the postwar period,
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almost entirely because of the progress made in technology area
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concerning different sectors. A 3-minute telephone call from the
USA to Britain cost $12 in 1946, whereas today it can cost as little
as 48 cents, despite the fact that consumer prices have multiplied
by over eight times in the intervening period. The first computers
were lumbering away with piles of punched cards in the early
postwar years and telegrams provided the only rapid means of
written communication. There was no fax or internet or e-mail
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or world-wide web, no PCs or satellites or cell-phones. Today we
witness phenomena that no futurist dreamed of half a century
ago, such as Indians with medical degrees residing in Bangalore
who earn a living by acting as secretaries to American doctors by
transcribing their tapes overnight.
It is clearly the availability of cheap, rapid and reliable

communications that permits such phenomena, just as this is the
key to the integration of the international capital market. The same
factor is also important in nurturing the growth of multinational
corporations, since it is this which enables them to exploit their
intellectual property efficiently in a variety of locations without
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losing the ability to maintain control from head office. But in
this context, other factors are also at work, such as the spread of
consumer knowledge about what is available that comes from travel
and from advertising, itself encouraged by the communications
revolution and its children like CNN. The reduction in transport
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costs is also a key factor underlying the growth in trade.
Of course, it needed a reasonably peaceful world to induce economic

agents to exploit the opportunities for globalisation presented
by technological progress. But the technological basis for the
phenomenon of globalisation implies that, barring an end to the
"Pax Americana" or else extremely vigorous conscious actions to
reverse the process, globalisation is here to stay.
Consequences
Globalisation certainly permits an increase in the level of global
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output. Whether as a result of the old Heckscher-Ohlin theory

of the basis of comparative advantage as lying in different factor
abundance in different countries, or as a result of the new trade
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theories that explain trade by increasing returns to scale, that will

increase world output.
International capital flows can transfer savings from countries

where the marginal product of capital is low to those where it is
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high, which again increases world output. Globalisation must be
Notes
expected to influence the distribution of income as well as its level.
So far as the distribution of income between countries is concerned,
standard theory would lead one to expect that all countries will
benefit. A flow of capital that finances a real investment is again
likely to benefit both parties, since the yield on the investment is
expected to be higher than the rate of interest the borrower has
to pay, while that rate of interest is also likely to be higher than
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the lender could expect at home since otherwise there would have
been no incentive to send it abroad. The effects on domestic income
distribution are less clear. Standard theory says that trade will
tend to hurt unskilled labour in rich countries and help in poor
ones, since the poor countries will be able to export-labour-intensive
goods like garments to rich countries, thus increasing the demand
for unskilled labour in the poor countries and decreasing it in the
rich ones. That is, within rich countries, there is a good analytical
reason for arguing that trade will tend to make the rich richer and
the poor poorer.
It seems more difficult to doubt that exports of labour-intensive

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goods have been a factor that has done something to increase the
demand for unskilled labour and therefore to equalise the income
distribution in the exporting countries like Sri Lanka. Hence, it
betrays a sad lack of concern with the prospects of the poor to hear,
as garment exports being denigrated as likely in some unexplained
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way to bring negative impacts. On the other hand, some of the

effects of the communications revolution must surely have had a
disequalisseing effect on income distribution in these countries:
think of the Indian doctors who are acting as secretaries to American
doctors rather than treating Indian patients, thereby earning more
for themselves and also tending to pull up the pay of other doctors
in India, who are relatively affluent by Indian standards. Thus, the
net effect of globalisation on income distribution within developing
countries seems distinctly ambiguous.
Globalisation and Long-Term Economic Growth

Possibilities in Developing Countries
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What impact is globalisation likely to have on the long-term

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possibilities of economic growth in developing countries?
Globalisation is tending to make the technologies and the

knowledge for this process to occur more readily available and
therefore to enable the process to be telescoped in time. (Singapore
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may be a small country, but there is no previous case in history of
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any country that did not enjoy massive resource discoveries going
from stark poverty to affluence in under 30 years.)
But it is surely also true that globalisation is bringing new dangers.

The virulence of the East Asian crisis was primarily a result of
countries exposing themselves to the full force of the international
capital market before they had built up an unquestioned reputation
for being able as well as willing to service their debts come what
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may, which meant that when investors became concerned about
their potential vulnerability as a result of the Thai crisis there
were no other investors willing to step in and provide stabilising
speculation even after exchange rates and interest rates had
clearly overshot. Moreover, a much longer and more imaginative
list of dangers comprise those which looks beyond narrow economic
questions and considers the role of globalisation in spreading such
unsavoury phenomena as drugs, the sex trade, crime and terrorism.
Policy Issues
Globalisation stems from technological developments rather than
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policy choices. It would be more productive to seek to maximise the
benefits it offers and minimise the risks it creates.
In order to raise living standards progressively over time, it is

at least as important to raise educational standards as it is in a
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relatively closed economy. If one asks what distinguishes those

countries that suffered contagion from the East Asian crisis from
those that escaped it, the answer seems to me very clear: that the
victims were those that had built up a substantial stock of short-
term dollar-denominated debt as a result of having established
capital account convertibility, while those who escaped catastrophe
were those that had been cautious in liberalising their capital
accounts at the short end.
Furthermore, one needs to ask whether there are mechanisms

that can protect individuals when risks to the economy actually
materialise. The recent experience in East Asia is again instructive:
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the World Bank has put a lot of effort into a crash course in
developing social safety nets in the countries that fell victim to
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the crisis in the past year. A globalised world is going to have to

deal with a broader policy agenda than simply liberalisation if the
outcome is to be reasonably equitable.
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Concepts of International Marketing
Notes
International marketing or global marketing refers to marketing
executed by transatlantic companies across national borders. This
strategy uses an extension of the techniques used in the main
country of the company. According to the American Marketing
Association, "International marketing is a multinational process of
planning and executing the conception, promotion and distribution
of ideas, goods and services to create exchanges that satisfy
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individual and organisational objectives."
More Definitions
Similar to other elements of marketing, there is not a single
definition for international marketing. Additionally, some authors
define international marketing and global marketing differently:
• "At a very simple level, international marketing implies the

company making one or more of the marketing mix across
national borders. "To a very complex level, company implies it
in established production to overseas plants and coordinating
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marketing strategies across the world."
• "International Marketing is the provision of commercial

activities that directs the flow of goods and services of the
company to consumers or users in more than one nation by the
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gain."
• "International Marketing is the orientation and implementation

capabilities of marketing to international business."
• "The international market exceeds the export merchant and

involves more in the environment of marketing in the countries
in which it does business."
• "Global/multinational Marketing jib to effectively employ

investments, products to the experience of a company at a
global level and also adapt it to what is really unique and
different in each country."
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• "Global Marketing refers to the marketing activities that are

coordinated and integrated across multiple markets of those
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countries."
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Differences Between Domestic Marketing and
Notes
International Marketing
There are many differences between domestic marketing and
international marketing in form of cultural, political, religious,
customary, ideological differences and more. Because of language
barriers, it is more difficult to obtain and interpret information
from research in international marketing.
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Further, advertising messages has to care for many cultural
differences between the countries. That includes differences in
languages, habits, expressions, gestures, ideological thought
process and more. For example, in the United States, the round "or"
made by the thumb and index finger sign means "okay" while the
same Mediterranean countries sign represents "zero" or "worst".
In Tunisia it is understood as "I will kill you" and to a Japanese
consumer, the gesture means 'money'.
International Marketing Definition
Every day, marketing is gaining greater importance, both on micro

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and macro levels. In this context of globalisation, companies are
subject to a lot of competition from other companies from domestic
regions and those coming from the foreign markets. In this sense,
there are many companies that do not want to lose their market
share, are forced to go outside.
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We can expand the definition and say that it is a business

management technique through which the company intends to
earn a profit by taking advantage of the opportunity offered by
foreign markets and dealing with international competition. On
the basis of all this, the definition can be expanded: strategy that is
developed with the purpose of achieving targets in foreign markets
having as a base the capabilities of the company (strengths and
weaknesses), the situation of the environment and international
competition (threats and opportunities).
Differences Between National Marketing and

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When drawing up the National Marketing we must take into
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account various aspects. But when we talk about international

markets, some of these aspects acquire more complexity, there
are certain aspects of the International Marketing and are not
addressed in the National Marketing.
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Environment
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The international environment is quite more complex than the
domestic environment. Obviously in international markets we will
find different laws and legal regulations, languages and different
tastes, as well as various infrastructures. Therefore, the study of
the environment is quite more complex.
Competition
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Will also be much more complex because in international markets
there will be a greater number of competitors and the offer of
products and services will be much more extensive and in many
cases unknown to the company.
Selection of Markets
It is exclusive to the International Marketing.
Selection of the Input Form

It is also exclusive. To penetrate the markets, there are several
ways: alone or with support from a partner and each one of them
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implies a level of different investment, greater or lesser commitment
to the market, more or less risk and greater or lesser approach to
the final customer.
Coordination of the Marketing-Mix

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Working in international markets, will have to coordinate the

policies of marketing-mix of all markets (this does not mean that
they are the same).
International Marketing Concept

The purpose of the International Marketing is to publicise the
importance that have differences between the national and
international environment and the way in which they influence
the formulation and implementation of Marketing strategies
in foreign markets. International Marketing develops together
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with the Marketing experiencing their same philosophical and

organisational developments with its specific peculiarities.
These peculiarities will lead to the development of their own
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organisational strategies and techniques as well as the resurgence

of a double philosophy of International Marketing that revolves
around the controversy of globalisation versus adaptation.
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Thus, corresponding to the previous both philosophical and
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organisational evolutions of Marketing, you can set the following
three phases (the latter can be subdivided into two) in international
Marketing:
• Orientation to foreign trade
• Guidance to sales in foreign markets
• Orientation to international Marketing
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Philosophical Evolution
Just as in Marketing the philosophical evolution corresponds to
an organisational evolution growing and expanding the available
techniques. Likewise, as regards the time horizon, unable to
speak of fixed dates but that they will depend on changes in the
environment (economic, political, competitive, technological etc.) of
different countries and industry sectors. Dates and features that
will be present are approximate and will refer primarily to the more
developed countries and the more advanced sectors (consumer
goods, technological etc.). Today, these countries and sectors, are
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located in the last phase and can be found yet (least developed)
countries and sectors (where the philosophy of Marketing not
stalled long enough and the techniques employed are few) that are
located in the first phases of orientation.
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The first phase of "orientation to foreign trade" would encompass

the period that goes from before the industrial revolution to the
1930s where the main objective of the commercial activity consisted
in an approach to placement of the productive surplus or guarantee
of raw material sourcing, as it is the case of export or import. It is,
primarily, a trade of products of agriculture, fishing and mining
being carried out, largely between the metropolis and its colonies.
Commerce craft and more elaborate products was minority.

In addition, the objective pursued by the Governments of the
countries was the obtaining of foreign currency - mainly gold-that
enriqueciesen the Treasury coffers as well as favoring national
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production which distorting the market with a subsidised export

supply and a series of legal obstacles to the importation. During
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this phase the International Marketing activities carried out by

the company are marginal, have mainly logistical, transport and
security of collection character.
In the second phase of "guidance for sale in foreign markets"

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that would run from the 1930s in the early 1970s (in the majority
Notes
of countries and markets) start with a basic fact, the crisis of the
international financial system of fixed exchange rates, which
seriously affected trade. International trade suffers a severe fall
and countries consisting of competitive devaluations steps taken
to promote its exports and impede imports or, are decided by the
way of autarky. It will only be from the second world war with the
establishment of a new system of fixed exchange rates (Bretton
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Woods) and the Agency for the promotion of international trade,
GATT, when it will begin to recover international trade culminating
an important development towards the end of this era.
In the third stage, which would start from the mid-1970s well
is could speak of the emergence a guidance to international
Marketing itself. This orientation to international Marketing
arises simultaneously to the general orientation to Marketing. You
are at a stage where demand is already objectively inferior to bid
both nationally and abroad and ways to encourage it through the
discovery and covert needs of consumers will look for.
This era begins, like the previous one, with an economic crisis
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caused by the breakdown of the Bretton Woods fixed changes
system but that will not affect both foreign as the 29 trade since they
develop measures economic monetary stabilisation individually
or collectively (EEC) countries, as well as the development of
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security of cobro-pago insurance Exchange (futures markets and

instruments(, forward, options etc.).
A primary fact of this phase, is the extension of the homogeneity

between the markets in a phenomenon that has come to be
called "globalisation". This phenomenon has given rise to a new
type of so-called global Marketing International Marketing that
comes in contrast to the also known by multi-domestic Marketing
International Marketing.
What is International Marketing?

"International marketing", which is a set of strategies by which
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the marketer makes to get the good or service to overseas markets

and which is aimed at a population specific. On many occasions,
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this is a gradual process, which has to do with the abilities of

the company and the performance that you purchased within its
market of reference, to subsequently embark on the conquest of
new markets, new cultures, both in the way of doing business and
features that consumers in other locations have to face. That is why,
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requires a comprehensive plan that could exploit the advantages
Notes
offered by the external market and in any event minimise the risks
of an investment.
It is the marketing applied to other cultures or different realities

alien to our environment and should therefore take into account
multiple factors in development and introduction of products. The
producer should try to design and produce consumer goods that
meet the needs of the consumer. In order to discover what these are
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used knowledge of marketing. Marketing has many more functions
that must comply with before starting the process of production;
among these, is –
• Market research
• Design, development and testing of the final product
What is, therefore, the international marketing?
It is of the application of marketing strategies in an environment

different from their own. The specialist must interact with cultures
and realities that are alien to their usual environment and force it to
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pay special attention to certain factors that keys to the introduction
of products will result in the market. One of the responsibilities of
the marketing is loyalty to the consumer, for which the product in
question should meet your needs. In international marketing, it
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is important that the expert has clear what these needs are and
how the product that aims to commercialise can satisfy them. To
meet this objective, it is necessary to work within the scope of the
investigation into the foreign market. International marketing
has to know the characteristics of this environment to perform the
corresponding recommendations on the design and development of
the product. Once the product was introduced in the market, it will
be the moment of trying to gain the loyalty of the consumer and to
develop expansion strategies.
Evolution and Orientation of Global Marketing

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Evolution to Global Marketing

Global marketing is not a revolutionary shift, it is an evolutionary
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process. While the following does not apply to all companies, it does
apply to most companies that begin as domestic-only companies.
Companies use various concepts in various international marketing
stages from casual exporting to global marketing. These concepts
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are expressed as “EPRG schema”. On the basis of international
Notes
marketing commitment, the writer of schema divides the firms
into four parts. Such as:
• Ethnocentric
• Polycentric
• Regiocentric
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• Geocentric
These are broadly discussed below:
1. Domestic Market Extension: Under this concept, domestic

firm tries to sell products in the foreign market which were
actually produced for the domestic market. It may include in the
second phases of international marketing. Primary objective of
it is to sell the excess production of the firm after meeting up
the domestic demand. Here mainly, the priority is given to the
domestic market and sale in foreign market is treated as the
profitable extension of domestic marketing activities. Although
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the foreign market is more profitable, the domestic market
considered as the fundamental market. Under this concept,
the product may be sold in any country; but no change will
be brought into the marketing mix. Domestic marketing mix
will be applied in the foreign market. The products are sold in
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those markets which are similar to the domestic market.
According to this concept, it is profitable for both small and big

firms. The firms adopting this concept or approach will include
in the Ethnocentric group. Meter-Man Inc Company follows
this approach.
2. Multi-domestic Market Concept: When a company

understands that domestic market and foreign market are
different from each other and the effect of foreign business
on their firm is more profitable, then its orientation towards
international business may shift to multi domestic market
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strategy. The company uses different marketing programs for

different countries to adapt their business with those countries.
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Advertising, product and distribution channel are separately

taken for each country. The firms do standardisation of their
marketing mix rather than finding similarity among the
elements of marketing mix to adapt in the market. The company
adopting this approach will include in the Polycentric. Feeders
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are that type of company.
Notes
3. Global Marketing Concept: A company guided by the global
marketing orientation or philosophy is generally referred to as
a global company. The marketing activities of the company will
be global and the whole world will be treated as one market to
that company. The product will be standardised, qualitative
and that product will be sold at reasonable price.
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The main feature of global marketing concept is to meet up the
needs and demands of the people in a similar way considering
the whole world as one market. The company has to take some
strategies which will be universally applicable. Considering
the whole world as one market, the company develops a global
marketing strategy. The company adopting this approach will
include in the Regiocentric or Geocentric. Example: Coca-Cola,
Intel, General Motors Company.
Check Your Progress
1. Globalisation is manifested in the growth of world trade

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as a proportion of output (the ratio of world imports to
gross world product, ”GWP”, has grown from some …….in
1938 to about ……….in 1970 to over …………….in 1996.
2. …………………stems from technological developments

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rather than policy choices.
3. Globalisation can also involve the use of

………………………….to encourage the acceptance of
foreign products among a local audience.
Summary
International marketing simply means the sale and purchase of
products and services in a market that acts as a platform for several
other markets. Companies from different countries attempt to
draw customers by advertising their products and services on the
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same platform. When companies decide to go overseas with their

products there are many environmental forces that the marketer
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will have to confront and adapt to. For example, the foreign
uncontrollable elements include: political/legal forces, economic,
competitive social and cultural forces, the level of technology,
physical and geographical. The marketer may find it easier to deal
with the marketing controllable, i.e. marketing mix or 4 P's and
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domestic uncontrollable as compared to the foreign uncontrollable.
Notes
Today, more and more businesses are exporting, importing and/
or manufacturing their goods with other countries. The companies
that are not involved in international business also feel the effects of
their customers and competitors that are doing business overseas.
There are many companies that sell a large portion of their goods
overseas and depend on those profits to survive.
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Questions for Discussions
1. What are the major objectives of international marketing?
2. Explain the effects of globalisation & its long-term economic

growth possibilities in developing countries.
3. What are the differences between domestic marketing and

international marketing?
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Unit 2
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Notes
Opportunities and Challenges in

Objectives
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 Significance of International Trade
 An Overview of India’s Foreign Trade
 Composition of World Trade
 Trends in World Trade
 Identifying Opportunities and Challenges in International Markets
Introduction
As the globalisation is growing, firms are getting international and
from international, they are growing global. Internationalisation
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has become very usual to firms these days as they sell and buy
products from variety so sources and places within and outside
their domain. International marketing has made lives very easy as
the availability of goods and services are now being insured to all,
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regardless where they are residing currently. If we see and observe

closely, we will find that actually international marketing has
made our purchasing pattern richer and diversified as compared
to previous times. It is due to international selling/production of
products that our day to day activities and consumption patterns
have been reorganised/redefined.
Significance of International Trade

The importance of international trade within the world economic
system is caused by important factors and practicability of
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international exchange of goods and services. There are some

factors predetermining the necessity of international trade. They
are:
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• Emergence of the world market.
• Unevenness of development of individual industries in different

countries. Products of the most developed industries, which
Unit 2: Opportunities and Challenges in International Marketing
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can't be realised at the internal market, is transported abroad.
Notes
In other words, both the sales requirements at foreign markets
and the need in receiving certain goods from outside, appear.
• Tendency to unlimited expansion of the production. Since the

capacity of domestic market is limited by solvent demand of
population, production is overgrowing the limits of domestic
market and businesspeople of every country are struggling for
foreign markets.
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• Tendency to get higher income in connection with the usage
of low-paid manpower and raw materials from developing
countries.
International trade is rational, when it provides some benefits,

which can be received on three levels:
• National level
• The level of domestic international firm
• Also on customers' one

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Foreign Trade Policy
• In the Mid-Term Review of the Foreign Trade Policy (FTP)
2015-20 the Ministry of Commerce and Industry has enhanced
the scope of Merchandise Exports from India Scheme (MEIS)
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and Service Exports from India Scheme (SEIS), increased MEIS

incentive raised for ready-made garments and made- ups by 2
per cent, raised SEIS incentive by 2 per cent and increased the
validity of Duty Credit Scrips from 18 months to 24 months.
• All export and import-related activities are governed by the

Foreign Trade Policy (FTP), which is aimed at enhancing
the country's exports and use trade expansion as an effective
instrument of economic growth and employment generation.
• The Department of Commerce has announced increased

support for export of various products and included some
)
additional items under the Merchandise Exports from India

Scheme (MEIS) in order to help exporters to overcome the
(c
challenges faced by them.
• The Central Board of Excise and Customs (CBEC) has

developed an 'integrated declaration' process leading to the
creation of a single window which will provide the importers
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and exporters a single point interface for customs clearance of
Notes
import and export goods.
• As part of the FTP strategy of market expansion, India has

signed a Comprehensive Economic Partnership Agreement
with South Korea which will provide enhanced market access to
Indian exports. These trade agreements are in line with India’s
Look East Policy. To upgrade export sector infrastructure,
‘Towns of Export Excellence’ and units located therein will be
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granted additional focused support and incentives.
• RBI has simplified the rules for credit to exporters, through

which they can now get long-term advance from banks for up
to 10 years to service their contracts. This measure will help
exporters get into long-term contracts while aiding the overall
export performance.
• The Government of India is expected to announce an interest

subsidy scheme for exporters in order to boost exports and
explore new markets.
Road Ahead
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India is presently known as one of the most important players
in the global economic landscape. Its trade policies, government
reforms and inherent economic strengths have attributed to its
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standing as one of the most sought after destinations for foreign

investments in the world. Also, technological and infrastructural
developments being carried out throughout the country augur well
for the trade and economic sector in the years to come.
Boosted by the forthcoming FTP, India's exports are expected reach

US$ 750 billion by 2018-2019 according to Federation of India
Export Organisation (FIEO). Also, with the Government of India
striking important deals with the governments of Japan, Australia
and China, the external sector is increasing its contribution to
the economic development of the country and growth in the global
markets. Moreover, by implementing the FTP 2014-19, by 2020,
)
India's share in world trade is expected to double from the present

level of three per cent.
(c
Trends in World Trade

1. United Nations’ projection for India’s exports to do well in
coming times is quite encouraging for the country. According
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to Asia-Pacific Trade and Investment Report 2015 recently
Notes
released by United Nations Economic and Social Commission
for Asia and the Pacific (UNESCAP) exports from India are
expected to relatively do well in 2016 as their shipments are
largely directed to advanced economies in Europe and North
America that are expected to expand in the coming year.
2. Presently, India’s exports have registered a negative growth at

(-) 24.3% for a consecutive tenth month. In light of the major
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challenges being faced by Indian exporters in the backdrop
of the global economic slowdown Ministry of Commerce and
Industry recently announced increased support for export of
various products and included some additional items under the
Merchandise Exports from India Scheme (MEIS).
3. Pertaining to global trade growth, WTO lowered forecast for

world trade growth to 2.8% in 2015 from 3.3% in April. These
revisions reflect a number of factors that weighed on the global
economy in the first half of 2015, including falling import
demand in China, Brazil and other emerging economies; falling
prices for oil and other primary commodities and significant
E
exchange rate fluctuations.
4. However, World Trade Organisation (WTO) in its recent

flagship report World Trade Report 2015 highlighted that
full implementation of the Trade Facilitation Agreement
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(TFA) reached in December 2013 has the potential to increase

global merchandise exports by US$1 trillion per annum, with
developing countries expected to capture more than half of
these gains.
5. In the direction of strengthening international economic

relations India has signed 18 MOUs/ Agreements with
Germany during the visit of Chancellor of Federal Republic of
Germany to India in the month of October.
6. Signing of Trans-Pacific Partnership (TPP) Agreement by

Ministers of the 12 Trans-Pacific Partnership (TPP) countries,
)
Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia,

Mexico, New Zealand, Peru, Singapore, United States and
(c
Vietnam is also a major development at the international level.

20
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Notes
Identifying Opportunities and Challenges in
International Markets
11 Biggest Challenges of International Business in
2017
From the U.K.’s unprecedented decision to leave the European
Union to the historic and divisive US presidential election, 2016 was
a year of large-scale change and uncertainty. Nowhere, perhaps,
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was it felt more keenly than in the world of international business.
Political, economic and environmental issues are increasingly
becoming the remit of international business leaders as much as
governments. At Hult, our aim is to prepare our students to become
the next generation of global business leaders, embracing the
opportunities and challenges of international business. While the
global marketplace becomes more interconnected and accessible,
the risks involved in doing business abroad are not to be taken
lightly.
Expanding business overseas means reaching new clients or

customers and potentially boosting profits. Despite all the
E
uncertainty of 2017 and the challenges that have yet to reveal
themselves, there are some guidelines for conducting business on
a global scale that you should always consider before leaping into
new international operations. Here is our advice on how to tackle
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the 11 biggest challenges for international business:
1. International company structure
2. Foreign laws and regulations
3. International accounting
4. Cost calculation and global pricing strategy
5. Universal payment methods
6. Currency rates
7. Choosing the right global shipment methods

)
8. Communication difficulties and cultural differences

(c
9. Political risks
10. Supply chain complexity and risks of labor exploitation
11. Worldwide environmental issues

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Foreign Laws and Regulations
Notes
Along with getting your company structure in place, gaining a
comprehensive understanding of the local laws and regulations
governing your target markets is key. From tax implications
through to trading laws, navigating legal requirements is a central
function for any successful international business. Eligibility to
trade is a significant consideration, as are potential tariffs and the
legal costs associated with entering new markets.
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Airbnb ran into trouble in 2014, with a crackdown on advertised
rental properties falling outside local housing and tourism
regulations. The company was forced to pay a €30,000 fine for a
breach of local tourism laws in Barcelona. It’s important to note
that employment and labor requirements also differ by country.
For instance, European countries stipulate that a minimum of
14-weeks maternity leave be offered to employees, while on the
other hand, there is no such requirement for US employers. With
the complexity involved in foreign trade and employment laws,
investing in knowledgeable and experienced corporate counsel
can prove invaluable. Beyond abiding by official laws, engaging
E
in international business often requires following other unwritten
cultural guidelines. This can prove especially challenging in
emerging markets with ill-defined regulations or potential
corruption. In response, companies doing business in the United
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States must abide by the Foreign Corrupt Practices Act, which aims
at eliminating bribery and unethical practices in international
business. A good rule of thumb is to beware of engaging in any
questionable activities, which might be legal but could have future
reputational repercussions.
International Accounting
Of the main legal areas to consider when it comes to doing
international business, tax compliance is perhaps the most crucial.
Accounting can present a challenge to multinational businesses
who may be liable for corporation tax abroad. Different tax systems,
)
rates and compliance requirements can make the accounting

function of a multinational organisation significantly challenging.
(c
Cost Calculation and Global Pricing Strategy

Setting the price for your products and services can present
challenges when doing business overseas and should be another
major consideration of your strategy. You must consider costs to
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remain competitive, while still ensuring profit.
Notes
Researching the prices of direct, local-market competitors can
give you a benchmark, however, it remains essential to ensure the
math still works in your favor. For instance, the cost of production
and shipping, labor, marketing and distribution, as well as your
margin, must be a taken into account for your business to be viable.
Pricing can also come down to how you choose to position
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your brand — should the cost of your product reflect luxury
status? Or will low prices help you to penetrate a new market?
Swedish furniture giant Ikea, known in Europe for its low-cost
value, struggled initially in China due to local competitor costs of
labor and production being much cheaper. By relocating production
for the Chinese market and using more locally sourced materials,
the company was able to successfully cut prices to better reflect its
brand and boost sales among target consumers.
Communication Difficulties and Cultural

Differences
Good communication is at the heart of effective international
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business strategy: However, communicating across cultures
can be a very real challenge. At Hult, developing cross-cultural
competency and communication skills are a core focus inside and
outside of the classroom.
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Effective communication with colleagues, clients and customers

abroad is essential for success in international business. And it’s
often more than just a language barrier you need to think about —
nonverbal communication can make or break business deals too.
Cultural differences can also influence market demand for

your product or service: The need your business may address at
home may already be met or not exist at all overseas. Local market
insight is key and there are a number of successful brands whose
business models simply weren’t viable in overseas markets. For
instance, American coffee company Starbucks seriously struggled
)
in Australia, where the demand for local, independent cafes and

coffee shops vastly outweighed the appeal of the corporate giant.
(c
Political Risks
An obvious risk for international business is political uncertainty
and instability. Countries and emerging markets that may offer
considerable opportunities for expanding global businesses may
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also pose challenges, which more established markets do not.
Notes
Before considering expansion into a new or unknown market, a
risk assessment of the economic and political landscape is critical.
Supply Chain Complexity and Risks of Labour

Exploitation
When it comes to sourcing products and services from overseas,
managing suppliers and supply chains can also be a tricky process.
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Unfortunately, the length and complexity of supply chains increases
the chance of working with suppliers who have unethical — and
even illegal — business practices. Of growing concern is the risk
in international business of forced labor and worker exploitation.
Worldwide Environmental Issues

As the environmental risks and effects of climate change are
becoming better understood, sustainability is high on the agenda of
many major global corporations. Recent international legislations
and proposals, such as the UN’s Sustainable Development Goals,
have put environmental issues at the forefront of international
business development. The Ashridge Centre for Business
E
and Sustainability at Hult researches innovative ways that
organisations can develop and implement more environmentally
sustainable business models.
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On a practical level, if you’re considering expanding your business

overseas, it’s important to be aware of the country-specific
environmental regulations and issues associated with your industry.
Some key considerations include how your production methods
might impact the local environment through waste and pollution.
Check Your Progress
1. India’s trade and external sector had a significant impact

on the ………………as well as expansion in per capita
income.
)
2. All export and import-related activities are governed by

the …………….. which is aimed at enhancing the country's
exports and use trade expansion as an effective instrument
(c
of economic growth and employment generation.
3. Over the early modern period, …………………between

empires and colonies accounted for an important part of
international trade.
24
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Notes
Summary
India has been at the epic centre of all this happening and
tectonic shifting in terms of market forces are concerned. Not only
consumers/customers are being heavily benefited as well from
international marketing phenomenon. There are several dynamics
of international marketing when it comes to different regions and
nations all across the world. The product/service compositions and
strategies change, the approach towards the customers change,
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more importantly the entire marketing concepts are redesigned,
keeping in mind the different sets of behavioural patterns of
buyers. Most of the world has become a single largest market
with all most similar traits and international marketing sees the
different nations as one and try to constantly cater the distinctive
needs of it.

1. What is supply chain complexity and risks of labor exploitation?
2. Explain the statement: Good communication is at the heart of

E
effective international business strategy.
3. What are the 11 Biggest Challenges of International Business

in 2017?
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4. What are the factors predetermining the necessity of

international trade?
5. What is importance of gaining a comprehensive understanding

of the local laws and regulations governing your target markets?
)
(c
Unit 3 25
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Notes
Cultural Environment of Global

Markets
Objectives
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 Historical and Geographical Perspective of Global Culture
 Dynamics of Culture in Assessing Global Marketss
 Management Styles Around the World
 Global Scenario of Political Environment
Introduction
Culture is complex and fully appreciating its influence takes
significant time, effort and expertise. Various features of a culture
can create an illusion of similarity, but marketers need to dig deeper
E
to make sure they truly understand the people and environments
in which they work. Even a common language does not guarantee
similarity of interpretation. For example, in the US we purchase
“cans” of various grocery products, but the British purchase “tins.”
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In India, where English is one of a number of officially recognised

languages, “matrimonial” is used as a noun in casual conversation,
referring to personal ads in newspapers seeking marriage partners.
The impact of religious, family, educational and social systems on

oneself and on people that is the way they live and the choices
they make. Marketing exists in an environment that is shaped
by culture. Domestic or International Marketing both needs
culture to thrive. There are many organisations that intend to
market their products in different countries, must be sensitive
to the cultural factors at work in their target markets. Cultural
differences between different countries or different regions in the
)
same country seem to be very small, marketers who ignore them,

faces failure risk when they implement their programs.
(c
Perspective of Global Culture

Globalisation is one of the most widely discussed topics in
geography and other social sciences. It refers to intensified
26
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geographical movements across national borders of commodities,
Notes
people seeking employment, money and capital investment,
knowledge, cultural values and environmental pollutants. It also
refers to the increased interdependence among nation-states and
supranational institutions and to increased connectivity among
people’s movements for a more democratic and humane society.
Globalisation has –
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• Economic aspects
• Political aspects
• Cultural aspects
• Spatial aspects
• Environmental aspects
Geographic Perspectives
Where something occurs is the spatial perspective; how life forms
interact with the physical environment is the ecological perspective.
E
We need both perspectives to comprehend Earth as the home of
people. Perspectives, knowledge and skills comprise the content
of geography. In general, a perspective is a framework that can
be used to interpret the meanings of experiences, events, places,
persons, cultures and physical environments. Having a perspective
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means looking at our world through a lens shaped by personal

experience, selective information and subjective evaluation.
Acquiring, understanding and using a wide variety of perspectives

are essential to becoming a geographically informed person. Such
a person knows that each individual –
• Has personal points of view based in unique life experiences
• Accepts the existence of diverse ways of looking at the world
• Understands how different perspectives develop

)
• Is aware that perspectives incorporate values, attitudes and

beliefs
(c
• Considers a range of perspectives when analysing, evaluating

and solving a problem
• Understands that perspectives are subject to change
Although the field of geography includes many different

Unit 3: Cultural Environment of Global Markets
27
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perspectives, geographers depend upon two perspectives in
Notes
particular to frame their understanding of people and places in the
world —
• The spatial perspective
• The ecological perspective
The Spatial Perspective
UP
A historical perspective focuses on the temporal dimension of
human experience (time and chronology), while geography is
concerned with the spatial dimension of human experience (space
and place).
Understanding spatial patterns and processes is essential to

appreciating how people live on Earth. People who approach
knowing and doing with a habit of inquiring about whereness
possess a spatial perspective.
The Ecological Perspective

People who regularly inquire about connections and relationships
E
among life forms, ecosystems and human societies possess an
ecological perspective. Understanding and using the spatial and
ecological perspectives helps geographers understand how to
interpret nature and societies on Earth. Viewed together, the
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geographic perspective overall encompasses an understanding of

spatial patterns and processes on Earth and its web of living and
nonliving elements interacting in complex webs of relationships
within nature and between nature and societies.
A fully developed geographic perspective, therefore, involves –
• An integration of both spatial and ecological points of view
• A consideration of other related perspectives that may be

useful in understanding and interpreting the world
Dynamics of Culture in Assessing Global

)
Markets
What is Culture
(c
“Culture refers to “the human-made part of human environment—

the sum total of knowledge, beliefs, art, morals, laws, customs and
any other capabilities and habits acquired by humans as members
of society”
28
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• Culture is the integrated sum total of learned behavioral traits
Notes
that are shared by member of society
• Culture – Ways of living, built up by a group of human beings,

that are transmitted from one generation to another
• Culture is acted out in social institutions
• Culture has both conscious and unconscious values, ideas and

attitudes
UP
• Culture is both material and nonmaterial
Culture’s Pervasive Impact

• Culture influences every part of our lives
• Cultures impact on birth rates in Taiwan, Japan and Singapore
• Birthrates have implications for sellers of diapers, toys, schools

and colleges
• Consumption of different types of food influence is culture:

Chocolate by Swiss, seafood by Japanese preference, beef by
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British, wines by France and Italy
• Even diseases are influenced by culture: stomach cancer in

Japan and lung cancer in Spain
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Elements of Culture
International marketers must design products, distribution
systems and promotional programs with due consideration to
culture, which was defined as including five elements:
1. Cultural values
2. Rituals
3. Symbols
4. Beliefs and
)
5. Thought processes
Factual versus Interpretive Cultural Knowledge

(c
There are two kinds of knowledge about cultures both of which are
necessary:
Factual knowledge is usually obvious and must be learned, e.g.,

29
ES
different meanings of colors and different tastes; it deals with
Notes
a facts about a culture Interpretive knowledge is the ability to
understand and appreciate the nuances of different cultural traits
and patterns, e.g., the meaning of time and attitudes toward
people. Interpretive knowledge requires a degree of insight It
is dependent on past experience for interpretation It is prone to
misinterpretation if one’s SRC is used.
Cultural Change and Cultural Borrowing
UP
• International marketers should appreciate how cultures
change and accept or reject new ideas
• How cultures change, e.g., war (changes in Japan after World

War II) or by natural disaster
Resistance to Change
Cultures change gradually with resistance to changes. The
resistance varies inversely with the interest a society has in the
change. Culture doesn’t resist change if the product is a status-
valued imported item, a fashion item, or is given the advantage of
E
inferior feelings about local products.
Planned and Unplanned Cultural Change

Cultures that are resistant to change represent a major hurdle in
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marketing products
Cultural change can be accomplished by:
• First, determine which cultural factors conflict with an

innovation, thus creating resistance to its acceptance
• Second, change those factors from obstacles to acceptance into

stimulants for change
• Third, marketers can cause change by introducing an idea or

product and deliberately setting about to overcome resistance
and to cause change that accelerates the rate of acceptance
)
Three Cultural Change Strategies

There are three strategies.
(c
(a) Culturally congruent strategy: The culturally congruent

strategy involves marketing products similar to ones already
on the market in a manner as congruent as possible with
existing cultural norms, thereby minimising resistance.
30
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(b) Strategy of unplanned change: A strategy of planned
Notes
change means deliberately setting out to change those aspects
of a culture most likely to offer resistance to predetermined
marketing goals.
(c) Strategy of planned change. The strategy of unplanned

change consists of introducing an innovation and then waiting
for an eventful cultural change that will permit the culture to
accept the innovation.
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Importance / Marketing Implications of Culture
1. A successful marketer must be a student of culture. Culture is
pervasive in all marketing activities— in pricing, promotion,
channels of distribution, product, packaging and styling
2. Understanding culture can determine success or failure in

international marketing
3. Universal aspects of the cultural environment represent

opportunities to standardise elements of a marketing program
E
4. The importance of “cultural empathy” to the foreign marketer is
that being culturally sensitive allows him or her to objectively
see, evaluate and appreciate another culture.
A marketer can obtain cultural empathy by studying the

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culture and living with it. The latter is not always possible
and it may be expedient to hire natives who speak your tongue
and their own. This procedure will often give you the intuition
which is necessary for success.
5. Markets are the result of the triune interaction of a marketer’s

efforts, economic conditions and all other elements of the
culture.” This statement emphasises the point that markets
evolve out of the interrelationship of three major factors. They
are a marketer’s efforts, economic conditions and all the other
elements of the culture.
6. Resistance to cultural change will affect new product

)
introduction in the respect that the greatest resistance will

confront products which are farthest from the status quo,
(c
but this resistance can be lowered by gaining public interest.

Lowering resistance in this situation means shortening the
duration of the resistance.
7 Understanding troublesome problems caused by language

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in foreign market: differences in tongues, the idiomatic
Notes
interpretations mean something different.
8. Improved communications have contributed to a convergence

of tastes and preferences in a number of product categories:
High Context
• Information resides in context
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• Emphasis on background, basic values
• Less emphasis on legal paperwork
• Focus on personal reputation
• Saudi Arabia, Japan
Low Context
• Messages are explicit and specific
• Words carry all information
• Reliance on legal paperwork

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• Focus on non-personal documentation of credibility
• Switzerland, US, Germany

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9. Marketer as a change agent: Whether or not the marketer is

aware of it, he assumes the role of a change agent when he
introduces into another culture new ideas or new products
requiring some form of change in behavior for acceptance and
use of the new idea or product. The international marketer
must concern himself with the impact of his actions upon the
new culture.
Cultural Factors of Various Countries

• Never touch the head of a Thai or pass an object over it. The
head is considered sacred in Thailand.
)
• Avoid using triangular shapes in Hong Kong, Korea and

Taiwan. It is considered a negative shape.
(c
• The number 7 is considered bad luck in Kenya, good luck in the

Czech Republic and has a magical connotation in Benin.
• The number 10 is bad luck in Korea.

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• The number 4 means death in Japan.
Notes
• Red represents witchcraft and death in many African countries.
Red is a positive color in Denmark.
Cultural Analysis for a Potential Market: Steps to be

followed
a Material Culture
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• Technology – the techniques and “know-how” of producing
material goods.
• Economics – the employment of capabilities and the

results.
b. Social Institutions
• Social organisations – family life, status, age.
• Education – literacy and intelligence and how informed

the public is.
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• Political structures – control over business.
c. Man and the Universe
• Belief systems – how do these affect product and

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promotional acceptance?
d. Aesthetics
• Graphic and plastic arts – degree of modernisation.
• Folklore – superstition, tradition etc.
• Music, drama and the dance – promotional possibilities.
Management Styles Around the World

A key value underlying the American business system is reflected
in the notion of a never-ending quest for improvement. The United
)
States has always been a relatively activist society; in many walks

of life, the prevailing question is can it be done better? Thus,
(c
management concept reflect the belief that change is not only normal
but also necessary, that nothing is scared or above improvement.
In fact, the merit on which one achieves advancement is frequently
tied to one’s ability to make improvements. Results are what count;
if practices must change to achieve results then change is in order.
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In other cultures, the strength and power of those in command
Notes
frequently rest not on change but on premise that the status quo
demands stable structure. To suggest improvement implies that
those in power have failed; for someone in a lower position to
suggest change would be viewed as a threat to another’s private
domain rather than as the suggestion of an alert and dynamic
individual.
In most countries, the foreign trader is also likely to encounter
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a fairly degree of government involvement. Among the four
dimensions of Hofstede’s cultural values discussed, the
individualism / Collectivism Index (IDV) and Power Index (PDI)
are especially relevant in examining methods of doing business
cross culturally.
Global Scenario of Political Environment

Different Political Systems
The study of political systems is extensive and complex. A political
system is basically the system of politics and government in a
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country. It governs a complete set of rules, regulations, institutions
and attitudes. A main differentiator of political systems is each
system’s philosophy on the rights of the individual and the
group as well as the role of government. Each political system’s
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philosophy impacts the policies that govern the local economy and
business environment. There are more than thirteen major types
of government, each of which consists of multiple variations. Let’s
focus on the overarching modern political philosophies.
At one end of the extremes of political philosophies, or ideologies,

is anarchism, which contends that individuals should control
political activities and public government is both unnecessary and
unwanted. At the other extreme is totalitarianism, which contends
that every aspect of an individual’s life should be controlled and
dictated by a strong central government.
In reality, neither extreme exists in its purest form. Instead, most

)
countries have a combination of both, the balance of which is often

a reflection of the country’s history, culture and religion. This
(c
combination is called pluralism, which asserts that both public

and private groups are important in a well-functioning political
system. Although most countries are pluralistic politically, they
may lean more to one extreme than the other.
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Authoritarian governments centralise all control in the hands
Notes
of one strong leader or a small group of leaders, who have full
authority. These leaders are not democratically elected and are not
politically, economically, or socially accountable to the people in the
country. Totalitarianism, a more extreme form of authoritarianism,
occurs when an authoritarian leadership is motivated by a distinct
ideology, such as communism. In totalitarianism, the ideology
influences or controls the people, not just a person or party.
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Authoritarian leaders tend not to have a guiding philosophy and
use more fear and corruption to maintain control. Democracy is
the most common form of government around the world today.
Democratic governments derive their power from the people of the
country, either by direct referendum (called a direct democracy) or
by means of elected representatives of the people (a representative
democracy). Democracy has a number of variations, both in theory
and practice, some of which provide better representation and
more freedoms for their citizens than others.
Different Legal Systems

Let’s focus briefly on how the political and economic ideologies
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that define countries impact their legal systems. In essence, there
are three main kinds of legal systems—common law, civil law
and religious or theocratic law. Most countries actually have a
combination of these systems, creating hybrid legal systems. Civil
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law is based on a detailed set of laws that constitute a code and

focus on how the law is applied to the facts. It’s the most widespread
legal system in the world. Common law is based on traditions and
precedence. In common law systems, judges interpret the law and
judicial rulings can set precedent.
Religious law is also known as theocratic law and is based on

religious guidelines. The most commonly known example of
religious law is Islamic law, also known as Sharia. Islamic law
governs a number of Islamic nations and communities around
the world and is the most widely accepted religious law system.
Two additional religious law systems are the Jewish Halacha and
)
the Christian Canon system, neither of which is practiced at the

national level in a country. The Christian Canon system is observed
(c
in the Vatican City.
The most direct impact on business can be observed in Islamic law—

which is a moral, rather than a commercial, legal system. Sharia
has clear guidelines for aspects of life. For example, in Islamic law,
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business is directly impacted by the concept of interest. According
Notes
to Islamic law, banks cannot charge or benefit from interest. This
provision has generated an entire set of financial products and
strategies to simulate interest—or a gain—for an Islamic bank,
while not technically being classified as interest. Some banks
will charge a large up-front fee. Many are permitted to engage in
sale-buyback or leaseback of an asset. For example, if a company
wants to borrow money from an Islamic bank, it would sell its
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assets or product to the bank for a fixed price. At the same time, an
agreement would be signed for the bank to sell back the assets to
the company at a later date and at a higher price.
The difference between the sale and buyback price functions as the
interest. In the Persian Gulf region alone, there are twenty-two
Sharia-compliant, Islamic banks, which in 2008 had approximately
$300 billion in assets. Clearly, many global businesses and
investment banks are finding creative ways to do business with
these Islamic banks so that they can comply with Islamic law while
earning a profit.
Government—Business Trade Relations:

E
The Impact of Political and Legal Factors on
International Trade
How do political and legal realities impact international trade and
what do businesses need to think about as they develop their global
CC
strategy? Governments have long intervened in international trade

through a variety of mechanisms. First, let’s briefly discuss some
of the reasons behind these interventions.
Why Do Governments Intervene in Trade?

Governments intervene in trade for a combination of political,
economic, social and cultural reasons. Politically, a country’s
government may seek to protect jobs or specific industries. Some
industries may be considered essential for national security
purposes, such as defense, telecommunications and infrastructure—
for example, a government may be concerned about who owns the
)
ports within its country.
National security issues can impact both the import and exports
(c
of a country, as some governments may not want advanced

technological information to be sold to unfriendly foreign interests.
Some governments use trade as a retaliatory measure if another
country is politically or economically unfair. On the other hand,
36
ES
governments may influence trade to reward a country for political
Notes
support on global matters.
State Capitalism: Governments Seeking to Control Key Industries
Despite the movement toward privatising industry and free trade,

government interests in their most valuable commodity, oil,
remains constant. The thirteen largest oil companies (as measured
by the reserves they control) in the world are all state-run and all
UP
are bigger than ExxonMobil, which is the world’s largest private oil
company. State-owned companies control more than 75 percent of
all crude oil production, in contrast with only 10 percent for private
multinational oil firms.
Table 1: The Major Global State-Owned Oil Companies
Aramco Saudi Arabia

Gazprom Russia
China National Petroleum Corp. China
National Iranian Oil Co. Iran
Petróleos de Venezuela Venezuela
Petrobras Brazil
E
Petronas Malaysia
In the past thirty years, governments have increasingly privatised

a number of industries. However, “in defense, power generation,
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telecoms, metals, minerals, aviation and other sectors, a growing

number of emerging-market governments, not content with simply
regulating markets, are moving to dominate them.”
State companies, like their private sector counterparts, get to keep

the profits from oil production, creating a significant incentive
for governments to either maintain or regain control of this very
lucrative industry. Whether the motive is economic (i.e., profit) or
political (i.e., state control), “foreign firms and investors find that
national and local rules and regulations are increasingly designed
to favor domestic firms at their expense.
Multinationals now find themselves competing as never before

)
with state-owned companies armed with substantial financial and

political support from their governments.”
(c
Governments are also motivated by economic factors to intervene

in trade. They may want to protect young industries or to preserve
access to local consumer markets for domestic firms. Cultural and
social factors might also impact a government’s intervention in
37
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trade. For example, some countries’ governments have tried to limit
Notes
the influence of American culture on local markets by limiting or
denying the entry of American companies operating in the media,
food and music industries.
How Do Governments Intervene in Trade?

While the past century has seen a major shift toward free trade,
many governments continue to intervene in trade. Governments
UP
have several key policy areas that can be used to create rules and
regulations to control and manage trade.
• Tariffs: Tariffs are taxes imposed on imports. Two kinds of

tariffs exist—specific tariffs, which are levied as a fixed charge
and ad valorem tariffs, which are calculated as a percentage of
the value. Many governments still charge ad valorem tariffs as
a way to regulate imports and raise revenues for their coffers.
• Subsidies: A subsidy is a form of government payment to a

producer. Types of subsidies include tax breaks or low-interest
loans; both of which are common. Subsidies can also be cash
grants and government-equity participation, which are less
E
common because they require a direct use of government
resources.
• Import quotas and VER: Import quotas and voluntary

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export restraints (VER) are two strategies to limit the amount

of imports into a country. The importing government directs
import quotas, while VER are imposed at the discretion of the
exporting nation in conjunction with the importing one.
• Currency controls: Governments may limit the convertibility

of one currency (usually its own) into others, usually in an
effort to limit imports. Additionally, some governments will
manage the exchange rate at a high level to create an import
disincentive.
• Local content requirements: Many countries continue to

require that a certain percentage of a product or an item be
)
manufactured or “assembled” locally. Some countries specify

that a local firm must be used as the domestic partner to
(c
conduct business.
• Antidumping rules: Dumping occurs when a company sells

product below market price often in order to win market share
and weaken a competitor.
38
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• Export financing: Governments provide financing to domestic
Notes
companies to promote exports.
• Free-trade zone: Many countries designate certain geographic

areas as free-trade zones. These areas enjoy reduced tariffs,
taxes, customs, procedures, or restrictions in an effort to
promote trade with other countries.
• Administrative policies: These are the bureaucratic policies
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and procedures governments may use to deter imports by
making entry or operations more difficult and time consuming.
Check Your Progress
1. The creation of the ....................in 1992 was expected to

change the way marketing is done worldwide.
2. A historical perspective focuses on the ................of human

experience (time and chronology), while geography is
concerned with the ............of human experience (space
and place).
E
3. ....................governments centralise all control in the
hands of one strong leader or a small group of leaders,
who have full authority.
4. A subsidy is a form of government payment to a producer.

CC
Types of subsidies include ...............or ............, both of

which are common.
Summary
Business activity tends to grow and thrive when a nation is politically
stable. When a nation is politically unstable, multinational firms
can still conduct business profitably. Their strategies will be
affected however. Most firms probably prefer to engage in the
export business rather than invest considerable sums of money in
investments in foreign subsidiaries. Inventories will be low and
)
currency will be converted rapidly. The result is that consumers

in the foreign nation pay high prices, get less satisfactory products
(c
and have fewer jobs.
The creation of the single European market in 1992 was expected

to change the way marketing is done worldwide. It meant the
birth of a market that was larger than the United States and
the introduction of European Currency Units (Euros) in place
39
ES
of the individual currencies of member nations. Experience in
Notes
multilingual marketing would help non-European companies
succeed in this gigantic market. With new technologies such as
multilingual processing programs, it would be possible to target
potential customers anywhere in Europe, in any language and in
the same marketing campaign.
Questions for Discussion
UP
1. What are the causes and impacts of globalisation?
2. Explain the dynamics of culture in accessing global markets.
3. What are the three cultural change strategies?
4. What are the different political systems?
5. What are the different legal systems?
6. Why do governments intervene in trade?

E
) CC
(c
40
Unit 4
ES
Notes
Implications
Objectives
UP
 WTO: An Overview
 From GATT to WTO
 Functions and Structure of WTO
 Standards and Safety Measures for International Markets
 Settlement of International Trade Disputes
Introduction
Implementation of a marketing strategy can improve business
profitability because of implications for all aspects of the company's
E
operations. The marketing strategy focuses company attention
on particular target market segments and makes it clear what
product characteristics are required for successfully satisfying
customer needs. This focus eliminates marginal operations that
CC
don't contribute to business growth and promotes a streamlined

approach to the company's business.
Historical Overview - GATT

The wartime discussions which laid the groundwork for the
1946-48 GATT/ITO negotiations were largely an American and
British effort. The discussions began with an exchange of views in
Washington in September and October of 1943. For the most part,
the experts found themselves in complete agreement on particular
issues of substantive policy. They canvassed most of the leading
problems including quantitative restrictions, subsidies, export
)
taxes, state trading, discrimination and tariff reduction. On each

point, the answers seemed fairly clear.
(c
Quantitative Restrictions: More commonly known as quotas,

were to be prohibited, the only exception being those used to deal
with balance of payments emergencies. Export taxes and export
subsidies were to be eliminated. State trading enterprises were to
41
ES
be encouraged to behave like private traders. Discrimination had
Notes
to be outlawed and tariffs had to be reduced substantially.
Details Proposals Forming Basis of International Trade

Organisation (ITO): Throughout 1945, formal government to
government conversations continued. In December of that year,
the American and British governments produced a detailed set of
"proposals" on which the negotiations for an International Trade
Organisation (ITO) could be based.
UP
United Nations Conference on Trade and Employment: At
the same time, the United States issued a preliminary invitation
to fifteen other countries to take part in a bilateral/multilateral
negotiation for the reduction of tariffs and other barriers to trade.
Three more countries were added to the list, making the participants
in the coming tariff negotiations identical to the members of the
Preparatory Committee for the Havana Conference to establish the
ITO. The proposals were accepted by the United Nations Economic
and Social Council in early 1946 and a "United Nations Conference
on Trade and Employment" officially convened.
E
Preparatory Committee Appointment: A Preparatory Committee,
consisting of the eighteen key governments, was appointed to
prepare a draft charter for consideration by the Plenary Conference.
At the end of the first session of the Preparatory Committee, held
in London, the United States extended a formal invitation to the
CC
other seventy members of the Committee to meet to negotiate a

concrete arrangement for the relaxation of tariff and trade barriers
of all kinds.
Geneva Session: In the Geneva Session held in 1947, the members

of the Preparatory Committee had two tasks before them: to work
out a draft charter for consideration and decision by the Havana
Conference and to organise the tariff negotiations and revise the
Draft Agreement on Tariffs and Trade.
Tariff Negotiations: The tariff negotiations started in April 1947

and on October 30th of that year, the General Agreement on Tariffs
)
and Trade (GATT) was signed by "contracting parties" of twenty-

three countries. For eight countries (Australia, Belgium, Canada,
(c
France, Luxembourg, the Netherlands, the United Kingdom and

the United States), the Agreement went into effect on January 1,
1948. In the following months, the remaining countries ratified the
Agreement. At the same time, signatory countries were drawing
up the "Havana Charter" for the proposed ITO.
42
ES
Havana Charter: The Havana Charter was a comprehensive
Notes
code governing the conduct of world trade. It contained both
general statements of principle and specific commitments
of national policy dealing primarily with national barriers
to trade. It covered all types of restrictions on trade, for
example –
• Tariffs
UP
• Preferences
• Internal taxation and regulation (such as quotas and related

exchange matters)
• Labor and employment
• Economic development and reconstruction
• Subsidies
• State trading and related matters
• General commercial provisions on freedom of transit

E
• Antidumping and countervailing duties
• Special provisions for free trade areas and customs unions
• Restrictive business practices

CC
• Intergovernmental commodity agreements
Havana Charter – Basis of GATT - The GATT was largely based

on parts of the Havana Charter. It had the limited purpose of cutting
tariffs as a bridging measure pending approval of the Charter.
It was to be affected with minimal institutional arrangements
because responsibility for trade liberalisation was expected to be
assumed shortly by the ITO. Plans for the ITO were abandoned,
however, when it became clear that the Havana Charter would not
be ratified by the US Senate.
The GATT was consequently a treaty without a planned

)
administrative organisation and which covered only part of its

originally intended scope.
(c
Principles of the GATT

The GATT functions according to the following four fundamental
principles:
Unit 4: International Marketing Implications
43
ES
1. Most-Favored-Nation Treatment (MFN): One of the key
Notes
provisions of the GATT outlawed discrimination among
members and between imported and domestically produced
merchandise.
According to Article I, the famous "most favored nation clause,"

members are bound to grant to the products of other members,
treatment no less favorable than that accorded to the products
of any other nation. Thus, no country is to give special trading
UP
advantages to another or to discriminate against it. All are one
and on an equal basis and all share the benefits of any moves
towards lower trade barriers.
There are a number of exceptions to Article I, notably that

covering customs unions and free trade areas. However, MFN
treatment generally ensures that developing countries and
others with little economic leverage are able to benefit freely
from the best trading conditions wherever and whenever they
are negotiated.
2. National Treatment Principle: This is Article III of the GATT

E
and requires that once goods have entered a market, they must
be treated no less favorably than the equivalent domestically
produced goods.
3. Anti-Non-Tariff Barriers Principle: This principle states

CC
that, where protection is given to domestic industry, it should

be extended exclusively (subject to very limited exceptions)
through customs tariffs and not through other commercial
measures.
Among other things, the aim of this rule is to make the extent of
protection clear and quantifiable. Fees and charges other than
tariffs must be limited to the approximate cost of the services.
Treatment given to marks of origin must not be discriminatory
and should be consistent with protection of the consumer.
The "Escape Clause" exception permits the imposition of tariffs

)
and non-tariff barriers in cases where, as a result of unforeseen

developments, a product is imported into the territory of a
contracting party of like or directly competing with a domestic
(c
product in such increased quantities and under conditions

which causes harm or threatens serious injury to domestic
producers. These may be imposed only to the extent and for
such a time as is necessary to prevent or remedy the injury.
44
ES
Exceptions also exist for national security, public morals, short
Notes
supply or domestic price stabilisation, health and other valid
public policy reasons.
4. Tariff Concession Principle: Under standard GATT operating

practice, a country wishing to become a contracting party
to the Agreement must submit negotiated tariff concession
schedules (including lists of non-GATTs complying non-
tariff trade restrictions). These are sometimes referred to as
UP
"bindings." They may include schedules of tariff reductions or
the elimination of specified non-tariff trade restrictions.
These tariff concession schedules are negotiated with other members

collectively. They constitute the "high water" mark for that country
for its tariffs and non-tariff trade restrictions as long as it remains
a member. Thereafter, tariffs and other trade restrictions may
only (with certain exceptions that invite retaliatory action by other
members) be reduced or eliminated through scheduled, unilateral,
or mutually negotiated further trade liberalisation. They may not
be increased.
E
Structure of the GATT
The highest body of the GATT was the Session of Contracting
Parties which met annually. GATT decisions were usually arrived
CC
at by consensus, not by vote. When voting took place, each member

country had one vote and decisions were by a simple majority. Two-
thirds of the votes cast, with the majority comprising more than half
the member countries, were needed for "waivers" (authorisations,
in particular cases, to depart from specific obligations under
GATT).
Between sessions of the contracting parties, the Council of

Representatives, made up of representatives of all members and
referred to as "the GATT Council," was authorised to act on both
routine and urgent matters. It usually met once a month. Major
GATT standing committees or councils were the Committee on
)
Trade and Development, concerned with issues of special interest

to developing countries, the Textiles Committee, made up of the
Multilateral Fiber Agreement (MFA) signatories and committees
(c
concerned with the Tokyo Round agreements. Ad hoc committees

dealt with specific transitory questions, such as requests for
accession to the GATT, verification that agreements concluded by
members conformed to the GATT, or the study of issues on which
45
ES
members might later make a joint decision. Panels of Conciliation
Notes
were often convened to investigate disputes between particular
members.
GATT Secretariat: This was headquartered in Geneva,

Switzerland and constituted the administrative body of the
GATT. Headed by an Executive Secretary, the Secretariat was
a clearinghouse for the work of contracting parties and was
well placed to play an active part in international commercial
UP
policy decisions. Also, it collected statistics as well as evidence
of regulation hindering or helping international trade and made
it available as a background material to the contracting parties.
Much of the evidence collected has become available for the first
time on a worldwide basis. The role of the Secretariat, both as
catalyst and as an initiator of policies, was thus undoubtedly large.
Significant Differences between the WTO and the

GATT
One of the most significant differences between the WTO and the
GATT involves the dispute settlement process embodied in Annex
E
II of the WTO Agreement.
Under the GATT, the procedure for settling disputes had no fixed
timetables, rulings were easy to block and cases often dragged on
inconclusively. The Uruguay Round introduced a more structured
CC
process with clearly defined stages and emphasis on prompt

settlement. The WTO Agreement also made it extremely difficult
for the losing country to block the adoption of the ruling.
Under the GATT, rulings were not adopted unless full consensus
was reached, meaning one vote, i.e. the losing country's, could
block a ruling. Under the WTO, however, rulings are automatically
adopted unless there is a consensus for rejection. According to this
procedure, any country wanting to block the adoption of a ruling
has to convince all other WTO member countries, including the
country favored by the ruling, to do so.
)
Trade in Intellectual Property Rights

Developing countries benefit from their participation in the WTO
(c
mainly by two means: preferential access to developed countries

markets and exemptions from many WTO rules and mechanisms.
The concept of 'special and differential treatment' (S&D) was
introduced in the Tokyo Round to serve the interests of the many
newly independent countries that joined the GATT. The argument
46
ES
behind S&D was to provide protection to the developing countries
Notes
for their economic development programs.
The developing countries also created the principle of "non-

reciprocity" to avoid engaging in reciprocal reductions of trade
barriers in order to protect their infant industries. The Differential
and More Favorable Treatment, Reciprocity and Fuller
Participation of Developing Countries clause, also known as the
"Enabling Clause," provided for such departures from GATT rules
UP
exempting developing countries from reciprocity requirements.
However, as some of the developing countries achieved greater
economic growth, their larger markets became more attractive to
firms from the developed countries. In fact, some of these countries,
such as Taiwan and South Korea, even had large trade surpluses
with the developed countries.
This has encouraged the developed countries to pursue more

aggressive strategies for opening up the developing countries'
markets. The developed countries also began to seek greater
protection of their intellectual property rights. In fact, the
developed countries have insisted that Trade Related Intellectual
E
Property Rights (TRIPs) play a large role in the WTO. This hurts
those developing countries which cannot afford patents and rely on
unauthorised copying of developed countries' intellectual property
for their "leapfrogging" development strategies. Developed
CC
countries control over 90 percent of the world's patents.
Environmental Regulations
Another point of contention between the developed and developing
countries is how to implement "sustainable development."
Sustainable development is defined as, "the pursuit of economic

growth and environmental protection simultaneously." The
developed countries often impose penalties, or even bans, on
products from developing countries that are produced under
environmentally questionable circumstances. The developing
countries suspect that any environmental rules by the developed
)
countries are simply ways to limit access to their markets. Thus,

there is a wide divergence of opinion between the two groups of
(c
countries.
Unlike the developed countries, developing countries often have

only two resources:
• Cheap labour
47
ES
• Abundant natural resources
Notes
The exploitation of these two resources is fundamental to their
economic growth. Consequently, environmental degradation is
considered unavoidable by the developing countries which want
to achieve higher standards of living for their citizens. In fact,
countries that have weak or non-existent law enforcement of
environmental standards have a competitive advantage in the
global marketplace.
UP
Some developed countries have begun to focus on "carrot and stick"
strategies to promote sustainable development. However, many
developing countries have rallied against the developed countries'
heavy reliance on "stick" measures, such as import penalties and
bans, which have often failed to promote positive changes. Instead,
the developing countries would like to see more "carrot" measures,
such as joint environmental protection programs. Some have
argued for a "Green Fund" consisting of contributions by developed
countries for assisting developing countries in such programs or
at least subsidising their own abstention from production. Others
have argued for the subsidising of the added expense of undertaking
E
environmentally sound technologies on the part of the developing
countries or the forgiving of debt in return for more environmental
regulation. Although there exist many differences between the
interests of the developed and developing countries, the WTO
CC
should serve as a forum for the settlement of disputes between

the two groups. As long as the WTO remains fair and profitable to
its members, it should serve the interests of both developed and
developing countries. The issues of intellectual property rights
and environmental regulations should be discussed in the WTO.
Harmonisation of the interests of the developed and developing
countries will be achieved through compromises on both sides.
From GATT to WTO

Historical Roots of GATT and the Failure of the ITO
)
While the United States has always participated in international

trade, it did not take a leadership role in global trade policy making
(c
until the Great Depression. One reason for this is that under the
US Constitution, Congress has responsibility for promoting and
regulating commerce, while the executive branch has responsibility
for foreign policy. Thus, trade policy was a tug of war between the
branches and the two branches did not always agree on the mix of
48
ES
trade promotion and protection.
Notes
However, in 1934, the United States began an experiment, the
Reciprocal Trade Agreements Act of 1934. In the hopes of expanding
employment, Congress agreed to permit the executive branch to
negotiate bilateral trade agreements. (Bilateral agreements are
those between two parties — for example, the US and another
country.)
UP
During the 1930s, the amount of bilateral negotiation under this
act was fairly limited and in truth it did not do much to expand
global or domestic trade. However, the Second World War led
policy makers to experiment on a broader level. In the 1940s,
working with the British government, the United States developed
two innovations to expand and govern trade among nations. These
mechanisms were called the General Agreement on Tariffs and
Trade (GATT) and the ITO (International Trade Organisation).
GATT was simply a temporary multilateral agreement designed to

provide a framework of rules and a forum to negotiate trade barrier
reductions among nations. It was built on the Reciprocal Trade
E
Agreements Act, which allowed the executive branch to negotiate
trade agreements, with temporary authority from the Congress.
The ITO
CC
The ITO, in contrast, set up a code of world trade principles and a

formal international institution. The ITO’s architects were greatly
influenced by John Maynard Keynes, the British economist. The ITO
represented an internationalisation of the view that governments
could play a positive role in encouraging international economic
growth. It was incredibly comprehensive: including –
• Chapters on commercial policy
• Chapters on investment
• Chapters on employment
• Chapters on business practices

)
The ITO also included a secretariat with the power to arbitrate

(c
trade disputes. But the ITO was not popular. It also took a long
time to negotiate. Its final charter was signed by 54 nations at the
UN Conference on Trade and Employment in Havana in March
1948, but this was too late. The ITO missed the flurry of support
for internationalism that accompanied the end of WWII and which
49
ES
led to the establishment of agencies such as the UN, the IMF and
Notes
the World Bank. The US Congress never brought membership in
the ITO to a vote and when the president announced that he would
not seek ratification of the Havana Charter, the ITO effectively
died.
Consequently the provisional GATT (which was not a formal

international organisation) governed world trade until 1994
(Aaronson, 1996, 3-5).
UP
GATT
GATT was a club, albeit a club that was increasingly popular. But
GATT was not a treaty. The United States (and other nations)
joined GATT under its Protocol of Provisional Application. This
meant that the provisions of GATT were binding only insofar as
they are not inconsistent with a nation’s existing legislation. With
this clause, the United States could spur trade liberalisation or
contravene the rules of GATT when politically or economically
necessary (US Tariff Commission, 1950, 19-21, 20 note 4).
From 1948 until 1993, GATT’s purview and membership grew

E
dramatically. During this period, GATT sponsored eight trade
rounds where member nations, called contracting parties, agreed to
mutually reduce trade barriers. But trade liberalisation under the
GATT came with costs to some Americans. Important industries
CC
in the United States such as textiles, television, steel and footwear

suffered from foreign competition and some workers lost jobs.
However, most Americans benefited from this growth in world

trade; as consumers they got a cheaper and more diverse supply
of goods, as producers, most found new markets and growing
employment. From 1948 to about 1980 this economic growth came
at little cost to the American economy as a whole or to American
democracy (Aaronson, 1996, 133-134).
The Establishment of the WTO

By the late 1980s, a growing number of nations decided that
)
GATT could better serve global trade expansion if it became a

formal international organisation. In 1988, the US Congress, in
(c
the Omnibus Trade and Competitiveness Act, explicitly called for

more effective dispute settlement mechanisms. They pressed for
negotiations to formalise GATT and to make it a more powerful
and comprehensive organisation. The result was the World Trade
Organisation (WTO), which was established during the Uruguay
50
ES
Round (1986-1993) of GATT negotiations and which subsumed
Notes
GATT. The WTO provides a permanent arena for member
governments to address international trade issues and it oversees
the implementation of the trade agreements negotiated in the
Uruguay Round of trade talks
Functions and Structure of WTO

Structure of the World Trade Organisation
UP
The WTO secretariat (numbering 625 of many nationalities) is
headed by Director General. However, the WTO is headed by the
Ministerial Conference who enjoys absolute authority over the
institution. It not only carries out functions of the WTO but also
takes appropriate measures to administer the new global trade
rules. In addition to these, the structure of the WTO consists of a
General Council to oversee the WTO agreement and ministerial
decisions on a regular basis. The Council sits in its headquarters
Geneva, Switzerland usually once a month. Besides General
Council, there is –
E
• The Council for Trade in Goods
• The Council for Trade in Services
• The Council for Trade Related Intellectual Property Rights

CC
(TRIPS)
These Councils and their respective subsidiary bodies perform

their respective functions. Decision-making is made by consensus.
If consensus is not reached then majority voting plays the crucial
rate. The significant task facing the WTO is that of making the new
multilateral trading system truly global. Implementation of WTO
agreements and ministerial decisions are crucial to credibility of
the multilateral trading system and indispensable for –
• Expanding global trade
• Creating additional jobs

)
• Improving the standard of living

(c
Functions of the World Trade Organisation

At the heart of the Organisation are the WTO agreements,
negotiated and signed by the bulk of the world’s trading nations.
The goal is to help producers of goods and services, exporters and
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importers conduct their business. The WTO’s overriding objective
Notes
is to help trade flow smoothly, frets, fairly and predictably.
With these objectives in mind, we can state the following six

specific functions:
• It shall facilitate the implementation, administration and

operation of the WTO trade agreements, such as multilateral
trade agreements, plurilateral trade agreements.
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• It shall provide forum for negotiations among its members
concerning their multilateral trade relations.
• It shall administer the ‘Understanding on Rules and Procedures’

so as to handle trade disputes.
• It shall monitor national trade policies.
• It shall provide technical assistance and training for members

of the developing countries.
• It shall cooperate with various international organisations

like the IMF and the WB with the aim of achieving greater
E
coherence in global economic policy-making.
The WTO was founded on certain guiding principles –
• Non-discrimination
CC
• Free trade
• Open, fair and undistorted competition, etc
In addition, it has special concern for developing countries.
WTO Agreements
General Agreement on Tariffs and Trade was established in 1947.
In 1995, GATT was replaced by the World Trade Organisation
(WTO).
As far as the old system or GATT was concerned, there were two
)
GATTS:
• GATT the organisation

(c
• GATT the agreement
The second one refers to the agreement between different

governments setting out the rules for trade. GATT, the organisation,
has been replaced by the establishment of the WTO. GATT, the
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agreement, however, exists along with the additional WTO new
Notes
agreements, viz.
• General Agreement on Trade in Services (GATS)
• General Agreements on the Trade Related Aspects of

Intellectual Property Rights (TRIPS).
It is, thus, clear that the WTO Agreements cover goods, services
and intellectual property.
UP
Three Agreements Establishing the WTO
The three agreements establishing the WTO are:
• GATT
• GATS
• TRIPS
GATT is related to increasing market access by reducing various

trade barriers operating in different countries. Dismantling of
trade restrictions was to be achieved by the –
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• Reduction in tariff rates
• Reductions in non-tariff support in agriculture

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• Abolition of voluntary export restraints or phasing out the

Multi-fibre Arrangement (MFA)
• Cut in subsidies etc.
To improve market access, industrialised countries will have to

reduce tariffs by 36 p.c. over six years and 24 p.c. for developing
nations over 10 years. World trade in textiles and clothing’s is
governed by the MFA which requires to be phased out within 10
years (1993-2002).
On 1st January, 2003, textiles and clothing sector will stand

integrated into GATT, with the elimination of MFA restrictions.
)
GATT aims at elimination of farm support and export support in

developed countries. The agreement says that all countries will
have to reduce aggregate support levies if it is in excess of 5 p.c. of
(c
the total value of agricultural produce, but for developing countries

it is more than 10 p.c. The value and the volume of direct export
subsidies will have to be cut by 36 p.c. and 21 p.c., respectively,
over six years for developed countries.
53
ES
GATS
Notes
Multilaterally agreed and legally enforceable rules and disciplines
relating to trade in services are covered by General Agreement on
Trade in Services. It envisages free trade in services, like banking,
insurance, hotels, construction etc., so as to promote growth in
the developed countries by providing larger markets and in the
developing countries through transfer of technologies from the
developed countries.
UP
As a result of this agreement, access of service personnel into
markets of member countries will henceforth be possible on a non-
discriminatory basis under transparent and rule-based system.
Under the agreement, service sector would be placed under most
favoured nation (MFN) obligations that prevents countries from
discriminating among different nations in respect of services.
TRIPS
The TRIPS Agreement covers seven specific areas, viz. copyrights,
trademarks, industrial designs, integrated circuits, geographical
indications, trade records and patent. Of these seven areas, the
E
most important as well as debatable aspect is the patents right.
The basic principle of the patent system is that an inventor, who
makes a full disclosure of what he has invented, is granted a
statutory monopoly to exploit his invention.
CC
Patents should be available for any invention, whether products

or processes, in all fields of technology provided they are new,
involve an inventive step and capable of industrial application.
Patents should be available and patent rights enjoyable without
discrimination.
TRIPS also say that members must provide for the protection
of plant varieties either by patents or by an effective sui generis
system. The sui generis system commonly refers to the system
of Plant Breeders’ Rights (PBRs)—the exclusive right to produce
seed of the protected variety for the seed trade and control of its
)
marketing. In addition, WTO members have set procedures for

settling disputes arising out of the violation of trade rules. Thus,
there exists a multilateral system of settlement of disputes. The
(c
WTO agreement also allows governments to take appropriate

action against dumping.
GATT was transformed into World Trade Organisation (WTO)

with effect from 1st January 1995. The headquarters of WTO are
54
ES
situated at Geneva, Switzerland.
Notes
Representation in the WTO and Economic
Groupings
The work of the WTO is undertaken by representatives of member
governments but its roots lie in the everyday activity of industry and
commerce. Trade policies and negotiating positions are formulated
in capitals, usually with a substantial advisory input from private
UP
firms, business organisations, farmers as well as consumer and
other interest groups. Most countries have a diplomatic mission
in Geneva, sometimes headed by a special Ambassador to the
WTO, whose officials attend meetings of the many negotiating and
administrative bodies at WTO headquarters. Sometimes expert
representatives are sent directly from capitals to put forward their
governments' views on specific questions.
As a result of regional economic integration - in the form of customs

unions and free trade areas - and looser political and geographic
arrangements, some groups of countries act together in the WTO
with a single spokesperson in meetings and negotiations.
E
EU: The largest and most comprehensive grouping is the European
Union and its 15 member states. The EU is a customs union with
a single external trade policy and tariff. While the member states
coordinate their position in Brussels and Geneva, the European
CC
Commission alone speaks for the EU at almost all WTO meetings.

The EU is a WTO member in its own right as are each of its member
states.
A lesser degree of economic integration has so far been achieved by

the countries which are GATT members of the Association of South
East Asian Nations (ASEAN) - Malaysia, Indonesia, Singapore,
Philippines, Thailand and Brunei Darussalam. Nevertheless, they
have many common trade interests and are frequently able to
coordinate positions and to speak with a single voice.
Among other groupings which occasionally present unified

)
statements is the Latin American Economic System (SELA) and the

African, Caribbean and Pacific Group (ACP). More recent efforts at
regional economic integration - for instance, NAFTA (Canada, US
(c
and Mexico) and MERCOSUR (Brazil, Argentina, Paraguay and

Uruguay) - have not yet reached the point where their constituents
frequently have a single spokesperson on WTO issues.
A well-known alliance in the Uruguay Round - bringing together a

55
ES
similarity of trade interests rather than a regional identity - was
Notes
the Cairns Group which comprised and still comprises, agricultural
exporting nations from developed, developing and East European
countries.
How the WTO Takes Decisions?

The WTO continues a long tradition in GATT of seeking to make
decisions not by voting but by consensus. This procedure allows
UP
members to ensure their interests are properly considered even
though, on occasion, they may decide to join a consensus in the
overall interests of the multilateral trading system. Where
consensus is not possible, the WTO agreement allows for voting. In
such circumstances, decisions are taken by a majority of the votes
cast and on the basis of "one country, one vote".
There are four specific voting situations envisaged in the WTO

Agreement.
First, a majority of three-quarters of WTO members can vote to

adopt an interpretation of any of the multilateral trade agreements.
E
Second and by the same majority, the Ministerial Conference,
may decide to waive an obligation imposed on a particular member
by a multilateral agreement.
Third, decisions to amend provisions of the multilateral agreements

CC
can be adopted through approval either by all members or by a

two-thirds majority depending on the nature of the provision
concerned. However, such amendments only take effect for those
WTO members which accept them.
Finally, a decision to admit a new member is taken by a two-thirds

majority in the Ministerial Conference.
The WTO Secretariat and Budget

The WTO Secretariat is located in Geneva. It has around 450
staff and is headed by its Director-General, Mr. Renato Ruggiero
and four deputy directors-general. Its responsibilities include the
)
servicing of WTO delegate bodies with respect to negotiations

and the implementation of agreements. It has a particular
(c
responsibility to provide technical support to developing countries

and especially the least-developed countries. WTO economists and
statisticians provide trade performance and trade policy analyses
while its legal staff assists in the resolution of trade disputes
involving the interpretation of WTO rules and precedents. Much
56
ES
of the Secretariat's work is concerned with accession negotiations
Notes
for new members and providing advice to governments considering
membership.
The WTO budget is around US$83 million (105 million Swiss

Francs) with individual contributions calculated on the basis of
shares in the total trade conducted by WTO members. Part of the
WTO budget also goes to the International Trade Centre.
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How Countries Join the WTO?
Most WTO members are previously GATT members who have
signed the Final Act of the Uruguay Round and concluded their
market access negotiations on goods and services by the Marrakesh
meeting in 1994. A few countries which joined the GATT later in
1994, signed the Final Act and concluded negotiations on their
goods and services schedules, also became early WTO members.
Other countries that had participated in the Uruguay Round
negotiations concluded their domestic ratification procedures only
during the course of 1995 and became members thereafter.
Aside from these arrangements which relate to "original" WTO

E
membership, any other state or customs territory having full
autonomy in the conduct of its trade policies may accede to the
WTO on terms agreed with WTO members.
CC
In the first stage of the accession procedures the applicant

government is required to provide the WTO with a memorandum
covering all aspects of its trade and economic policies having a
bearing on WTO agreements. This memorandum becomes the basis
for a detailed examination of the accession request in a working
party.
Alongside the working party's efforts, the applicant government

engages in bilateral negotiations with interested member
governments to establish its concessions and commitments on goods
and its commitments on services. This bilateral process, among
other things, determines the specific benefits for WTO members
)
in permitting the applicant to accede. Once both the examination

of the applicant's trade regime and market access negotiations are
complete, the working party draws up basic terms of accession.
(c
Finally, the results of the working party's deliberations contained

in its report, a draft protocol of accession and the agreed schedules
resulting from the bilateral negotiations are presented to the
General Council or the Ministerial Conference for adoption. If a
57
ES
two-thirds majority of WTO members vote in favor, the applicant
Notes
is free to sign the protocol and to accede to the Organisation;
when necessary, after ratification in its national parliament or
legislature.
Assisting Developing and Transition Economies

Developing countries accounted for 97 of the total GATT membership
of 128 at the end of 1994 and, together with countries currently
UP
in the process of "transition" to market-based economies, they are
expected to play an increasingly important role in the WTO as
the Organisation's membership expands. As a consequence, much
attention is paid to the special needs and problems of developing
and transition economies. For instance, the WTO Secretariat,
alone or in cooperation with other international organisations,
conducts missions and seminars and provides specific, practical
technical cooperation for governments and their officials dealing
with accession negotiations, implementing WTO commitments or
seeking to participate effectively in multilateral negotiations.
Courses and individual assistance is given on particular WTO

E
activities including dispute settlement and trade policy reviews.
Moreover, developing countries, especially the least-developed
among them, are helped with trade and tariff data relating to their
own export interests and to their participation in WTO bodies.
CC
The WTO Secretariat has also continued GATT's programme

of training courses. These take place in Geneva twice a year for
officials of developing countries. Since their inception in 1955 and
up to the end of 1994, the courses have been attended by nearly 1400
trade officials from 125 countries and 10 regional organisations.
Since 1991, special courses have been held each year in Geneva for
officials from the former centrally-planned economies in transition
to market economies.
Specialised Help for Export Promotion

The International Trade Centre was established by GATT in 1964
)
at the request of the developing countries to help them promote

their exports. It is jointly operated by the WTO and the United
(c
Nations, the latter acting through UNCTAD (the UN Conference

on Trade and Development).
The Centre responds to requests from developing countries for

assistance in formulating and implementing export promotion
58
ES
programmes as well as import operations and techniques. It
Notes
provides information and advice on export markets and marketing
techniques and assists in establishing export promotion and
marketing services and in training personnel required for these
services. The Centre's help is freely available to the least-developed
countries.
The WTO's part in Global Economic Policy-making
UP
An important aspect of the WTO's mandate is to cooperate with
the International Monetary Fund, the World Bank and other
multilateral institutions to achieve greater coherence in global
economic policy-making. A separate Ministerial Declaration was
adopted at the Marrakesh Ministerial Meeting in April 1994 in
order to underscore this objective.
The declaration envisages an increased contribution by the WTO

to achieving greater coherence in global economic policy-making. It
recognises the inter-linkages between different aspects of economic
policy and calls on the WTO to develop its cooperation with the
international organisations responsible for monetary and financial
E
matters - the World Bank and the International Monetary Fund..
The declaration also recognises the contribution that trade

liberalisation makes to the growth and development of national
economies. It views such liberalisation as an increasingly important
CC
component in the success of the economic adjustment programmes

which many WTO members are undertaking, even though it may
often involve significant transitional social costs.
Overseeing National Trade Policies

Surveillance of national trade policies is a fundamentally important
activity running throughout the work of the WTO. At the centre of
this work is the Trade Policy Review Mechanism (TPRM).
Objectives of the TPRM - The objectives of the TPRM are,

through regular monitoring, to increase the transparency and
understanding of trade policies and practices, to improve the
)
quality of public and intergovernmental debate on the issues and

to enable a multilateral assessment of the effects of policies on
(c
the world trading system. In this way member governments are

encouraged to follow more closely the WTO rules and disciplines
and to fulfill their commitments.
Conducting of Reviews: Reviews are conducted on a regular,

59
ES
periodic basis. The four biggest traders - the European Union, the
Notes
United States, Japan and Canada - are examined approximately
once every two years. The next 16 countries in terms of their share
of world trade are reviewed every four years; and the remaining
countries every six years, with the possibility of a longer interim
period for the least-developed countries.
Reviews are Conducted in the Trade Policy Review Body

(TPRB) - established at the same level as the General Council
UP
- on the basis of two documents: a policy statement prepared by
the government under review and a detailed report prepared
independently by the WTO Secretariat. These two reports, together
with the proceedings of the TPRB are published after the review
meeting,
In addition to the TPRM, many other WTO agreements contain

obligations for member governments to notify the WTO Secretariat
of new or modified trade measures. For example, details of any
new anti-dumping or countervailing legislation, new technical
standards affecting trade, changes to regulations affecting trade in
services and laws or regulations concerning the TRIPs agreement
E
all have to be notified to the appropriate body of the WTO.
Special groups are also established to examine new free-trade

arrangements and the trade policies of acceding countries.
CC
Technical Regulations and Standards

Technical regulations and standards are important, but they vary
from country to country. Having too many different standards
makes life difficult for producers and exporters. If the standards are
set arbitrarily, they could be used as an excuse for protectionism.
Standards can become obstacles to trade. But they are also

necessary for a range of reasons, from environmental protection,
safety, national security to consumer information. And they can
help trade. Therefore the same basic question arises again: how to
ensure that standards are genuinely useful and not arbitrary or an
)
excuse for protectionism.
Technical Barriers to Trade Agreement (TBT): It tries to ensure

(c
that regulations, standards, testing and certification procedures

do not create unnecessary obstacles.
However, the agreement also recognises countries’ rights to adopt

the standards they consider appropriate — for example, for human,
60
ES
animal or plant life or health, for the protection of the environment
Notes
or to meet other consumer interests. Moreover, members are
not prevented from taking measures necessary to ensure their
standards are met. But that is counterbalanced with disciplines. A
myriad of regulations can be a nightmare for manufacturers and
exporters.
Life can be simpler if governments apply international standards

and the agreement encourages them to do so In any case, whatever
UP
regulations they use should not discriminate. The agreement also
sets out a code of good practice for both governments and non-
governmental or industry bodies to prepare, adopt and apply
voluntary standards. Over 200 standards-setting bodies apply
the code. The agreement says the procedures used to decide
whether a product conforms with relevant standards have to be
fair and equitable. It discourages any methods that would give
domestically produced goods an unfair advantage. The agreement
also encourages countries to recognise each other’s procedures
for assessing whether a product conforms. Without recognition,
products might have to be tested twice, first by the exporting
E
country and then by the importing country.
Manufacturers and exporters need to know what the latest

standards are in their prospective markets. To help ensure that
this information is made available conveniently, all WTO member
CC
governments are required to establish national enquiry points and

to keep each other informed through the WTO — around 900 new or
changed regulations are notified each year. The Technical Barriers
to Trade Committee is the major clearing house for members to
share the information and the major forum to discuss concerns
about the regulations and their implementation.
Settlement of International Trade Disputes

The WTO’s procedure is a mechanism which is used to settle trade
dispute under the Dispute Settlement Understanding. A dispute
arises when a member government believes that another member
)
government is violating an agreement which has been made in the

WTO. However, these agreements are consequential to dialogues
(c
between the member States and hence they are the writers of such
agreement.
In case any dispute arises, the ultimate duty to settle it lies in the
hands of member government through Dispute Settlement Body.
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This system already achieved a great deal and providing some of
Notes
the necessary attributes of security and predictability which trader
and other market participants need and which is called for in the
Dispute Settlement Understanding under Article 3.
The WTO’s Dispute Settlement Understanding (DSU) advanced

out of the ineffective means used under the GATT for settling
disagreements among members. Under the GATT, procedures
for settling disputes were ineffective and time consuming since a
UP
single nation, including the nation whose actions was the subject of
complaint could effectively block or delay every stage of the dispute
resolution process.
Outline of the Dispute Settlement Understanding

The Dispute Settlement Understanding (DSU) officially known
on rules and procedure Governing the Settlement of Disputes,
establishes rules and procedures that manage various disputes
arising under the Covered Agreements of the Final Act of the
Uruguay Round. There had been total 314 complaints brought by
the member of WTO.
E
All WTO member nation-states are subject to it and are the only
legal entities that may bring and file cases to the WTO. The DSU
created the Dispute Settlement Body (DSB), consisting of all WTO
members, which administers dispute settlement procedures. It
CC
provides strict time frames for the dispute settlement process and
establishes an appeals system to standardise the interpretation
of specific clauses of the agreements. It also provides for the
automatic establishment of a panel and automatic adoption of a
panel report to prevent nations from stopping action by simply
ignoring complaints.
Strengthened rules and procedures with strict time limits for

the dispute settlement process aim at providing “security and
predictability to the multilateral trading system” and achieving
“solution mutually acceptable to the parties to a dispute and
consistent with the covered agreements.”
)
The basic stages of dispute resolution covered in the understanding

include consultation, good offices, conciliation and mediation, a
(c
panel phase, Appellate Body review and remedies.
Arbitration
Members may seek arbitration within the WTO as an alternative
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ES
means of dispute settlement “to facilitate the solution of certain
Notes
disputes that concern issues that are clearly defined by both parties.”
Those parties must reach mutual agreement to arbitration and the
procedures to be followed. Agreed arbitration must be notified to
all members prior to the beginning of the arbitration process.
Third parties may become party to the arbitration “only upon

the agreement of the parties that have agreed to have recourse
to arbitration.” The parties to the proceeding must agree to abide
UP
by the arbitration award. “Arbitration awards shall be notified to
the DSB and the Council or Committee of any relevant agreement
where any member may raise any point relating thereto.”
WTO Dispute Panels and the Balance Between

Trades
Agreements and National Policy
Since the various agreements that constitute the WTO cover such
a wide range of topics, dispute settlement panelists find that a
number of subjects come under their authority. This places WTO
dispute panels in a delicate position. On the one hand they must
E
identify cases where nations are failing to comply with international
trade agreements; on the other, they must be cautious when
making recommendations that reverse the preferences of national
governments.
CC
Thus far, in the decisions of the panels and the Appellate Body, there
has been a tendency to write decisions in a way that minimizes the
burden on nations to change their regulations and laws in order
to comply with their WTO trade obligations. This does not mean
that dispute settlement panels have not found nations in violation
of the trade agreements. When they have, however, they have left
national governments with a variety of options in order to come
into compliance.
Check Your Progress

)
1 This is ............of the ..............and requires that once goods

have entered a market, they must be treated no less
(c
favourably than the equivalent domestically produced

goods.
2. Traditionally, the GATT had only covered trade in ........ .

Contd...
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3. The WTO Secretariat, located in ..................is headed by a
Notes
director- general and four deputies.
4. Although there exists many differences between the

interests of the developed and developing countries, the
WTO should serve as a forum for the .....................between
the two groups.
5. The WTO continues a long tradition in ...........of seeking to
UP
make decisions not by voting but by consensus.
Summary
The main implication of a marketing strategy is the orientation
toward meeting customer needs that results in increased customer
satisfaction. Once you have identified your target market and
the characteristics of your targeted customers through surveys
and market studies, you can focus on strategies to serve your
customers better than your competition. Customer impressions
of your company improve with this focus and your image in the
marketplace becomes more positive. Such a marketing strategy is
E
designed to gain new customers as you build a more favourable
reputation.

CC
1. What are the four fundamental principles of GATT?
2. Discuss the difference between WTO and GATT.
3. How do developing countries benefit from their participation in

the WTO?
4. Difference between GATT, WTO and ITO?
5. Discuss rising importance of international trade and trade

policy.
6. Process of countries for joining the WTO?

)
(c
64
Unit 5
ES
Notes
International Economic
Environment
Objectives
UP
 International Economic Institutions
 IBRD
 International Monetary Fund (IMF)
 United Nations Conference on Trade and Development (UNCTAD)
 TRANSACT
 Growth of RTAs (Regional Trade Agreements)
 India’s Trade with SAARC, ASEAN, APEC
 India’s Trade with APEC
E
Introduction
The international economic environment can be described as
the global factors that are outside of the control of individual
organisations but that can affect the way that businesses operate.
CC
These factors include unemployment rates, inflation rates

and labour costs. External factors found in the macroeconomic
environment can also affect organisations' decision-making and
performance activities. They include cultural and social influences,
legal issues, demographics and political considerations, as well as
changes in the natural environment and technology.
To gain a good understanding of the international economic climate

and how or why particular factors can affect it, it's important to
have an understanding of the business cycle.
)
International Economic Institutions

There is a broad framework of international and national
(c
institutions related to international trade. The institutional

framework facilitating international business in India involves
the–
• Ministry of Commerce
Unit 5: International Economic Environment
65
ES
• Advisory bodies
Notes
• Commodity organisations
• Service organisations
Economic development has been considered vital to improve the

quality of life of millions of people across the world and to reduce
poverty. A large number of organisations have been set up under
the aegis of the UN to facilitate international trade and investment.
UP
This provides an institutional framework for –
• Multilateral trade
• Investment
• International economic growth
Several international economic and trade organisations affect the

environment of international business in a variety of ways, such
as –
• Assessing the country’s economic environment

E
• Extending credit facilities to national governments as well as
individual organisations
• Undertaking equity investments

CC
• Providing multilateral guarantees for trade and investment
• Settling disputes
• Keeping surveillance of international monetary systems
• Compiling and disseminating information
• Protecting intellectual property
• Providing technical assistance
• Funding development projects
A thorough understanding of the institutional framework, both at

)
the international and national level, thus becomes pertinent for

international business managers for effective decision making.
(c
The major international and multilateral institutions have come

up under the aegis of the UN system, such as the –
• World Trade Organisation (WTO)

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• World Bank (WB)
Notes
• International Monetary Fund (IMF)
• United Nations Conference on Trade and Development

(UNCTAD)
• International Trade Centre (ITC)
WTO: The WTO provides a rule-based multilateral framework
UP
for international trade and deals with a variety of issues, such as
tariffs, non-tariff barriers, market access, intellectual property
rights, subsidies, countervailing measures, rules of origin, policy
framework, dumping etc. Since it has been the most significant
organisation of the international economic institutions affecting
international trade in the present context.
World Bank: The most significant framework of international

economic institutions that constitutes the World Bank group
include:
• International Bank for Reconstruction and Development

E
(IBRD)
• International Development Association (IDA)
• International Finance Corporation (IFC)

CC
• Multilateral Investment Guarantee Agency (MIGA)
• International Centre for Settlement on Investment Disputes

(ICSID)
IMF: The IMF came into existence in 1944, subsequent to the

Bretton Woods conference, with an aim to maintain regular
dialogue and policy advice to each of its member and providing
exchange stability.
UNCTAD: It helps create development-friendly integration of

developing countries into the world economy, which has led to
the launch of several useful agreements facilitating developing
)
countries to promote trade.
WIPO: The World Intellectual Property Organisation (WIPO)

(c
establishes an institutional framework for the protection of

intellectual property internationally.
ADB: In order to extend credit and technical assistance for

improving the welfare of the people in Asia and the Pacific, the
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ES
Asian Development Bank (ADB) undertakes projects in the region,
Notes
aimed at –
• Pro-poor sustainable economic growth
• Social development
• Good governance
ITC: Besides, some international organisations, such as the ITC,
UP
exclusively deal with the promotion of international trade. Most
countries have their own independent organisations to promote
international trade.
International Economic Institutions – World

Intellectual Property Organisation
The World Intellectual Property Organisation (WIPO) is a
specialised agency of the United Nations headquartered at Geneva.
The WIPO is dedicated to developing a balanced and accessible
international intellectual property (IP) system, which –
• Rewards creativity
E
• Stimulates innovation
• Contributes to economic development while safeguarding

public interest.
CC
The WIPO was established by the WIPO convention in 1967 with

a mandate from its member states to promote the worldwide
protection of IP through cooperation among states and in
collaboration with other international organisations.
Major Functions of WIPO

The major functions of WIPO include providing:
• Advice and expertise in the drafting and revision of national

legislation which is particularly important for those WIPO
member states with obligations under the TRIPS Agreement
)
• Comprehensive education and training programmes at national

and regional levels for officials dealing with intellectual
(c
property, including those concerned with management of

rights and enforcement
• Traditional and new groups of users, on the value of intellectual

property and how to create their own economic assets through
68
ES
better use of the intellectual property system
Notes
• Extensive computerisation assistance to help developing
countries acquire the information technology resources (both
in human and material terms) to streamline administrative
procedures for managing and administering their own
intellectual property resources and to participate in WIPO’s
global information network
UP
• Financial assistance to facilitate participation in WIPO
activities and meetings, especially those concerned with the
progressive development of new international norms and
practices
Five Strategic Goals Defined by WIPO

The five strategic goals defined by WIPO are:
i. To promote an IP culture.
ii. To integrate IP into national development policies and

programmes.
E
iii. To develop international IP laws and standards.
iv. To deliver quality services in global IP protection systems.
v. To increase the efficiency of WIPO’s management and support

CC
processes.
International Economic Institutions – United

Nations Industrial Development Organisation
The United Nations Industrial Development Organisation
(UNIDO), set up in 1966, is headquartered in Geneva and became
a specialised agency of the United Nations in 1985. It aims to
promote industrialisation in developing countries and in countries
with economies in transition.
UNIDO helps these countries in their fight against marginalisation

in today’s globalised world. It mobilises knowledge, skills,
)
information and technology to promote a productive employment,

a competitive economy and a sound environment.
(c
UNIDO’s assistance: UNIDO’s assistance is delivered through

two core functions, discussed below:
1. A Global Forum: The UNIDO generates and disseminates

knowledge related to industrial matters and provides a
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ES
platform to various stakeholders to enhance cooperation,
Notes
establish dialogue and develop partnership.
2. As a Technical Cooperation Agency: It designs and

implements programmes to support the industrial development
efforts of its clients. It also offers tailor-made specialised
support for programme development.
International Economic Institutions – Asian
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Development Bank
The Asian Development Bank (ADB) is a multilateral financial
institution that aims to improve the welfare of people in Asia and
the Pacific, particularly the 1.9 billion who live on less than $2 per
day. It is owned by 67 member countries, 48 from the region and 19
from other parts of the globe. Japan and the US are coequally the
largest shareholders, each with 12.8 per cent of total subscribed
capital.
The ADB has an important role to play in making the

region free of poverty, as Asia and the Pacific region are home
to two-thirds of the world’s poor. The ADB’s main instruments
E
for providing help to its developing member countries
include –
• Policy dialogue
CC
• Loans
• Technical assistance
• Grants
• Guarantees
• Equity investments
The major functions of the bank are:
• To extend loans and equity investments to its developing

member countries (DMCs) for their economic and social
)
development
• To provide technical assistance for planning and execution

(c
of development projects and programmes and for advisory

services
• To promote and facilitate investment of public and private

capital and development
70
ES
• To respond to requests for assistance in coordinating
Notes
development policies and plans of its developing member
countries
Priorities of the ADB’s projects and programmes
The priorities of the ADB’s projects and programmes

include –
• Economic growth
UP
• Human development
• Gender and development
• Good governance
• Environmental protection
• Private sector development
• Regional co-operation
The three pillars of ADB’s poverty reduction strategy comprise:

E
• Pro-poor sustainable economic growth
• Inclusive social development
• Good governance.
CC
ADB lends to governments and to public and private enterprises in

its developing member countries. Loans and technical assistance
are its principal tools which are provided to governments for
specific, high-priority development projects and programmes.
ADB’s lending both supports and promotes investment for
development, based on a country’s priorities.
International Economic Institutions – United

Nations Economic and Social Commission for Asia
and the Pacific
The United Nations Economic and Social Commission for Asia and
)
the Pacific (UN- ESCAP) is the most comprehensive of the UN’s

five regional commissions aimed at developing the Asia-Pacific
(c
region. It was established in 1947 with headquarters in Bangkok,

Thailand. India is one of the founding members of the ESCAP.
The main mandate of the ESCAP is to foster cooperation among

its 53 members and nine associate members. ESCAP provides the
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strategic link between global and country level programmes and
Notes
issues. It supports governments of the region in –
• Consolidating regional positions
• Advocating regional approaches to meet the region’s unique

socio-economic challenges in a globalising world
ESCAP’s Major Activities
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ESCAP’s major activities include:
• Regional economic cooperation
• Poverty alleviation through growth and social development
• Environment and sustainable development
• Development of transport communications, tourism and

infrastructure development in the region
• Enhancing capabilities of national statistical organisations
Trade and Investment - Sub-Program of UN-ESCAP

E
Trade and investment is one of eight sub-programmes of UN-
ESCAP, which aims to benefit the region through the globalisation
process with the help of increased global and regional trade and
investment flows.
CC
The trade and investment division assists countries to:
• Understand trade and investment agreements, their

implications and economics.
• Facilitate trade and investment flows, including trade finance

and e-commerce.
• Promote regional trade agreements in conformity with the

multilateral trading system.
• Understand the economics of trade policy.

)
• Negotiate accession to the WTO, especially for least developed

countries and economies in transition.
(c
• Formulate more effective policies and strategies for foreign

direct investment promotion and facilitation.
• Develop small and medium sised enterprises and promote

entrepreneurship.
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• Access trade and investment related information.
Notes
Its areas of focus include:
• Trade facilitation
• Trade and investment information
• Regional trade agreements
• Doha development agenda
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• Investment promotion and facilitation
• Enterprise development
IBRD
The International Bank for Reconstitution and Development
(popularly known as World Bank) was set up as a result of the
decision taken in Bretton Woods Conference New Hampshire.
The conference was held in July 1944 and attended by 44 nations.

E
There it was decided to set up two organisations i.e.
• I.M.F.
• I.B.R.D.
CC
It was done to solve the monetary and financial problems of the

less developed countries likely to be faced in Post-World War II
period.
When I.B.R.D. was Set Up?
The I.B.R.D. or World Bank was set up on December 27, 1945. When
its Articles of Agreement was signed by 29 members Government in
Washington. On 30th June, 1996, 185 countries were its members.
If a country resigns its membership, it is required to pay back all
loans with interest on due dates. If the Bank incurs a financial
loss in the year in which a member resigns, it is required to pay its
)
share of the loss on demand.
Capital Structure
(c
The I.B.R.D. was started with an authorised capital of $10 billion

divided into 1,00,000 shares of $1,00,000 of this $9,400 million was
actually subscribed. On 30th June 1988 the authorised Capital
Stock of the I.B.R.D. comprised 7,16,500 authorised shares of the
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par value of S.D.R. (Special Drawing Rights) 1,00,000 each. In
Notes
July 1994 the total authorised bank capital was $185 billion with
a capital increase of $9.3 billion.
Principal Purposes/Objectives of Bank

The principal purposes as set forth in its Articles of Agreement (or
charter) are as follows:
• To assist in the reconstruction and development of its
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member countries by facilitating the investment of capital for
productive purposes, thereby promoting long range growth of
international trade and improvements in standard of living.
• To promote private foreign investment by guarantees of and

participation in loans and other investments made by private
investors.
• When private capital is not available or reasonable terms to

make loans for productive purposes out of its own resources or
the funds borrowed by it.
E
• To arrange the loans made or guaranteed by it in relation to
international loans through other channels so that more useful
and urgent small and large projects are dealt with first.
Principal Activities Performed to Achieve these

CC
Purposes
In order to achieve these purposes, the charter authorises the
World Bank to engage in the following financing activities:
• It may lend funds directly, either from its capital funds or from
the funds it borrowed in private investment markets.
• It may guarantee loans advanced by other or it may participate

in such loans.
• Loans may be advanced to member countries directly or

any of their political sub-divisions or to private business or
)
agricultural enterprises in the territories of members.
• It has provided loans to the developing countries for

(c
development projects and programmes because credit rating of

many developing countries is poor—hence they feel difficulties
in raising funds in international capital markets.
• The World Bank is a vital source to the developing countries,

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when the member Government in whose territory the project is
Notes
located, is not the borrower, the World Bank asks the member
Government for a guarantee.
Characteristics of Bank Loan

Some basic provisions of Bank Loan may be mentioned as such:
1. They are meant for high priority productive purposes mainly

to develop the infrastructure for the development such as:
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• Electric supply
• Power
• Rail
• Roads
• Ports and inland waterways airlines and airports etc.

2. They must be used to meet only the foreign exchange
components of the projects.
E
3. The interest rate of the bank is somewhat lower in relation to
market rate.
4. From July 1, 1982-Bank adopted a policy of resulting its

lending rates half-yearly.
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Subsidiaries of the World Bank

There are two subsidiaries of the World Bank. They are:
• International Development Association (I.D.A.)
• International Finance Corporation (I.F.C.)
1. International Development Association (IDA)

This association was set up in 1960. It is an aiding centre for those
developing countries who look up to it for financial assistance. It is
an association of donor countries who have come under the “Aegis”
)
(protection of) of the World Bank. It offers credit to the eligible

developing countries on extremely favourable terms.
(c
Main criteria for the allocation of I.D.A. credit
The main criteria for the allocation of I.D.A. (International

Development Association) credit are the per capita income of the
recipient country. Countries which have an annual per capita
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Gross National Product (G.N.P.) of less than $681 (in 1989)
Notes
dollars are eligible for I.D.A. credits. Other parameters taken into
consideration are –
• Country’s credit worthiness
• Its accessibility to commercial borrowing
• Its economic performance
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• The density of its population
• The existence of viable projects in the borrowing nations
I.D.A. interests free credit
I.D.A. interests free credit are available to Governments only

and may be obtained on payment of nominal service charges at
0.75% per annum. The period of repayment of loan is 40 years. The
purposes for which the I.D.A. has advanced the credits are –
• Agriculture
• Rural development education

E
• Energy
• Industrial development and finance

CC
• Population and nutrition
• Transportation and tourism
• Telecommunication
India has been the largest beneficiary from I.D.A. Since its inception
India’s share is 40% of I.D.A. Funds. India has not been able to
utilise this aid fully, both because of infrastructural difficulties
at home and the adverse conditions imposed by donor countries
governing such aid.
Industrial Finance Corporation (IFC)

)
This corporation was set up in 1956. It extends credits to private

business enterprises. It provides –
(c
• Equity and loan capital for private enterprises in association

with private investors and management
• Encourages the development of local capital market

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• Stimulates the international form of private capital
Notes
It supports joint ventures which provide opportunities to combine
domestic knowledge of market and other conditions with the
technical and managerial experience available in the industrial
nations. The corporation has about 200 members. Its paid up
capital is about 544 million dollar and its retained earning were
205 million dollars.
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The project, for which the corporation advances assistance, must
satisfy the following conditions:
• It should have the prospects of earning profits
• It should boost the economy of the best country
• Local investors should be able to participate in the project in

the beginning of the project or later
• The required funds for the project are not available from
private investors at reasonable terms
• The management should be capable and experienced

E
• The sponsor of the project has a substantial holding in the
enterprise
India is the topmost borrower of I.D.A. Loans. The prospects of

CC
getting larger funds from the World Bank seem to be bleak because
of constraints on resources. The situation is not much better as
regards I.D.A. Loans because of the failure of the USA. to provide
funds for its replenishment.
Other Assistance Extended By I.B.R.D.
Various other helps have been provided by the World Bank and
they are as follows:
• The I.B.R.D. helps in providing training, technical assistance,

inter-organisational co-operation, research and studies and in
the settlement of investment disputes of its members.
)
• The Bank has established a Staff College, known as the

Economic Development Institute (E.D.I.) for training senior
(c
officials of the member developing countries. It helps to

improve the management of their economies and to increase
the efficiency of their investment programmes.
• It provides technical assistance to the needy country under two

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categories: (a) engineering related such as engineering design
Notes
and construction supervision and (b) Institution related such
as diagnostic policy and institutional studies, management
support and training.
• The bank also extends inter-organisational Co-operational.

Co-operation between the I.B.R.D. and other international
organisation like the F.A.O.; the W.H.O.; the G.A.T.T.;
the United Nations Environment Programme (U.N.E.P),
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the U.N.D.P., the United Nations Industrial Development
Organisation (U.N.I.D.O.) the Industrial Fund for Agricultural
Development (I.F.A.D.) etc.
Centre for Settlement of Investment Disputes
The bank has established the International Centre of Settlement

of Investment Disputes (I.C.S.I.D.) between States and Nationals
of other states. All members of the Bank have signed over the
paper. The Bank in this has successfully mediated in solving many
international investment disputes such as –
• The River Water Dispute between India and Pakistan

E
• Suez Canal between Egypt and the U.K.
In the end we can say that the Bank’s overall performance must
be judged not on its lending but on its success in providing advice
CC
and technical assistance. The Bank is laying greater emphasis

on developing human resources health and nutrition and on
environment.
Economists View over the Working of the I.B.R.D.
Economists are of this view that the Bank has been quite
successful in achieving the principal objective of reconstruction
and developing. No doubt it has helped in the reconstitution of
Europe after the destruction in the Second World War. But some
economists are not lacking in saying that its lending policies are
not proper and satisfactory.
)
Further they have written that:

(c
• The Bank charges a very high rate of interest on loans as also

an annual commitment charge on undistributed balance.
• Further they have said that it has failed to meet the financial
needs of the developing countries fully. Its loan has just touches
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the fringes of the total capital requirements for their economic
Notes
and social uplift.
• The lending procedure of the bank is faulty because it lays

emphasis on the repaying capacity of the borrowing country
before granting any loan. Such a condition is not proper rather
it is harsh and discriminatory for developing countries which
are mostly poor and need financial help on a large scale.
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• The Bank has also been criticised for being discriminatory in
its purpose-wise and region-wise assistance to its members.
India and the World Bank
As we are aware that India is one of the founder members of the

Bank and has occupied a permanent seat on its Board of Executive
Directors for a number of years. Therefore, India is very much
attached and is in link with the bank and has received many
benefits which are as follows:
• The Bank has extended assistance to India in its planned

economic development by granting loans, conducting field
E
surveys, rendering expert advice and training Indian personnel
at the E.D.I. (Economic Development Institute).
• The Bank has established a Chief of Mission of the Bank at

New Delhi, who monitors the aided projects in India.
CC
• It is said that India has been the largest receiver of the World
Bank assistance.
• The Bank also helped India to solve amicably its river water
dispute with Pakistan.
In the end it can be said that India has gained much for being
the member of the World Bank for the development of agriculture,
industry, energy and transport. In future India, will have to borrow
more from the Bank.
)
IMF
The International Monetary Fund (IMF) is an international
(c
financial institution with headquarters in Washington, D. C.,

USA. It was established by 45 countries (including the former
Czechoslovakia) at an international conference in July 1944 in
Bretton Woods, USA. The IMF formally started its activity on 27
December 1945 when 29 countries signed the Articles of Agreement.
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The IMF currently has 189 members.
Notes
Goals of the Institution
• To promote international monetary cooperation and facilitate
a balanced growth of international trade
• To promote exchange stability, to maintain exchange

agreements among members and to avoid competitive exchange
depreciation
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• To assist in the establishment of a multilateral system of
payments in respect of current transactions between members
and in the elimination of foreign exchange restrictions which
hamper the growth of world trade
• To make the general resources of the IMF temporarily available

to member countries, under adequate safeguard, to correct
maladjustments in their balance of payments.
The IMF (unlike the World Bank) provides loans only for
overcoming problems following from the maladjustment of the
E
balance of payments which is often the consequence of various
deformations in the economic system, either of structural nature
or due to a wrong macro-economic policy. The IMF provides always
only temporary financial help.
CC
IMF Bodies
The Board of Governors is the highest decision-making body of the
IMF. It consists of one Governor and one Alternate for each member
country. The Board of Governors makes all relevant decisions on
IMF activities. The Board of Governors normally meets once a
year (at Annual Meetings of the IMF and the World Bank Group).
The Board of Governors has delegated many of its powers to the
Executive Board which is its permanent executive body.
International Monetary and Financial Committee (IMFC) -

It meets twice a year to assess key problems of the international
monetary system. Until September 1999 it worked as an Interim
)
Committee.
(c
Development Committee – It is a joint committee of the Boards of

Governors of the IMF and the World Bank. Its task is to advise and
to submit reports to Governors of member states on all questions
related to developing countries.
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Executive Board – It consists of 24 Directors. It deals with a
Notes
wide range of political, operative and administrative questions,
including surveillance over the monetary policy of member
countries, providing financial help by the IMF to member countries
and solving system problems of global economy.
The Managing Director is the Chairman of the Executive Board

and also the head of the IMF staff. She/he is elected for a period
of 5 years and can be re-elected several times. Since 25 July 2011
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Christine Lagarde (France) has been the Managing Director of the
IMF.
SDR Currency
The SDR (Special Drawing Rights) was created as an artificial
currency unit in July 1969. It serves as an international reserve
asset and as a unit of account. It serves only to IMF member
states and some other designated institutions (e.g. the World Bank
and the Bank for International Settlements). The SDR currently
consists of a basket of 5 currencies (USD, EUR, JPY, GBP, CNY).
Member Quotas and Voting Rights

E
The basic element of financial and organisational relations of a
member country to the IMF is the member quota (expressed in
SDR) which is determined on the basis of the economic position
CC
of the member country towards other IMF members. The member

quota –
• Determines its maximum financial commitment to the IMF
• It determines the share of a member country in the SDR

allocation
• The amount of money a country can receive from the IMF
The number of member votes depends on the size of the member

quota. These votes determine the voting right of a member country
at various policy and operative decisions of the IMF.
)
International Monetary Fund (IMF)

What it is:
(c
The International Monetary Fund (IMF) is the central institution

embodying the international monetary system and promotes –
• Balanced expansion of world trade

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• Reduced trade restrictions
Notes
• Stable exchange rates
• Minimal trade imbalances
• Avoidance of currency devaluations
• The correction of balance-of-payment problems
The IMF's goal is to prevent and remedy international financial
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crises by encouraging countries to maintain sound economic
policies. Because of its size, the IMF is also a forum for discussion
of global economic policies.
The IMF is headquartered in Washington, D.C., but has offices in

Paris, Tokyo, New York and Geneva.
Mechanics of the IMF

Board of governors: The IMF is run by a board of governors,
which makes decisions on major policy issues but delegates day-to-
day decision making to the executive board. All member countries
E
are represented on the board of governors, which meets once per
year. Each member country appoints a governor and an alternate
governor to represent it to the IMF. The governors are usually the
ministers of finance or governors of their central banks.
CC
Executive board: The IMF's 24-member executive board is

chaired by a managing director. The managing director is selected
by the executive board every five years and three deputy managing
directors, each from a different region of the world, report to the
managing director.
The executive board meets three times a week and the IMF's five
largest shareholders (the United States, Japan, France, Germany
and the United Kingdom) as well as China, Russia and Saudi
Arabia, each have a seat on the board. The other sixteen directors
are elected for two-year terms by groups of countries. There are
several committees within the IMF. The International Monetary
)
and Financial Committee, which is a committee of the board of

governors, meets twice per year to evaluate policy issues relating
(c
to the international monetary system. The IMF Development

Committee, which is composed of members of the boards of
governors of both the IMF and the World Bank, advises and reports
to the IMF governors on matters concerning developing countries.
The IMF has a weighted voting system that gives more votes
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to countries with larger economies. However, according to the
Notes
IMF, most decisions are not made based on formal voting, but by
consensus.
Funding of IMF: The IMF is funded by the subscriptions

countries pay upon joining the IMF or when their subscriptions
are increased. Members pay 25% of their subscriptions in Special
Drawing Rights (SDRs) or in major currencies. The IMF can call on
the remaining 75% as needed for lending.
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The IMF determines a country's subscription amount based on its
relative size in the world economy. The IMF may borrow money to
supplement the funds received from subscriptions. Generally, the
IMF may borrow money from several countries that participate in
one of two standing lending agreements with the IMF.
IMF Operations
The IMF monitors economic and financial developments and
policies in member countries and at the global level and then
gives policy advice to its members based on its observations and
experience.
E
IMF advice generally focuses on –
• Macroeconomic
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• Financial-sector regulation
• Structural policies
To do this, the IMF engages in three types of surveillance:
• Country surveillance
• Global surveillance
• Regional surveillance
Country surveillance: During country surveillance, which occurs

annually, a team of economists visits a member country to collect
)
data, examine policies and meet with government and bank

officials. The team submits its findings to the IMF executive board,
which makes recommendations to the country.
(c
Global surveillance: The IMF's global surveillance functions

center around the publication of the World Economic Outlook and
Global Financial Stability reports, which are issued twice a year.
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Regional surveillance: It usually occurs within a series of internal
Notes
IMF discussions about developments in certain regions or within
groups of countries.
The IMF also provides technical help and training to the market
participants and governments of member countries. This often
comes in the form of –
• Advice on banking regulation
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• Tax administration
• Budget formulation
• Managing statistical data
• Drafting or reviewing legislation
They also provide training courses for government and central

bank officials.
IMF's biggest function: One of the IMF's single biggest functions

is lending money to members in need. If a country is unable to make
E
payments to other countries without taking "measures destructive
of national or international prosperity," such as implementing
trade restrictions or devaluing its currency, it may borrow money
from the IMF.
CC
When the IMF lends a country money, it often requires the borrower
to follow a program aimed at meeting certain quantifiable economic
goals, which are described in a letter of intent from the borrowing
government to the IMF's managing director. IMF loans are not
provided to fund particular projects or activities, they are provided
to promote a country's overall economic health. The duration,
payment terms and lending conditions vary on a case-by-case
basis. The IMF charges borrowers a market-related interest rate
and also requires service charges and a refundable commitment
fee. Low-income countries pay as little as 0.5% interest per year.
The IMF also lends money to countries dealing with –

)
• Sudden losses of financial confidence

(c
It comprises situations like after natural disasters or wars, in

order to prevent the spread of financial crises stemming from those
countries.
There are five main facilities from which the IMF makes loans:
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• IMF Stand-By Arrangements (for short-term lending)
Notes
• The Extended-Fund Facility
• The Poverty Reduction and Growth Facility
• The Supplemental Reserve Facility
• The Exogenous Shocks Facility
When a country borrows from the IMF, the proceeds are deposited
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in the country's central bank. The repayment period varies for each
loan, but maturities usually extend from six months to up to ten
years. The international community places considerable pressure
on a borrower to repay the IMF so that those funds are available
to other countries and the IMF in turn is diligent about timely
repayment in order to maintain its status as a preferred creditor.
UNCTAD
Core Areas
The United Nations Conference on Trade and Development
E
(UNCTAD) promotes the development-friendly integration of
developing countries into the world economy. The Organisation
aims to help shape current policy debates and thinking on
development, with a particular focus on ensuring that domestic
CC
policies and international action are mutually supportive in

bringing about sustainable development. Established in 1964,
UNCTAD is the principal organ of the General Assembly in the
field of trade and development.
UNCTAD undertakes its mandate through three key functions:
• As a forum for intergovernmental deliberations, supported by

discussions with experts and exchanges of experience, aimed
at consensus building
• Undertaking research, policy analysis and data collection

)
• Providing technical assistance tailored to the specific

requirements of developing countries, with special attention
to the needs of the least developed countries (LDCs) and of
(c
economies in transition
When appropriate, UNCTAD cooperates with other organisations

and donor countries in the delivery of technical assistance. It also
cooperates with civil society and the business sector. UNCTAD has
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193 Member States. Its annual operational budget is approximately
Notes
$50 million, which is drawn from the United Nations regular
budget. Technical cooperation activities, which have developed
as a result of UNCTAD’s sectoral expertise and are financed from
extra-budgetary resources, amount to approximately $31,5 million
in 2007. The Secretary-General of UNCTAD is Mr. Supachai
Panitchpakdi who took up office on 1 September, 2005. UNCTAD
has a staff of about 400.
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Engagement with External Actors
UNCTAD views NGOs and the private sector as full-fledged
partners in its activities, allowing the Organisation to have a better
understanding of the concerns of members of civil society and to
supply a better response to their specific needs and requirements.
UNCTAD reaches out to non-governmental stakeholders in various
ways, including through –
• The dissemination of its work via a number of informal channels

(using the networks of associated institutions and actors)
• Through informal meetings and dialogue

E
Civil Society
UNCTAD cooperates with civil society actors by setting up formal
and informal mechanisms for NGO participation and contribution
CC
to UNCTAD’s activities, including –
• Participation in conferences, workshops and seminars
• Producing co-publications
• Information-sharing and policy analysis through exchange of

ideas
• Implementation of technical cooperation programmes
The Civil Society Outreach Unit organises regular consultations,

briefings and seminars with civil society organisations. UNCTAD’s
)
Trade and Development Board (TDB) has institutionalised hearings

with civil society and the private sector since 2004. Such hearings
are now convened as part of the annual session of the TDB.
(c
Arrangements for the participation of NGOs concerned with trade

and development in the activities of UNCTAD are governed by Rule
77 of the Rules of Procedure of the TDB. This Board establishes
relationship arrangements with NGOs for the purpose of enabling
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UNCTAD, the TDB and its subsidiary bodies to secure information
Notes
or advice from organisations having special competence on subjects
for which relationship arrangements are made and to enable
organisations representing important elements of public opinion
to express their views.
The TDB distinguishes between NGOs that have a basic interest

in most of the activities of the TDB which are placed in the
general category and those having a special competence in specific
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activities, which are placed in the special category. NGOs in status
receive regular notifications of and documentation for conferences
and meetings convened by UNCTAD. Their representatives are
entitled to participate as observers in the public meetings of the
intergovernmental bodies. Such representatives may make oral
statements on matters falling within the scope of their activities
and may circulate written statements on matters related to agenda
items of these meetings.
National NGOs of recognised standing, which are deemed to have

a significant contribution to make to the work of UNCTAD, may
be entered by the Secretary-General of UNCTAD in a Register
E
established for this purpose after prior consultations with
appropriate representatives of the respective Member States
concerned. National NGOs receive UNCTAD’s documentation.
Extent of Collaboration
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Partnerships are an important element in the engagement with

NGOs. Examples include:
Advisory Services on Investment and Training (ASIT)

ASIT has been providing services to developing countries and
countries with economies in transition to increase their capacity
to attract and benefit from foreign direct investment (FDI). ASIT
activities do include cooperation with the World Association of
Investment Promotion Agencies (WAIPA)—an NGO made up of over
225 investment promotion agencies worldwide. The cooperation is
)
in line with the Partnership for Development Initiative launched

at UNCTAD XI (Sao Paulo, Brazil, June 2004).
(c
As part of the Partnership, joint training workshops in best

practices for investment promotion and investor targeting are
organised with a host country institution within the context of
ASIT’s ongoing technical cooperation programme. Through WAIPA,
but also independently, private companies can participate in ASIT
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workshops and contribute their expertise and perspective to these
Notes
events. Some partners have also provided logistical support to
conferences and other events organised by ASIT and WAIPA.
Virtual Institute
UNCTAD’s Virtual Institute seeks to create a global network of
higher learning and research on trade and development issues to
equip future generations of decision makers with the capacity to
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make informed choices about the economic development of their
countries. The Institute aims to assist academic institutions
around the world that wish to enhance their -
• Curricula
• Knowledge
• Training skills
• Research expertise in the areas of trade
• Investment and development

E
It provides open access to selected UNCTAD resources (readings
and presentations) and pedagogical tools to help interested
institutions develop their own high-quality training materials. It
also hosts a network of academic institutions committed to sharing
material, expertise and experience to enhance their training and
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research activities.
UNCTAD/UNDP Global Programme on Globalisation

and Sustainable Human Development
This arrangement provides a forum for close collaboration with
governments, NGOs, academic organisations and the private
sector to assist governments to create strategies for managing
their integration into the world economy, in a manner conducive to
sustainable human development.
Private Sector and Civil Society Dialogue Events

)
A series of discussion forum and workshops involving civil

society, private sector and academia are organised to provide
(c
a forum for dialogue on investment regimes and international

investment issues. UNCTAD’s work programme on international
investment agreements (IIAs) has undertaken several capacity-
building activities in cooperation with civil society and academic
institutions. The training sessions for negotiators of IIAs are
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organised in cooperation with local universities.
Notes
In 2004, the joint UNCTAD-CUTS (Consumer Unity and Trust
Society of India) project on “Awareness and capacity building for
civil society on investment regimes and international investment
issues” sought to address the need for involvement and capacity
building for civil society in this area.
Training Courses and Seminars on International
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Trade Issues
UNCTAD provides training courses and seminars on international
trade issues for policy makers, government officials, trainers,
business people and parliamentarians at the national or the
regional level.
Multi-Stakeholder Dialogue on Debt

UNCTAD is a member of the core team guiding the multi-
stakeholder consultation process on “sovereign debt for sustained
development,” led by the UN’s Department of Economic and Social
Affairs’ Financing for Development Office. The consultations aim
E
to take stock, at both the policy and operational level, of ways in
which the challenges to developing and transition economies in
the use of sovereign external debt can be mitigated and to elicit
views and proposals from the different perspectives of all relevant
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stakeholder involved in debt issues, including those of civil society.
Debt consultation process: The debt consultation process has

been structured to build an inclusive multi-stakeholder meeting
(for governments, international financial institutions, private
sector, academics and civil society). A global level meeting was
organised in conjunction with UNCTAD’s Fifth Inter-Regional
Debt Management Conference in June 2005. It served as the third
and final round of consultations organised as part of the multi-
stakeholder dialogue.
Private Sector
)
UNCTAD cooperates with the private sector in research and

technical cooperation in the areas of –
(c
• International trade
• Transport
• Investment
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• Development finance
Notes
• Technology
Private sector representatives participate in seminars, workshops

and conferences. For specific operational projects, UNCTAD’s
divisions and programmes work directly and in partnership with
private sector actors.
Extent of Collaboration
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The following are a few examples of programmes undertaken by
UNCTAD with the private sector:
Commodity Exchange Development Programme

Since the early 1990s, UNCTAD has worked actively with the
private sector and governments of many countries to develop
commodity exchanges. UNCTAD has undertaken a wide range of
activities necessary to enable the successful development of such
exchanges, including –
• Assistance to the private sector in developing business plans

E
• Structuring the necessary partnerships for effective use of
commodity exchanges
Several new exchanges have been formed as a result of this work.

CC
African Oil Trade and Finance Programme

Since 1995, UNCTAD has been working with private sector
companies and banks involved in this sector and other stakeholders
on the interface between oil and finance, covering issues such as
oil trade and project finance, improving the part of oil revenue
retained in Africa and managing budgets in the face of volatile
prices.
The programme includes –
• Analysis activities
)
• Advice activities
• Awareness-raising activities
(c
• Training activities
• Institution building activities
• match-making activities
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The flagship event is the African Oil and Gas Trade and Finance
Notes
Conference which attracts many of the continent’s key energy
sector decision-makers and is entirely funded through private
sector sponsoring.
Bio Trade Initiative

UNCTAD launched the Bio Trade Initiative in 1996 to foster the
development of the sectors for biodiversity products and services
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and promote simultaneously the sustainable use and conservation
of biodiversity resources in developing countries.
The Bio Trade Initiative seeks to respond to a number of issues in

an integrated manner:
• Stimulating public and private investment partnerships

in biological resource-based products and services while
enhancing the capacity of developing countries to enhance its
supply capacity
• Meet domestic and international environmental regulations

E
• Seek greater access to world markets for biodiversity products
produced in a sustainable manner in developing countries
The initiative undertakes –
• Economic and market assessment research

CC
• Promotes training and capacity building
• Develops alternative partnership arrangements and strategies

for biological resource conservation and development
• Promotes information dissemination, networking and active

private sector involvement
TRANSACT
This initiative provides assistance to governments and the private
sector in their negotiations with foreign investors, especially
)
transnational corporations (TNCs).
Empretec - Integrated Capacity-Building Programme

(c
This integrated capacity-building programme promotes the

creation of sustainable small and medium enterprise (SME) support
structures to help promising entrepreneurs build innovative and
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internationally competitive SMEs. Over the years, Empretec has
Notes
collaborated with many –
• Public institutions
• Bilateral and multilateral donor agencies
• Private sector organisations and large companies
Business Linkages Programme
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Business linkages between large enterprises, such as TNCs and
local suppliers, can be a channel for the transfer of technology,
knowledge and skills to host economies. UNCTAD is able to provide
a combination of advisory and technical assistance services in the
field of foreign direct investment and enterprise development.
Indigenous Peoples
UNCTAD convened an Expert Meeting in 2000 to address the
protection of knowledge, innovations and practices of local and
indigenous communities and to enhance cooperation on research
and development on technologies associated with the sustainable
E
use of biological resources.
Traditional Knowledge (TK) has been addressed as part of

UNCTAD’s work in the area of trade and environment. The UNCTAD
Secretariat has been working closely with the secretariats of other
CC
intergovernmental organisations, in particular the Convention on

Biological Diversity (CBD) and the World Intellectual Property
Organisation (WIPO) and encourages indigenous people to
participate in TK-related activities.
Parliamentarians
UNCTAD works with several representative associations of
parliamentarians. UNCTAD and the Inter-Parliamentary Union
(IPU) have had constant and close interaction for several decades
and there has been growing mutual interest in recent years to
build up stronger ties between the two organisations.
)
This culminated in the parliamentary meetings on the occasion

of UNCTAD X and UNCTAD XI. Parliamentarians and the IPU
(c
Secretariat participate in UNCTAD’s events and meetings to

exchange views and to discuss issues of mutual concern to both
organisations.
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Notes
Growth of RTAs (Regional Trade Agreements)
The ever-growing number of regional trade agreements and
preferential trade arrangements is a prominent feature of
international trade. Regional trade agreements (RTAs) are defined
as reciprocal trade agreements between two or more partners.
They include –
• Free trade agreements
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• Customs unions
Major objective behind forming of RTAs is trade liberalisation.
Reasons behind Growth of RTAs

• Lower Tariff and Non-Tariff Barriers
• Deeper regional economic integration
• Expansion of Export
• More Investments and Jobs

E
• Secure Borders
• Preferential treatment and duty-free access
India’s Trade with SAARC, ASEAN, APEC

CC
India‘s total exports (or exports to world) rose from $31,795million

to $1,05,152 million showing more than a threefold increase during
the period 1995-96 to 2005-06.The average annual growth rate of
exports during this period was 12.07.
India‘s imports during this period surged greatly exhibiting more

than a fourfold increase. The imports registered a still higher
growth rate of 13.71percent annum. Both the export and import
growth rates were statistically significant.
India‘s exports to SAARC region also showed a threefold increase

)
from about $1.721 million to $5,405 million. The exports registered

an average annual growth rate of about 13.3 percent that was
higher than the growth of India‘s total exports. India‘s imports
(c
from the SAARC region though lower in magnitude than exports

exhibited a fivefold increase from $256 million to $1.355 million
between 1995-96 and 2005-06. India‘s integrated capacity-building
programme imports from SAARC region registered a spectacular
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growth of 17.34 percent per annum even at low levels.
Notes
The share of India’s exports to SAARC region as a proportion
of total exports was low and varied between 3.78 and 6.49 percent
during various years under study.
The share of India’s imports from the SAARC region as

a proportion of India‘s total imports constituted a still lower
proportion varying from 0.08percent to 1.11 percent during various
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years under study.
In short India’s trade with SAARC region (both exports and

imports),even though insignificant, has been growing at a higher
rate than India‘s total trade with the world.
India’s Trade with ASEAN

This year, the Association of Southeast Asian Nations (ASEAN)
and India are celebrating 25 years of dialogue, 15 years of summit
level meetings and five years of strategic partnership. India’s
relationship with ASEAN has improved to the extent that the
regional grouping is now the anchor of India’s Act East policy.
E
Today, India has 30 sectoral dialogue mechanisms and seven
ministerial level interactions with ASEAN, in fields such as –
• External affairs
CC
• Defence
• Connectivity
• Commerce
• Telecommunications
• Agriculture
• Energy
• Environmental issues
)
• Tourism
India also shares strong bilateral relations with each of the 10

(c
ASEAN member countries. But the relationship between ASEAN

and India has not always been close.
India throughout the Cold War was not in favor of involvement in

regional organisations, preferring to focus on active participation
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in global organisations. Apart from this, the geopolitics of the Cold
Notes
War placed ASEAN and India in opposing ideological blocs. The
formation of ASEAN itself was viewed by India as a US measure
to contain communism, which was on the rise due to the spillover
from the Vietnam War. A series of Indian moves created fissures
in the already tense ASEAN-India relationship:
• India’s friendship treaty with the Soviet Union in 1971
UP
• Its stance on the Vietnam War
• Its recognition of Hang Samrin’s regime in Kampuchea

(Cambodia)
• Its selective silence on the Soviet’s invasion in Afghanistan and

Vehement criticism of the American presence in Diego Garcia
• India’s Peaceful Nuclear Explosion of 1974 and its military

(especially naval) modernisation in the 1980s
ASEAN and India did converge on the issue of the –
• Zone of Peace
E
• Freedom and Neutrality (ZOPFAN) in the Indian Ocean Region
(IOR)
India had modest bilateral relations with a selected few ASEAN

CC
countries in the economic sphere. But throughout the Cold War,

ASEAN-India relations were dominated by tensions and mutual
suspicion on both sides.
ASEAN-India Relations throughout Cold War

The story of ASEAN-India relations throughout the Cold War can
be appropriately summarised as missed opportunities due to:
• Political mistrust
• Economic inconsequentiality
• Occasional military threats

)
However, changes in the structural factors changed India’s

perception regarding the value of regional organisations. These
(c
included:
• The fall of the Soviet Union
• The rise of the parallel forces of globalisation and regionalisation

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• The rise of the People’s Republic of China (PRC)
Notes
• The Asian Financial Crisis and the 9/11 attacks - Worsening
security conditions and isolation at the international level
The rising balance of payment crisis which India faced in 1991,

compelled New Delhi to move from its recalcitrant approach to
active engagement with regional organisations.
India’s Look East policy
UP
Prime Minister Narasimha Rao’s visit to select Southeast Asian
countries marked the beginning of India’s Look East policy, with
the ASEAN at the center. In 1992, India became a dialogue partner
across limited sectors in ASEAN; it achieved the status of full
dialogue partnership in 1995. The next year, India was given the
opportunity to appear in the ASEAN Post Ministerial Conference
(PMC) and became a full member of the ASEAN Regional Forum
(ARF).
Membership in ARF gave India the chance to share a high table

with big powers like the United States, China and Russia, alongside
E
ASEAN, on security issues in the Indo-Pacific region. Since then,
ASEAN-India relations have continued to mature, apart from the
brief period of 1997-2001, when events like India’s nuclear tests
and the Asian Financial Crisis of 1997 saw a marginal dip in
CC
engagement.
Today the ASEAN and India annual summit is in its 15th year.
ASEAN and India celebrated a “commemorative summit” in 2012
where relations were upgraded to a strategic partnership.
Issues concerning economics, security and connectivity have always

been at the center of ASEAN-India relations. In the year 2016-17,
ASEAN accounted for around 10.4 percent of India’s exports and
10.6 percent of India’s imports. Over the past 20 years, ASEAN’s
portion of India’s total exports and imports is around 9.22 percent
and 8.93 percent, respectively, which is a considerable chunk.
India signed a free trade agreement in goods in 2009 and an FTA
)
in services and investments in 2014 with ASEAN. Apart from this,

India has a Comprehensive Economic Cooperation Agreement
(c
with various countries of the ASEAN region. This has resulted in

concessional trade and a rise in investments; around 10 percent
of the total FDI equity inflows to India comes from the ASEAN
region.
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Security Issues: On the security issues, inclusion in ARF was a
Notes
major positive for India, which missed out on a permanent seat
on the UN Security Council. Over recent years, ASEAN and India
have seen their interests converge on the issue of nontraditional
security in the IOR. Countries of the IOR have repeatedly suffered
due to the rise in –
• Piracy
UP
• Illegal migration
• Trafficking of drugs, arms and human on the trans-national

level
• Maritime terrorism
ARF allows India to discuss these issues, which are of immediate

concern and can be only resolved on a multilateral level. India
has also scored several diplomatic successes at ARF, including
maintaining ties after its nuclear test of 1998, isolating Pakistan
during the Kargil War and lobbying against Pakistan’s entry in
the forum till 2002. Apart from the ARF, the ASEAN PMC and the
E
ASEAN Defense Ministerial Meeting-Plus (ADMM-Plus) provide a
platform for India and ASEAN to deliberate on the security issues
concerning this region. Some measures that have added new
dimension to ASEAN-India relations include:
CC
• Signing of a “Joint Declaration for Cooperation to Combat

International Terrorism”
• Maritime exercises with the navies of ASEAN countries
• Information-sharing initiatives
• Defence agreements with individual ASEAN countries
Connectivity - Issue of Convergence between ASEAN

and India
Connectivity is another important issue of convergence between
)
ASEAN and India, with India working toward formalising its transit
agreements and establishing better connectivity infrastructure
with this region through land, water and air. Relations have also
(c
visibly developed in other areas like education, tourism, academic,

cultural, social and scientific cooperation.
The “ASEAN-India Partnership for Peace, Progress and Shared

Prosperity” in 2004 and the “Plan of Action” in 2012 highlighted
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the growing confluence in various areas between ASEAN and
Notes
India. Today, three-and-a-half-years into his term, Indian Prime
Minister Narendra Modi has already visited eight out of ten
ASEAN countries and gives prime importance to the ASEAN-
India summit. This reflects the strategic importance of this region
in India’s foreign policy approach. The upgrade from the Look East
to Act East policy with the ASEAN at the core was among the
earliest initiatives of the Modi government. The rise of China has
UP
compelled India to put forth its best efforts to engage with ASEAN
as a regional grouping. The ASEAN countries have always looked
to India for balancing against China, but India has consistently
disappointed them. For India to be a regional power as it claims to
be, continuing to enhance its relations with ASEAN in all spheres
must be a priority.
In this age of multilateral alignment, the geopolitics of the Indo-

Pacific region will either be defined by India’s engagement and
cooperation with ASEAN and the like minded countries, or by a
rising China’s expansive unilateralism in the Indo-Pacific region.
ASEAN- India Relations

E
The Association of South-East Asian Nations (ASEAN) comprises
of –
• Indonesia
CC
• Singapore
• Philippines
• Malaysia
• Brunei
• Thailand
• Cambodia
• Lao PDR
)
• Myanmar
• Vietnam
(c
India’s focus on a strengthened and multi-faceted relationship

with ASEAN is an outcome of the significant changes in the
world’s political and economic scenario since the early 1990s and
India’s own march towards economic liberalisation. India’s search
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for economic space resulted in the ‘Look East Policy’. The Look
Notes
East Policy has today matured into a dynamic and action oriented
‘Act East Policy. PM at the 12th ASEAN India Summit and the 9th
East Asia Summit held in Nay Pyi Taw, Myanmar, in November,
2014, formally enunciated the Act East Policy.
Other policy initiatives taken by India in the region - Apart from

ASEAN, India has taken other policy initiatives in the region that
involve some members of ASEAN like BIMSTEC, MGC etc. India
UP
is also an active participant in several regional forums like –
• The Asia-Europe Meeting (ASEM)
• East Asia Summit (EAS)
• ASEAN Regional Forum (ARF)
• ASEAN Defence Ministers' Meeting + (ADMM+)
• Expanded ASEAN Maritime Forum (EAMF)
India's Relationship with ASEAN

E
India's relationship with ASEAN is a key pillar of our foreign policy
and the foundation of our Act East Policy. The up-gradation of the
relationship into a Strategic Partnership in 2012 was a natural
progression to the ground covered since India became a Sectoral
Partner of the ASEAN in 1992, Dialogue Partner in 1996 and
CC
Summit Level Partner in 2002. There are, in total, 30 Dialogue

Mechanisms between India and ASEAN, cutting across various
sectors.
Mission to ASEAN: India has set up a separate Mission to ASEAN

and the EAS in Jakarta in April 2015 with a dedicated Ambassador
to strengthen engagement with ASEAN and ASEAN-centric
processes.
25th Anniversary of ASEAN-India Dialogue Relations:
India and ASEAN are observing 25 years of their Dialogue

)
Partnership, 15 years of Summit Level interaction and 5 years of

Strategic Partnership throughout 2017 by undertaking a wide range
of activities, both in India and through our Missions in ASEAN
(c
Member States, which would culminate in a Commemorative

Summit on the theme "Shared Values, Common Destiny” on 25
January, 2018.
We have also hosted a Youth Summit and a Connectivity Summit

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among other events. In the run up to the Summit, we plan to host
Notes
a Business and Investment Meet and Expo, Business Conclave,
Textile Event and Regional Indian Diaspora Meet. In addition,
we have organised throughout the year academic conferences,
business events and cultural festivals. In 2012, ASEAN and India
had commemorated 20 years of dialogue partnership and 10 years
of Summit level partnership with ASEAN with a Commemorative
Summit in New Delhi under the theme 'ASEAN-India Partnership
UP
for Peace and Shared Prosperity' on 20-21 December 2012.
Commemorative Summit: The Commemorative Summit

attended by the Leaders from all the 10 ASEAN countries endorsed
elevating the partnership to a 'Strategic Partnership'. The Leaders
also adopted the 'ASEAN-India Vision Statement', which charts the
future of ASEAN-India cooperation. Two major events that were
organised in 2012 in the run-up to the Commemorative Summit
included the 2nd ASEAN-India Car Rally and Shipping Expedition
of INS Sudarshini to ASEAN countries.
Plans of Action: As a reflection of the interest of ASEAN and

India to intensify their engagement, the ASEAN-India Partnership
E
for Peace, Progress and Shared Prosperity, which sets out the
roadmap for long-term ASEAN-India engagement, was signed
at the 3rd ASEAN-India Summit in 2004 in Vientiane. A Plan
of Action (POA) for the period 2004-2010 was also developed to
CC
implement the Partnership. The 3rd POA (2016-20) was adopted

by the ASEAN-India Foreign Ministers Meeting held in August
2015.
Furthermore, ASEAN and India have identified priority areas

for the period of 2016-2018 and are already implementing
activities under it, which would contribute towards successful
implementation of the 2016-2020 Plan of Action.
Political Security Cooperation: Faced with growing traditional

and non-traditional challenges, politico-security cooperation is
a key and an emerging pillar of our relationship. Rising export
)
of terror, growing radicalisation through ideology of hatred and

spread of extreme violence define the landscape of common security
threats to our societies. Our partnership with ASEAN seeks to craft
(c
a response that relies on coordination, cooperation and sharing of

experiences at multiple levels.
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ASEAN Regional Forum (ARF)
Notes
The main forum for ASEAN security dialogue is the ASEAN
Regional Forum (ARF). India has been attending annual meetings
of this forum since 1996 and has actively participated in its various
activities. The ASEAN Defence Ministers' Meeting (ADMM) is
the highest defence consultative and cooperative mechanism in
ASEAN. The ADMM+ brings together Defence Ministers from
the 10 ASEAN nations plus Australia, China, India, Japan, New
UP
Zealand, Republic of Korea, Russia and the United States on a
biannual basis. Defence Minister attended the 3rd ADMM Plus
held from 4-5 November 2015 in Kuala Lumpur. Expanded ASEAN
Maritime Forum (EAMF) is an avenue for track 1.5 diplomacy
focusing on cross cutting maritime issues of common concern.
India participated in the 4th EAMF held in Manado, Indonesia on
10-11 September 2015.
Economic Cooperation: India-ASEAN trade and investment

relations have been growing steadily, with ASEAN being India's
fourth largest trading partner. India's trade with ASEAN has
increased to $70 billion in 2016-17 from $65 billion in 2015-16.
E
India's export to ASEAN has increased to $31.07 billion in 2016-17
from $25 billion in 2015-16. India’s import to ASEAN increased by
1.8% in 2016-17 vis-à-vis 2015-16 and stood at $40.63 billion.
CC
Investment flows are also substantial both ways, with ASEAN

accounting for approximately 12.5% of investment flows into India
since 2000. FDI inflows into India from ASEAN between April
2000 to August 2017 was about $514.73 billion, while FDI outflows
from India to ASEAN countries, from April 2007 to March 2015, as
per data maintained by DEA, was about $38.672 billion.
The ASEAN-India Free Trade Area has been completed with the
entering into force of the ASEAN-India Agreements on Trade
in Service and Investments on 1 July, 2015. ASEAN and India
have been also working on enhancing private sector engagement.
ASEAN India-Business Council (AIBC) was set up in March 2003
)
in Kuala Lumpur as a forum to bring key private sector players

from India and the ASEAN countries on a single platform for
business networking and sharing of ideas. AIBC organised the
(c
ASEAN-India Business Leadership Conclave 2016 on 21 July 2016

in Kuala Lumpur, Malaysia.
Socio-Cultural Cooperation: We have been organising a large

number of programmes to boost People-to-People Interaction with
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ASEAN, such as –
Notes
• Inviting ASEAN students to India each year for the Students
Exchange Programme
• Special Training Course for ASEAN diplomats
• Exchange of Parliamentarians
• Participation of ASEAN students in the National Children’s
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Science Congress
• ASEAN-India Network of Think Tanks
• ASEAN-India Eminent Persons Lecture Series, etc
As part of commemorative events we have organised Youth centric

Programs such as youth summit, artists camp and music band
festival.
Connectivity: ASEAN-India connectivity is a priority for India as

also the ASEAN countries. In 2013, India became the third dialogue
partner of ASEAN to initiate an ASEAN Connectivity Coordinating
E
Committee-India Meeting. While India has made considerable
progress in implementing the India-Myanmar-Thailand Trilateral
Highway and the Kaladan Multimodal Project, issues related to
increasing the maritime and air connectivity between ASEAN and
India and transforming the corridors of connectivity into economic
CC
corridors are under discussion.
A possible extension to India-Myanmar-Thailand Trilateral

Highway to Cambodia, Lao PDR and Viet Nam is also under
consideration. A consensus on finalising the proposed protocol
of the India-Myanmar-Thailand Motor Vehicle Agreement (IMT
MVA) has been reached. This agreement will have a critical role
in realising seamless movement of passenger, personal and cargo
vehicles along roads linking India, Myanmar and Thailand. PM
announced a Line of Credit of $1 billion to promote projects that
support physical and digital connectivity between India and
ASEAN and a Project Development Fund with a corpus of INR 500
)
crores to develop manufacturing hubs in CLMV countries at the

13th ASEAN India Summit held in Malaysia in November, 2015.
(c
We have also organised a Connectivity Summit in December, 2017.
Funds: ASEAN Multilateral Division offers project-based financial

assistance to ASEAN countries. Financial assistance has been
provided to ASEAN countries from the following Funds:
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ASEAN-India Cooperation Fund: At the 7th ASEAN-India
Notes
Summit in 2009, India announced a contribution of $50 million to
the ASEAN-India Fund, to support implementation of the ASEAN-
India Plans of Action, which envisage cooperation in a range of
sectors in the political, economic and socio-cultural spheres for
deepening and intensifying ASEAN-India cooperation.
Projects worth approx. $48 million are under various stages of

implementation or processing. In order to take the development and
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capacity building initiatives forward, PM has proposed enhancing
the ASEAN-India Fund with an additional grant of $50 million at
the 14th ASEAN India Summit in Vientiane in September 2016.
ASEAN-India S&T Development Fund (AISTDF): At the

6th ASEAN-India Summit in November, 2007 in Singapore,
India announced the setting up of an ASEAN-India Science and
Technology Development Fund with a $1 million contribution
from India to promote joint collaborative R&D research projects in
Science and Technology. This Fund become operational in 2009-10
and expenditure began to be incurred from FY 2010-11. This fund
has been enhanced to $5 million from 2016-17.
E
Projects worth $0.67 million are already under implementation
and new projects are being identified.
ASEAN-India Green Fund: At the 6th ASEAN-India Summit on

CC
21 November 2007 in Singapore, India announced the setting up

of an ASEAN-India Green Fund with an initial contribution of $5
million from India, to support collaboration activities relating to
environment and climate change. Some of the areas identified for
collaboration under the Fund are –
• Climate change
• Energy efficiency
• Clean technologies
• Renewable energy
)
• Biodiversity conservation and environmental education

(c
Projects worth $1.97 million covered under this fund are currently
at the implementation stage.
ASEAN-India Projects: India has been cooperating with

ASEAN by way of implementation of various projects in the fields
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of Agriculture, Science and Technology, Space, Environment
Notes
and Climate Change, Human Resource Development, Capacity
Building, New and Renewable Energy, Tourism, People-to-People
contacts and Connectivity etc.
Some of the prominent projects, which are either ongoing or in the

final stages of approval are as follows:
• Space Project envisaging establishment of a Tracking
UP
• Data Reception/Data Processing Station in Ho Chi Minh City
• Vietnam and upgradation of Telemetry Tracking and Command

Station in Biak, Indonesia
• Setting up of Centres of Excellence in Software Development

and Training in CLMV countries
• e-Network for provision of tele-medicine and tele-education in

CLMV countries
• Quick Impact Projects in CLMV etc.

E
India’s Trade with APEC
In addition to the radical changes in the global political and security
arena that came about with the end of the Cold War, the post-Cold
CC
War era also marked the beginning of a new spurt of attempts at

regional economic cooperation and integration.
Geo-economics has emerged as the new buzzword which is supposed

to replace the earlier theme predominant during the Cold War, i.e.,
geo-politics. While it may be premature to jump to conclusions as to
whether geo-politics has withered away as a dominant component
of international relations giving way to geo-economics, there is no
denying the fact that international economic relations have come
to the centre stage to play a vital role in global affairs. Cooperation
through regional organisations is a major trend in this.
Second Wave of Regional Economic Cooperation: The second

)
wave of regional economic cooperation, after the first one in the

1960s and 1970s which was primarily confined to West Europe, in
(c
the late 1980s and the early 1990s was stimulated by the attempts
at greater regional integration in Europe. However, it soon spread
to a number of other regions too. The regional efforts started
gaining momentum in part as an alternative to, if not a substitute
for, the Uruguay Round of global multilateralism whose progress
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toward its culmination had become excruciatingly slow.
Notes
It has to be kept in mind that in addition to the economic benefits
that would accrue as a result of regional economic integration
and cooperation, it has been acknowledged that potential political
gains would be enormous. Thus, most of the regional organisations,
especially the successful ones, despite the avowed goal of economic
cooperation, have always had a definitive political agenda. There
has been a proliferation of regional pacts on economic integration
UP
and cooperation since the early 1990s. Some of the prominent ones
are:
• The North American Free Trade Area (NAFTA) signed in 1992
• The decision taken in 1995 to set up a Pan-American Free

Trade Area by 2005
• The ASEAN Free Trade Area (AFTA) to be realised by early

next decade
• The South Asian Free Trade Area (SAFTA) by 2001
India and APEC

E
India, along with Russia, Vietnam and Peru, has been one of the
leading countries which has striven hard to become a member of
APEC. The APEC leaders decision not to admit India in the recent
CC
expansion at Vancouver while admitting Russia, Vietnam and

Peru and the imposition of a moratorium for another ten years on
inclusion of new members has not only come as a rude shock to
New Delhi, but it is a major setback to India's 'Look East policy.'
Apart from the South Asian Association for Regional Cooperation
(SAARC), India is the only major country in the world which is yet
to become a member of a regional free trading club.
Given the enormous political problems, especially between India

and Pakistan, India's domineering position in South Asia and
a number of other economic constraints, notwithstanding the
grandiose plans to create a virtual free trade area in South Asia
)
by the year 2001, SAARC is not expected to make much headway.

In any case SAARC would not accrue the kind of economic and
non-economic benefits that a forum like APEC offers for a country
(c
like India which has targeted large-scale foreign investments and

a manifold increase in its trade volume in the coming years.
It needs no reiteration that, outside West Europe, most of the capital

surplus nations are in the Asia Pacific. Emergence of NICs as major
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capital exporting countries in the recent years, particularly at a
Notes
time when there are massive shortages of investible capital and as
a result of its ever growing demand in the developing countries is a
significant development from the Indian viewpoint. India seeking
to join APEC is a natural corollary to its new initiative of 'Look
East policy' embarked upon in the early 1990s.
From APEC's point of view, it makes little sense to keep world's

second largest country out of its activities, particularly in view of
UP
the recent concerted moves by India to integrate itself with global
economic dynamics more closely. World Bank has predicted that
by 2020 India would be the fourth largest economy in the world
and it is already one of the large emerging markets. One way to
expedite India's economic reforms would be to admit it into APEC
and make it conform to the collective decisions. Thus, a mutually
beneficial relationship could be built up between India and the rest
of APEC countries.
India is already a Dialogue Partner of ASEAN and a member of

ASEAN's security forum, the ASEAN Regional Forum (ARF),
which is a testimony to the fact that India as an important power
E
could no longer be ignored. Also, a majority of the top investors in
India in the last few years have been APEC member countries and
these nations have already emerged as the most important trading
partners of India.
CC
There are, of course, strong reservations about the sincerity of

economic reforms, especially with regard to –
• Tariff and non-tariff barriers
• Quantitative restrictions
• Implementation of intellectual property rights
• Politically unstable conditions
There have also been concerns about slow pace of economic reforms
and the much talked about de-regulation of Indian financial sector
)
is yet to take off. Additionally, India also faces the problem of its
image. Somehow the general perception outside is that the Indian
economy is still mired in bureaucratic red tape and the Indians
(c
tend to be more negative in their attitude.
Highly restrictive trade and investment regimes, which had been

the norm in the pre-reform era, have theoretically come a long way,
but in practice the bureaucratic mindset and political populism
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have not kept pace with the reform programme. Unfortunately,
Notes
this image of India looms very large in the minds of most countries
that have taken a lot of interest in India. Prevailing political
uncertainty has contributed its bit in further dampening the
enthusiasm. Unless India urgently undertakes measures which
prove that the changes it has brought about in recent years are
irreversible and improves its image, it may once again miss the
Asia Pacific bus.
UP
Secondly, Indian policymakers do not seem to have understood that
APEC is as much a political forum as an economic one. Its political
agenda became obvious when Russia was included. Each nation
in APEC, especially the major ones, has a political objective and
unless this is understood New Delhi would be groping in the dark.
For instance, for Japan, APEC is a forum to underpin its economic
interests with long-term political strategy, to demonstrate that it
would not translate its economic might into military might and
to pursue a larger political role commensurate with its economic
strength through multilateral forum.
For China, APEC is an organisation which enables its leadership

E
not only to participate in APEC summit meetings and thrash out
political differences and problems with other members, but also to
get politically and economically closer to this vital region. It has
also successfully pushed through its concerns about APEC and its
CC
long-term objectives. Taiwan's membership of APEC has a number

of political connotations. For ASEAN, APEC is a conduit to assert
its own separate identity and political significance in the regional
affairs.
Indian entry into APEC would be determined by how far it has gone
and is willing to go in further liberalising its trade and investment
regimes. Although there was a wide divergence in the Individual
Action Plans of APEC members, but most of them have far fewer
barriers than India. India should have brought out an Action Plan
of trade and investment liberalisation on its own a long time back
by bringing down its barriers to the average level of APEC states
)
and demonstrated its sincerity in further reducing these barriers

in the coming years.
(c
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ES
Check Your Progress
Notes
1. ..........................has been considered vital to improve the
quality of life of millions of people across the world and
to reduce poverty.
2. The WIPO treats ............as an important tool for the

...................and .............development of all countries.
3. The Asian Development Bank (ADB) is a multilateral
UP
financial institution that aims to improve the welfare of
people in ........................, particularly the 1.9 billion who
live on less than $2 per day.
4 Trade and investment is one of eight sub-programmes of

......................, which aims to benefit the region through
the ..............process with the help of increased global and
regional trade and investment flows.
Summary
The global factors that are outside of the control of individual
E
organisations but that can affect the way that businesses operator
is called international economic environment. The factors such
as unemployment rates, inflation rates and labour costs etc.
are external factors found in the macroeconomic environment
CC
which affect organisations' decision-making and performance

activities. They include cultural and social influences, legal issues,
demographics and political considerations, as well as changes in
the natural environment and technology.

1. What are the five strategic goals defined by WIPO?
2. Explain about international economic institutions aand their

functioning.
3. Discuss the importance of growth of RTAs (Regional Trade

)
Agreements).
(c
4. What is India's look East policy?
5. Explain the role of India in APEC.

108
Unit 6
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Notes
Dynamics of International Trade

Objectives
Objectives
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 Global Perspective
 Trade Barriers; Protectionism
 Tariffs, Quotas, Boycotts and Embargos
 Antidumping Penalties
 Easing trade restrictions
Introduction
International trade confers a good deal of benefits on the
trading countries. According to the comparative cost theory, if
E
different countries specialise on the basis of comparative costs of
commodities, it would enable them to make optimum use of their
resources and thereby add to their output, income and welfare of
their people. International trade policies can be seen as a measure
CC
of international competitiveness of a country in the global market

called international trade. In calculating international trade
policies, trade openness was adopted as indices; we use the addition
of imports and exports over GDP.
Gains from trade are broadly divided into two types – Static gains
and dynamic gains. Static gains from trade refer to the increase
in production or welfare of the people of the trading countries as a
result of the optimum allocation their given factor-endowments, if
they specialise on the basis of their comparative costs.
Global Perspective
)
Globalisation for development liberalisation has not translated into

(c
qualitative gains with widespread and structural developmental

impact. Still others have seen only partial gains. In the LDCs
especially, the promised and expected gains of trade-driven
globalisation are still missing or insufficient.
Unit 6: Dynamics of International Trade Objectives
109
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There is concern that the costs of trade driven globalisation
Notes
maybe economically, socially, politically and environmentally
unsustainable, resulting in increasing inequalities and the loss of
social cohesion within and across countries. For such countries, it
has meant –
• Incurring costs–including from adjustment to trade

liberalisation
UP
• Intensified competition
• Reduced policy space
• Increased vulnerability to external shocks
In addition, disappointment with the lack of sufficient development

dividends and increasing hardships on account of adjustment in
many developing countries are calling into question the ‘raison
d'être’ of trade liberalisation and globalisation. Even developed
countries – thus far the drivers and main beneficiaries of trade
driven globalisation– now have following anxieties arising from
freer trade:
E
• Job displacement
• Wage stagnation
• Rising inequalities
CC
• Adjustment costs
This is particularly so as more and more developing countries are

becoming competitive in different sectors and posing a challenge
to the domestic manufacturing and services industries as well as
the labour force of developed countries. This has begun to arouse
protectionist sentiments and even threaten a backlash against their
trade with and investment relations with developing countries.
Thus a prime concern today for most policymakers everywhere is

how to –
)
• Maximise the development benefits of globalisation and trade
• To minimise their economic, social, human and environmental

(c
costs and to make these the over-arching objectives of trade-

driven globalisation
It is imperative that both the reality and the perceptions about

the costs and benefits of trade driven globalisation be managed
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in such a way as to maximise development benefits with equity
Notes
and inclusiveness and minimise costs. The failure to do so has the
potential of posing a setback to the attainment of internationally
agreed development goals, including the MDGs.
In this regard, countries are called upon to judiciously calibrate

the following:
• The tension between national policy space and international
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obligations and commitments
• The balance between national and global governance
• The coherence among different policy areas and levels
• The differing yet complementary roles of the state, the market

and the corporate sector in the process of development
There is increasing acknowledgement that, despite an apparent

irreversibility and spontaneity, it is possible to manage the
globalisation process towards better development outcomes.
Efforts to create and sustain an enabling environment to benefit
E
from globalisation will have to be pursued in the context of an
increasingly differentiated trade and development landscape.
There is need to capture the 'common development denominators'
across developing countries. These include –
CC
• Structural characteristics and policy issues of common concern
• Applicability to developing countries, irrespective of their size

or weight in the world economy and international trade
These are reflected in the qualitative benchmarks of beneficial

participation and integration of developing countries in
international trade and economy. It will also be necessary to focus
on the specific trade and development concerns of countries in
special need, such as -
• LDCs
)
• Landlocked countries
• Small and vulnerable economies

(c
For these countries, the challenges of marginalisation, structural

inadequacy and productive capacity constraints are manifold.
Moreover, despite their recent rapid growth and a successful
increase in their global exports, many developing countries
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are still hugely challenged in having to deal with the backlog
Notes
of underdevelopment, poverty and infrastructure deficit in a
sustained manner.
Attention to Middle Income Developing Countries

The predicament of middle income developing countries– exposed
to global markets and financial flows even as they strive to climb
the trade and development ladder and further reduce poverty
UP
and inequality–will also need attention. Already countries with
economies in transition are providing examples of trade and
development endeavour that require different approaches and
policy responses. National, regional and international trade and
development strategies need to take these specificities as well
as the baseline scenarios of such countries into account whilst
adopting an integrated and holistic approach based on common
development denominators.
Another reality that needs to be taken into account is the

shifting comparative advantage and competitiveness paradigm in
international trade. Natural resource endowments– particularly
E
oil and gas as well as minerals and metals– have once again become
important in trade competitiveness, both directly and indirectly.
They have enabled many developing countries to reap trade gains.
CC
Trade Barriers; Protectionism

Trade barriers are measures that governments or public authorities
introduce that prevent or restrict overseas trade and investment.
These measures need not necessarily take the form of legislation or
a specific decision. They may also take the form of current practice.
As a result of these measures, domestic companies receive a
competitive advantage relative to their foreign counterparts.
It is accepted that in many cases, products are liable to customs

duties when imported into a market and that imported products
ought to be accompanied by the correct documentation. In some
cases, however, customs duties may be unreasonably high or
)
customs clearance may take an unreasonably long time. Trade

barriers may take the form of, for example:
(c
• Customs duties
• Customs procedures
• Technical regulations, standards etc. - for example for the

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purpose of consumer protection, health protection, protection
Notes
of the environment, etc
• Veterinary and phytosanitary measures - barriers based

on health and safety regulations
• Restrictions on access to primary products - for example

in the form of export levies that drive up prices artificially or
special export prices that are higher than the price of the same
UP
primary products for use in national processing industries
• Insufficient protection of intellectual property rights -

both with respect to the scope of protection and with respect to
the possibilities of legal protection. This includes, for instance,
protection of patents, copyrights, trademarks and geographical
indications of origin
• Barriers to trade in services - for example in the form of

discriminatory conditions
• Restrictions on access to investment - for example through

national participation requirements or restrictions on access to
E
repatriation of profits
• Unfair application of state aid and other forms of subsidies
Globalisation Making Trade Restrictions

CC
Increasingly Significant
At the same time, traditional trade obstacles such as tariffs and
import restrictions have been reduced, as a result of international
trade liberalisation. In the period following the Second World
War, average tariffs for industrial goods have been reduced from
approx. 40 percent to less than 5 per cent. As a consequence, other
trade restrictions have become of relatively greater significance.
These other trade restrictions are often based on regulations and
principles relating to qualitative matters, for example:
• Product quality requirements and product packaging

requirements ostensibly for the purpose of consumer protection
)
• Education and qualification requirements for providers of

(c
services
• Rules relating to patent and trademark protection
This has contributed to making it more difficult for companies to

gain an overview of rules and changes to rules, making the handling
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of trade barriers more complicated, as barriers touch on matters
Notes
that are subject to internal national legislation or regulation in the
export markets.
Types of Tariffs and Trade Barriers

There are several types of tariffs and barriers that a government
can employ:
• Specific tariffs
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• Ad valorem tariffs
• Licenses
• Import quotas
• Voluntary export restraints
• Local content requirements
Specific Tariffs
A fixed fee levied on one unit of an imported good is referred to as
E
a specific tariff. This tariff can vary according to the type of good
imported. For example, a country could levy a $15 tariff on each
pair of shoes imported, but levy a $300 tariff on each computer
imported.
CC
Ad Valorem Tariffs
The phrase ad valorem is Latin for "according to value," and this
type of tariff is levied on a good based on a percentage of that good's
value. An example of an ad valorem tariff would be a 15% tariff
levied by Japan on US automobiles. The 15% is a price increase on
the value of the automobile, so a $10,000 vehicle now costs $11,500
to Japanese consumers. This price increase protects domestic
producers from being undercut but also keeps prices artificially
high for Japanese car shoppers.
Non-tariff barriers
)
Non-tariff barriers to trade include:

(c
Licenses
A license is granted to a business by the government and allows
the business to import a certain type of good into the country.
For example, there could be a restriction on imported cheese and
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licenses would be granted to certain companies allowing them to
Notes
act as importers. This creates a restriction on competition and
increases prices faced by consumers.
Import Quotas
An import quota is a restriction placed on the amount of a particular
good that can be imported. This sort of barrier is often associated
with the issuance of licenses. For example, a country may place a
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quota on the volume of imported citrus fruit that is allowed.
Voluntary Export Restraints (VER)

This type of trade barrier is "voluntary" in that it is created by
the exporting country rather than the importing one. A voluntary
export restraint is usually levied at the behest of the importing
country and could be accompanied by a reciprocal VER. For
example, Brazil could place a VER on the exportation of sugar to
Canada, based on a request by Canada. Canada could then place a
VER on the exportation of coal to Brazil. This increases the price of
both coal and sugar but protects the domestic industries.
E
Local Content Requirement
Instead of placing a quota on the number of goods that can be
imported, the government can require that a certain percentage of
a good be made domestically. The restriction can be a percentage of
CC
the good itself or a percentage of the value of the good. For example,
a restriction on the import of computers might say that 25% of the
pieces used to make the computer are made domestically, or can
say that 15% of the value of the good must come from domestically
produced components.
Defining Protectionism
Protectionism consists of economic policies that restrict trade
between countries in order to promote "fair competition" between
imported domestically produced goods. For instance, the United
States may feel that China is undervaluing its currency to make
)
exports cheaper and impose a tariff on certain goods imported from

the country. Tariffs are only one form of protectionism.
(c
Most of the time, protectionism stems from a desire to help improve

domestic manufacturers by making them more competitive
with imported goods. And often times, these desires stem from
a weak jobs market that could be improved with more domestic
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manufacturing jobs. Unfortunately, economists believe that many
Notes
of these efforts may be misguided.
In other cases, a government may only be seeking to protect a single

strategic industry. For example, many countries imposed tariffs on
Chinese photovoltaic solar panels after the country began dumping
them into the global market following a slowdown in demand and
over supply. The goal was to protect their own domestic solar
operations and ensure energy security in the future.
UP
Types of Protectionism
Protectionism has a broad definition that encompasses a number
of different economic policies designed to restrict trade and boost
domestic manufacturers. From new taxes to import restrictions,
these policies are implemented by both emerging markets and
developed economies alike and can have a negative impact on
global free trade.
Some of the most popular protectionist policies include:
• Import Tariffs - Taxing imported goods increase the cost to

E
importers and raises the price of the imported goods in local
markets.
• Import Quotas - Limiting the number of goods that can

be produced abroad and sold domestically limits foreign
CC
competition in domestic markets.
• Domestic Subsidies - Subsidising costs or providing cheap

loans to domestic companies can increase their competitiveness
against foreign imports.
• Exchange Rates - Intervening in the foreign exchange (forex)

market to lower a currency's valuation can raise the cost of
imports and lower the cost of exports.
• Administrative Barriers - Excessive government regulations

can place huge burdens on foreign imports, making it difficult
to sell them in domestic markets.
)
Costs of Protectionism
(c
There's little question among economists that protectionism is

harmful, with costs that far outweigh benefits over the long run.
Comparative advantage provides much of the rationale for this
argument, saying that two countries can benefit from free trade,
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even if one is more efficient in the production of all goods than the
Notes
other.
Arguments for Protectionism

Despite the beliefs held by many mainstream economists, there
are many other economists that argue for protectionism. Many
of these economists insist that the mobility of capital around the
world undercuts comparative advantage, since capital can move
UP
to wherever costs are lowest to pursue an absolute advantage,
thereby eliminating the key premise.
Proponents for protectionism further argue that nearly all

developed countries have successfully implemented protectionist
programs. For example, the US auto industry has been a consistent
beneficiary of protectionism and has flourished for the most part
over the past several decades, despite cheaper competition from
Japan and Germany.
Tariffs, Quotas, Boycotts and Embargos

E
Maintaining a stable and attractive currency is just one policy
objective of governments in the area of foreign trade. Most nations
adopt measures aimed at preserving a trade surplus and a positive
balance of payments. As part of these efforts, some nations provide
protection for their domestic industries from foreign competition.
CC
Protectionism is a set of policies aimed at protecting a nation’s

industries from foreign competition. When, for example, an
American buys a Volkswagen instead of a Ford, American dollars
leave the country and (most likely) German workers, rather than
American workers, draw a paycheck. To prevent this, governments
impose –
• Tariffs
• Quotas
• Embargos
)
A tariff is just a tax on stuff imported from other another country;

the tax raises its price and thus diminishes its attraction.
(c
A quota is a limit placed on the quantity of a specific good allowed

into the country.
An embargo is a complete prohibition against bringing a certain

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good into a country.
Notes
Anti-dumping Actions
If a company exports a product at a price lower than the price it
normally charges on its own home market, it is said to be “dumping”
the product. Is this unfair competition? Opinions differ, but many
governments take action against dumping in order to defend their
domestic industries. The WTO agreement does not pass judgment.
UP
Its focus is on how governments can or cannot react to dumping —
it disciplines anti-dumping actions and it is often called the “Anti-
Dumping Agreement”. (This focus only on the reaction to dumping
contrasts with the approach of the Subsidies and Countervailing
Measures Agreement.)
Legal definitions: The legal definitions are more precise, but

broadly speaking the WTO agreement allows governments to act
against dumping where there is genuine (“material”) injury to the
competing domestic industry. In order to do that the government
has to be able to show that –
• Dumping is taking place

E
• Calculate the extent of dumping (how much lower the export
price is compared to the exporter’s home market price)
• Show that the dumping is causing injury or threatening to do

CC
so
The Anti-Dumping Agreement - Action against

dumping
GATT (Article 6) allows countries to take action against dumping.
The Anti-Dumping Agreement clarifies and expands Article 6 and
the two operate together. They allow countries to act in a way that
would normally break the GATT principles of binding a tariff and
not discriminating between trading partners — typically anti-
dumping action means -
• Charging extra import duty on the particular product from the

)
particular exporting country in order to bring its price closer to

the “normal value”
(c
• To remove the injury to domestic industry in the importing

country
There are many different ways of calculating whether a particular

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product is being dumped heavily or only lightly. The agreement
Notes
narrows down the range of possible options. It provides three
methods to calculate a product’s “normal value”.
• The main one is based on the price in the exporter’s domestic

market
When this cannot be used, two alternatives are available —
• The price charged by the exporter in another country
UP
• A calculation based on the combination of the exporter’s
production costs, other expenses and normal profit margins
The agreement also specifies how a fair comparison can be made

between the export price and what would be a normal price.
Application of Anti-dumping Measures

Calculating the extent of dumping on a product is not enough.
Anti-dumping measures can only be applied if the dumping
is hurting the industry in the importing country. Therefore, a
detailed investigation has to be conducted according to specified
E
rules first. The investigation must evaluate all relevant economic
factors that have a bearing on the state of the industry in question.
If the investigation shows dumping is taking place and domestic
industry is being hurt, the exporting company can undertake to
CC
raise its price to an agreed level in order to avoid anti-dumping

import duty.
Informative Action – Anti Dumping

• The agreement says member countries must inform the
Committee on Anti-Dumping Practices about all preliminary
and final anti-dumping actions, promptly and in detail.
• They must also report on all investigations twice a year.
• When differences arise, members are encouraged to consult

each other.
)
• They can also use the WTO’s dispute settlement procedure.

(c
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Check Your Progress
Notes
1. An ......................is a restriction placed on the amount of
a particular good that can be imported.
2. GATT ..................allows countries to take action against

dumping.
3. Anti-dumping measures must expire .............after the

date of imposition, unless an investigation shows that
UP
ending the measure would lead to injury.
4. Protectionism consists of economic policies that restrict

trade between countries in order to promote .................
between imported domestically produced goods.
5. The use of tariffs to protect infant industries can be seen

by the ................................... strategy employed by many
developing nations.
Summary
E
Static gains from trade are measured by the increase in the utility
or level of welfare when there is opening of trade between the
countries. In modern economics increase in utility or welfare is
measured through indifference curves. When as a result of foreign
trade, a country moves from a lower indifference curve to a higher
CC
one, it implies that the welfare of the people has increased. On

the other hand, dynamic gains refer to the contributions which
foreign trade makes to the overall economic growth of the trading
countries. Further, dynamic gains from trade refer to the gains
from trade that accrue to the countries over time because trade
induces economic growth of a country and brings increase in
efficiency in the use of resources by a country. It is this trade that
makes possible the division and specialisation of labour on which
higher productivity of different countries is so largely based.

)
1. Discuss role of trade barriers, protectionism in relation to

(c
global market.
2. Why Are Tariffs and Trade Barriers Used?
3. What are the Types of Tariffs and Trade Barriers

120
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4. Who benefits from tariffs and how they affect price of goods?
Notes
5. Explain anti-dumping agreement and actions against dumping.
UP
E
) CC
(c
Unit 7 121
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Notes
International Market Analysis
Objectives
 Identification of International Markets
UP
 Segmentation of International Markets
 Selection of International Markets
 Tools of International Market Analysis
Introduction
An international market is defined geographically as a market
outside the international borders of a company's country of
citizenship. A company, to the extent that it is a legally distinct
entity from its owners like a corporation, is usually a citizen of the
country where it is organised. IBM, for example, was formed in the
E
United States.
Thus, any geographic area outside the territorial boundaries of the

United States where IBM conducts business is IBM's international
market. The conceptual opposite of an international market is the
CC
company's domestic market, which is the geographic region within

the national boundaries of a company's home country.
Identification of International Markets

To succeed in exporting, you must first identify the most profitable
international markets for your products or services. Without
proper guidance and assistance, however, this process can be time
consuming and costly – particularly for a small business.
How to Gather Foreign Market Research

)
Now that you know where to begin your research, you should next
identify the most profitable foreign markets for your products or
(c
services. You will need to:
• Classify your product
• Find countries with the largest and fastest growing markets

for your product
122
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• Determine which foreign markets will be the most penetrable
Notes
• Define and narrow those export markets you intend to pursue
• Talk to US customers doing business internationally
• Research export efforts of US competitors
Finding Countries with Largest and Fastest Growing

Markets for Your Products
UP
At this stage of your research, you should consider where your
domestic competitors are exporting. Trade associations can often
provide data on where companies in a particular industry sector
are exporting their products.
Determining the Most Penetrable Markets

Once you have defined and narrowed a few prospective foreign
markets for your product, you will need to examine them in detail.
At this stage you should ask the following questions:
• How does the quality of your product or service compare with

E
that of goods already available in your target foreign markets?
• Is your price competitive in the markets you are considering?
• Who are your major customers?

CC
Answering these questions may seem overwhelming at first, but

many resources are available to help you select which foreign
markets are most conducive to selling your product.
Defining which Markets to Pursue

Once you know the largest, fastest growing and most penetrable
markets for your product or service, you must then define your
export strategy. Do not choose too many markets. For most small
businesses, three foreign markets will be more than enough,
initially. You may want to test one market and then move on to
secondary markets as your “expertise” develops. Focusing on
)
regional, geographic clusters of countries can also be more cost

effective than choosing markets scattered around the globe.
(c
The Industry Sector Analyses (ISAs) contains succinct,

international market information on specific industries that can
help US exporters determine market potential, market size and
competitors for their products and services.–You must register
with the US Commercial Service to access this database.–
Unit 7: International Market Analysis
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Country Commercial Guides (CCGs) are comprehensive
Notes
reports that contain information on the business and economic
situation and political climate in overseas markets, as well as
general information on marketing, trade regulations, investment
climate and business travel.
Segmentation of International Markets

Market segmentation is a marketing strategy which involves
UP
separating a wide target market into subsets of customers,
enterprises, or nations who have, or are perceived to have, common
requirements, choices and priorities and then designing and
executing approaches to target them.
Market segmentation approaches are basically used to identify

the target clients and provide assisting data for marketing plan
components like positioning to get certain marketing plan objectives.
Businesses may discover product differentiation approaches, or
an undifferentiated approach, including specific goods or product
lines relying on the precise demand and attributes of the target
E
segment.
Market Segmentation
The most common forms of market segmentation practices are as
follows –
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Geographic Segmentation
Dealers can segment market according to geographic criterion
that is nations, states, regions, countries, cities, neighbourhoods,
or postal codes. The geo-cluster strategy blends demographic
information with geographic data to discover a more precise or
specific profile. For example, in rainy areas dealers can easily sell
raincoats, umbrellas and gumboots. In winter regions, one can sell
warm clothing.
A small business product store focuses on customers from the

)
local neighbourhood, while a larger departmental store focuses its

marketing towards different localities in a larger city or region.
They neglect customers in other continents. This segmentation is
(c
very essential and is marked as the initial step to international

marketing, followed by demographic and psychographic
segmentation.
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Demographic Segmentation
Notes
Segmentation on the basis of demography relies on variables
like age, gender, occupation and education level or according to
perceived advantages which an item or service may provide.
Firmographic or Character Based Segmentation

An alternative of this strategy is called firmographic or character
based segmentation. This segmentation is widely used in business
UP
to business market. It’s estimated that 81% of business to business
dealers use this segmentation.
According to firmographic or character based segmentation, the

target market is segmented based on characteristics like size of the
firm in terms of revenue or number of employees, sector of business
or location like place, country and region.
Behavioural Segmentation
This divides the market into groups based on their knowledge,
attitudes, uses and responses to the product. Many merchants
E
assume that behavior variables are the best beginning point for
building market segments.
Psychographic Segmentation
Psychographic segmentation calls for the division of market into
CC
segments based upon different personality traits, values, attitudes,

interests and lifestyles of consumers. Psychographics uses people’s
lifestyle, their activities, interests as well as opinions to define a
market segment.
Mass media has a dominating impact and effect on psychographic

segmentation. To the products promoted through mass media can
be high engagement items or an item of high-end luxury and thus,
influences purchase decisions.
Occasional Segmentation
)
Occasion segmentation is dividing the market into segments on

the basis of the different occasions when the buyers plan to buy
the product or actually buy the product or use the product. Some
(c
products are specifically meant for a particular time or day or

event. Thus, occasion segmentation helps identify the customers’
various reasons to buy a particular product for a particular and
thus boosts the sale of the product.
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International Marketing Planning
Notes
Any company on the marketing platform is expected to have a
detailed analysis of the choices and preferences of the customers
in the target market. That is where the company will be selling
the products. This will help the company produce the products
according to the demands of the customers and this will eventually
lead to a win-win situation between the buyer and the seller.
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The plan that leads to the analysis is a step by step approach
wherein the analysis is done on cultural, economic and political
situation prevailing in the target market or the country.
The different steps in the planning process are as follows −
Phase 1 − Identifies the target market and builds relative priorities

for resource allocation.
Phase 2 − Fixes the positioning approach for each target market.

The aim is to match the requirements with the needs based on the
analysis.
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Phase 3 − Includes the preparation of the marketing plan. It
consists of examining the situation, aim, objectives, approach and
tactics, budgets and forecasts and action programs.
Phase 4 − The plan is executed and managed. Results are checked

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and strategies adjusted when required to improve results.
Even though the international marketing planning process is very

much similar to planning domestic marketing strategies but the
environment is far more complicated, knotty and uncertain in
international markets.
Selection of International Markets

Market selection plays a crucial role at the international level.
Market selection is based on a thorough evaluation of the different
markets with reference to certain well-defined criteria, given the
)
company resources and objectives.
The following are the steps involved in the market selection process:
(c
(a) International Marketing Objectives: The first step in

market selection process is to determine or ascertain the
export marketing objectives of the organisation. The market
selected to serve a particular international marketing objective
Understanding
Petrochemical
Management
Business
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need not necessarily be the best suited to achieve some other
Notes
international marketing objective.
(b) Parameters for Selection: For proper evaluation and selection

of the markets, it is essential to clearly lay down the parameters
and criteria for evaluation. The different parameters for the
selection of a market are –
• Firm's resources
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• International environment
• Market situation
• Nature of competition
• Government policy etc.

(c) Preliminary Screening: The objective of the preliminary
screening is to eliminate the markets which are not potential.
The parameters used for the preliminary screening may
vary from product to product. However, parameters that are
commonly used include:
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• Size of population
• Per capita income

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• Structure of the economy
• Infrastructural factors
• Political conditions
(d) Short Listing of Markets: Preliminary screening enables to
eliminate markets which obviously do not meet consideration
at the very outset. There would be a large number of markets
left even after the preliminary screening. They are further
screened with the help of more information than was used at
the preliminary screening stage.
)
(e) Evaluation and Selection: The short listed markets are

further evaluated with reference to the cost-benefit analysis
(c
and feasibility study. They are then, ranked on the basis of

their overall attractiveness. Of the markets, the best one is
chosen for the launching of product considering the company’s
resources and external environment
(f) Test Marketing: Initially, the market is tested on a smaller

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scale by launching the product in a part of the markets This
Notes
provides a feedback to the producer about the market. At the
same time, it helps the producer in assessing overall response
of the consumers from a specific market, after tested success,
the production can be undertaken on a mass scale.
(g) Commercial Production: Once the product is tested "in the

selected market, the company goes ahead with mass production.
Minor modifications, if any, are introduced in the product mix
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during this stage.
Tools of International Market Analysis

A business that doesn’t know its tools is a business that is destined
to fail. In this article, we are briefly going to talk about –
• Market analysis tools (i.e. the most common methods to

understand your target market)
• How you can use them to achieve business success
How to Collect your Own Market Data

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Here are some major ways in which you can collect data for your
business:
1. Observation
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This includes observing people in marketplace conditions to

ascertain consumer behaviour. However, in the digital realm,
observation takes a whole new meaning as you are now able to
judge visitors’ website behaviours using analytics.
2. Surveys
This can further be broken down into:
• Interviews and individual surveys
• Telephone surveys
)
• Social media surveys
3. Focus Groups and Product Testing

(c
The company can call in a select bunch of people to ask questions

pertaining to a particular product or service. In addition, you can
launch product in a limited scale to gauge customer response and
then extrapolate those results for a nationwide or global launch.
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You should note that all forms of data collection have their own
Notes
limitations. That is why for near-accurate analysis, you should use
a combination of primary and secondary sources of information.
Situation Analysis
This is the analysis of all the factors that affect your business.
Several methods are involved in situation analysis, the most
common one being SWOT. This is the evaluation of a company’s
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strengths, opportunities, weaknesses and threats. Briefly, here is
what SWOT analysis is all about:
Strengths: The competitive advantage you have in the marketplace

(e.g. customer service, better access to raw materials)
Weakness: All things with which your competitors are able to grab
your market share
Opportunities: Unexplored market trends and untapped market

niches that waiting to be taken advantage of
Threats: Political, climatic, technological and other external

E
factors that can cause a problem for your business and get in the
way of its long term goals
PEST Analysis
The reason why businesses conduct a SWOT analysis is that it
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offers you an all-round view of the environment in which they

are operating in so they can better tackle projects and anticipate
problems. As you can see, the last two components of SWOT are
specifically geared towards external market conditions. But SWOT
is not the only tool at the disposal of organisations when they are
conducting situation analysis. There is also what is known as the
PEST analysis, which can be summarised as:
Politics: As governments intervene in the economy, businesses

are bound to be affected. Indeed, employment policies, tax laws,
trade restrictions can impact your business directly and indirectly,
)
along with political stability and how foreign markets operate.
Economic: This is easy to understand. Macro and micro-economical

(c
economic factors such as interest rates, exchanges rates, inflation

and disposable incomes influence how you will manage your
business at present and in the long run.
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Social: This has to do with the beliefs and culture of the society
Notes
you are operating in. Population trends, dietary considerations,
ethics and media and spend habits are some of the factors that
come under social considerations that you need to observe in your
business activity.
Technological: Finally, businesses also have to deal with

production, distribution and communication changes imposed by
new technology in order to stay afloat in a competitive economic
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landscape.
Note that a variation of PEST analysis called PESTLE also takes

legal and environmental factors in account.
Check Your Progress
1. Market segmentation is a marketing strategy which

involves separating a .....................into subsets of
customers, enterprises, or nations who have, or are
perceived to have, common requirements, choices and
priorities and then designing and executing approaches
E
to target them.
2. The reason why businesses conduct a ...................

analysis is that it offers you an all-round view of the
environment in which they are operating in so they can
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better tackle projects and anticipate problems.
3. To determine the rate of duty, you will need to identify

the ...................Tariff section which corresponds to the
product you wish to export.
4. Chambers of Commerce, particularly .....................,

or chambers located in ......................., often employ
international trade specialists who gather information on
markets abroad.
Summary
)
An international market is defined geographically as a market

(c
outside the international borders of a company's country of

citizenship. Any geographic area outside the territorial boundaries
of a country where a company conducts business is the company’s
international market which is opposite the company's domestic
market, which is the geographic region within the national
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boundaries of a company's home country.
Notes

1. What do you understand by market segmentation?
2. What are the steps involved in the international market

selection process?
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3. Discuss the tools of international market analysis and the need
of analysis.
4. Which businesses are using the best marketing mix to provide

products and services?
5. What are the most common forms of market segmentation

practices?
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) CC
(c
Unit 8 131
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Notes
Objectives
 Breadth and Scope of International Marketing Research
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 Multicultural Research
 Research on The Internet
 Estimating Market Demand
Introduction
International marketing research is the systematic design,
collection, recording, analysis, interpretation and reporting of
information pertinent to a particular marketing decision facing
a company operating internationally. International marketing
managers need to constantly monitor the different forces affecting
E
their international operations. There are three general categories
of research based on the type of information required.
Scope of International Marketing Research

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International environment is changing readily and all these changes
present organisation with opportunities as well as challenges.
These changes include rapid progression in the advance technology,
international investment trade, growth in international capital
and also in customer's preferences. All these changes influence
on business to change or expand these international strategies,
polices and tactics. Which means the international marketing is
focusing business to confirm to a new international order.
)
International marketing research and domestic \national

marketing research has lots of common factors for instance –
(c
• Defining the problems
• Research methodology and design
• Field work
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• Research report
Notes
• Conclusion and recommendations
Most of the differences have been raised between the two types
of researches due to political, economic, social, technological,
environmental and legal differences among different countries.
Importance and Scope of International Marketing

Research
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International marketing research plays an important role to
understand the consumer behaviour. The main objective of
international marketing research is to understand the consumers
demands and consumers behaviour and then translates their
behaviours into the markets strategies.
In this modern century the international markets consumers

have lots of choices due to growth of market research and internet
communication development. In order to organisation has been
responsible to maintain their approaches to enhance the markets
strategies in a way of targets markets. In the other hands if the
E
company has no ability to seek the consumer's behaviour on the
international level so the company should be lost its consumer
market. In this condition company also faces lots of challenges
which have been appear due lack of international market research.
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Think Globally, Learn Locally

International market research is an essential for developing
strategy in readily changing global marketplace. The author said
that these tools help to positioning new products, avoiding product
formulations errors, accurately considerate the cultural differences
classify relevant promotion messages, being an apprehensive
approach of geographical differences, assess the language and
translations challenges. (Craig and Douglas,2005).
Three major important information factors are as below:
Information needs for international market entry includes –

)
• Micro issues (for instance product and services sales potential,

(c
market growth rate and completive intensity)
• Macro issues e.g. (Political, legal and regulatory environment

of each international country).
Unit 8: International Marketing Research
133
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Notes
Framework
International Marketing research is consisting of four familiar
stages of the domestic process setting research objectives –
• Methodology
• Collecting data
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• Report
• Recommendations
These stages are not unique to the international setting but

they provide backdrop for instance between different countries
information requirement at corporate, regional and local level,
will vary widely. Correspondingly assessing previous data and
collecting secondary data is very complicated in some countries but
all of these are depending on the position of the market research
infrastructure. International marketing research's activities have
been conduct very tricky on the international level; anyhow these
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activities are highlight as below.
Setting Research Objectives

In domestic research information may be required for decision
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making at different level in the organisation, strategic issues are

relating on the corporate level, more tactics are concerned to local
operating units (Craig and Douglas 2005).
Projects on the management level cover the following issues. For

instance brand awareness and tracking. Decision level covers the
following issues for instance local prices, packaging and marketing
mix decisions. International marketing should also consider any
previous data that the organisation may have, new data should
always be considered along the existing information.
Designing Research Methodology

)
This is the most important step in the international marketing

research which involves the designing the methodology.
(c
Methodology research variations vary from –
• Primary to secondary research
• Qualitative and quantitative experiments

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• Test markets observations and surveys
Notes
Tactical marketing mix decisions would require more of a local
unite of analysis and corporate decision would require more global
or regional approaches. Here explain some research methods
for instance in-person, telephone and mail and internet survey
and data analysis. Technical issues pose many challenges for
international marketing research, due to their different levels
of presence, acceptance and utilisation s across the worldwide
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markets.
Collecting Data and Reporting Findings

When the appropriate data collection methodology is selected,
fieldwork must be operated. The next step is to assess the
findings and make a manage report. Language restrictions have
a considerable impact on the data collection. The new information
should be integrated into the organisation database and business
strategies should be customised. This practice repeats itself as a
need of the future information has been required. This process
exposed is a very uncomplicated and easy method in United
E
State, Western Europe and other developed countries. The market
research industry, was very grown-up and well settled in US, it
gain $16.1billion annually, which $6 billion is coming from United
State, $7.6 billion from the European Union, $2.5 billion from the
Asian Pacific region (Marketing News 2005).
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Today international marketing research infrastructure offers very

reliable advantages to the well developed countries and help to
grow the markets. Basically market research infrastructure has
large range of tools for instance, data sources, methodology options
etc, these tools help in the market research projects but sometime
this market research infrastructure mostly pretend limited.
Challenges of Conducting International Marketing

Research
A lot of challenges arise while conducting market research across
)
international borders and if these challenges are not addressed

properly so these impact negatively on project management.
These factors can major impact on traditional market research
(c
for instances vary cultural norms across different countries or

continents, similarly language barriers also have impact on the
data collection into the organisations to gain the benefits.
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Cultural Differences
Notes
Operate market research is an international environment requires
concentration to obtain details and learning new things. In
managerial point of views this includes more infinite knowledge
of native cultures. Cultural components for instance, social
institutions, gender role, language, religion, aesthetics, education
and time orientations are closely related to national culture.
(javalgi and white 2000).
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Cultural differences intensely affect on acceptance of products and
services, in the other hand market behaviour. The knowledge of
target markets plays a critical role in manipulation of research.
Market research professionalises require certain level of
educational and technical skills. These skills are very demanding
to operate the international marketing research strategies.
Language Differences
As market research is being carried out internationally researchers
have to take language and culture consideration while designing
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their questionnaires. Language is the most important factors which
brings challenges in carrying out international research. Many
organisations have command over English language, but that does
not mean that everyone can understand English. Situations can
become more complicated when there variations within the same
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language for instance, Americans and British have some variations

in the way of speak English.
Translation and Conversion

The most common problem that researchers face is translating
their questionnaire developed for one country can be difficult to
translate into another language because of differences in idioms,
concepts, syntax, Venezuelans (lyer,1997 Rydholm, 1996). In
international marketing research, accurate information takes
an essential part to maintain their targets. So sometime market
researchers send back the questionnaires translated in to proper
)
translations. In this process questionnaires translated one language

to another language to interpret the important information about
international marketing research.
(c
Language Rules
Syntax is related to the language as it refers to constructions of
sentences and phrasing of words together for instance, translating
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English in grammar language is very difficult because of sentence
Notes
constructions.
Traditional and Cultural Norms

After language the most important factor is cultural norms in
the international marketing researchers. These norms are very
prominent strengths and can easily identify the difference between
the successful and failure production establishment. Unfortunately
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these norms are very dedicated rather than transparent which
make very difficult to analysis the international market.
Consider here the case of U.S Ketchup Company that, after

knowing that the ketchup is not available in Japan, so they decided
to attempt the market for introduce the ketchup over there. Rather
than they should be focus on it why is the ketchup is not available
in Japan, here they ignore the investigation through international
market research and invested the huge amount for launch their
product establishment. After this the company of U.S become to
know that soy sauce preferred in Japan (Zikmund, 2000). So the
ignorance the importance of cultural norms has become a cause of
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certain problems in international marketing research.
Period and Time Zone

Time zone should be kept in minds while conducting market
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research. Differences in time zone have a huge impact on

communication and timings of the project. Extra time is required
for project and communications to take place across the world.
Time of days also matter in countries like Japan where business is
only done in business hours.
International Holidays
Foreign holidays another factor like time zone that has to be kept
in mind, as different countries have different holidays depending
on their culture, religion and their beliefs. It is important to check
holidays schedule before starting research in another country.
Nearby every Monday is holiday somewhere in the world.
)
Multicultural Research
(c
As companies become global marketers and seek to standardise

various parts of the marketing mix cross several countries,
multicultural studies become more important. A company needs
to determine to what extent adaptation of the marketing mix is
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appropriate.
Notes
Thus market characteristics across diverse cultures must be
compared for similarities and differences before a company
proceeds with standardisation on any aspect of marketing strategy.
The research difficulties discussed thus far addressed problems
of conducting research within a culture. When engaging in
multicultural studies, many of these problems further complicate
the difficulty of cross cultural comparisons.
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Multicultural research involves dealing with countries that have
different –
• Languages
• Economies
• Social structures
• Behaviour
• Attitude patterns
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Research on the Internet
Authority
• Who is the author?

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• Is the author’s name given?
• Are her qualifications specified?
• Is there a link to information about her and her position?
• Is there a way to contact her (an address or a “Mailto” link)?
• Have you heard of her elsewhere (in class, or cited in your

course text or in Library material)?
• Has the author written elsewhere on this topic?

)
Affiliation
• Who is the sponsor of the Web site?

(c
• Is the author affiliated with a reputable institution or

organisation?
• Does the information reflect the views of the organisation, or

only of the author?
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If the sponsoring institution or organisation is not clearly identified
Notes
on the site, check the URL. It may contain the name of a university
(U of T Mississauga’s includes utoronto) or the extension.edu,
which is used by many educational institutions. Government sites
are identified by the extension.edu. URLs containing .org are
trickier and require research: these are sites sponsored by non-
profit organisations, some of which are reliable sources and some
of which are very biased. Sites with the .com extension should also
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be used with caution, because they have commercial or corporate
sponsors who probably want to sell you something. The extension
~NAME often means a personal Web page with no institutional
backing; use such sites only if you have checked on the author’s
credibility in print sources.
Audience Level
• What audience is the Web site designed for?
You want information at the college or research level. Don’t

use sites intended for elementary students or sites that are too
technical for your needs.
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Currency
• Is the Web site current?
• Is the site dated?

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• Is the date of the most recent update given?
Generally speaking, Internet resources should be up-to-date; after

all, getting the most current information is the main reason for
using the Net for research in the first place.
• Are all the links up-to-date and working?
Broken links may mean the site is out-of-date; they’re certainly a

sign that it’s not well-maintained.
Content Reliability/Accuracy
)
• Is the material on the Web site reliable and accurate?
• Is the information factual, not opinion?

(c
• Can you verify the information in print sources?
• Is the source of the information clearly stated, whether

original research material or secondary material borrowed
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from elsewhere?
Notes
• How valid is the research that is the source?
• Does the material as presented have substance and depth?
• Where arguments are given, are they based on strong evidence

and good logic?
• Is the author’s point of view impartial and objective?
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• Is the author’s language free of emotion and bias?
• Is the site free of errors in spelling or grammar and other signs

of carelessness in its presentation of the material?
• Are additional electronic and print sources provided to

complement or support the material on the Web site?
If you can answer all these questions positively when looking at

a particular site, then you can be pretty sure it’s a good one; if
it doesn’t measure up one way or another, it’s probably a site to
avoid. The key to the whole process is to think critically about what
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you find on the Net; if you want to use it, you are responsible for
ensuring that it is reliable and accurate.
Estimating Market Demand

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For assessing current product demand and forecasting future

demand, reliable historical data are required. As previously
noted, the quality and availability of secondary data frequently
are inadequate, nevertheless estimates of market size must be
attempted to plan effectively. Despite limitations, some approaches
to demand estimation are usable with minimum information. The
success of these approaches relies on the ability of the researcher
to find meaningful substitutes or approximations for the needed –
• Economic relationship
• Geographic relationship
)
• Demographic relationships
(c
When the desired statistics are not available, a close approximation

can be made using local production figures plus imports, with
adjustments for exports and current inventory levels. These data
are more readily available because they are commonly reported
by the United Nations and other international agencies. Once
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approximations for sales trends are established, historical series
Notes
can be used as the basis for projections of growth.
In any straight extrapolation, however the estimator assumes that

the trends of the immediate past will continue into the future. In
a rapidly developing economy, extrapolated figures may not reflect
rapid growth and must be adjusted accordingly. Given the greater
uncertainties and data limitations associated with foreign markets,
two methods from forecasting demand are particularly suitable for
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international marketers expert opinion and analogy.
Expert Opinion
For many market estimation problems, particularly in foreign
countries that are new to the marketer expert opinion is advisable.
In this method, experts are polled for their opinions about market
size and growth rates. Such experts may be companies own sales
managers or outside consultants and government officials.
Analogy
Another technique is to estimate by analogy. This assumes that
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demand for a product develops is much the same way in all
countries as comparable economic development occurs in each
country. First, a relationship must be established between the
item to be estimated and a measurable variable in a country that is
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to serve as the basis for the analogy. Once a known relationship is

established, the estimator then attempts to draw analogy between
the known situation and the country in question.
Caution must be used with analogy because the method assumes

that factors other than the variable used (in the preceding example
GDP) are similar in both countries, such as the same tastes, taxes,
prices, selling methods, availability of products, consumption
patterns and so forth.
Research Process
Dissertation markers expect the explanation of research process
)
to be included in Methodology chapter. A typical research process

comprises the following stages:
(c
1. Selecting the research area: You are expected to state that

you have selected the research area due to professional and
personal interests in the area and this statement must be true.
The importance of this first stage in the research process is
often underestimated by many students. If you find research
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area and research problem that is genuinely interesting to you
Notes
it is for sure that the whole process of writing your dissertation
will be much easier. Therefore, it is never too early to start
thinking about the research area for your dissertation.
2. Formulating research aim, objectives and research

questions or developing hypotheses: The choice between
the formulation of research questions and the development
of hypotheses depends on your research approach as it is
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discussed further below in more details. Appropriate research
aims and objectives or hypotheses usually result from several
attempts and revisions and these need to be mentioned in
Methodology chapter. It is critically important to get your
research questions or hypotheses confirmed by your supervisor
before moving forward with the work.
3. Conducting the literature review: Literature review is

usually the longest stage in the research process. Actually,
the literature review starts even before the formulation
of research aims and objective; because you have to check
if exactly the same research problem has been addressed
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before. Nevertheless, the main part of the literature review is
conducted after the formulation of research aim and objectives.
You have to use a wide range of secondary data sources such as
books, newspapers, magazines, journals, online articles etc.
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4. Selecting methods of data collection: Data collection

method(s) need to be selected on the basis of critically analysing
advantages and disadvantages associated with several
alternative data collection methods. In studies involving
primary data collection, in-depth discussions of advantages and
disadvantages of selected primary data collection method(s)
need to be included in methodology.
5. Collecting the primary data: Primary data collection needs

to be preceded by a great level of preparation and pilot data
collection may be required in case of questionnaires. Primary
)
data collection is not a compulsory stage for all dissertations

and you will skip this stage if you are conducting a desk-based
research.
(c
6. Data analysis: Analysis of data plays an important role in

the achievement of research aim and objectives. Data analysis
methods vary between secondary and primary studies, as well
as, between qualitative and quantitative studies.
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7. Reaching conclusions: Conclusions relate to the level of
Notes
achievement of research aims and objectives. In this final part
of your dissertation you will have to justify why you think that
research aims and objectives have been achieved. Conclusions
also need to cover research limitations and suggestions for
future research.
8. Completing the research: Following all of the stages

described above and organising separate chapters into one
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file leads to the completion of the first draft. The first draft
of your dissertation needs to be prepared at least one month
before the submission deadline. This is because you will need
to have sufficient amount of time to address feedback of your
supervisor.
Check Your Progress
1. International market research is an essential for

developing strategy in readily changing .............
marketplace.
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2. Tactical marketing mix decisions would require more of
a local unite of analysis and ...............would require more
global or regional approaches.
3. Language is the most important factors which brings

CC
challenges in carrying out ...................................
4. .....................is a very common practise in the

manipulating of international marketing research.
5. Privacy and ..................have different challenges in

international marketing research.
Summary
• International marketing managers need to constantly monitor
the different forces affecting their international operations.
)
There are three general categories of research based on the

type of information required.
(c
• Exploratory research is characterised by a high degree of

flexibility and it tends to rely on secondary data, convenience or
judgment samples, small-scale surveys or simple experiments,
case analyses and subjective evaluation of the results.
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• Descriptive research is focused on the accurate description of
Notes
the variables in the problem model. Consumer profile studies,
market-potential studies, product-usage studies, attitude
surveys, sales analyses, media research and price surveys are
examples of descriptive research. Any source of information
can be used in a descriptive study, although most studies of
this nature rely heavily on secondary data sources and survey
research.
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• Causal research attempts to specify the nature of the functional
relationship between two or more variables in the problem
model. For example, studies on the effectiveness of advertising
generally attempt to discover the extent to which advertising
causes sales or attitude change.

1. What are the three general categories of research based on the
type of information required?
2. What are the challenges arising while conducting market

E
research across international borders?
3. What do you understand by multicultural research?
4. What is the process of estimating of market demand?

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5. What comprises a typical research process?

)
(c
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Unit 9
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Notes
Product Strategy for International

Markets
Objectives
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 Basic Concepts
 Product Positioning
 Product Standardisation
 New Products in global marketing
Introduction
Every successful company has a thorough strategy process, which
is usually gone through annually, bi-annually, or every three years.
However, the direct connection of the product strategy process and
E
business environment to the products in the company’s product
portfolio whether the company manufactures them itself or just
owns the product concept is too often unclear. An agile and flexible
company that can adapt quickly to changes in market and business
CC
environment variables usually stays ahead of its competitors.
International Marketing Mix - Product Policy

International Product Strategies
In international markets, managers need to decide the level of
standardisation and adaptation they have to achieve in terms of
their products and related communication.
Standardisation of Product Strategies

• Standardisation means offering a uniform product on regional
)
or worldwide base may be with minor changes.
• Customisation leverages cross-border differences in needs and

(c
wants of the firm’s target customers.
The forces that favour a globalised product strategy are:
• Common customer needs and buying behaviour

Unit 9: Product Strategy for International Markets
145
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• Economies of scale in production, R&D, marketing and cost
Notes
savings
• Lesser time required in introducing into new markets
• Global consumers and consumer mobility
• Home country image
• Similar technical specs for industrial and consumer products
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• Operating via exports of uniform products
• Better marketing performance
• Consistency in product design and selling techniques
• Establishes a common image
• Success in one market can be duplicated in other markets
• Standardisation may lead to substantial opportunity lost
Adaptation of Product Strategies

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This involves obligatory adaptation due to laws and regulations of
foreign countries with discretionary adaptation (on the choice of
the marketer):
• To better suit varying customer needs

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• Differing use conditions
• Due to different market factors
• Company’s resources / product objectives
• Product life-cycle stage
Product Designing – Creation of New Products

As the name indicates, the process of creating a new product for sale
to customers is known as product design. Thought this definition
tends to oversimplify, product design is actually a broad concept
)
which encompasses a systematic generation and development of

ideas that eventually leads to the creation of new products. Design
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experts work on concepts and ideas, eventually turning them into

tangible products and inventions.
1. Product Design Process

Every design team may follow a different process for product design
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and development. One process, outlined by Koberg and Bagnell,
Notes
describes how to turn design ideas into products. The process flows
as per following steps –
• Problem identification
• Brainstorming ideas
• Prototype creation
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• Eventually creating the product
This is followed up the formal manufacturing of the product and

a critical evaluation to identify any improvements that may be
needed.
2. Product Design Stages

Within the broad stages mentioned in the previous section, detailed
stages can be followed in a systematic manner to design successful
products. These stages include:
The Design Brief

E
• A statement of intent, the design brief states the problem that
needs to be addressed.
• It serves as a starting point from where the design team can

orient themselves.
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• By itself however, it does not offer sufficient information with

which to begin the actual design process.
The Product Design Specification (PDS)
• A vitally important but often overlooked and misunderstood

stage, the PDS document lists the problem in detail.
• Before working on producing a solution, there needs to be a

deep understanding of the actual problem identified.
• This document should be designed after conversations with the

)
customer and an analysis of the market and competitors.
• The design team should refer back to it often for correct

(c
orientation at later stages.
The Concept Design
• With the PDS document as a guide, the design team will now
begin to outline a solution.
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• At this stage, the design is largely conceptual, with a framework
Notes
of key components in place with details to a later stage.
• The details included at this stage will depend on the type of

product being designed.
• It is important to understand both upstream and downstream

concerns relating to the product at this point.
• These may include activities such as manufacturing, sales and
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production costs among other things.
• This early understanding of the value chain will help eliminate

or reduce rework and multiple iterations.
• In this stage, concept generation and evaluation are both a

vital consideration.
• Multiple concepts, each fulfilling the product requirements

previously identified are identified and then evaluated to
decide the best way forward.
The Concept Generation

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• At this point, a design team may involve a larger audience
to help brainstorm the details of concepts drawn up in the
previous stage.
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• A group that includes various expertise may end up being

the most successful in terms of presenting creative ideas and
solutions.
• It is pertinent to encourage all ideas to be voiced as these

increase the chances of innovation.
The Concept Evaluation
• With a number of potential concepts in hand, a suitable

design now needs to be chosen that fulfil the product design
specifications previously generated.
)
• This document should serve as a basis for final design decisions.
• Again, a multi skilled team should be involved here so that all

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angles of the chosen design can be evaluated.
• The concept that is closest in solving the problem identified

and fulfil the most design requirements will now be developed
in detail.
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The Detailed Design
Notes
• At this point, the final concept has been chosen and most
obvious kinks have been worked out.
• The concept is now designed in detail with the necessary

dimensions and specifications.
• At this stage, it may be important to produce one of more

prototypes to test the product in close to real scenarios.
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• It becomes vital for the design team to work in close cooperation
with other units such as manufacturing and logistics to ensure
the practical aspects of production and supply.
Eliminating Design Iterations
Although traditionally sequential, multiple iterations within these

stages can be reduced by asking the following questions:
• Manufacturing – Can we make the product at our existing

facility?
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• Sales – Are we able to produce what the customer wants?
• Purchasing – Do we have required parts available or do they

need to be ordered?
• Cost – What will the design cost us to make?

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• Transport – is the product sised for available transportation

methods? Will there be any special transportation needs?
• Disposal – How will the product be disposed of at the end of its

life?
3. Product Design Types

Two basic categories encompass most product designs. These are:
Demand – Pull Innovation
• Demand – Pull happens when a product design can directly

)
take advantage of an opportunity in the market.

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• A new design works towards solving an existing design issue.
• This happens either through a new product or a variation of an

existing product.
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Invention – Push Innovation
Notes
• This innovation occurs with advancement gained in technology
or intelligence.
• This is driven through research or a creative new product

design.
4. Factors Affecting Product Design
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Cost
• One major factor that affects product design is the cost of

production including material costs and labour costs.
• These in turn affect the pricing strategy, which needs to be in

line with what the customer is prepared to pay for it.
Ergonomics
• The product needs to be user friendly and afford convenience

in its function.
• Using ergonomic measurements, minor or major changes

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may need to be made to product design to meet essential
requirements.
Materials
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• Whether the requisite materials are available easily is an

important consideration in product design.
• In addition, an eye needs to be kept on new developments in

the field of materials and technology.
Customer Requirements
• One major and obvious influence on the design of the product

is the customers and their requirements.
• It is vital to capture customer feedback on any prototype as

well as during the planning and conceptual stages.
)
• Even a technologically advanced and exciting feature may need

to be removed if it causes dislike or negative feelings in an end
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user.
Company Identity
• The company’s identity is a point of pride and as a matter of

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course, a product’s very design or colour schemes and features
Notes
may be determined by this identity.
• The logo may need to be featured in a specific manner or subtle

or overt features of the company identity may need to be built
into the design.
Aesthetics
• The product may need to appear stylish or of a certain shape.
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• This form may end up determining the technology that it built
into the product.
• This may in turn also affect the manufacturing process that

needs to be followed.
Fashion
• The current fashion and trends may also affect a certain

product’s design.
• Customers will want the most updated options and this need to
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be considered during product design.
Culture
• If a product is for a certain market with its own individual

culture, this needs to be kept in mind during product design
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stge.
• A product acceptable in one culture may end up being offensive

or not desirable in another one.
Functions
• How many problems is the product trying to solve?
• The number of uses and functions a product has will impact its
design.
Environment
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• Another consideration to product design is its impact on the

environment.
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• The average customer these days may be more discerning and

concerned about the environment than before.
• Things to consider here may include –

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 Whether the materials used are recyclable
Notes
 How the product will be disposed of at the end of its life
 How the packaging can be disposed of
5. Consideration in Product Design

Product design is a complex process, since all the relevant
stakeholders have different requirements from the product.
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Some examples of conflicting needs that will require attention
during product design are:
Economic Viability
• The manufacturer will want the product to be created at the

lowest cost possible, in order to maximise profit and ensure
sales.
• A prohibitively expensive product will have higher price tag

and may drive away customers and often, this may mean a
product redesign or a compromise on quality.
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Price, Appearance and Prestige Value
• The customer will always want a well presented product with

a functional yet aesthetically appealing design.
• They will also want it to be priced reasonably.

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• The appearance may not always be vital to function, but if

there are multiple nearly similar products in the market, the
look of the product may become the deciding factor.
Functionality
• There needs to be equal focus on the functionality of the product

or how well it performs.
• This is defined as the product foremost needs to perform as it

claims to.
)
• The end user may purchase for the external appearance, but
long term satisfaction and repeat usage will only occur if the
product performs at an optimal level
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Maintenance
• Product designers, manufacturers and maintenance workers

may all favor a modular construction for a product as
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• more easily different parts can be worked on individually, the
Notes
more versatility the product offers.
• A re-design effort may only need to focus on changing certain

parts rather than the whole, where –
 The manufacturer can easily tweak elements without

changing entire production processes
 Maintenance workers may not need to disassemble
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everything, thereby reducing repair time and effort
6. Examples of Successful Product Design

The Apple iPhone
Apple is consistently ranked as one of the most innovative companies

in the world. Though not successful initially, Apple gradually
managed to create unique products with superior designs that have
now created great appeal with the end users. The Apple iPhone
revolutionised the cell phone market with its innovative features,
streamlined design and an entire supporting universe through the
E
app store. Though it was not the pioneer in smart phones, Apple
is extremely successful because it created a beautiful product that
gives a superior user experience to a consumer.
The Porsche Cayenne

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A respected and coveted sports car maker, Porsche entered the

SUV market a few years ago. The sports utility vehicle is thought
to be boring and the category has broad generic definitions of
utilitarian. Porsche, through the Cayenne, endeavoured to bring
together the rational and the emotional. Through focused product
design, the company managed to build an SUV that has all the
necessary features of this category of car but with the driving
experience of any other Porsche car. This resulted in successful
sales and made this car a breakthrough product into a new market
for a premium brand.
Wunderkind
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Launched by a young, innovative start-up, this company launched

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a cloud based, cross platform productivity application called

Wunderlist in 2010. It is now one of the most popular apps of its
kind and boasts millions of users. It successfully launched across
five different platforms in a brief span of time. Data is seamlessly
updated across multiple devices and the design is simple but
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effective
Notes
Product Standardisation
Even though product adaptation becomes inevitable; in the case of
certain products, it should be realised that there is sound economic
logic behind a product policy which suggests uniformity in all
markets.
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Six factors that have been identified, which may favor international
product standardisation are -
1. Economies of Scale in Production

• When only one standard version is marketed in all the areas,
it will be possible to have larger production runs, which will
result in lower manufacturing costs.
2. Economies in Product Research and

Development
• Product standardisation achieved will allow recovery of the
E
costs incurred in product research and development from the
entire sales.
• This will reduce the recovery period as well as also lower the
break-even point.
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• Moreover, additional expenditure on adapting a product to

each individual market can be avoided.
3. Economies in Marketing
When the same product is to be launched in different markets,
economies can be achieved in terms of –
• Sales literature
• Sales force Training
• Inventory management
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• Advertising and after-sales service requirements

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The above three factors which are economic might motivate

a company to go for international product standardisation.
There are also three marketing factors which may reinforce the
standardisation level:
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1. Consumer Mobility
Notes
• Consumers are becoming increasingly more mobile and trans-
continental travel is now fairly common.
• A consumer who is loyal to a particular brand in his home

market is more likely to remain loyal in a foreign country as
well when the product in question is the same.
• Gillette razors and Kodak films are good examples.
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2. Made-in Image
• When the name of a country is associated with high standard of

quality in the minds of the consumers, a product manufactured
in that country may enjoy a psychological premium in the
foreign markets.
• French perfumes and Japanese cameras are good examples.
3. Impact of Technology
• Industrial products generally tend to have standard

E
specifications and do not require much adaptation for foreign
markets, unless climatic and similar considerations call for it.
• Even when industrial goods are modified, changes are likely

to be minor, e.g changes in voltage or conversion to metric
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measures.
• Products in which technical specification are critical tend to be

uniform.
• However, operating instructions have to be in the local

language.
New Products in Global Marketing

Organisations must develop new products and services. A company
has to be good at developing new products. It also must manage
them in the face of changing tastes, technologies and competition.
)
As a reason to change, the company must realise that products

face limited life spans and must be replaced by newer products. In
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addition, new products can fail. Here, the risks of innovation can
be as great as the rewards.
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New Product Development Process
Notes
1. Idea Generation
The first step in the new-product development process is idea
generation, which is the systematic search for new product
ideas. For every one hundred new product ideas, only a very
few ever make it to commercially. The search for these ideas
should be systematic not haphazard. There are many sources
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for new product ideas.
2. Idea Screening
The second step in the new-product development process is
idea screening which involves screening new product ideas in
order to spot good ideas and drop poor ones as soon as possible.
As product-development costs rise dramatically in later stages,
companies must proceed only with product ideas that will turn
into profitable products.
3. Concept Development and Testing

E
The third stage in the process is concept development and
testing.
 Concept Development – This involves developing

product ideas into some alternative product concept,
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finding out how attractive each concept is to consumers

and choosing the best one.
 Concept Testing – This involves testing the concepts

with a group of target consumers to find out if the concepts
have strong consumer appeal. Concepts may be presented
to consumers either symbolically or physically. Marketers
are always trying to find new ways to make product
concepts more real to concept-test subjects.
4. Marketing Strategy Development

• The fourth step is marketing strategy development which
)
involves designing an initial marketing strategy for new

product based on the product concept.
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• A marketing strategy statement should be produced. This

is a statement of the planned strategy for a new product
that outlines the intended target market, the planned
product positioning, sales, market share and profit goals
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ES
for the first few years.
Notes
5. Business Analysis
The next step is business analysis, which is a review of the
sales, costs and profit projections for a new product to find out
whether these factors satisfy company's objectives. To estimate
sales, the company should look at the sales history of similar
products and should survey market opinion.
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6. Product Development
The sixth step is product development, which involves
developing the product concept into a physical product in order
to ensure that the product idea can be turned into a workable
product.
7. Test Marketing
The seventh step is test marketing, which is the stage at which
the product and marketing programs are introduced into more
realistic marketing settings. Test marketing lets the target
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market experience with marketing the product.
8. Commercialisation
The eighth and final step in the new-product development
process is commercialisation. This step involves introducing a
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new product into the market. The company bringing out a new
product must make the following decisions:
• When? When is the time right (timing) to introduce the

new product?
• Where? The company must decide whether to launch the

new product in a –
 Single location
 A region
)
 Several regions
 The national market

(c
 The inter-national market

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Check Your Progress
Notes
1. Standardisation means offering a uniform product on
............or ............base may be with minor changes.
2. ......................is an important element of a marketing plan.
3. Effective product positioning requires a clear understanding

of customer needs so that the .........................are selected
and key messages will resonate with customers.
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4. The key to successful innovation is in a total-company
effort, ................and a systematic ...........................process.
5. The first step in the new-product development process is

.............., which is the systematic search for new product
ideas.
Summary
The connection between business environment and product must
be clear and well-defined. In this kind of scenario, the tool needed
E
to couple the monitoring of product performance back to set
business strategy targets is definitely to be found in the practices,
concepts and IT-systems of product life cycle management. With
the help of multivariate analysis three types of international
business strategy are identified: business concentration, product
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adaptation and user divergence. In the business concentration

strategy, similarities in user characteristics and product design
across national boundaries are emphasised. In the case of the
user divergence strategy, standardisation refers to the product
only, while product adaptation involves localising the product and
customising it to satisfy local needs.

1. What are five major product strategies in international
marketing?
)
2. What is meant by standardisation of product strategies?

(c
3. What are the two approaches that are being commonly used in
international product design?
4. What do you understand by product design?

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5. What are the factors that affect product design?
Notes
6. What are the six factors that may favour international product
standardisation?
7. What are the steps involved in new-product development

process?
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Unit 10 159
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Notes
Branding in International Markets
Objectives
 What is Global Branding?
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 Standardised Global Marketing
 Who’s Responsible for the Brand
 The Importance of Global Brand
 Components Forming Company's Corporate Symbol
 Adapted vs. Global Marketing
 Benefits Associated to Global Branding
 Lure of Global Branding
 Global Branding and the Internet
 Strategies for a Successful Global Brand
 Branding Globally: Adapting Locally
 5 Keys to Taking a Local Brand International
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Introduction
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Branding is a process of designing a distinct name and picture for

an item in the minds of the customers, mainly through advertising
campaigns. A brand is a name, signature, mark, term, symbol,
design or mixture of these components used to determine an item,
a family of goods, or all products of a company. Branding is a vital
aspect or element of product planning process and proves to be a
very essential and powerful tool for marketing and selling products.
What is Global Branding?

Global branding means using standardised global advertising and
global marketing strategies. It's basically a method of designing
)
standardised global advertising and global marketing strategies in

order to develop a product or service that is recognised worldwide,
(c
regardless of the country, continent or region where it is marketed.
Global brands are products or services that are recognised pretty

much worldwide. Companies that use global branding use the
same, or at least a very similar, marketing strategy to promote the
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brand everywhere the brand is offered, regardless of the country
Notes
or region. This helps the companies ensure that the brand's values
are presented in a consistent manner in all markets.
Standardised Global Marketing

Standardised global marketing refers to making use of the same
marketing, or global branding, strategy worldwide. Put another
way, standardised global marketing means that a company is using
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the same marketing strategy from country to country, with little
change other than the translation of advertising to the language of
the targeted country.
The Importance of Global Brand

The brand of a company represents everything the company
stands for. It becomes the label of the company’s values,
services and reputation. Branding offers a competitive edge
through differentiation. This makes it vital to create an effective
international brand.
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Choosing the right name
Branding for international distribution must be highly researched

to assure that there are no duplicates or chances of potential
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mistranslations in other regions all over the globe. When choosing

international brand names, you must go for simple, distinct,
straightforward and familiar name options.
Brand name types
There’s always a history behind a name. Company brands are no

different from humans. However, there are seven broad categories
for naming international brands:
• Some companies use the names of their founders as their brand

names and slogan headers.
• If you intend to be explanatory with your products and services,

)
you can always opt for descriptive names.

(c
• Geographical names are popular among companies that plan

to operate in a defined area. This can prove to be a problem if
you plan to expand to other locations at a later stage.
• Witty brand names may be attention catching to some

Unit 10: Branding in International Markets
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customers who are familiar with your product range but prove
Notes
to be irrelevant in the international market.
• Using values and virtues for brand names i.e. Virgin, could
be very effective - especially when it comes to advertising and
promotional campaigns.
As a company’s name is everything, so to avoid lawsuits or

humiliation, pick a name that is unique and widely acceptable in
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different nationalities and cultures.
Components Forming Company's Corporate

Symbol
The merging of the following components form a company's
corporate symbol or name −
Brand Name − It can be a single word, a combination of words,

letters, or digits to highlight a product or service. For example,
Pepsi, Lakme, Baggit etc.
Trade Name − It promotes and advertises an enterprise or a

E
division or a specific corporation through a corporate brand name.
For example, Dell, Nike, Google and many more.
Brand Mark − It is a distinct symbol, coloring, lettering, or other

design component. Mostly, it is recognizable and need not be
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pronounced on spelled. For example, Apple's apple, or Coca-Cola’s

cursive typeface, Nike correct symbol.
Trade Mark − It is a word, name, letter, digit, symbol, or merging

of these components. Trade mark is legally secured and owned by
the government. For example, NBC owns colorful peacock as its
trade mark, or McDonald's golden arches. No other enterprise can
use these symbols.
Trade Characters − These characters include animals, people,

animated characters, cartoons, objects that are used to promote a
product or service, that is related with that product or service. For
)
example, Godrej almirah and lockers.

(c
Adapted vs. Global Marketing

Supporters of the adapted global marketing argue that consumers
in different countries are simply different. They have different
needs and wants, varied levels of discretionary income to spend,
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as well as unique product preferences and shopping patterns –
Notes
preferences that are often specific to a country, region, or culture.
Ignoring those differences is ethnocentric, argue proponents of

adapted marketing. That is, it ignores the unique needs, wants
and even values of specific cultures. They contend that marketing
strategies should be tailored to the target country’s specific cultural
needs while maintaining the overall brand image.
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Advantages and Disadvantages of Adaptation in
Supporters of standardised global branding and marketing

acknowledge that there are advantages and disadvantages of
adaptation in international marketing. Localising a product
to a particular region may seem like a good strategy, they say.
Satisfying regional needs, rather than offering the same branded
product worldwide, may seem like a good way to help products
adapt to local cultures.
How to Build a Brand Internationally

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In starting a new business or seeking to increase growth at
your current business by expanding into international markets,
establishing and building a brand identity becomes essential.
What Branding Involves

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Branding involves what people think about your business and your
products. "Think of a brand as a reputation," says Paul Williams,
founder of the international marketing firm Idea Sandbox, which
helps companies build their brands. "Building a reputation in
any new market, including overseas, involves a first impression,
which comes from the initial interactions someone has with your
company, products and services."
Shaping and Forming of Branding by Businesses
Businesses can attempt to shape or form the branding of their

company or products in many ways, including advertising, media,
)
word-of-mouth and contact with your products or services. A lot of

thought and effort goes into branding, including naming products,
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designing logos and ensuring that service is uniform throughout

the business.
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Why Need of Developing Brand Recognition
Notes
The reason businesses spent time and money developing brand
recognition is so that they can charge a premium for a product or
service. People will pay more for a brand name product or service
if it is recognised as a leader and a trusted brand and they know
what they will get.
Global Branding and the Internet
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With the growth of the internet, global branding is easier to
accomplish today than in previous decades. And presenting a
specific image for global brands has become more popular as
a result. Put another way, global brands tend to have the same
advertising, marketing strategies, as well as their look and feel,
from one country to another. Some well-known global brands are
McDonald's, Google, IBM, Microsoft, Amazon, Disney, Samsung
and Apple.
These brands are examples where their parent companies have

succeeded in using global marketing strategies and standardised
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global advertising to achieve global branding. These products and
services, or brands, are relatively the same whether they are being
sold in China, Japan, Russia, Europe, or many other countries or
regions worldwide.
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Advantages of Global Branding and Advertising

Global branding is the act of marketing a product or service
under the same name in multiple countries, with similar and
centrally coordinated marketing strategies. Put another way,
global branding is offering a product or service whose advertising,
positioning, strategy, personality, look and feel are the same from
one country to another.
Before adopting a global branding strategy, it's important to take a

look at the advantages and even disadvantages, of such a strategy,
as well as the potential need for adaptation in international
)
marketing.
How do Customers Benefit from Brand Advertising?

(c
Customers benefit from brand advertising, sometimes just called

branding, in a number of ways:
• Shopping takes less time because branded products can be

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easily identified.
Notes
• The quality of the branded product is better, or at least
consumers generally believe it to be better.
• Prices of branded products are fixed by the companies

themselves and there are no frequent changes.
• The companies that own the branded products are clearly

responsible for their quality and usefulness something
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consumers know.
• Consumers always know where to go with any questions or

concerns about the products to the companies themselves.
Strong brands help communicate to consumers: Consumers get to

know and trust the brands for their consistency and quality and
feel they are getting a product or products they can depend on.
Global Branding Helps the Bottom Line

Though these are advantages for the consumer, you can also think
of brand advertising in terms of brilliant marketing pros. In other
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words, the same advantages that accrue to the consumer due to
brand advertising (quality, consistency, dependability) also help
the companies marketing the branded products by increasing the
bottom line.
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Put simply, brand advertising and brand loyalty, allows companies

to charge a premium because consumers are willing to pay more
for products they perceive as dependable, of high quality and that
provide consistency. Indeed, customers benefit from any kind of
brand advertising, including global branding, because they know
that the product or service they are buying is pretty much the same
regardless of the part of the globe they are in at the time.
A McDonald's hamburger will be and taste, fairly similar regardless

of whether the customer is in Spain, Moscow, or Beijing.
)
Branding Globally: Adapting Locally

Reaching out internationally and adopting a strategy of global
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branding and advertising may seem daunting for a small but

growing business. But it doesn't have to be. Companies like the
following all started small, at one point, but benefited greatly from
global branding.
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• Airbnb.
Notes
• Apple.
• Starbucks.
• Coca-Cola.
• Ikea.
These companies have come to understand the advantages and
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disadvantages of adaptation in international marketing and have
adopted global branding strategies, but they have also tailored
their products, or at least their marketing strategies, to local
cultures and regions when needed.
Adopt Global Branding

So, if you are a small business looking to increase your customer
base, consider adopting global branding, which would involve
standardised global advertising, as well as global marketing
strategies. But, consider adapting your brand to the local culture.
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This doesn't mean that you need to change the product or service you
are offering worldwide, but get to know that cultures and values of
the countries and regions where you plan to market your products
as you expand globally. A little local knowledge may help you to
adapt your marketing strategy, just slightly, while maintaining
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the quality and consistency of your product. So, take the plunge:
You have a world of customers out there awaiting the products and
services you offer. Use global branding to help them see why your
product or service will improve their lives – regardless of what
corner of the globe they call home.
5 Keys to Taking a Local Brand International

It can be tempting in these days of online markets to believe that
any brand with a website is automatically international. In reality,
building a brand beyond your national borders is more complex
)
than many realise. If you’ve done the groundwork and expansion

still beckons, here are five simple principles that will help you stay
true as you take your brand to the world.
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1. Understand What You’re Selling

If you’re looking to shift from a local market to an international
presence, it’s critical to evaluate how your brand will translate,
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literally and culturally. Too often brands are simply looking to
Notes
transpose what they have to somewhere else, particularly if they
have been very successful in their country of origin.
In reality a brand is often a spirit expressed in a product. So in

addition to all the obvious viability factors (like demand, level of
competition, access, regulation, distribution and organic growth),
it’s important to know what changes if any you should make to
your core line-up. Naming is a classic example of how a word or
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idea can have very different implications when used elsewhere.
2. Have A Single Philosophy But Tailor A Powerful

Story
Sometimes the story that you tell inside your local market is not
the same as the one you can use beyond your borders. That’s
because people in other countries may see your country differently,
the market itself may have different expectations of participants
(for example, a luxury market at home may be a more price-
sensitive market elsewhere), customers may exhibit quite different
behaviours based on different habits or attitudes, or there may just
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be aspects of how you came to be that take too much explaining for
those not familiar with your original context. It comes back to the
previous point about understanding what you’re selling.
3. Have a Progression Plan

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Most brands landing on foreign shores will need to think about

how they use their new presence and their historic legacy to best
advantage over time. New Zealand brands for example entering
Europe or the Americas often lack the volumes to fulfil sizeable
demand. Pacing yourself so that you align your brand with your
ability to fulfil is critical.
4. Embrace the Serendipity

Sometimes you can over-think opportunities. This is an increasingly
interconnected world after all and today, it can be customers, not
companies that make the decision around entering markets. As
)
Nataly Kelly points out, Apple’s international expansion was

actually started by international visitors buying their products at
(c
their US stores and taking them home.
5. Prepare for Neighbourly Competition

The moment you take your local brand out of your own market
and into another, the dynamics around your competitiveness
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change. Now the very things that enabled you to succeed against
Notes
international brands in your home market are the very advantages
that others have as you enter theirs.
Check Your Progress
1. Companies benefit from global branding through the

.......................
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2. With the growth of the ................, global branding is easier
to accomplish today than in previous decades.
3. With the abundance of ...............platforms, it is no longer

possible for brands to follow different brand strategies in
different countries.
4. Most brands landing on foreign shores will need to think

about how they use their .................and their ............to
best advantage over time.
5. Today, all multinational companies should actively engage

in ................ management.
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Summary
Two years ago, the newly appointed global brand manager of a
CC
prominent packaged-goods marketer organised a brand strategy

review. He found that all the country brand managers used their
own vocabularies and strategy templates and had their own
strategies. The resulting mess had undoubtedly contributed to
inferior marketing and weakened brands.
In current times, companies that practice global brand

management use a planning process that is consistent across
markets and products—a brand presentation looks and sounds the
same whether it’s delivered in Singapore, Spain, or Sweden and
whether it’s for PCs or printers. It shares the same well-defined
vocabulary, strategic analysis inputs (such as competitor positions
)
and strategies), brand strategy model and outputs (such as brand-

building programs).
(c
Today, all multinational companies should actively engage in

global brand management. Any company that tries to get by with
unconnected and directionless local brand strategies will inevitably
find mediocrity as its reward. In such cases, an exceptionally
talented manager will, on occasion, create a pocket of success. But
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that success will be isolated and random—hardly a recipe that will
Notes
produce strong brands around the world.

1. What is a brand and its different types?
2. What is global branding?
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3. What do you mean by standardised global marketing?
4. What are advantages and disadvantages of adaptation in

international marketing?
5. Why do you need developing of brand recognition?
6. Discuss the role of global branding and the internet.

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) CC
(c
169
Unit 11
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Notes
Pricing Decisions
Objectives
 Basic Concepts
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 Environmental Factors on Pricing Decisions
 Objectives and Strategies of Global Pricing
 Transfer Pricing
 Gray Market Goods
 Dumping
 Anti-Dumping
Introduction
Pricing decisions are the choices businesses make when setting
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prices for their products or services. Companies that make simple
pricing decisions often try to increase sales by making small,
competitive adjustments such as purchase discounts, volume
discounts and purchase allowances. The different pricing methods
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include: cost-based pricing, value-based pricing and competition-

based pricing. Pricing strategies for new products include
penetration pricing and price skimming. Price skimming can also
be called "riding down the demand curve" ("Price Skimming").
Essentially what happens is that a company will set a relatively
high price that exactly matches the product's value.
The three major influences on pricing decisions are customers,

competitors and costs. The customers influence pricing through
their demand for product and services. Here, activity-based costing
provides a more accurate method of product/service costing, leading
to more accurate pricing decisions. It increases understanding of
)
overheads and cost drivers; and makes costly and non-value adding
activities more visible, allowing managers to reduce or eliminate
them.
(c
Basic Concepts
Pricing is a process to determine what manufacturers receive in
exchange of the product. Pricing depends on various factors like –
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• Manufacturing cost
Notes
• Raw material cost
• Profit margin etc
Objectives of Pricing
The main objectives of pricing can be learnt from the following
points −
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• Maximisation of profit in short run
• Optimisation of profit in the long run
• Maximum return on investment
• Decreasing sales turnover
• Fulfill sales target value
• Obtain target market share
• Penetration in market
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• Introduction in new markets
• Obtain profit in whole product line irrespective of individual

product profit targets
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• Tackle competition
• Recover investments faster
• Stable product price
• Affordable pricing to target larger consumer group
• Pricing product or services that simulate economic development
Pricing objective is to price the product such that maximum profit

can be extracted from it.
Factors Influencing Pricing

)
Pricing of a product is influenced by various factors as price involves

many variables. Factors can be categorised into two, depending on
(c
the variables influencing the price. These include:
Internal Factors
The following are the factors that influence the increase and
decrease in the price of a product internally −
Unit 11: Pricing Decisions
171
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• Marketing objectives of company
Notes
• Consumer’s expectation from company by past pricing
• Product features
• Position of product in product cycle
• Rate of product using pattern of demand
• Production and advertisement cost
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• Uniqueness of the product
• Production line composition of the company
• Price elasticity as per sales of product
Internal factors that influence pricing depend on the cost of

manufacturing the product, which includes –
• Fixed cost like labor charges, rent price etc.
• Variable costs like overhead, electric charges etc.

E
External Factors
The following are the external factors that have an impact on the
increase and decrease in the price of a product −
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• Open or closed market
• Consumer behavior for given product
• Major customer negotiation
• Variation in the price of supplies
• Market opponent product pricing
• Consideration of social condition
• Price restricted as per any governing authority
External factors that influence price depend on elements

)
like –
• Competition in market
(c
• Consumer flexibility to purchase
• Government rules and regulation etc.

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Notes
Environmental Factors on Pricing Decisions
Pricing decision of an organisation is affected by various internal
and external factors. Let us now discuss the external environmental
factors.
External factors affecting pricing decisions

External factors include:
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1. Demand
2. Competition
3. Government control
Objectives and Strategies of Global Pricing

A pricing strategy can be defined as a process, companies use to price
their services or products. The majority of companies, regardless
of size, base the price of their products on labor, advertising and
production expenses. Then they add on a certain amount of money
E
depending on the profit they are seeking per unit sold.
There are many different pricing strategies, such as –
• Price skimming
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• Penetration pricing
• Discount pricing
• Competitive pricing
Price skimming is when the price of a product or service is

initially set very high and then it decreases over time.
Penetration pricing is when the price of a product or service is

set very low to gain market share.
Discount pricing is similar to penetration pricing, but instead of

always keeping the prices low, discount prices only keep low prices
)
for a certain amount of time.
Competitive pricing is when a company sets the price of its

(c
product or services based on what the competition is selling their

products for.
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Factors Involving Decision Making on Global Pricing
Notes
Strategy
There is a plethora of factors that are involved in the decision-

making process of a company’s global pricing strategy. The same
pricing strategies are relevant in foreign markets (penetration
pricing, competitive pricing etc.), however the difference is, the
companies need to be more cost effective and efficient in order to
be able to compete in the foreign markets due to extra costs added
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by the additional factors.
Having well-planned global pricing strategies are critical for

companies that operate at any capacity in markets other than in
their home market. It is essential for companies to perform an
analysis of the foreign markets (PESTLE analysis or something
similar), so that they can familiarise themselves with the new
market. This will give them insight into the new foreign market
regarding everything ranging from political issues to environmental
issues. As a side note, a PESTLE analysis is also a good place to
start to find out if the new market will even be a viable option for
the company.
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Transfer Pricing
Transfer pricing refers to value attached to transfer of goods or
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services between related parties.
Thus, transfer pricing can be defined as the price paid for goods
transferred from one economic unit to another, assuming that the
two units involved are situated in different countries, but belong to
the same multinational firm.
Arm’s Length Principle Applied to Transfer Pricing

and Attribution of Profits to PE
The arm’s length principle is applied both in the context of transfer
pricing and attribution of profits. Such an application makes no
distinction between a branch or a subsidiary through which an
)
MNE carries on business in a country. A functionally separate

entity approach as a working hypothesis underlying the application
(c
of the arm’s length principle, is found in almost all tax treaties.
Issues of Transfer Pricing

Transfer price is the price charged in a transaction. The term
‘transfer price’ is used to describe the actual price charged between
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the associated enterprises in an international transaction. Transfer
Notes
pricing issues arise when entities of multinational corporations
resident in different jurisdictions transfer property or provide
services to one another. These entities do not deal at arm’s length
and, thus, transactions between these entities may not be subject
to ordinary market forces.
Aims and Objectives of Transfer Pricing
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1. Transfer Pricing Minimises the Tax Burden or
Arranging Direction of Cash Flow
Transfer price, as aforesaid, refers to the value attached to transfer
of goods, services and technology between –
• Related entities such as parent and subsidiary corporations
• Between the parties which are controlled by a common entity
2. Transfer Pricing Results in Shifting Profits

Whatever the reason for fixing a transfer price which is not arm’s
length, the result is the shift of profit. The effect is that the profit
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appropriately attributable to one jurisdiction is shifted to another
jurisdiction. The main object is to –
• Avoid tax as also to withdraw profits leaving very little scope

for the local participation to share
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• Other object is avoidance of foreign exchange restrictions.
3. Shifting of Profits- Tax Avoiding not the only Object

Transfer between the enterprises under the same control and
management involving goods, commodities, merchandise, raw
material, stock or services is made at a price which is not dictated
by the market. It is controlled by considerations such as:
• To reduce profits artificially so that tax effect is reduced in a

specific country
)
• To facilitate decentralisation of production so that efforts are

directed to concentrate profits in the State of production where
there is no or least competition
(c
• To remit profits more than the ceilings imposed for repatriation
• To use it as an effective tool to exploit the fluctuation in foreign

exchange to its advantage
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Gray Market Goods Notes
Gray market goods – also known as parallel imports – are typically
defined as “genuine branded goods obtained from one market (i.e.,
a country or economic area) that are subsequently imported into
another market and sold there without the consent of the owner of
the trademark.” (INTA). They may take the form of “US copyrighted
products — from textbooks to watches — that are manufactured in
other countries for sale there, then purchased and imported to the
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US for discounted resale.” (NPR).
Gray marketers use low prices to undersell US distributors,

commonly resulting in lost sales. “Likewise, because gray goods
often ‘materially differ’ from domestic goods, including quality
control, product characteristics, labeling and other key elements,
US consumers may be disappointed by the gray goods, resulting in
a loss of the US distributor's goodwill.” (ABA).
Remedies for Goods that are Sold on Gray Market

Remedies for gray market goods are country specific. First, one
E
needs to check with local counsel to learn whether a remedy is
available under trademark law. For example, in some countries,
such as –
• Canada and New Zealand, trademark law allows for parallel

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importation, though other laws (e.g., copyright law) may also

provide a remedy.
• In contrast, in the United States both the Lanham Acts and

the Tariff Act provide remedies for gray market goods.
• Similarly, in Brazil the owner of a trademark can prevent

third parties from importing any goods that infringe its rights
by pursuing both criminal and civil measures. (INTA).
Dumping
Dumping is when a country's businesses lower the sales price of
)
its exports to gain unfair market share. It usually drops the price
below what it would sell for at home. It may even push it below its
(c
actual cost of production.

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Two Advantages
Notes
1. Selling at Unfairly Competitive Lower Price
The main advantage of dumping is selling at an unfairly competitive
lower price. A country subsidises the exporting business to enable
them to sell below cost.
The country is willing to take a loss on the product to increase its

market share in that industry. It may do this because it wants to
UP
create jobs for its residents. It often uses dumping as an attack
on the other country's industry. It hopes to put that country's
producers out of business and become the industry leader.
2. Temporary Advantage to Consumers of Lower

Priced Goods
There is also a temporary advantage to consumers in the country
being dumped upon. As long as the subsidy continues, they pay
lower prices of that commodity. For example, low-cost Canadian
lumber is keeping new home prices low. A 20 percent tariff would
raise prices and possibly hurt new home buyers.
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Three Disadvantages
1. Expensive to Maintain
The problem with dumping is that it's expensive to maintain. It
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can take years of exporting cheap goods to put the competitors out
of business. Meanwhile, the cost of subsidies can add to the export
country's sovereign debt.
2. Retaliation by Trade Partner

The second disadvantage is retaliation by the trade partner.
Countries may impose trade restrictions and tariffs to counteract
dumping.
3. Censure by International Trade Organisations

The third is censure by international trade organisations. These
)
include the World Trade Organisation and the European Union.

(c
Anti-Dumping
A country prevents dumping through trade agreements. If both
partners stick to the agreement, they can compete fairly and avoid
the issue of dumping.
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Violations of Dumping Rules
Notes
Violations of dumping rules can be difficult to prove and expensive
to enforce. For example, NAFTA provides a mechanism to review
violations of the trade agreement. A NAFTA panel concluded that
Canada was dumping lumber. In 2004, it said the United States did
not prove the dumping had harmed the American lumber industry.
Dumping Issues with Countries Outside of Treaties
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Of course, trade agreements don't prevent dumping with countries
outside of the treaties. That's when countries facing dumping
issues need to take more extreme measures. Here, anti-dumping
duties or tariffs remove the main advantage of dumping. A country
can add an extra duty, or tax, on imports of goods that it considers
to be involved in dumping.
If that country is a member of the WTO or EU, it must prove that

dumping existed before slapping on the duties. These organisations
want to make sure that countries don't use anti-dumping tariffs as
a way to sneak in trade protectionism.
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The Role of the World Trade Organisation in Anti-
dumping
Most countries are members of the WTO. Member countries
adhere to the principles laid out during negotiations of the GATT
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that was a multilateral trade agreement that preceded the WTO.

Here, countries agree that they won't dump and that they won't
enforce tariffs on any one industry or country. Therefore, to install
an anti-dumping duty, WTO members must prove that dumping
has occurred.
The WTO is specific in its definition of dumping. First, a country

must prove that dumping harmed its local industry. It must also
show that the price of the dumped import is much lower than the
exporter's domestic price.
WTO asks for three calculations of this price:

)
• The price in the exporter’s domestic market

(c
• The price charged by the exporter in another country
• A calculation based on the exporter’s production costs, other

expenses and reasonable profit margins
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Check Your Progress
Notes
1. Pricing decisions are the choices businesses make when
..................for their products or services.
2. The three major influences on pricing decisions are

..................., .................. and costs.
3. Pricing of a product is influenced by various factors as

price involves many .................
UP
4. Choosing the correct strategy is essential for the ............of
a company.
5. Transfer pricing refers to value attached to transfer of

...............or ...............between related parties.
6. ...................is when a country's businesses lower the sales

price of its exports to gain unfair market share.
Summary
An organisation can adopt a number of pricing strategies, where
E
the pricing strategy will usually be based on corporate objectives
nd after selecting a pricing objective, you will need to determine
a pricing strategy. This will assist you when it comes time to
actually price your products. As with the pricing objectives,
CC
numerous pricing strategies are available from which to choose.
Certain strategies work well with certain objectives, so make sure

you have taken your time selecting an objective. Careful selection
of a pricing objective should lead you to the appropriate strategies.
If the pricing strategy you choose seems to contradict your chosen
pricing objective, then you should revisit the questions posed in the
introduction and your marketing plan.
Additionally, different pricing strategies can be used at different

times to fit with changes in marketing strategies, market conditions
and product life cycles. For example, if you’re working under
)
a status quo pricing objective with competitive pricing as your

strategy due to poor market conditions and a year later you feel
that the market has improved, you may wish to change to a profit
(c
margin maximisation objective using a premium pricing strategy.
It is clear that pricing strategies play the most unique role in that
it changes often, most volatile business strategy and is dependent
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and interactive. Pricing makes a product attractive or non-
Notes
attractive. Pricing makes a business decide how much advertising
or marketing a product gets because of the relationship to cost and
consumer happiness. If a consumer or buyer is happy than they
buy the product more regardless of price.

1. What are the main objectives of pricing?
UP
2. What are the factors that influence pricing?
3. What are the strategies and objectives of global pricing?
4. What are the factors involving decision making on global

pricing strategy?
5. What are the aims and objectives of transfer pricing?
6. What are the advantages and disadvantages of dumping?

E
) CC
(c
180
Unit 12
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Notes
Personal Selling and Sales

Management
Objectives
UP
 Designing the Sales Force
 Recruiting Marketing and Sales Personnel (Expatriates, Virtual
Expatriates, Local Nationals)
 Training for international marketing
 Motivating Sales Personnel
 Evaluating and Controlling Sales Representatives
Introduction
Personal selling is a means for implementing marketing programs.
E
It involves processes like interaction of the seller with the buyer
to understand needs and wants of buyer. Personal Selling is an
element of promotional mix, where salesman visits the customer
and displays the goods to initiate the purchase. Sales Promotion
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is a tool used to stimulate sales by employing incentive element to

attract customers.
Sales management is responsible for the sale of a product of a

company and to add profits to the business operations. Sales
managements is the act of managing the activities of the sales
force. Whereas, personal selling or salesmanship is the process of
assisting and persuading a prospective buyer, to buy a product or
a service in a face to face situation.
Designing the Sales Force

)
The face of any organisation is the sales force. Companies spend

a considerable amount of time and money on sales force rather
(c
than on any other promotional activity. However, sales force is

expensive and companies are looking forward to managing them
in an efficient and effective manner. Sales force is a link between
companies and customers. Therefore, companies have to be careful
in designing and structuring its sales force.
Unit 12: Personal Selling & Sales Management
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Steps Undertaken:
Notes
1. First step is setting out an objective for sales force. Earlier
companies had a single objective of increasing sales and made
it an objective also for the sales people. Sales people are asked
to –
• Perform a search for prospective clients or lead
• Balance time between a prospective customer and current
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customer
• Maintain effective communication of product and services

that is essential to close the deal
• Play an important role in after sales service that can make

a difference for the company
Sales people are eyes and ears of the company in the market,
gathering information about competition and customer
changing demands.
2. Second step is use sales people strategically. Sales people have

E
to combine efforts with other team members to achieve the
given objective. Further, sales people should also be aware of
how to analyse market data been provided and convert them
into marketing strategies.
CC
3. Third step is deciding the structure of the sales force. The

structure of the sales is dependent on the strategy followed by
the company.
Common sales force structures are as follows:-
 Territorial structure: It is used where every sales

representative is assigned specific geographical area. This
structure is preferred for building relationships with locals.
 Product structure: It is used for complex and un- related

product portfolio. Here the sales people are directly
)
associated with research and development of the products.
 Market structure: It is used if the companies are

(c
operating different industry or market segments. Every

sales force specialises in a definite market and helps push
a product efficiently across the given market. However, the
disadvantage would arise if customers are located over a
wide geographical area.
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 Complex structure: It is used when companies are in
Notes
business of selling complex products to different customers
across a large geographical area. Here sales force structure
is a combination of other structures discussed.
Once the structure is designed, companies need to make a

decision with respect to the size of the sales force. The size of
the sales force is dependent on the market size and number of
customers.
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4. The next step is to design compensation for the sales force.
Compensation plays a big motivational factor for sales
people. Companies follow a structure of a fixed amount plus a
variable amount depending of success achieved in the market.
Allowances play an important factor in the salary owing to
continuous travel and market visits.
Managing Sales Force

Integral part for success of marketing strategy is management of
the sales force. The management of sales consists of following: -
E
Recruitment
It is at the centre of an effective sales force. One approach in the
selection is asking a customer what characteristics they look for
in a sales representative. Companies develop selection procedure
CC
where behavioral and management skills are tested.
Training
It is essential to remain ahead of the competition. Sales force needs
training before entering the market as well as training at different
stages of the product life cycle.
Supervision
Supervision on sales force is decided based upon the profile of
product portfolio. A general supervision is maintained with respect
to sales people dealing with potential clients. Another supervision
)
is related to efficient time management from preparation of client

call to closing of the deal.
(c
Motivation
It is a key aspect for management of the sales force. Here
compensation plays an important part in driving up the motivational
level. Compensation can be assigned based on sales quota. Other
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motivational tools are –
Notes
• Social gathering
• Family outing
Evaluation
It is essential for the management of a sales force. Sales reports
sent by the sales force serve a good starting point of evaluation. Art
UP
of negotiation and relationship marketing are the two important
aspects of becoming a successful sales representative and provide
for long term benefits for the company.
Recruiting Marketing and Sales Personnel

(Expatriates, Virtual Expatriates, Local
Nationals)
The number of marketing management personnel from the home
country assigned to foreign countries varies according to the –
• Size of the operation

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• Availability of qualified locals
• Other firm characteristics
Increasingly the number of US home country nationals

CC
(expatriates) assigned to foreign posts is smaller as the pool of

trained experienced locals grows.
The largest personnel requirements abroad for most companies

are the sales force, recruited from three sources:
• Expatriates
• Local nationals
• Third country nationals
A Company’s staffing pattern may include all these types in any

)
single foreign operation, depending on qualifications, availability

and a company’s needs. Sales and marketing executives can be
recruited via the –
(c
• Traditional media of advertising (including newspaper,

magazines, job fairs and the Internet)
• Employment agencies or executive search firms

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• All important personal referrals
Notes
The last source will be crucial in many foreign countries, particularly
the relationship oriented ones.
Expatriates
The number of companies relying on expatriate personnel is
declining as the volume of world trade increases and as more
companies use locals to fill marketing positions. However, when
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products are highly technical or when selling requires an extensive
background of information and applications an expatriate’s sale
force remains the best choice.
The expatriate sales person may have the advantage of greater

technical training better knowledge of the company and its
product line and proven dependability. Because they are not local
expatriates sometimes add to the prestige of the product line
in the eyes of foreign customers. And, perhaps most important,
expatriates usually are able to effectively communicate with and
influence head quarters personnel.
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The chief disadvantages of an expatriate sales force are the –
• High cost
• Cultural and legal barriers

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• Limited number of high calibre personnel willing to live abroad

for extended periods
Designing of Sales Force Based on Analyses of Current

and Potential Customers
Designing the Sales Force Based on analyses of –
• Current and potential customers
• The selling environment
• Competition
)
• Firm’s resources and capabilities
• Making decision regarding the numbers, characteristics and

(c
assignments of sales personnel
Distribution strategies will often vary from country to country.

Some markets may require a direct sales force, whereas others
may not. How customers are approached can differ as well.
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Virtual Expatriates
Notes
The Internet and other advances in communications technologies,
along with the growing reluctance of executives to move abroad,
are creating a new breed of expatriate, the virtual one. Virtual
expatriates manage operations in other countries but don’t move
there.
Local Nationals
UP
The historical preference for expatriate managers and salespeople
from the home country is giving way to a preference for local
nationals. At the sales level, the picture is clearly biased in favour
of the locals because they transcend both cultural and legal
barriers. They are also familiar with distribution systems and
referral networks.
The main disadvantage of hiring local nationals is-
• The tendency of headquarters personnel to ignore their advice
• Their lack of availability

E
In many countries, sales positions are viewed negatively.
Third Country Nationals

Third-country nationals (TCNs), are expatriates from their own
CC
countries working for a foreign company in a third country.
Host Country Restrictions

The host government’s attitudes toward foreign workers often
complicate selecting expatriate US nationals over locals. Concerns
about foreign corporate domination, local unemployment and other
issues cause some countries to restrict the number of non-nationals
allowed to work within the country.
Selecting Sales and Marketing Personnel

To select personnel for international marketing positions
)
effectively, management must define precisely what is expected

of its people. Effective executives and sales people, regardless of
what foreign country they are operating in, share certain personal
(c
characteristics, skills and orientations such as –
• Maturity
• Emotional stability
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• Breadth of knowledge
Notes
• Positive outlook
• Flexibility
• Cultural empathy
• Energetic and enjoy travel
Selection mistakes are costly. When an expatriate assignment
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does not work out, hundreds of thousands of dollars are wasted in
expenses and lost time. Mew evidence indicates that a manager’s
culture affects personnel decisions.
Training for International Marketing
The nature of a training program depends largely on both the

home culture of the sales person and the culture of the business
system in the foreign market. Continual training may be more
important in foreign markets than in domestic ones because of the
lack of routine contact with the parent company and its marketing
personnel.
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One aspect of training is frequently overlooked: Home-office
personnel dealing with international marketing operations need
training designed to make them responsive to the needs of the
foreign operations. The Internet now makes some kinds of sales
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training much more efficient.
Motivating Sales Personnel
Motivation is especially complicated because the firm is dealing

with different cultures, different sources and different philosophies.
Because cultural differences affect the motivational patterns of a
sales force, a manager must be extremely sensitive to the personal
behaviour patterns of employees.
Individual incentives that work effectively in the United States

can fail completely in other cultures. Communications are also
)
important in maintaining high levels of motivation; foreign

managers need to know that the home office is interested in their
operations. Because promotion and the opportunity to improve
(c
status are important motivators, a company needs to make clear

the opportunities for growth within the firm.
Overcoming Reluctance to Accept a Foreign Assignment

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Concerns for career and family are the most frequently mentioned
Notes
reasons for a manager to refuse a foreign assignment. The most
important career-related reservation is the fear that a two- or three-
year absence will adversely affect opportunities for advancement.
Concern for family may interfere with many accepting an
assignment abroad.
Initially, most potential candidates are worried about uprooting a

family and settling into a strange environment. Questions about
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the education of the children, isolation from family and friends,
proper health care and, in some countries, the potential for violence
reflect the misgivings a family faces when relocating to a foreign
country.
Reducing the Rate of Early Returns
Once the employee and family accept the assignment abroad, the
next problem is keeping them there for the assigned time. One
researcher estimated that 75 percent of families sent to a foreign
post experience adjustment problem with children or have marital
discord.
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Before going abroad, cross-cultural training should be provided for
families as well as the employee. Once the family is abroad, some
companies even provide a local ombudsman (someone experienced
in the country) to whom members can take their problems and get
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immediate assistance.
Successful Expatriate Preparation
Returnees should know where they are going and what they will
be doing next month and several years ahead. A report on what
MNCs are doing to improve the re-entry process suggests five steps:
1. Commit to reassigning expatriates to meaningful positions
2. Create a mentor program. Mentors are typically senior

executives who monitor company activities, keep the expatriate
informed on company activities and act as liaison between the
)
expatriate and various headquarters departments.
3. Offer a written job guarantee stating what the company is

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obligated to do for the expatriate on return.
4. Keep the expatriate in touch with headquarters through

periodic briefings and headquarters visits.
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5. Prepare the expatriate and family for repatriation once a
Notes
return date is set.
Developing Cultural Awareness
Most expatriate failures are cause by lack of an understanding of

cultural differences and their effect on management skills. Good
cultural skills can be learned and developed. Cultural skills provide
the individual with the ability to relate to a different culture even
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when the individual is unfamiliar with the details of that particular
culture.
The Changing Profile of the Global Manager
Fewer companies today limit their search for senior-level executive

talent to their home countries. Some companies believe that it is
important to have international assignments early in a person’s
career and international training is an integral part of their entry-
level development programs. Many companies are active in making
the foreign experience an integrated part of a successful corporate
career.
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Foreign Language Skills
Many believe that learning a language improves cultural

understanding and business relationships. Many believe that to
be taken seriously in the business community, the expatriate must
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be at least conversational in the host language. Many companies

are making stronger efforts to recruit people who are bilingual or
multilingual.
Training for International Marketing

1. Choose a Great Location
Almost as important as the quality of the training content and
the presentation skills of the person delivering the training is
the location of the training itself. Why? Because certain places
provide a much more inspiring and positive environment for
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learning and networking than others.
We like to isolate our trainees from their workplace and put

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them in an international atmosphere in great locations. Our

experience taught us that the best way to train people is when
you keep them as far away as possible from their daily jobs, their
colleagues, telephones and emails. This way, their attention
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span is much higher and provides undisturbed environment
Notes
for absorption of new knowledge. In addition, holding training
in a location which is unfamiliar to all attendees helps them to
connect through sharing a new experience.
Of course, it’s not only the city but also the training venue that
matter and choosing a quality, comfortable venue with great
facilities will add to the experience and enjoyment of your
delegates. After all, if you’re teaching international content,
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what more inspiring place could you choose than a foreign
destination or a place full of people from around the world!
2. Plan the Training Room Style

We learnt that the most effective way of learning is to hold
training in small rooms with up to 15 attendees to make sure
that everyone has a chance to participate in discussions and
make the most of the time spent at the training. Rather than
making the attendees feel like they are back at school, we
choose an informal layout of the room, all around a meeting
table which allows for flawless conversation between the
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attendees.
In addition, we try to choose rooms with a great view – while

listening to the presenter your training attendees could observe
a spectacular Las Vegas Strip or absorb the view of beautiful
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sunshine flooding Barcelona’s streets.
3. Work Hard on Training Content and Choose the

Right Tutors
The more time spent preparing the training content the bigger
the reward!
Carefully prepared materials and exercises ensure that,

in the time given, attendees gain the maximum amount of
practical knowledge and stay focused throughout this process.
PowerPoint presentations can only maintain attendees’
attention for a short period of time.
)
That’s why courses should be packed with practical exercises,

quizzes and discussion points which engage the audience in
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a much more stimulating way than dry facts and numbers.

Brain engaging tasks also often prove to be a funny, creative
and team building way of exchanging knowledge and learning
new things. International business is a lot about the ability to
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communicate effectively with your target audience. Therefore
Notes
having presenters from variety of countries and environments,
speaking different languages and understanding different
markets is a big advantage in international training.
4. Think about Logistics

When delegates are traveling from various worldwide locations
you need to ensure easy and fairly cheap access to the training
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facilities. Choosing locations which are close to international
airports and have a selection of hotels will make it easier for
delegates to get budgets approved and to plan their event.
Selecting a place where local people know a common language
like English also helps to ease the process of moving around
the city and ordering something for dinner which they actually
like!
5. Breaks
Keeping course attendees highly engaged, by taking regular
breaks, gives them the chance to digest the information given.
Serving plenty of fresh coffee also helps too – especially when
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the subject is as technical as Yandex PPC!
It’s also important to encourage your attendees to utilise the

breaks to make the most of their surroundings and experience
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the local area. This will add to their overall experience and
make them more receptive when the training starts again…
and if the training is in Vegas, who knows – they might return
home a millionaire!
Bonus Tip – Plan Post-Training Activities

Making sure that the training doesn’t stop with the last slide
prolongs the experience even further.
Organise evening networking events – anything from a group meal

to a show to some sightseeing – to give the opportunity for the
delegates and trainers to continue conversations started during
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the day and to get to know each other better. Why not do something
particular to your location – flamenco dancing in Barcelona anyone?
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If well organised and structured, international training can be very

productive and profitable as well as fun and engaging. Focused,
interested and happy people learn much quicker and remember
things much longer therefore, it’s worth considering our tips when
planning your next training budget.
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Motivating Sales Personnel Notes
In order to motivate your sales team, executives need a
comprehensive toolkit of tactics to push their top performers,
develop junior members and keep the team focused on achieving
aggressive growth targets.
Sales team’s that possess energy and confidence are successful and
good leaders know how to keep morale high whether business is at a
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peak or in a slump. Since motivation is an intangible quality, sales
leaders need unique approaches that are tailored for their people.
To keep your sales team motivated, use this 20 point checklist,
starting with tips to fuel your team’s intrinsic motivators.
Evaluating and Controlling Sales Representatives

One of the most important responsibilities of sales managers is to
evaluate the performance of the sales personnel. The performance
appraisal period can become one of those times that a salesperson
dreads, unless the appraisal is effectively conducted. Ineffective
performance appraisal tends to become a time-consuming and
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unpleasant activity for the sales manager as well as the sales
personnel.
The factors affecting sales peoples' performance are many. Some

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of these are beyond the control of the individual, while some can
be modified. Aspects like motivation, skill-set, job satisfaction, role
perception, personal factors like age, sex, height, etc; the ego drive
and empathy towards the customers are inherent in the individual
salesperson.
Environmental and organisational factors, along with the different

functions of sales management come under external factors. It
is difficult for the sales manager to predict the influence of the
external factors on the performance of the sales force. To measure
performance, it is necessary for the sales manager to put in place
a performance evaluation procedure. A proper evaluation process
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ensures that the organisation is well managed. It also provides the

sales personnel with information on their performance and gives
recommendations for further improvement.
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Performance evaluation
Performance evaluation can also help in improving the relationships
between the sales force and superiors by minimising suspicion
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and improving interaction. The performance evaluation process
Notes
generally involves five steps:
• The first step is to determine the factors that affect the

performance of the sales force.
• The next step involves the selection of criteria that will be

used to evaluate the performance.
• Step three involves establishing performance standards that
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can be used as a basis to compare the performance of the sales
force.
• Step four involves monitoring actual performance.
• The last step is to review and provide feedback to the sales

personnel.
The purpose of conducting performance evaluation is to

crosscheck whether the sales force activities are in alignment with
organisational objectives. It also helps monitor the sales force
activities and provide remedial action, if required.
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Performance evaluation also helps to prepare a future action plan
for the sales personnel and fulfil the organisational objectives. It
exerts an influence on the mode of compensation, fixing of sales
quotas and decisions on the transfer or removal of the salesperson
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from the organisation. In most organisations, it is the immediate

superior or the sales manager who conducts the performance
appraisal.
Sometimes a team of people including the personnel manager and

the department head, along with the sales manager, appraise the
sales personnel. The timing of appraisal also varies for different
organisations. It depends on the complexity of the sales plan, the
costs involved and the current objectives of the organisation.
Periodic Performance Appraisal

Periodic performance appraisal is necessary to identify any
)
discrepancies in the overall sales plan and correct them. The sales
manager or the concerned person involved in appraising the sales
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force can take the help of quantitative or qualitative criteria. These

are also termed the behaviour and outcome components.
Qualitative criteria include
• Sales skills
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• Territory management skills
Notes
• Personality traits
Quantitative factors include
• Sales volume
• Average calls per day
• Sales orders
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Quantitative criteria are those aspects that measure the sales
performance in terms of the end results whereas qualitative criteria
involve all those activities that the sale person does to achieve the
end results. The sales manager must ensure that the performance
standards are set to compare and evaluate the actual performance
of the sales force. The standards vary from industry to industry
and are different for different job profiles.
Performance Standards
Performance standards come under –
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• Quantitative standards
• Qualitative standards
• Time-based standards
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• Cost-based standards
All the sales force activities can be segregated into one of these four
categories and compared with the base standard. Many methods
of performance evaluation have been developed over the years.
Yet, there is no single method that can be considered ideal for all
organisations.
Some of the commonly used methods are –
• Essays
• Rating scales
)
• Rankings
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• Management by objectives
• Behaviourally-anchored rating scales
Several modern methods like critical incident appraisal, work-

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standards method, family of measures etc., have been developed to
Notes
suit variations and other requirements. Finally, regular monitoring
and review of the sales force activities is also necessary to ensure
that the organisational activities are aligned to the sales plan.
Check Your Progress
1. ..............management is responsible for the sale of a

product of a company and to add profits to the business
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operations.
2. Developing an equitable and functional compensation

plan that .................., .............and ...................is extremely
challenging in international operations.
3. Performance evaluation can also help in improving

the relationships between the ..........and ...................by
minimising suspicion and improving interaction.
4. International business is a lot about the ability to ...............

effectively with your target audience.
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5. The Internet and other advances in ............technologies,
along with the growing reluctance of executives to move
abroad, are creating a new breed of .............., the virtual
one.
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Summary
Sales management is responsible for the sale of a product of a
company and to add profits to the business operations. Sales
managements is the act of managing the activities of the sales
force. Whereas, personal selling or salesmanship is the process of
assisting and persuading a prospective buyer, to buy a product or
a service in a face to face situation.
Integral part for success of marketing strategy is management

of the sales force. Sales force is a link between companies and
)
customers. Therefore, companies have to be careful in designing

and structuring its sales force.
(c

1. What are the steps involved in the designing and structuring
of its sales force?
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2. What is the importance of periodic performance appraisal?
Notes
3. What are the factors involved in designing compensation
systems for expatriates?
4. What are the chief disadvantages of an expatriate sales force?
5. What is the common sales force structure?
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Unit 13
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Notes
Entering International Markets
Objectives
 Decision Criteria for Entering International Markets
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 Modes of International market entry
 Choosing the right international market entry mix
Introduction
By selling your product or service in another country, you can
introduce your company to huge markets, increase your sales and
profits, gain brand recognition, reduce the risk of only operating
in one market (e.g., due to economic or seasonal downturns) and
extend your product’s life cycle.
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The obvious issue here is cost. Entering a market on a large scale
will require significant resources. Although this is more likely to
make an impression on a new market as it will attract the attention
of customers and local businesses alike, it may be risky financially
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if your company does not take off.
Decision Criteria for Entering International

Markets
The International Marketing Entry Evaluation Process is a five
stage process and its purpose is to gauge which international
market or markets offer the best opportunities for our products or
services to succeed.
The five steps are –
• Country Identification
)
• Preliminary Screening
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• In-Depth Screening
• Final Selection
• Direct Experience
Unit 13: Entering International Markets
197
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Let’s take a look at each step in turn:
Notes
Step One – Country Identification
The World is your oyster. You can choose any country to go into.
So you conduct country identification – which means that you
undertake a general overview of potential new markets. There
might be a simple match – for example two countries might share a
similar heritage e.g. the United Kingdom and Australia, a similar
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language e.g. the United States and Australia, or even a similar
culture, political ideology or religion e.g. China and Cuba. Often
selection at this stage is more straightforward.
For example a country is nearby e.g. Canada and the United States.
Alternatively your export market is in the same trading zone e.g.
the European Union. Again at this point it is very early days and
potential export markets could be included or discarded for any
number of reasons.
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Step Two – Preliminary Screening

At this second stage one takes a more serious look at those countries
remaining after undergoing preliminary screening. Now you begin
to score, weight and rank nations based upon macro-economic
)
factors such as currency stability, exchange rates, level of domestic

consumption and so on. Now you have the basis to start calculating
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the nature of market entry costs.
Some countries such as China require that some fraction of the

company entering the market is owned domestically – this would
need to be taken into account. There are some nations that are
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experiencing political instability and any company entering such
Notes
a market would need to be rewarded for the risk that they would
take. At this point the marketing manager could decide upon a
shorter list of countries that he or she would wish to enter. Now
in-depth screening can begin.
Step Three – In-Depth Screening

The countries that make it to stage three would all be considered
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feasible for market entry. So it is vital that detailed information on
the target market is obtained so that marketing decision-making
can be accurate. Now one can deal with not only micro-economic
factors but also local conditions such as marketing research in
relation to the marketing mix i.e.
What prices can be charged in the nation?
How does one distribute a product or service such as ours in the

nation?
How should we communicate with our target segments in the

nation?
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How does our product or service need to be adapted for the nation?
All of this information will form the basis of segmentation, targeting

and positioning. One could also take into account the value of the
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nation’s market, any tariffs or quotas in operation and similar

opportunities or threats to new entrants.
Step Four – Final Selection

Now a final short-list of potential nations is decided upon. Managers
would reflect upon strategic goals and look for a match in the
nations at hand. The company could look at close competitors or
similar domestic companies that have already entered the market
to get firmer costs in relation to market entry.
Managers could also look at other nations that it has entered to see
if there are any similarities, or learning that can be used to assist
)
with decision-making in this instance. A final scoring, ranking and

weighting can be undertaken based upon more focused criteria.
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After this exercise the marketing manager should probably try to

visit the final handful of nations remaining on the short, short-list.
Step Five – Direct Experience

Personal experience is important. Marketing manager or their
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representatives should travel to a particular nation to experience
Notes
first-hand the nation’s culture and business practices. On a first
impressions basis at least one can ascertain in what ways the
nation is similar or dissimilar to your own domestic market or the
others in which your company already trades. Now you will need
to be careful in respect of self-referencing.
Remember that your experience to date is based upon your life

mainly in your own nation and your expectations will be based
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upon what your already know. Try to be flexible and experimental
in new nations and don’t be judgmental – it’s about what’s best for
your company – happy hunting.
Modes of International Market Entry

There are a variety of ways in which a company can enter a foreign
market. No one market entry strategy works for all international
markets. Direct exporting may be the most appropriate strategy
in one market while in another you may need to set up a joint
venture and in another you may well license your manufacturing.
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The following strategies are the main entry options open to you:
Direct Exporting
Direct exporting is selling directly into the market you have chosen
using in the first instance you own resources. Many companies,
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once they have established a sales program turn to agents and/or

distributors to represent them further in that market. Agents and
distributors work closely with you in representing your interests.
They become the face of your company and thus it is important

that your choice of agents and distributors is handled in much the
same way you would hire a key staff person.
Licensing
Licensing is a relatively sophisticated arrangement where a firm
transfers the rights to the use of a product or service to another
)
firm. It is a particularly useful strategy if the purchaser of the

license has a relatively large market share in the market you want
to enter. Licenses can be for marketing or production.
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Franchising
Franchising is a typical North American process for rapid market
expansion but it is gaining traction in other parts of the world.
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Franchising works well for firms that have a repeatable business
Notes
model (e.g. food outlets) that can be easily transferred into other
markets.
Partnering
Partnering is almost a necessity when entering foreign markets and
in some parts of the world (e.g. Asia) it may be required. Partnering
can take a variety of forms from a simple co-marketing arrangement
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to a sophisticated strategic alliance for manufacturing.
Partnering is a particularly useful strategy in those markets where

the culture, both business and social, is substantively different
than your own as local partners bring local market knowledge,
contacts and if chosen wisely customers.
Joint Ventures
Joint ventures are a particular form of partnership that involves
the creation of a third independently managed company. It is
the 1+1=3 process. Two companies agree to work together in a
particular market, either geographic or product and create a third
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company to undertake this. Risks and profits are normally shared
equally.
The best example of a joint venture is Sony/Ericsson Cell Phone.

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Buying a Company
In some markets buying an existing local company may be the most
appropriate entry strategy. This may be because the company has
substantial market share, are a direct competitor to you or due
to government regulations this is the only option for your firm to
enter the market. It is certainly the most costly and determining
the true value of a firm in a foreign market will require substantial
due diligence.
On the plus side this entry strategy will immediately provide you
the status of being a local company and you will receive the benefits
of local market knowledge, an established customer base and be
)
treated by the local government as a local firm.
Piggybacking
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Piggybacking is a particularly unique way of entering the

international arena. If you have a particularly interesting and
unique product or service that you sell to large domestic firms
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that are currently involved in foreign markets you may want to
Notes
approach them to see if your product or service can be included
in their inventory for international markets. This reduces your
risk and costs because you are essentially selling domestically
and the larger firm is marketing your product or service for you
internationally.
Turnkey Projects
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Turnkey projects are particular to companies that provide services
such as environmental consulting, architecture, construction and
engineering. A turnkey project is where the facility is built from
the ground up and turned over to the client ready to go – turn the
key and the plant is operational.
This is a very good way to enter foreign markets as the client is

normally a government and often the project is being financed by
an international financial agency such as the World Bank so the
risk of not being paid is eliminated.
Greenfield Investments
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Greenfield investments require the greatest involvement in
international business. A greenfield investment is where you buy
the land, build the facility and operate the business on an ongoing
basis in a foreign market.
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It is certainly the most costly and holds the highest risk but some
markets may require you to undertake the cost and risk due to –
• Government regulations
• Transportation costs
• Ability to access technology or skilled labour
Choosing the Right International Market Entry

Mix
With so many options for international market entry, it can be
)
difficult for a company to decide on the strategy that will meet its
strategic objectives with the most success. This is why strategic
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planning is so important; different markets and industries will

require a different approach.
To select the best strategy, a company must consider the markets

it has selected, the products or services it wishes to sell and its
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overall aims for international trade. The range of elements to
Notes
consider might seem daunting, but without a full analysis of the
situation for each potential market, a company might select an
inappropriate strategy.
Below is a list of factors you and your company should consider and
some questions you might ask:
Company goals
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What are our objectives for entering this market?
Which strategy will best meet these goals?
Size of company: Does our size mean some strategies might not be
possible?
Resources
Are there strategies we cannot use because of a lack of resources,
such as direct investment?
Product or service: Which strategy will align best with the product
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or service we’re offering?
Remittance
How will each strategy impact the price we can get for our product/
service? (For example, would direct importing be so expensive that
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our product will have to be overpriced?)
Competition
What is the level of competition in the market? What entry
strategies are our competitors using?
Which strategy will give us the best competitive edge?
Intermediaries
Will we need to work with intermediaries? Are there intermediaries
we can use in the market?
)
Control
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How much control does our company need over activities? (For
example, direct exporting enables a lot of control, whereas indirect
importing does not.)
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Investment
Notes
How much investing will be required for market entry?
Time
How much time is available to enter the market? Do we need a
strategy that will provide returns quickly?
Risk
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What level of risk can our company face? Which strategies are the
least risky? Flexibility: How much flexibility do we need? Can we
withdraw from a market quickly if we need to?
Check Your Progress
1. A greenfield investment is where you ......................,

......................and ..................................on an ongoing basis
in a foreign market.
2. The International Marketing Entry Evaluation Process

E
is a ....................process and its purpose is to gauge
which international market or markets offer the best
opportunities for our products or services to succeed.
3. Piggybacking is a particularly unique way of entering the

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...................arena.
4. Turnkey projects are particular to companies that provide

services such as ........................., architecture, construction
and engineering.
Summary
Entering on a smaller scale can offer business owners the chance
to learn about the new market and limit risks – however, you are
much less likely to gain significant amounts of attention. When
you know the scale of entry, you will need to work out how to take
)
your business abroad. This will require careful consideration as

your decision could significantly impact your results. There are
several market entry methods that can be used.
(c

1. What is the decision criteria for entering international
markets?
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2. How should we communicate with our target segments in the
Notes
nation?
3. What are the different modes of international market entry?
4. How to choose the right international market entry mix?
5. What are the different stages of international marketing entry

evaluation?
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Unit 14 205
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Notes
International Logistics and

Distribution
Objectives
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 International Logistics and Distribution
 Logistics and the Value Chain Concept
 Selecting Channels of International Distribution
 International Retailing and Franchising
Introduction
Logistics management is a supply chain management component
that is used to meet customer demands through the planning,
control and implementation of the effective movement and
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storage of related information, goods and services from origin to
destination. The logistics management process begins with raw
material accumulation to the final stage of delivering goods to the
destination.
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Logistics management activities typically include inbound and

outbound transportation management, fleet management,
warehousing, materials handling, order fulfilment, logistics
network design, inventory management, supply/demand planning
and management of third party logistics services providers.
International Logistics and Distribution

The Logistics Chain
Management of logistics is a key factor for satisfying demand in
international markets. In a globalised environment it is not just
)
products that compete, the logistics chains compete too. These

chains represent combinations of manufacturers, distributors and
(c
logistics operators, who collaborate to produce the highest efficiency

and lowest cost possible for each product, with the requirements
for availability and flexibility needed at any given time.
In turn, the logistics chains revolve around specialised, high-

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capacity –
Notes
• Intermodal logistical hubs
• Networks
• Transportation infrastructure elements
Collaboration among companies involved in the same supply chain

also helps to optimise resources, minimise the need for stock and
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reduce supply times through the use of cross trade operations,
for example by applying logistical optimisation systems like lean
manufacturing.
Within this context, CIT aspects are an indispensable part in terms

of:
• Managing information flows
• Allowing product traceability
• Carrying out electronic commerce
The complexity of international trade operations makes the services

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of a global logistics operator essential, allowing the exporter to
focus instead on developing its competitive advantages.
The Logistics Process in International Trade

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Scheduling for the logistics chain should begin from the very
moment a company develops plans to import or export a product.
This is because it affects everything from the design of containers
or packages to the delivery terms that will be agreed upon in the
sales contract, among many other aspects.
In addition to the costs inherent to all logistical operations, the

main elements that must be considered include:
• Nature and characteristics of the goods
• The cargo unit

)
• The mode of transport
• The transport process

(c
• Legislation and standards
• Logistics in the international sales contract

Unit 14: International Logistics and Distribution
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Nature and Characteristics of The Goods
Notes
These aspects determine the configuration of the cargo unit and
even the mode of transport that should be used, as well as the
storage and handling systems.
It is worth making a distinction between:
• General cargo in loose units (fractionated cargo) or grouped in

pallets (unitary cargo), which is mostly shipped in containers.
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• Bulk cargo, which can be shipped in containers or other cargo
transport units, or else in bulk ship holds, oil tankers, tanker
lorries etc.
• Oversized cargo, which requires special conditions for handling

or transport.
• Controlled temperature cargo: refrigerated, frozen, ultra

frozen, or hot.
• Dangerous goods, particularly those included under

international regulations: ADR Convention, IMDG Code, IATA
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DGR Rules and the RID Convention.
• Rolling cargo, made up of platforms that can be rolled on

wheels, lorry trailers, trucks, train cars etc.
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• Other goods such as valuable goods or live animals.
The Cargo Unit

)
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Cargo Unit
Notes
The cargo unit must have two basic qualities: strength and stability.
These are achieved through the containers and packaging used for
the products.
Fractionated cargo –
It is generally grouped onto pallets, which, once shrink wrapped,

represent individual cargo units that can be more easily handled
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and stored. This increases safety and contributes to more efficient
handling.
Pallets are usually transported in cargo transport units (CTUs)

built for use in intermodal shipping. These CTUs are usually –
• Shipping containers
• Portable boxes
• Freight train cars
• Lorry trailers.
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Loading or consolidation of the container must take into account
standards established for packing and securing of the goods and
this may be performed by the –
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• Exporting company
• Logistics operator
It can result in either a full container (full container load or FCL)

or a consolidated container (less than container load or LCL).
The Mode of Transport

Selection of the mode of transport is conditioned by factors such as
the destination country; the nature, value and volume of the goods;
and the planned delivery time. The transit company must advise
the exporter with respect to the itineraries and the shipping mode
)
or combination of modes (intermodal transport, under the scope of

a single transport contract), which must be contracted for each leg
(c
of the journey:
• Maritime, regulated by the Hague Rules and where the contract

is formalised in the bill of lading.
• Road, where the contract is formalised in the CMR carrier

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letter, regulated by the CMR Convention. Notes
• Air, regulated by the Montreal Convention and with the

contract formalised in the air carrier letter.
• Railway, where the contract is formalised in the CIM carrier

letter and regulated by the CIM Convention.
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E
Although most goods packed into containers travel on container
ships that follow regular intercontinental routes, there are also
goods that travel by air (controlled temperature products, valuable
goods, live animals, replacement parts etc.), while transport across
a single continent mainly takes place by lorry or train.
CC
The Transport Process

Although there are many details that can vary, the international
shipping chain has a series of common processes:
)
(c
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1. Signing of the shipping contract between the loading company
Notes
(may be the exporter or the importer, depending on the terms
agreed upon in the sales contract and established through the
appropriate Incoterms rules) and the international logistics
operator.
2. Collection of the goods in the exporting company’s warehouse,

generally using lorries. The goods are then sent to the shipping
terminal (full container) or to the warehouse of the logistics
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operator (fractionated cargo).
3. Handling and storage at the logistics platform of the transport

operator or terminal.
4. Loading and packing onto the means of transport (ship, train,

lorry, or airplane) after customs processing at the departure
terminal.
5. Shipping of the goods by the main means of transport.
6. Unpacking and unloading at the destination terminal and

import customs processing.
E
7. Handling and storage at the shipping terminal or logistical
platform of the international transport operator.
8. Transfer of the goods (full container) to the importing

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company’s warehouse, or after de-consolidation of the container

if fractionated cargo is involved.
Legislation and Standards

Although the international logistics operator is the party responsible
for advising the exporting or importing company on the applicable
laws and standards for each shipping operation, it is important to
have the most detailed knowledge possible of certain issues that
relate exclusively to the loading company, such as those related to,
among others:
)
• Packing and securing of cargo.
• Storage and transport of dangerous goods.

(c
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Notes
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• Storage and transport of perishable goods or products for
human consumption.
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• Transport of protected species.
Logistics in the International Sales Contract

) CC
(c
There are aspects related to logistics that require careful planning

before any risks and liabilities are assumed in the sales contract,
such as:
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• Establishing and agreeing upon the exact point of delivery in
Notes
the destination country.
• Physical risks associated with the operation (weather

conditions, theft, looting etc.).
• Performing an in-depth evaluation of the most appropriate

Incoterms 2010 rules to suit the logistical complexity of the
operation.
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• The benefits of using a reliable international logistics operator
to control management of the shipping.
• The need for insurance coverage for the entire logistics process
throughout the shipping chain.
Logistics and the Value Chain Concept

Purchasing, materials handling, logistics, transportation,
inventory control and supply chain management have continued
to evolve, causing many of these functional areas to intersect with
one another. This intersection has resulted in blurred definitions
E
for some of these terms such as logistics and supply chain
management.
While these two terms do have some similarities they are, in

fact, different concepts with different meanings. Supply chain
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management is an overarching concept that links together multiple

processes to achieve competitive advantage, while logistics refers to
the movement, storage and flow of goods, services and information
within the overall supply chain.
Selecting Channels of International Distribution

The route through which the goods move from producer buyer
is called the Channel of Distribution. The distribution process
includes the physical handling and distribution of goods, the
passage of ownership and the most important from the standpoint
)
of marketing strategy, the buying and selling negotiations between

middlemen, producers and consumers.
(c
To complete the components of the marketing mix and to get

the product to the target market, channels of distribution must
be developed. Every country or the target market presents the
exporter with unique middlemen and distribution patterns.
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In essence, a channel of distribution includes the original producer
Notes
at one end, the final buyer at the other end and the middlemen
between the two i.e. wholesalers, retailers etc. The term middlemen
refer to those institutions or individuals in the channel which
either take title to the goods or negotiate or sell the goods in the
capacity of a broker or an agent.
Factors Affecting Selection of Channel
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The best channel decision is one that works best in the marketing
strategy selected by the company. The channel should be an ideal
one which satisfies the consumer's needs and preferences. In
choosing the channel the producer has to struggle usually with
what is ideal and what is available.
Ideally every company wants to select the lowest cost channel, but
the lowest cost channel is not necessarily the best for the product.
Various factors influence the selection of channels of distribution.
They may be classified as factors relating to:
(A) Product Characteristics

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(B) Market Characteristics
(C) Company Characteristics
(D) Middlemen Considerations

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(E) Environment.
Main Points
Channel of Distribution
Services move from producer to buyer It includes producer,
exporter, middle-men Buyer, physical handling and distribution of
goods and services
Channels of distribution for consumer goods:
• Producer->Agent (Domestic/Overseas)-> Wholesaler-> Retailer

)
Consumer
• Producer-> Wholesaler->Retailer->Consumer
(c
• Producer-> Retailer->Consumer
• Producer->Consumer
Factors considered in selecting channels of distribution in

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international export
Notes
• Product Characteristics
1. Perishable Products-shorter distributors channel (SDC)

2. Unit value-Computer diamond-direct selling (SDC) daily
consuming items (Long Distribution Channel) LDC
3. Weight and Bulky-bulky items direct selling-light item-
LDC
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4. Standard products _LDC (In quality Col.ck)
5. New established products LDC produces-direct selling
(SDC)
• Market Characteristics
1. No of purchase (soap /garments) -LDC

2. Geographical nature widely dispersed buyers (LDC)
3. Size and No of orders requiring frequent purchase LDC
4. Nature of Buyer and produce-Govt. buying's Direct selling
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• Middlemen Considerations
1. Service and attitude of middlemen-> higher profit-LDC

2. Specialist middlemen availability
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3. Cost of DC in overall cost will decide type of DC
• Company Factors
1. Size of the company/exporter

2. Financial strength of the company
3. Marketing policy of the company
Structure of Distribution Channels in International

Markets
Distribution plays an important role in the implementation of the
)
international marketing programme as it enable the products and

services to reach the ultimate customer. An international marketing
(c
firm has the option of managing its distribution function either

directly or indirectly through middleman or a suitable combination
of the two.
Following are the distributions channels in International market

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Indirect Distribution
Notes
Indirect channels are further classified based on whether the
international marketer makes use of domestic intermediaries. An
international marketer therefore can make use of the following
types of intermediaries for distribution in foreign markets.
• Domestic Overseas Intermediaries
1. Commission buying agents
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2. Country controlled buying agents
3. Export management companies (EMCs)
4. Export Merchants
5. Export agents
6. Piggy backing
• Foreign Intermediaries
1. Foreign Sales Representatives

2. Foreign Sales Agent
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3. Foreign Stocking and Non-Stocking Agents
4. State Controlled Trading Companies
Direct Distributions
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The options available to international marketer in organising

direct distributions include:
• Sending representatives abroad from the headquarters
• Setting up of local sales/branch office in the foreign country of

for a region establishing a subsidiary abroad
• Entering into a joint venture or franchising agreement
Companies with Long-term Interest in

)
Companies having long-term interest in international marketing

find it expedient to deploy their own sales forces in foreign markets.
(c
This helps them in increasing their sale volume through:
• Committed market development activities
• Better control and motivation of foreign intermediaries being

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used
Notes
• Paving the way for smoother transition to direct distribution
and marketing
International Retailing and Franchising

The Right Approach
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In recent years, many retailers have focused on using the franchise
model for international growth benefiting from the relative low
risk, low effort and profitable yields. This has often developed
somewhat opportunistically, offering an inferior level of support to
franchise partners whilst the central organisation has focused on
domestic growth.
At the same time, international expansion via ecommerce has

become a more viable option. Typically, retailers have selected
ecommerce to spearhead international expansion in sufficiently
mature online retail markets such as western Europe, the US and
Australia where a franchise approach is less common.
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Current Situation
The most common strategy employed to date has seen retailers
leverage centrally-based expertise and existing domestic
infrastructure. This is the result of many retailers working with
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a large number of small, unsophisticated franchisees limiting the

appetite from either side to consider a more locally managed solution
for online sales. Despite this there is general acceptance amongst
retailers (and some franchisees) of the missed opportunities and
franchise conflicts created by centrally-led global ecommerce
strategies.
Moving forward, retailers need to work closely with franchisees

(who are, in effect, their best customers), on developing a multi-
channel retail model which leverages central ecommerce expertise
but also local knowledge, infrastructure and stores. This more
)
collaborative approach must be central to any future strategy to

accommodate local market intricacies, share best practices and give
franchise markets the same privileges as the domestic business.
(c
Multi-Channel Retail Model Selection

Principally the multi-channel retail model must be mutually
attractive for both the brand owner and franchisee over a prolonged
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period. This needs to be reflected in the division of responsibilities
Notes
across the operating model (e.g. trading, marketing, fulfilment,
multi-channel initiatives) and in the commercial arrangement
(share of investments, operating costs and profits).
To determine the optimal strategy there are five key questions to

consider:
UP
1 Is the market attractive for a multi-channel retail
approach? Which markets should be prioritised?
• Does the addressable ecommerce market size and maturity

present a sufficiently large opportunity?
• Is the brand well established in the local market (# stores,

market share, site traffic)?
These questions help establish an initial market prioritisation

but it’s also worthwhile to consider:
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• Is there a strong and successful partner which justifies
raising a market’s prioritisation for multi-channel retail
development?
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• Are there a selection of markets where a customer-facing

website does not present an attractive opportunity but
enabling store colleagues to save the sale or access an
extended range via a localised interface is a valuable first
step?
2 Is the local franchisee capable and willing to trade

online?
• Key to understand franchisees motivations to trade online:

is it proactive or purely reactive to central ownership?
• Does the franchisee have experience trading online?

)
• Do they understand the level of investment and resource

required to lead and support ecommerce?
(c
3 Are there strong local requirements?
• How important will it be to leverage franchise knowledge

and experience?
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• Are there substantial ecommerce localisation requirements?
Notes
• Is there a significant local range and trading cycle
requirements?
4 Are there barriers to foreign fulfilment?
• Are there high import duties, inefficient cross-border

processing, high returns rates?
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• This limits the possible operating models, placing greater
emphasis on the franchisee
5 Are there alternative channel opportunities?
• Are there other routes to international growth which will

drive faster return and may be prioritised by retailers’ e.g.
online marketplaces, wholesale, more franchised stores?
When addressing these questions the biggest challenges tend to be

the following:
Check Your Progress

E
1. Logistics management is a .........................component that
is used to meet customer demands through the planning,
control and implementation of the effective movement
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and storage of related information, goods and services

from origin to destination.
2. The complexity of international trade operations makes

the services of a ..............................essential, allowing the
exporter to focus instead on developing its competitive
advantages.
3. Distribution plays an important role in the implementation

of the ..................................as it enable the products and
services to reach the ultimate customer.
4. ..............and ....................distribution methods are used by

)
the manufacturer to find the most effective and productive

way for their product to reach their consumer.
(c
5. Indirect channels are further classified based on whether

the international marketer makes use of .......................
intermediaries.
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Summary Notes
Many of these challenges are considerable and it will take time to
work towards the optimal solution. The supply chain in particular
will require a phased approach, which initially will be limited to
leveraging existing assets (e.g. domestic hub or ship from store in
countries where high foreign fulfilment barriers exist).
Longer term, growing a network of international distribution hubs
UP
will enable retailers to replenish franchise stores more efficiently
but also process ecommerce orders and returns within region
rather than from their home base.
For retailers implementing such strategies it’s important to

anticipate that the multi-channel retail proposition which has
been successful in domestic markets may take time to yield the
desired results in franchise markets due to local market conditions
and different consumer behaviours. Indeed in the short to medium
term multi-channel initiatives may yield a lower return than
simply localising the ecommerce offer.
E
In the future we expect more retailers to trial some of the concepts
above in key markets. First they need to focus on developing a
compelling business case for the multi-channel retail franchise
model in priority markets as well as building the foundations of
a collaborative relationship with partners such as strong lines
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of communication and greater transparency. Ultimately, this

approach should deliver a much more consistent experience for
customers as the international, multi-channel franchise business
develops – yielding greater returns for retailer and franchisee
alike.

1. Discuss relation between logistics and the value chain concept.
2. How to select channels of international distribution?

)
3. What are the factors involved in selecting channels of

distribution in international export?
(c
4. What are the types of international distribution channels?
5. What is the difference between direct and indirect distribution?

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Unit 15
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Notes
International Marketing Channels
Objectives
 Distribution Pattern (General Pattern, Retail Pattern)
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 Alternative middleman choices (Home-country, Foreign Country, Govt
affiliated)
 Locating, Selecting and Motivating Channel members
Introduction
Marketing is done through different marketing campaigns, which
are co-ordinated steps for promoting the product using a number of
different marketing mediums. The traditional marketing channels
follow a traditional marketing strategy of finding potential
customer, creating a message to reach out to customer, finding
E
the right channel of contact and converting as many potential to
customers as possible.
Marketing channels are often divided into two main categories:

traditional and new marketing channels. The new marketing
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channels were born from the digital revolution and the marketers
in the modern era have used many of the traditional methods, but
combined them with the digital technology.
Distribution Pattern (General Pattern, Retail

Pattern)
Even though patterns of distribution are in a state of change
and new patterns are developing, international marketers need
a general awareness of the traditional distribution base. The
“traditional” system will not change overnight and vestiges of it
)
will remain for years to come. Nearly every international firm

is forced by the structure of the market to use at least some
(c
middlemen in the distribution arrangement. It is all too easy to

conclude that, because the structural arrangements of foreign and
domestic distribution seem alike, foreign channels are the same as
or similar to domestic channels of the same name.
Only when the varied intricacies of actual distribution patterns

Unit 15: International Marketing Channels
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are understood can the complexity of the distribution task be
Notes
appreciated.
Retailing
Retailing shows even greater diversity in its structure than does
wholesaling. In Italy and Morocco, retailing is composed largely of
specialty houses that carry narrow lines, whereas in Finland, most
retailers carry a more general line of merchandise.
UP
Retail size is represented at one end by Japan’s giant department
store Mitsukoshi, which reportedly enjoys the patronage of more
than 100,000 customers every day and at the other extreme by the
market of Ibadan, Nigeria, where some 3,000 one- or two-person
stalls serve not many more customers. Some manufacturers sell
directly to consumers through company-owned stores such as
Cartier and Disney and some sell through a half-dozen layers of
middlemen.
Size Patterns
The extremes in size in retailing are similar to those that
E
predominate in wholesaling. The retail structure and the problems
it engenders cause real difficulties for the international marketing
firm selling consumer goods. Large dominant retailers can be sold
to directly, but there is no adequate way to reach small retailers
CC
who, in the aggregate, handle a great volume of sales.
Retailing around the world has been in a state of active ferment

for several years. The rate of change appears to be directly related
to the stage and speed of economic development and even the least
developed countries are experiencing dramatic changes.
Direct Marketing
Selling directly to the consumer through mail, by telephone, or door-
to-door is often the approach of choice in markets with insufficient
or underdeveloped distribution systems. The approach, of course,
also works well in the most affluent markets. Amway, operating in
)
42 foreign countries, has successfully expanded into Latin America

and Asia with its method of direct marketing.
(c
Companies that enlist individuals to sell their products are proving

to be especially popular in eastern Europe and other countries
where many people are looking for ways to become entrepreneurs.
In the Czech Republic, for example, Amway Corporation signed up
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25,000 Czechs as distributors and sold 40,000 starter kits at $83
Notes
each in its first two weeks of business. Avon is another American
company that is expanding dramatically overseas.
Alternative Middleman Choices (Home-country,

Foreign Country, Govt affiliated)
Channel of Distribution
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The route through which the goods move from producer to buyer
is called the Channel of Distribution. The distribution process
includes the physical handling and distribution of goods, the
passage of ownership and the most important from the standpoint
of marketing strategy, the buying and selling negotiations between
middlemen, producers and consumers.
International Channel of Distribution (Alternatives)

There is a diversity of channels of distribution in the international
market. One particular channel may be used to distribute a specific
product in one country, while another may be used to distribute a
E
specific product in another country. One may find the existence of
long channels in one country and short ones in another country.
There is absolutely no uniformity in the channels that may be

selected by the producer. The structure and composition of the
CC
channel will depend on the nature of the product and the producing
unit's strategy. Normally the channel of distribution of a consumer
product is longer than that for an industrial product.
Appointing an Agent
Appointing an agent is considered necessary where the producer
cannot afford to invest the amount required to develop a sales force
of his own. If he appoints an agent he moves to wholesalers and
retailers only through the agent. If agents are not appointed, the
alternative will be to go for wholesalers directly and through them
to the retailer.
)
Common Channels for Industrial Goods

For industrial goods the common channels are as below:
(c
• When the number of potential buyers is small, the producer

may sell directly or through agents/ brokers.
• If the number of buyers is large and area of the market big, one
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can use a distributor and through him retailers to reach the
Notes
consumer.
• For linking the domestic and overseas channel, the Exporter

can use many of the entry alternatives available.
• One may choose to export indirectly through export house,

domestic export merchants etc.
• It is also common to see one exporting directly and using the
UP
various channels of distribution explained above in the foreign
land.
The first task of the exporter is hence to find out the possible
distribution channel through which he can reach the consumer.
Locating, Selecting and Motivating Channel

Members
Channel Member Selection and Channel Design
Channel selection decisions are frequently necessary even when
E
channel structure changes have not been made. Firms may need
additional outlets to allow for growth or to replace channel members
that have left the channel.
Channel design is presented as a decision faced by the

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marketer
As a general rule, the greater the intensity of distribution, the less

emphasis on selection. If a firm’s emphasis is to ensure intensive
distribution, those intermediaries selected are often selected only
on their basis of the probability of paying their bills. On the other
hand, if channel structure stresses more selective distribution, the
prospective members should be much more carefully scrutinised
and selection decisions become more critical.
The Selection Process

Three steps are involved:
)
1. Finding prospective channel members

(c
2. Applying selection criteria to determine the suitability of

prospective channel members
3. Securing the prospective channel members as actual channel

members
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Finding Prospective Channel Members
Notes
The most important sources for finding channel members are listed
below in their order of importance:
1) Field sales organisations
2) Trade sources
3) Reseller inquiries
UP
4) Customers
5) Advertising
6) Trade shows
7) Other sources
1. Field Sales Organisations

Company salespeople are in the best position to know potential
channel members, usually better than anyone else in the firm.
Companies may not adequately reward salespeople for their efforts
E
in finding potential channel members.
2. Trade Sources
Trade sources such as trade associations, trade publications,
CC
directories, trade shows and the “grapevine” are all valuable

sources of information about prospective members.
3. Reseller Inquiries
Many firms learn about potential channel members through direct
inquiries from intermediaries handling their products.
4. Customers
Customers of prospective intermediaries can be a source of
information. Using informal or formal surveys of the views of
customers, a firm may well be able to gain insights about the
strengths and weaknesses of a prospective channel member from
)
the customer’s (end user) point of view.

(c
5. Advertising
Advertisements in trade publications offer another approach to
finding channel members.
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6. Trade Shows
Notes
Trade shows or conventions can be a very fruitful source for
finding potential channel members. Many trade associations, at
the industrial and retail levels, hold annual conventions at which
numerous representatives from the various organisations are
represented.
7. Other Sources
UP
Some firms also find the following sources helpful in locating
prospective members:
• Chamber of commerce, banks and local real estate dealers
• Classified telephone directories or yellow pages
• Direct-mail solicitations
• Contacts from previous applications
• Independent consultants
• List brokers that sell lists of names of businesses

E
• Business databases
• The Internet
Applying Selection Criteria

CC
Having developed a list of prospective channel members, the next

step is to appraise these prospects in light of selection criteria. If
a firm has not yet developed a set of criteria for selecting channel
members, it must develop one. However, no list of criteria, no
matter how carefully developed, is adequate for a firm under all
conditions.
Selecting the Channel Members

It is important to remember that the selection process is a two-
way street. It is not only the producer and manufacturer who does
)
the selecting –but also the intermediaries as well. The channel

manager in producing and manufacturing firms can use a number
of specific inducements in attempting to secure channel members.
(c
Manufacturers and producers should convey to the prospective

intermediary that the partnership will be mutually beneficial.
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1. Specific Inducements for Securing Channel Members
Notes
Generally, the more specific the manufacturer can be in spelling
out what kinds of support and assistance will be offered to channel
members, the better.
Most of the inducements fit within one of four areas:
A. Good, profitable product line
UP
B. Advertising and promotional supports
C. Management assistance
D. Fair dealing policies and friendly relationships
A. Product Line
At the heart of what the manufacturer has to offer is a good product
line with strong sales and profit potential (to the intermediary). It
is especially important for manufacturers whose products are not
well known to do a good job communicating the benefits of handling
their products from the channel members’ point of view.
E
These manufacturers should stress how effective their products
can be in generating sales and profits for channel members.
B. Advertising and Promotion

CC
Prospective intermediaries also look to manufacturers for

promotional support. Such factors as advertising allowances,
cooperative advertising campaigns, point-of-purchase material
and showroom displays indicate strong channel member support
and serve as good inducements to prospective intermediaries to
join the channel.
C. Management Assistance
Prospective channel members want to know whether the
manufacturer is committed to helping them by going beyond
advertising and promotional support to help them manage their
)
businesses better. Management assistance can cover areas such

as training programs, financial analysis and planning, market
analysis, inventory control procedures, promotional methods and
(c
others.
D. Fair Dealing and Friendly Relationship

A marketing channel relationship is not only a business relationship
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but a human relationship as well. The manufacturer should convey
Notes
to the prospective channel members that he or she is genuinely
interested in establishing a good relationship with them built on
the basis of trust and concern for their welfare.
This emphasis on fair dealing and friendly relationships, should not,

however, be expected to offset failings in the underlying economic
or business bases of the channel relationship. Interpersonal
relationships, cordiality and even genuine liking of channel
UP
members for each other are no substitute for substances in the
form of competitive products, pricing and support programs.
Motivating Channel Members

Imagine these three scenarios:
You are a producer of ‘Grand Pens’ a brand of fountain pens.
A customer seeks advice from a pen shop on which pen to buy and
the retailer strongly recommends yours.
A customer asks a retailer, who stocks your pen, for another brand
E
called ‘Bad Pens’. The retailer recommends and offers your pen as
superior.
A retailer actively solicits business for you by asking customers

buying other products to come and have a look at the exquisite
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‘Grand Pen’.
Positive Motivators
Keeping the intermediary stimulated is important. Positive
motivators, like sales contests are preferred to negative motivators
like sanctions such as reduced discounts and the threat of
terminating the relationship.
A positive reward works better than a negative punishment. Ideally

there should be a shared sense of responsibility – a partnership – a
strategic partnership. The supplier and intermediary are there to
help each other. Vertical Marketing Systems are a good example.
)
Non-financial Incentives
(c
Clear communications, covering sales goals, review meetings,

reporting procedures, marketing strategy, training, market
information required, suggestions for improvements, all help.
Regular contact through visits, review meetings, dinners,
competitions, newsletters, thank you letters, congratulatory
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awards all help to keep everyone working closely together.
Notes
Conflicts
Despite this, conflict can occur when too many distributors are
appointed within close proximity of each other, or the producer
engages in a multiple channel strategy of direct marketing as
well as marketing through intermediaries. Carefully motivating
distributors is vital if goods are to flow smoothly through the
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channel and reach satisfied customers.
Check Your Progress

1. Marketing is done through ..................., which are co-
ordinated steps for promoting the product using a number
of different marketing mediums.
2. The route through which the goods move from ...............to

................is called the Channel of Distribution.
3. The choice of channel also depends on the strengths and

weaknesses of various types of .............performing various
E
functions.
4. The adequacy of the intermediary in covering the .............

......................that the manufacturer would like to reach is
known as market coverage.
CC
5. A marketing channel relationship is not only a ..................

but a human relationship as well.
Summary
The new marketing channels and tactics have largely been driven
by the technological revolution. While these channels often use
similar tactics to traditional channels, they tend to rely on digital
technology in the delivery. Furthermore, the strategy used by
new marketing channels adds more emphasis on the cultivation
of relations after the potential customer has been turned into a
)
paying customer.
(c
Choosing the right marketing channel for your marketing strategy

is not always easy. As we’ve seen, the choices are varied and you
need to have a proper understanding of the benefits and downsides
to each marketing channel before making the decision.
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Questions for Discussion Notes
1. What do you mean by channel of distribution?
2. What are the common channels of industrial goods?
3. What are the "core competencies” that distributors must

possess for effective representation in foreign markets?
4. What are the specific inducements for securing channel
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members?
5. What are the steps for maintaining continually high levels of

motivation among intermediaries?
E
) CC
(c
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Unit 16
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Notes
International Export-Import Policy
Objectives
 India’s EXIM policy
UP
 Import and export Prohibitions and Restrictions
 Export Promotion schemes and Incentives
 Creation of Enclaves for Export Production and Promotion
Introduction
Foreign Trade Policy is prepared and announced by the Central
Government (Ministry of Commerce). Foreign Trade Policy or
EXIM Policy is a set of guidelines and instructions established
by the DGFT (Directorate General of Foreign Trade) in matters
E
related to the import and export of goods in India. The foreign trade
policy, has offered more incentives to exporters to help them tide
over the effects of a likely demand slump in their major markets
such as the US and Europe.
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India’s EXIM Policy

What does Darjeeling Tea, Basmathi Rice, Indian Carpet,
Kancheepuram Silk, Mysore Sandalwood Oil, Indian Garments,
Indian Software, Surat Diamonds to name a few have in common.
They represent the modern symbols of Indian foreign trade.
On 1st April 2015, the new Foreign Trade Policy (FTP) for the
period 2015-20 was announced which replaces the 2009-14 FTP
which expired on 31st March 2014. With the announcement of new
policy, exporters’ one-year wait for new FTP has come to end.
)
India's Foreign Trade Policy – Aim

India's Foreign Trade Policy also known as Export Import Policy
(c
(EXIM) in general, aims at –
• Developing export potential
• Improving export performance

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• Encouraging foreign trade
Notes
• Creating favorable balance of payments position
Foreign Trade Policy - Guidelines and Instructions

EXIM Policy
The Foreign Trade Policy of India is guided by the Export Import
in known as in short EXIM Policy of the Indian Government and is
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regulated by the Foreign Trade Development and Regulation Act,
1992.
DGFT (Directorate General of Foreign Trade) is the main governing

body in matters related to EXIM Policy. The main objective of the
Foreign Trade (Development and Regulation) Act is to –
• Provide the development and regulation of foreign trade by

facilitating imports into and augmenting exports from India
Foreign Trade Act has replaced the earlier law known as the
imports and Exports (Control) Act 1947. Indian EXIM Policy
contains various policy related decisions taken by the government
E
in the sphere of Foreign Trade, i.e., with respect to imports and
exports from the country and more especially export promotion
measures, policies and procedures related thereto.
Objectives of the FTP (EXIM) Policy

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The main objectives are:
• To accelerate the economy from low level of economic activities

to high level of economic activities by making it a globally
oriented vibrant economy and to derive maximum benefits
from expanding global market opportunities
• To stimulate sustained economic growth by providing access

to essential raw materials, intermediates, components,'
consumables and capital goods required for augmenting
production
)
• To enhance the techno local strength and efficiency of Indian

agriculture, industry and services, thereby, improving their
(c
competitiveness
• To generate employment
• Opportunities and encourage the attainment of internationally

accepted standards of quality
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• To provide quality consumer products at reasonable prices
Notes
In the light of the above-mentioned objectives, there are two broad
aspects of the FTP(EXIM) Policy –
• The import policy which is concerned with regulation and

management of imports
• The export policy which is concerned with exports not only

promotion but also regulation
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The main objective of the Government's EXIM Policy is to –
• Promote exports to the maximum extent
India’ Trade Policy Philosophy: Theoretical

Background
On analytical grounds, trade policy can be broadly divided into two
groups –
1. Inward oriented
2. Outward oriented
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Inward – oriented policy: - An inward oriented strategy is
the one in which trade and industrial incentives are biased in
favour of production for domestic market over the export market.
Thus, an inward oriented policy is often designated as the import
CC
substitution strategy.
Outward – oriented policy: - On the contrary, an outward

oriented strategy is the one in which trade and industrial policies do
not discriminate between production for domestic goods and foreign
goods. Thus, an outward oriented strategy is often designated as
the export promotion strategy.
Trade Policy Evolution

In a broader sense, after independence for almost forty years or so
India adopted inward oriented strategy. The basic rationale behind
)
it was that it would help rapid industrialisation through import

substitution and at the same time save valuable foreign exchange.
(c
Period of “Licence – Quota Raj”

This strategy covers the period from First Five Year Plan (1951
– 56) to the Seventh Five Year Plan (1985 – 90). This period is
considered as the period of “Licence – Quota Raj” wherein there
Unit 16: International Export-Import Policy
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was a controlled and restrictive environment.
Notes
1990’s - Economic Liberalisation
However, the decade of 1990 is marked with a near U turn as India
adopted gradually a path of economic liberalisation. It followed the
policy of Liberalisation, Privatisation and Globalisation (LPG) to
solve its BOP and related problems. A series of economic reforms
were introduced in various sectors to tackle the BOP and other
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problems. Hence, the Indian economy which was a closed economy
for almost forty years now became relatively more open posing
challenges for macroeconomic management. Thus, from 1990
onwards India adopted an outward oriented strategy which can
be considered as a significant turnaround from the earlier period.
The adoption of outward oriented strategy was a major departure
from the relatively protectionist trade policies pursued in earlier
years. There is no doubt that in the broader sense of the term India
followed an inward - oriented trade policy after independence till
1990.
However, an in depth analysis of India’s trade policy shows that

E
there were certain shifts in policy stance from time to time. Taking
this into account trade policy of India can be broadly divided into
the following phases:
• Phase I – Import Restriction and Import Substitution (From

CC
143 1950’s to 1970s)
• Phase II – Export Promotion and Import Liberalisation (From

1970s to 1990s)
• Phase III – Outward Orientation – (From 1990 onwards)
Economic (Trade) Reforms in India

In order to understand the evolution of the Foreign trade policy
(EXIM policy) over time we need to understand the larger
framework and evolution of Macroeconomic policy in India before
and after the liberalisation in the 90’s.
)
The subsequent trade policies were developed keeping in view this

larger framework and in sequence to it.
(c
Early Eighties
In the early eighties, the Government of India appointed a special

EXIM Policy Committee to review the government previous export
import policies. The committee was later on approved by the
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Government of India.
Notes
Mr. V. P. Singh, the then Commerce Minister and announced
the EXIM Policy on April, 1985. Initially the EXIM Policy was
introduced for the period of three years with main objective to
boost the export business in India.
Now, let us understand the history and evolution of foreign trade

policy in India we need to understand it under different phases:
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Policy in Practice: Trends in Foreign Trade Policy
1950-1990
Planned development era in 1950’s
India entered into planned development era in 1950’s and at that

time Import Substitution was a major element of India’s trade and
industrial policy. In 1950 India’s share in the total world trade
was 1.78% which reduced to 0.6% in 1995. During 2003-04 India’s
share in the global trade was 0.8%, in 2005 it was 1.0%.
PC Alexander Committee (1978) – for Import –Export

E
Policies and Procedures
The PC Alexander Committee (1978) was the first committee to

review and recommend on Import –Export Policies and Procedures.
This committee recommended the simplification of the Import
CC
Licensing procedure and provided a framework involving a shift in

the emphasis from “control to development”.
In 1980 Tandon Committee gave recommendations on export

strategies in Eightees. In the Export Import policy of 1978-79, for
the first time in India’s History decentralisation of some licensing
functions took place and the powers of regional licensing authorities
was enhanced.
Setting up of Export Oriented Units
Export Oriented Units were set up under the EOU scheme

introduced in early 1981. The export and Import Bank of India
)
(website) was set up in 1982 to take over the operations of

international finance wing of the IDBI. Other major objectives
(c
were to provide financial assistance to exporters and importers.
Trade Policy of 1985-88
In the Trade Policy of 1985-88 some measures were taken based

upon the recommendation of Abid Husain Committee 1984. This
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committee envisaged “Growth Led Exports, rather than Export
Notes
Led Growth”. The recommendation of this committee stressed
upon the need for harmonising the foreign trade policies with other
domestic policies. This committee recommended announcement of
foreign trade policies for longer terms.
Journey from Export Import Pass Book Scheme to Export

Processing Zones
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The export import pass book scheme was introduced in 1985 as per
recommendation of Abid Hussain Committee. In 1985 Vishvanath
Pratap Singh Government developed a 3 year eximpolicy.
Tax Reform Committee chaired by Raja J Chelliah suggested
minimising the role of quantitative restrictions and reducing the
tariff rates substantially. Export Processing Zones were set up to
push up exports. They are now SEZ
Main Features: Trade Policies- Era of Reforms (next

phase of reforms since nineties)
Post 1991’s trade liberalisation measures
E
As discussed the massive trade liberalisation measures adopted
after 1991 mark a major departure from the relatively protectionist
trade policies pursued in earlier years. Accordingly, Substantial
simplification and liberalisation has been carried out in the reform
CC
period.
Foreign Trade Policy (FTP) or Export Import Policy (EXIM) is

believed to be an important step towards the economic reforms
of India. In order to liberalise imports and boost exports, the
Government of India for the first time introduced the Indian EXIM
Policy on April 1, 1992. In the light of the reform policy objectives
successive governments have been taking various trade reforms.
Successive annual Union Budgets have also extended a number of
tax benefits and exemptions to the exporters. These include:
• Reduction in the peak rate of customs duty to 15 per cent

)
• Significant reduction in duty rates for critical inputs for the

Information Technology sector, which is an important export
sector
(c
• Grant of concessions for building infrastructure by way of

10-years tax holiday to the developers of SEZs
• Facilities and tax benefits to exporters of goods and merchandise

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• Reduction in the customs duty on specified equipment for ports
Notes
and airports to 10 per cent to encourage the development of
world class infrastructure facilities, etc
Announcements of Tax Benefits
A number of tax benefits have also been announced for the three
integral parts of the ‘convergence revolution’ –
• The Information Technology sector
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• The Telecommunication sector
• The Entertainment industry
In order to bring stability and continuity, the Export Import

Policy was made for the duration of 5 years. However, the Central
government reserves the right in public interest to make any
amendments to the trade Policy in exercise of the powers conferred
by Section-5 of the Act. Such amendment shall be made by means
of a Notification published in the Gazette of India.
Prior to 2004, the Foreign Trade Policy was called EXIM Policy.
E
Each FTP will be having objectives and set guidelines to achieve
those objectives. After the introduction of liberalisation in Indian
economy, 1992-97 policy was the first EXIM Policy which aimed
to dismantle the protectionist and regulatory policy towards a
CC
globally oriented economy.
Export Promotion Schemes and Incentives

Export Promotion Schemes - Promotional Measures
in Foreign Trade Policy
Exports are regarded as an engine of economic growth in the wake
of liberalisation and structural reforms in the economy. In recent
times India is witnessing slowdown in exports with its traditional
partners. Under these circumstances, we need to set in motion
strategies and policy measures which catalyse growth of exports in
)
several different sectors as well as in newer markets.
1. Export Promotion Schemes

(c
Foreign Trade Policy 2015-20 and other schemes provide

promotional measures to boost India’s exports with the objective to
offset infrastructural inefficiencies and associated costs involved
to provide exporters a level playing field. Brief of these measures
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are as under:
Notes
1.1 Exports from India Scheme
(i) Merchandise Exports from India Scheme (MEIS)
Under this scheme, exports of notified goods/ products to

notified markets as listed in Appendix 3B of Handbook of
Procedures, are granted freely transferable duty credit scrips
on realised FOB value of exports in free foreign exchange at
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specified rate (2-5%).
Duty Credit Scrips are provided for exports to diversify markets

and offset the disadvantage faced by exporters with regard to
freight costs, transport hurdles and other disabilities. They are
like debit notes which can be used to pay import duties.
Such duty credit scrips can be used for payment of custom

duties for import of inputs or goods, payment of excise duty on
domestic procurement, payment of service tax and payment
of custom duties in case of EO default. Exports of notified
goods of FOB value up to Rs 25, 000 per consignment, through
E
courier or foreign post office using e-commerce shall be entitled
for MEIS benefit.
(ii) Service Exports from India Scheme (SEIS)

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Service providers of notified services as per Appendix 3E are

eligible for freely transferable duty credit scrip @ 5% of net
foreign exchange earned.
2. Duty Exemption and Remission Schemes

An exporter must take Advance Authorisation (AA) from the
regional DGFT offices if he uses his imported product as an input
to manufacture his resultant exported product. No Advance
Authorisation can obviously be given for import of prohibited items.
Advance Authorisation can however be given for import of

restricted items with certain conditions. Items reserved for import
)
through State Trading Enterprises (STEs) can be imported against

Advance Authorisation/ DFIA provided the item of import is
(c
canalised/ bought through STEs or after obtaining No Objection

Certificate from STEs.
2.1 Advance Authorisation Scheme

Under this scheme, duty free import of inputs are allowed, that
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ES
are physically incorporated in the export product (after making
Notes
normal allowance for wastage) with minimum 15% value addition.
Advance Authorisation (AA) is issued for inputs in relation to
resultant products as per SION (Standard Input Output Norms
prescribed in Handbook of Procedures Vol. II) or on the basis of self
declaration, as per procedures of FTP.
2.2 Advance Authorisation for Annual

Requirement
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Authorisation holders who have been exporting for at least 2
years can get annual Advance Authorisation. This gives them
the flexibility to export any product throughout the year falling
under an export product group using the duty exempted imports.
However, specific inputs have to be tallied with the resultant
exports as per SION/ prescribed ad hoc norms.
2.3 Duty Free Import Authorisation (DFIA)

Scheme
DFIA is a variant to Advance Authorisation scheme. It is different
from Advance Authorisation as a higher minimum value addition of
E
20% is required, as compared to only 15% in Advance Authorisation.
It has enabling provision for transferability of authorisation or
materials imported against it.
CC
DFIA can be applied and obtained on post export basis as well.

It is popular with exporters who export first and then obtain the
Authorisation, which can be sold freely.
2.4 Duty Drawback of Customs/Central Excise

Duties/Service Tax
The scheme is administered by Department of Revenue. Under this
scheme products made out of duty paid inputs are first exported
and thereafter refund of duty is claimed in two ways:
i) All Industry Rates : As per Schedule
ii) Brand Rate : As per application on the

)
basis of data/documents
2.5 Rebate of Service Tax Through all Industry

(c
Rates
Refund of service tax paid on specified output services used for
export of goods is available at specified all industry rates.
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3. EPCG SCHEME
Notes
3.1 Zero Duty EPCG Scheme
Zero duty EPCG scheme allows import of capital goods for
preproduction, production and post production (including
Completely Knocked Down/ Semi Knocked Down thereof as well
as computer software systems) at zero Customs duty, subject to
an export obligation equivalent to 6 times of duty saved on capital
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goods imported under EPCG scheme, to be fulfilled in 6 years
reckoned from Authorisation issue-date (para 5.1 a of FTP).
3.2 Post Export EPCG Duty Credit Scrip Scheme

A Post Export EPCG Duty Credit Scrip Scheme shall be available
for exporters who intend to import capital goods on full payment of
applicable duty in cash.
4. EOU/EHTP/STP and BTP SCHEMES

Units undertaking to export their entire production of goods and
services may be set up under this scheme for import/ procurement
E
domestically without payment of duties. For details of the scheme
and benefits available therein FTP may be required.
5. OTHER SCHEMES
5.1 Towns of Export Excellence (TEE)
CC
Selected towns producing goods of Rs. 750 crores or more are

notified as TEE on potential for growth in exports and provide
financial assistance under MAI Scheme to recognised Associations.
5.2 Rebate of Duty on “Export Goods” and

“Material” used in Manufacture of Such Goods
Rebate of duty paid on excisable goods exported or duty paid on the
material used in manufacture of such export goods may be claimed
under Rule of 18 of Central Excise Rules, 2002.
5.3 Export of Goods Under Bond i.e. Without

)
Payment of Excise Duty

Rule 19 of Central Excise Rules 2002 provides clearance of excisable
(c
goods for exports without payment of central excise duty from the
approved factory, warehouse and other premises.
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5.4 Market Access Initiative (MAI) Scheme
Notes
Under this Scheme, financial assistance is provided for export
promotion activities on focus country, focus product basis to EPCs,
Industry and Trade Associations, State Government Agencies
and Indian Commercial Missions abroad to do market surveys,
publicity campaigns, participate in International Trade Fairs, set
showrooms/ warehouses etc.
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5.5 Status Holder Scheme
Upon achieving prescribed export performance, status recognition
as one star Export House, two Star Export House, three star
export house, four star export house and five star export house is
accorded to the eligible applicants as per their export performance.
Such Status Holders are eligible for various non-fiscal privileges as
prescribed in the Foreign Trade Policy.
Creation of Enclaves for Export Production and

Promotion
E
Various schemes have been introduced by the Government from
time to time to encourage exports, viz, Special Economic Zones
(SEZs), Export-oriented Units (EOUs), Software Technology
Parks (STPs), Electronics Hardware Technology Parks (EHTPs),
Biotechnology Parks (BTPs) etc.
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Special Economic Zones

With a view to providing an internationally competitive environment
for exports, the Government of India announced the SEZ Policy
in April, 2000. The objectives of the SEZ Policy include making
available goods and services free of taxes and duties supported by
integrated infrastructure for export production, expeditious and
single-window approval mechanism and a package of incentives to
attract foreign and domestic investments for promoting export-led
growth.
)
Salient Features of the SEZ Policy

The salient features of the SEZ Policy are as follows:
(c
• Simplified procedures for development, operation and

maintenance of the SEZs and for setting up units and
conducting business in SEZs;
• Single-window clearance for setting up of SEZ;

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• Single-window clearance for setting up units in SEZ;
Notes
• Single-window clearance on matters relating to Central as well
as State Governments; and
• Simplified compliance procedures and documentation with an

emphasis on self certification.
Incentives to the SEZs
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SEZs are deemed to be a foreign territory within the country. The
SEZs are specifically treated as duty-free enclaves for the purposes
of trade operations, duties and tariffs. SEZs enjoy a host of
exemptions from income tax, customs duties, excise duties, central
sales tax (CST), service tax and state levies.
Major Incentives to SEZ Developers

The major incentives and facilities available to SEZ Developers
include:
(i) Direct taxes

E
• 100% income tax deduction, allowed to the Developer under
s 80-IAB of the Income Tax Act for any consecutive 10 years
out of the first 15 years from the date of notification of the
SEZ.
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• Exemption from minimum alternate tax (MAT) under s

115JB of the Income-tax Act. However, with effect from
the assessment year 2012-2013, MAT at the rate of18.5%
has been imposed on SEZ Developers.
• Exemption from dividend distribution tax (DDT) under

s 115-O of the Income-tax Act to the SEZ Developers.
However, with effect from 1 June 2011, DDT has been
imposed at the rate of 15% on the dividend distributed by
the SEZ Developers.
(ii) Indirect Taxes

)
• Duty-free import/domestic procurement of goods for

development, operation and maintenance of SEZs
(c
• Exemption from Central Sales Tax (CST)
• Exemption from Service Tax

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(iii) FEMA/FDI/ECB
Notes
• 100% Foreign Direct Investment permitted for setting up
of SEZ with approval of the BOA.
• SEZ developers can avail of ECBs for providing

infrastructure facilities within SEZ.
(iv) Miscellaneous
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• Full freedom in the allocation of space and built-up area to
approved SEZ units on commercial basis.
• Authorisation to provide utilities and maintenance

services, viz, water, electricity, security, restaurants and
recreation centers on a commercial basis.
• Generation, transmission and distribution of power in

SEZ.
Check Your Progress
1. Literacy is penetrating deep in to even the far reach areas,

E
thus creating awareness and to .............................for all
kinds of goods across all sections of the society.
2. An inward oriented strategy is the one in which trade

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and ........................are biased in favour of production for

domestic market over the export market
3. In order to understand the evolution of the Foreign trade

policy (EXIM policy) over time we need to understand the
larger framework and evolution of ...................... in India
before and after the liberalisation in the 90’s.
4. Exports are regarded as an engine of ......................in

the wake of liberalisation and structural reforms in the
economy.
5. With a view to providing an internationally competitive

)
environment for exports, the Government of India

announced the ..................in April 2000.
(c
Summary
Foreign trade is exchange of capital, goods and services across
international borders or territories. In most countries, it represents
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a significant share of gross domestic product (GDP). While
Notes
international trade has been present throughout much of history,
its economic, social and political importance has been on the rise
in recent centuries.

1. What are the aims of International foreign trade policy?
UP
2. Describe the economic reforms in India?
3. What are the import and export prohibitions and restrictions?
4. What are the Export Promotion schemes and incentives

introduced by the government?
5. What are the salient features of the SEZ policy?

E
) CC
(c
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Unit 17
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Notes
Communication Decisions for

International Markets
Objectives
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 Marketing Communication Strategies
 Tools for Marketing Communication
 Factors Influencing International Marketing Communication
Introduction
All said and done, gaining awareness is one of the first primary
steps in the sales process and should be the main focus of your
marketing communications (marcom) strategy. Getting to know
your audience, crafting your message and tracking results are only
E
a few pieces of the puzzle. To implement integrated marketing
communication, it is essential for the organisations to communicate
effectively with the clients. You need to know how your products
or services would benefit your end-users. The more effectively you
CC
promote your brand, the more demand would it have in the market.
Marketing Communication Strategies

An effective marketing communications plan results in a better,
more consistent brand experience. The end result: more sales.
The Better you know your Audience, the Better you (and your
Team) can Appeal to their Interests
All successful marketing efforts begin with a thorough

understanding of your audience. Start by analysing your current
)
clients and why they chose your products or services. Don't have
enough data to get the full picture? Put a research plan in place to
help fill in any gaps relating to demographics, purchase patterns
(c
and other insights into when, where, why and how people purchase
your products.
Unit 17: Communication Decisions for International Markets
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Uncover your Unique Selling Proposition
Notes
Your Unique Selling Proposition (USP) is the main benefit that,
when communicated effectively, drives sales of your product or
service. It focuses on a unique problem that you solve better than
anyone else. Your USP must be compelling and strong enough to
move people to act. Your USP will be central to all of your marketing
communications, so don't take this step lightly.
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Sharpen your Brand Look and Feel
From logos to business cards and marketing collateral, your brand
must speak to the customer in a contemporary, relevant manner.
It needs to support your operational USP and accurately represent
your market position – don't mislead your audience by creating a
marquee brand if you're aiming to be a low-cost option. Be honest,
sincere and true to the heart of your business.
Ensure that All Messaging is Consistent

While most people think of logo and stationary when it comes to
branding, your brand voice is equally important. A good place to
E
start is to generate a few key positioning statements to feature in
your communications. Start with a tagline, single sentence version
and then a standard short paragraph.
Choose your Marketing Mix

CC
With all of the recent advancements in online marketing, there are

more ways to communicate than ever before. Every industry and
brand is unique, so there is no standard marketing mix that will
work for everyone.
The key is to understand your options and choose a media mix that
fits your audience (where do they spend their time / attention),
budget and marketing communications goals.
Establish Marcom Success Measurements (Metrics)

Whatever be the medium and message, ensure that your
)
communications are measurable. Whether it's email open rates,

social media exposure or direct mail response rates, establish
(c
key communications goals and put systems in place to chart your

success.
Tie this data in with sales metrics to get a true sense of what's
working and what's not.
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Manage Leads and Client Data
Notes
You know your audience, you've built your brand and you've told
your story. People are interested – now what? A CRM (Customer
Relationship Management) system is a database of your contacts
(customers, prospects, others) that allows you to –
• Organise information (contact info, records, files, calls, emails,

etc)
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• To streamline and scale sales and marketing processes
Tools for Marketing Communication

Integrated Marketing Communication tools refer to integrating
various marketing tools such as –
• Advertising
• Online marketing
• Public relation activities

E
• Direct marketing
• Sales campaigns to promote brands so that similar message

reaches a wider audience
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Products and services are promoted by effectively integrating

various brand communication tools.
Need to Communicate with Clients

To implement integrated marketing communication, it is essential
for the organisations to communicate effectively with the clients.
You need to know how your products or services would benefit your
end-users. The more effectively you promote your brand, the more
demand would it have in the market.
Identify your target audience. Remember, not everyone would need

your product. Understand why would an individual invest in your
)
brand unless and until you have something unique and interesting
to offer? The benefits of the brand need to be communicated
(c
effectively.
Modes of Brand Communication

Let us go through various integrated marketing communication
tools. Integrated marketing communication effectively integrates
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all modes of brand communication and uses them simultaneously to
Notes
promote various products and services among customers effectively
and eventually yield higher revenues for the organisation. The
marketing communication tools include:
Advertising
Advertising is one of the most effective ways of brand promotion.
Advertising helps organisations reach a wider audience within
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the shortest possible time frame. Advertisements in newspaper,
television, Radio, billboards help end-users to believe in your brand
and also motivate them to buy the same and remain loyal towards
the brand.
Sales Promotion
Brands (products and services) can also be promoted through
discount coupons, loyalty clubs, membership coupons, incentives,
lucrative schemes, attractive packages for loyal customers,
specially designed deals and so on. Brands can also be promoted
effectively through –
E
• Newspaper inserts
• Danglers
• Banners at the right place

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• Glorifiers and wobblers etc.
Direct Marketing
Direct marketing enables organisations to communicate directly
with the end-users. Various tools for direct marketing are –
• Emails
• Text messages
• Catalogues
• Brochures
)
• Promotional letters and so on

(c
Through direct marketing, messages reach end-users directly.
Personal Selling
Personal selling is also one of the most effective tools for integrated
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marketing communication. Personal selling takes place when
Notes
marketer or sales representative sells products or services to
clients. Personal selling goes a long way in strengthening the
relationship between the organisation and the end-users.
Public Relation Activities

Public relation activities help promote a brand through press
releases, news, events, public appearances etc. The role of public
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relations officer is to present the organisation in the best light.
Factors Influencing International Marketing

Communication
Keeping in view the dynamic environment of today's business,
Marketer is required to develop the product that have the capacity
to satisfy target market needs and wants, price that product
attractively and ensure its availability to the target customers.
But the task does not stop over here; the organisation must also
communicate with their target about the company offerings.
E
Communication is the process in which messages are exchanged to
achieve a –
• Desired behavior direction
• Desired behavior goal

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The task of communication with target market is called promotion

in marketing.
Emerging Communication Techniques

Companies must be aware of the fact that the face of marketing
communications is continuously shifting and, to be successful in the
future, the Marketing manager needs to utilise the novel emerging
communication techniques. According to Kotler and Armstrong
(2006), Integrated Marketing Communications (IMC) is a concept
in which a company carefully integrates and coordinates its many
)
communication channels like
• Mass media advertising

(c
• Personal selling
• Sales promotion
• Public relations
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Notes
• Packaging and others
This is done to deliver a clear, consistent and compelling message

about the organisation and its products. The results of IMC are
better communication that transform into consistent sales volume.
Integrated Marketing Communication
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The integrated marketing communication goes beyond these
specific promotion tools. The design and packaging of the product,
its container and packaging, its price and the retail stores that sell
the product, all communicate something to buyers.
Thus, although the promotion mix is an organisation's primary

communication, the whole marketing mix including product, place,
price and promotion must be coordinated in order to achieve the
desired impact. IMC helps the firm in –
• Identification of the target audience
• Designing a well-coordinated promotional program focusing on

E
managing customer relationship over time
Factors Leading to Integration of Marketing

Communication
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The following are some of the reason due to which it is inevitable to

integrate the Marketing Communication of the organisation.
Fragmentation of the Mass Market

This mass-marketing strategy focuses on what is general in
the needs of consumers rather than on what is different. The
organisation offer single Marketing Mix consists of one type
of product with small or no variation, one pricing strategy, one
promotion program aimed at every person and one distribution
system aimed at the entire market.
Media Fragmentation
)
Market fragmentation has resulted in media fragmentation because

the of alternative media channels available to the consumer and
(c
all messages seen as one single message to consumer. Today's

consumers are being irritated with a bundle of television channels
and a steady stream of new magazines that hit the newsstands
every week.
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Explosion of New Technologies
Notes
The Technology is evolving today with much speed and has a
very disruptive impact on our daily life. Something that has been
considered as status symbol today is a myth of past now. Also
this explosion allow customer to have greater control over the
communication.
Emergence of Global Markets
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Due to advent of IT the whole world has collapse to a global
village. The culture around the world is merging and a unified
culture is emerging. Although this has created some opportunities
for organisation, but is also posing some potential threat as they
need now to be very cautious while designing there promotional
programs and unless the promotional program are well coordinated
and integrated it will not have any impact on the target market.
Shifts of Power from Manufacturers to Retailer

The power that historically rests with manufacturer has been
shifted to retailer. The retailers due to this power now demands
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huge promotion fees and can offer better retail information from
due to the usage of checkout scanner technology.
Shifting of Promotion Cost from Advertising to other

Forms of Promotion
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Due to the increase usage of Internet, growth of customer databases,

customer lack of time, companies are moving toward concentrated
and niche segmentation, as consumer has the convenience to order
what he needs and wants from direct marketers. This had led
to change on the percentage of promotion spent on advertising.
Traditionally this percentage used to be very high but now as the
market conditions are changing it is eroding and taking the form
of –
• Point of sales activities

)
• Online advertising etc.

(c
Emergence of Lower Cost and More Target

Communication Tools
As the traditionally used media tools is losing its impact, the
exploration of lower-cost and more targeted communication tools
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continues. Marketer now have the option to use promotional tools
Notes
like event marketing and direct mail etc that are more targeted
and have less cost as compared to of mass media.
Development of Database and Relationship

Marketing
One of the most important Direct Marketing is the Customer
Databases. It is a controlled collection of absolute data about
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individual customers or prospects, together with geographic,
demographic, psychographic and behavioral data.
These databases help companies in influencing and building

customer relationships and the organisation can also tailor its
message or market offering according to the personal needs of the
target market.
Increase Usage of Internet

Companies around the world are using the Internet as a competitive
tool to change how they transact the business. They can a company
does business and how they communicate and interact with
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customers as they can reach prospects at just the right moment
and can offer a low-cost, well-organised way to reach markets.
Agency Accountability
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The terms and conditions of the relation that the company and
agency used to have are changing, due to changes in the competitive
setup of the industry. The organisation now demands for greater
accountability from the advertising agencies and changes in return
and incentives of the agency.
Change in Shopping Approach

The reason behind why the consumer goes for shopping has been
change. Traditionally people used to went for shopping in order to
get the desired products and/or services from the market. But now
the shopping approach has been changed, it is now taking form of
freedom and entertainment.
)
Growth of Digital Media

(c
Multi-track media society that is constantly developing and

changing with the passage of time has led to advent of digital
media. In digital media consumer have extraordinary control over
the information and entertainment choice.
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With new digital media in place, people have thousands of viewing
Notes
options they can select from.
Future of IMC
The conception of integrated marketing communications (IMC)
is fairly new. The IMC tools allows marketing manager to plan
and then execute his marketing communication programs, which
create and maintain mutually beneficial, long-term relationships
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with the target market by satisfying their needs and wants. This
means that promotion tools are used to create loyalty. The future
trends of IMC are discussed in the following:
Competitive Advantage
The Various tools that organisation has can be used as a competitive
edge against the competitors. Competitive advantage is the edge
and the ability of firm to provide superior value to its target market
as compared to competitors.
Brand Equity
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IMC strategies are essential to the company's strategic brand
management because IMC strengthens the interface between the
organisation's strategy of brand identity and the target market's
brand equity. The brand identity strategy of the organisation
serves as a foundation for its overall IMC initiative and, for this
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reason, accounts for to the firm's brand equity.
Online Advertising
Online Advertising is becoming powerful IMC tool for advertisers
and organisation can use online advertisement as people are now
spending more time online; the Internet became another channel
via which companies can market their offerings successfully.
(Google; 2007)
Viral Marketing
Viral marketing is an IMC technique that is mostly used for trendy
)
brands, Marketers are increasing acknowledging Viral marketing

as an important IMC tool because it offers the traditions benefits
(c
and effectiveness of advertising.
Multi Channel Promotion

As multi channel media increases in reputation, the problem of
IMC is to make sure that the IMC campaign reaches its planned
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audience. According Perkin (2003) "as media-blitsed, ad-cynical,
Notes
time-poor, channel-flicking audience living in a fast-paced,
attention-challenged world"
Media Selection
There are a huge number of magazines, each having its own focus,
allowing segmented audience to the organisation. The owner of
these Magazines not only offers media planners a place to get the
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target audience, but also provide insights regarding audience and
how to connect with them in the most excellent manner.
Sponsorship Campaign
Sponsorship of sporting events like football, cricket, or even horse
race is recognised as a strong medium of promotion due to its
focus of providing target audience on one platform event and the
capability to attach with company target market by adding value
to their behavior and interests. Targeting the accurate event
will take a lot of research on behalf of the organisation while the
exposure created by sponsorship is very short lived (Crow 2003).
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Market Positioning
The art of targeting customer to portray a product in a certain
desired manner in known as positioning is the one of the most
important factor while launching a new product and/or service for
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any organisation.
Advertising diffusion is exceptional and media fragmentation is

growing now a days. In order to get a desired level of recall and
brand awareness marketer need to target several medium. This is
due to fact that consumer media habits are diverse and had led to
higher IMC budgets and also waste of the precious organisational
resources.
Direct Marketing
Direct marketing has become one of the most effective and efficient
way for reaching target market due to dynamic environmental
)
factors, changing customer preferences and technological

developments. (Brassington, F. & Pettitt, S. 2003). The key to
(c
successful direct marketing for an organisation is targeting.
Site-Targeted Campaigns
The keyword-embattled ads can become visible on Google
exploration results pages or on search and content sites inside
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the Google Network. Site targeting will give an organisation the
Notes
ability to:
• Advertise on most wanted sites.
• Reach customers near the beginning in the buying process,

with advertisements designed to increase responsiveness or
to promote a brand, but not unavoidably to generate clicks or
traffic
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Check Your Progress
1. Marketing communications strategy is the strategy used

by a company or individual to reach their ....................
through various types of communication.
2. While most people think of logo and stationery when it

comes to branding, your ....................is equally important.
3. To implement .........................communication, it is
essential for the organisations to communicate effectively
with the clients.
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4. ..................is one of the most effective ways of brand
promotion.
5. This .....................strategy focuses on what is general in

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the needs of consumers rather than on what is different.
Summary
Marketing communications strategy is the strategy used by a
company or individual to reach their target market through
various types of communication. It includes your message (what
is to be said), the medium (where it is to be said) and the target
(to whom your message is reaching). Any integrated marketing
communications strategy (IMC) should have three guiding
principles:
)
Brand alignment: Whatever marketing channel you choose

should have the same brand perception as yours. For example, if
(c
you sell luxury watches, build relationships with journalists from

TIME magazine, not those writing in your local newspaper (unless
you live in the Hamptons!).
Customer alignment: Follow the oldest rule in marketing –

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‘be where your customers already are’. Pick channels where
Notes
your consumers are already active. If you’re targeting younger
millennials, advertise on social media platforms like Instagram,
not Facebook and certainly not day-time TV!
Budget alignment: Choose a marketing channel that fits your

budget (obviously). If you don’t have a budget, getting a print ad in
WSJ will be out of your reach. But perhaps you can get a free press
mention on WSJ’s website by reaching out to the journalists
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1. What is the importance of an effective marketing
communications plan?
2. What are the different modes of brand communication?
3. What are the factors that influence international market

communication?
4. What are the factors leading to integration of marketing

communication?
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5. What are the benefits of integrated marketing communications?
) CC
(c
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Unit 18
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Notes
Integrated Marketing
Communication and International
Advertising
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Objectives
 International World of advertising
 Global Advertising Content
 Selecting an advertising agency
 Creating advertising
Introduction
Integrated Marketing Communications is a simple concept. It
E
ensures that all forms of communications and messages are carefully
linked together. At its most basic level, Integrated Marketing
Communications, or IMC, as we’ll call it, means integrating all the
promotional tools, so that they work together in harmony.
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Although Integrated Marketing Communications requires a

lot of effort it delivers many benefits. It can create competitive
advantage, boost sales and profits, while saving money, time and
stress. IMC wraps communications around customers and helps
them move through the various stages of the buying process. The
organisation simultaneously consolidates its image, develops a
dialogue and nurtures its relationship with customers.
International World of Advertising

Global advertising or international advertising consists of collecting,
)
processing, analysing and interpreting information. There are two

main purposes of international advertising research:
(c
1. To assist business executives to make profitable international

advertising decisions for their specific products and services.
2. To contribute to general knowledge of international advertising

that is potentially useful to a variety of business executives,
Unit 18: Integrated Marketing Communication and International Advertising
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educators, government policy makers, advertising self-
Notes
regulatory organisations and others interested in understanding
the process and effects of international advertising.
Common Characteristics and Cultural Differences -

Product or Service Offering
In global marketing, a company offers the same products and
services across the board, in multiple countries. Think about
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banks, insurance companies and large retail chains like Wal-Mart.
In international marketing, products and services are tailored to
specific countries. Think about Sharia finance products, which are
only offered in Islamic countries or to Muslim customers in non-
Muslim countries.
Marketing Staff
Global marketing personnel tend to work at the company’s
headquarters and generally are a diverse group of people. They
possess various skills that collectively mesh well together and take
a global view of the company’s market.
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Conversely, in international marketing, team members tend to
hail exclusively from the same country or a country with linguistic
or cultural affinity with the primary country.
Marketing Budget
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The budget of a global marketing team is managed directly from the

corporate headquarters. For example, Nike sets a global marketing
budget, which then trickles down to local offices. In international
marketing, however, budget issues are negotiated and handled at
the local level, within the subsidiary. Take for example McDonald,
which runs local ads, some of which you will never see in another
country.
Promotion Tactics
When it comes to promotion tactics, global marketing teams try
to run ads and other communication ploys that are in sync with
)
a global audience. An excellent way to understand is to see ads

that were run during the 2014 FIFA World Cup – a perfect mix
(c
for global marketing: global sports event, billions of viewers, one

passion for the game.
In international marketing, commercials and other promotion

tactics are tailored for the local market.
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Operational Autonomy
Notes
Marketing does not mean you sit in a corner office and think
about how to sell a product. The typical marketing mix has four
components, what experts call the 4Ps:
• Product
• Price
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• Promotion
• Place (of distribution)
So in terms of operational autonomy, global marketing teams tend

to run everything from A to Z, from the corporate headquarters,
whereas international marketing teams handle things domestically.
Social Media
By reviewing their social media pages, you can quickly see which
companies favour global marketing over international marketing –
and vice versa. For example, you will notice that McDonald adopts
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an international marketing strategy, with Facebook pages as
diverse as McDonald’s Malaysia, McDonald’s Brazil, McDonald’s
Italia and McDonald’s Polska (Poland). Conversely, Nike or
Caterpillar runs a single page.
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Customer Engagement
Customer engagement is more active in international marketing.
By setting multiple communication channels, a company can
better engage with fans and customers at a local level. That is
not to say that global marketing is less effective when it comes
to customer engagement – the tactics are just different. But it is
clear that international marketing tends to produce a higher level
of engagement than global marketing.
Advertising
In global marketing, commercials are run all over the world,
)
whereas international marketing favours ad airing in the local

market exclusively – or in similar markets, at most. Some products
(c
lend themselves pretty well to global advertising. We already

talked about sport gear; you also have movies and songs as well
as technology products. Other products, conversely, cannot exist in
some countries because of cultural prohibition or legal censorship.
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Market Research and R&D
Notes
Market research and R&D are as deep and broad in global marketing
as they are in international marketing. Sometimes, though, global
marketing can produce big flops when market research has not
properly conducted or local customs thoroughly studied.
Think, for example, of Chevy Nova’s and Mazda LaPuta’s

unfortunate stints in the Spanish market (in Spanish, ‘no va’ and
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‘la puta’ mean ‘it doesn’t go’ and ‘the whore,’ respectively). Other
product flops include –
• The Ben-Gay aspirin
• McDonald’s Arch Deluxe
• The Cocaine Energy Drink produced by Redux Beverages
Hybrid Structure
Our number 10 example is not really an example of comparative
global marketing vs. international marketing analysis, but an
illustration of how a hybrid structure – international and global
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– can help companies succeed. Coca-Cola used that mixed tactic
effectively in the earlier days and is nowadays followed by every
company, from Mercedes Benz to Frito Lay to Procter and Gamble
to McDonald's.
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Every culture could benefit from Nike, since shoes are a benefit
to everyone with feet (which is virtually everyone). The same is
true of Caterpillar, since industrial machinery helps to advance
mankind in general through more efficient construction. On the
other hand, if it is a product that only serves one sub-set of people,
or otherwise excludes certain subsets, then an "international
marketing" approach is necessary.
Companies with risqué or culturally insensitive products can't use

the same approach everywhere. For example, alcohol and lingerie
companies wouldn't have much fortune in many middle eastern
companies where drinking and dressing inappropriately are not
)
widely viewed as acceptable. Cigarette companies would need to

modify their message for more socially conscious populations. In
(c
these scenarios, international marketing would work better and

either no marketing, or specifically tailored marketing would be of
greater benefit.
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Notes
Global Advertising Content
Advertising message is of certain content, which is to be conveyed to
a recipient. It is a part of mass public communication and a specific
message in the process of mass communication characterised by:
1. Its commercial character (it is created and published to initiate

and guide the behaviour of potential consumers at buying
certain products
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2. To be distributed to recipients through means of mass
communication [1, p. 229]. The content of an advertising
message, regardless of whether it is aimed at domestic of foreign
markets must be evaluated according to its contribution to sale
results.
Advertising Message for Global Markets

Advertising message for global markets, as both product and activity,
is distributed through different means of mass communication; it
endures strong competition and comes in contact with those to
whom it isn't aimed. Such message should be –
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• Repetitive
• General
• Must stimulate recipient's behaviour

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There are not a big number of advertising messages, which are able
to draw or constrain attention of recipients to a certain product. It is
mainly the case with some commercial that have been going on for
a prolonged time and which can be recognised with customers and
general public and are based on advertising appeal as a carrying
idea or theme of the advertising message.
Aim of Advertiser and Advertising Message

The aim of the advertiser is to discover the real appeal and to
evaluate the role it plays in the overall campaign. Aiming of the
)
content of advertising message at activating one of more motifs

through the appeal one can turn a motive into a necessity for
certain products or services.
(c
Modification Advertising Messages to Local

Markets
Global advertising is more or less uniformed for markets of a
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number countries and often (yet not always) presupposes the use
Notes
of means of media of global range. There are global prototypes in
which the sound and visual effect can be used to avoid language
and cultural barriers. For example Colgate-Palmolive and Coca-
Cola companies often use prototype advertisements. These are
followed by instructions for acceptable changes in prototypes;
ideas for creative changes and suggestions for acceptable media
follow these commercials.
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Localised Advertising
Localised advertising can be global in its essence. Contrary to
that in multinational advertising messages and/or their creative
implementation is modified to the demands of certain markets. To
fulfil efficient communication and persuasion through advertising
messages and strategy of media it is necessary to change
commercials, messages and promotion strategy and to modify it to
demands of local markets and regions.
Marketing Dimensions of Global Advertising

Certain modifications in advertising are the way to answer demand
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of different cultures. For example, Goodyear Tire and Rubber in
39 countries used a slogan "Goodyear, take me home" but there
were certain differences. For instance in Philippine they stressed
certain emotional family scenes while in Brazil they ended these
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with a visual joke. Similar to that "Kellogg" used frizsed flakes in

similar commercials worldwide (using different names in different
countries).
A considerable number of globally oriented companies use popular

pop stars in global advertisements. Michael Jackson is shown in
the main role in Pepsi commercial around the world including
Russia. Tina Turner was also in Pepsi global commercials. When
Pepsi wished to localise the commercial it made a generic version,
Tina Turner was videotaped on a stage. The tape was then sent to
different countries where her voice was synchronised by local stars
in local tongues.
)
Translating of Advertising Message

(c
Translating the message is a subject of great debates among

experts in this field.
Efficient translation demands:
• Good knowledge of original language and the one into which it

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is being translated.
Notes
• Good knowledge of technical aspects of the product and special
appeals about the product and ability to write text, which can
recreate and affect.
Before deciding whether to make a new commercial for foreign

market or to simply have it translated into the local tongue, expert
must be sure that when the text is translated will be accepts and
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understood by prospective consumers.
Importance of Creative Translation Vs its Literal

Meaning
It is a condition of good communication. Well formulated of
translated message can –
• Increase covering the market
• Its sale
• Its profit
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However hundreds of examples of wrong formulation and
translation are in existence. For example –
• Advertising of Chevrolet's car "Nova" was not accepted on the

Spanish market since in Spanish "No Va" means "Doesn't go".
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• Message of Esso Company ("Put a tiger in your tank") was a

success in USA but not in some countries in Europe and Asia.
Selecting an Advertising Agency

Businesses come to the conclusion of hiring an external ad agency,
only when they are certified of the fact that the agency will help
them execute their advertising and promotional campaigns
more effectively. This is because the individuals working in an
agency are not just passionate about advertising, but are also
knowledgeable experts in their own field and thrive on the values
)
of unity and dedication for the project at hand. Most advertisers

work in collaboration with the hired agency, in order to ensure
that the work is carried out smoothly and also adheres to industry
(c
standards. With their immense experience and technical know-how

of the industry, ad agencies can work wonders for the promotional
activities of any business. But before you decide to hire the services
of an ad agency for your advertising efforts, you must conduct
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thorough research on the background of the agency.
Notes
Creating Advertising
It is important that business owners understand the basics of
writing a good advertisement. All businesses need promotion.
Thousands and millions of dollars wasted on ineffective, poor or
outright bad ads—and I want to save you that pain. After all, you
need new customers because without them your business will fail.
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The good news is that the core principles of how to produce a proper
advertisement apply to practically anything you may want to use
as a promotional tool.
This includes, but is not limited to:
• Brochures
• Emails
• Fliers and other mailers and handouts
• Magazine and newspaper ads

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• Online advertisements (display etc.)
• Postcards
• Web sites, including those used with online advertising

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It can take a bit of trial and error (testing) to build an ad or ad

campaign that really works, but following these 11 tried and true
tips can help you get the results that you’re hoping for.
Developing your USP

There are many more examples. The goal here is to help you
develop your USP yourself. What makes you different? Unique?
What do you have that no one else does? This is the kind of thing
you’re looking for.
Please keep in mind that any USP is almost better than none and
)
that this can change and be refined later. One more thing to keep
in mind is that you do not have to be the only one doing something
(c
or delivering some product to include it in your USP. It can be

something others are doing, but no one else is really promoting.
Use a Powerful Headline: Grab their Attention

“Attention grabbing takes skill and practice”
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“Getting attention can be subtle too”
Notes
People scan things quickly. They come into contact with so many
advertisements each day that they can’t possibly read each one.
This is why you have to make sure that your advertisement actually
grabs and keeps their attention.
Use of effective headline - You do that with an effective

headline. The greatest advertising man in history, David Ogilvy,
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said “On average, five times as many people read the headline as
read the body copy. When you have written your headline, you
have spent eighty cents out of your dollar.” The question you need
to ask is “Who are your trying to attract? What would get their
attention?”
Make them an Offer they can’t Refuse

Consumers love a bargain. So offer them a good one so that they’ll
come back to you time and time again. Whether you’re offering an
unbeatable price, a free trial, free shipping or a bundled package,
going out of your way to provide your customers with a good deal
will help you be successful. Once you come up with your irresistible
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offer, make sure that you advertise it proudly. When people see
that you have something great to offer them, they will have a
difficult time resisting it.
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In determining how much you can spend for an introductory product

or service, think of the overall Client Lifetime Value (CLV), the
amount a client will benefit a company over time, for your firm.
Talk About the Benefits – What’s in it for them

Ads should focus on benefits
Explaining the features of your products or services is important,

but explaining the benefits for the customer is really what it’s all
about. After all, people are more interested in what they get from
your services than what you do. Make sense?
This is not complicated. Here’s what you do to figure this out:

)
• List out all your services (or products).

(c
• For each one, list out everything that service (feature) does.
• Then, next list out what the result of each feature is – the
benefit for the client.
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Tell your News: Create an Advertorial
Notes
Webster’s Dictionary says that an “advertorial” is “an advertisement
that imitates editorial format.” In other words, it’s an ad that looks
like a news article!
Here is why this is important.
People are seven times more likely to read a news article than an
advertisement. People come in contact with regular ads all day
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long. There is really no incentive for them to read your ad if you
don’t offer them more than what everyone else is offering.
Take Away their Fear: Make your Offer as Risk-

Free as Possible
People are nervous about spending their money. There are too
many scammers and low-quality products out there. People worry
that they’ll be wasting their hard-earned cash when it comes to
many products and services. If people fear that they’re going to
lose their money and regret their purchase, they are unlikely to
purchase your product. But, if you remove these doubts, people are
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given an incentive to give your product or service a try. Almost all
major department stores (Sears, Bloomingdale’s, Dillard’s, Macy’s,
Walmart, Target, Hudson’s Bay in Canada etc.) use risk-reversal
and have a money-back guarantee on their products.
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The “Call to Action” and Asking them to Buy – or

not
Don’t just tell your potential customers about what your company
has to offer. Encourage them to take action. Tell them directly to
click on your ad, order your product, pay for your service etc. For
example, your “call to action” can encourage people to email you
for more information, to fill out a form to find out more about your
services, to join your weekly or monthly email newsletter or to
purchase your product or service. It could even direct users to click
on your ad to take them to your website rather than just looking at
the advertisement.
)
Make it Seem Urgent, Give them a Reason to Buy

NOW
(c
You don’t want to just plant the seed with your ads, you want people
to move forward and do something about your offer NOW. When
people see an ad and think about giving a company a try later, they
might actually mean to do so. But, people most often move on with
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their lives and forget all about the ad and the product that they
Notes
might have been interested in. Therefore, you have to encourage
people to act now rather than later.
Use Testimonials
One of the most important parts of creating an effective ad is
building up trust and interest in your company. Remember that
people have a lot of concerns these days, particularly when they’re
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online. It is important to build trust in your business, its products
and services so they know that your company is the right choice.
You can do this by showing that others in the past have been
pleased with their decision to buy from or work with you.
A great way to do this is by adding a testimonial or two to your ads

from those who are satisfied with your company and its products.
Today, countless people rely on online reviews when shopping for
new businesses, products and services.
Use Exciting Graphics

Plain text on a plain background can be boring. People don’t
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always want to read everything that has been written in an ad or
an article. You can appeal to the visual interest that your clients
have by adding exciting graphics to your advertisements.
Complete Contact Information

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You would not believe how many times I’ve seen advertisements,
often expensive magazine ads, posters, billboards etc. without
clear-cut company contact information. Don’t make this mistake.
You’ve told them what you’re selling, now tell them where to buy
it. Anything else is a waste of money. You should use your ads to
link people to your website for more information as part of the
contact information.
Check Your Progress
1. At its most basic level, Integrated Marketing

)
Communications, or IMC, as we’ll call it, means integrating

all the ................., so that they work together in harmony.
(c
2. Global advertising or international advertising consists

of collecting, processing, ...............and ......................
information.
Contd...
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3. In international marketing, ..............and other
Notes
......................are tailored for the local market.
4. Sometimes global advertising of a global brand mishaps

and company must turn to ..................adaptation.
5. Certain .............in advertising are the way to answer

demand of different cultures.
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Summary
IMC increases profits through increased effectiveness. At its most
basic level, a unified message has more impact than a disjointed
myriad of messages. In a busy world, a consistent, consolidated and
crystal clear message has a better chance of cutting through the
‘noise’ of over five hundred commercial messages which bombard
customers each and every day.
Carefully linked messages also help buyers by giving timely

reminders, updated information and special offers which, when
presented in a planned sequence, help them move comfortably
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through the stages of their buying process… and this reduces their
‘misery of choice’ in a complex and busy world.
Finally, IMC saves money as it eliminates duplication in areas such

as graphics and photography since they can be shared and used in
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say, advertising, exhibitions and sales literature. Agency fees are

reduced by using a single agency for all communications and even
if there are several agencies, time is saved when meetings bring all
the agencies together – for briefings, creative sessions, tactical or
strategic planning.

1. What are the main purposes of international advertising
research?
2. What is the aim of advertiser and advertising message?

)
3. What is difference between global and local advertising?

(c
4. What is the difference between basic advertising appeal and

creative implementation of appeal?
5. What are the steps involved in creating advertising?

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Unit 19
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Notes
Global Promotional Strategies
Objectives
 Global public relations and Publicity
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 Direct Marketing
 International Trade Fairs
 Personal Selling
 Sponsorship Promotion
Introduction
The globalisation of business has caused multinational companies
to spend considerable time assessing their global product and
promotion strategies. A dilemma with both is whether to present
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a universal product offering or to customise the product or
promotional efforts to each country of operations.
Global Promotion - A global promotion strategy is when your

company presents the same basic message of brand or product
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value around the globe. This approach ties closely with the
standardised product strategy. The general idea is to present a
universal product with benefits that apply to customers in each
targeted marketplace. An advantage of a globalised approach is
consistency, in that customers in each market can identify with
your brands as they travel the world. While the company tailors
menus and messages in some instances, McDonald's has benefited
from a consistent commitment to its global message of efficient,
family-friendly fast food.
International Promotion - An international promotion strategy

is when promotional messages vary from one country to the next
)
or where campaigns are tailored to different regions. This strategy

is used with either the standardised or customised product. With
(c
a standardised product that has different uses, variations in

marketing project different benefits or value propositions based on
the uses in each market. With the customised product strategy,
promotions are tailored to emphasise the value of the customised
offering in each market. This can generate stronger loyalty in
Unit 19: Global Promotional Strategies
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markets where brands are perceived differently, though the costs
Notes
are usually greater with customised promotion.
Global Public Relations and Publicity

Every person engaged in business should understand the
importance of public relations and publicity. Many businesses tend
to invest heavily on promotional campaigns and advertisements
just to attract the attention of their target markets. Regardless
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of the cost of publicity campaigns, most companies are willing to
spend a fortune just to establish branding and an image that will
retain in their customer’s minds. Public relations and publicity are
two things that go hand in hand-always. Good publicity entails
good public relations and vice versa. They are highly essential to
the success of every business.
Establishing Company Image

Communication is crucial to every business. Public relations may
refer to any action taken by a company, organisation, or group
to create and maintain a harmonious relationship and open
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communication with the public. Everyone knows that it is the
public that dictates the success of a business. People are the life
of the corporate world. Without people supporting a product, such
company will never survive especially in the current economic
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downfall in the global market.
Building Rapport with Employees and Investors

Aside from the market, public relations involve the actions used
to build rapport with employees and investors. To achieve this,
businesses employ different PR means such as media relations,
analyst relations, corporate communications, labor relations and
internal communications. All these things are designed to achieve
one goal: to build a positive company image.
Right Marketing Approach

)
Public relations and publicity can be established with the right

marketing approach. PR professionals work with their clients to
create the image of a company. The market approach as a valuation
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method is used to find the value of a business by comparing it to

other similar businesses that have sold recently.
The traditional approach includes sending out press releases,

researching public opinion, courting journalists and media
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ES
personnel to have the company featured on a TV show or a
Notes
top-selling magazine and other publications. It also includes
researching public opinion to make an impression that a particular
company is interested in the public’s opinions and feedback.
Modern Marketing is a holistic, adaptive methodology that

connects brands with real customers and drives business results
by blending strategy, creative, technology and analysis.
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Publicity is Not Advertising
Most of the time, advertising is misunderstood as publicity but
they’re totally different when it comes to the concept but they’re
both the same as to the goal. Advertising is more product-oriented.
The aim is to sell the product or service offered by the company. On
the other hand, public relations and publicity is people-oriented.
The goal is to communicate with the market in a very efficient

manner in such a way that they would be motivated to buy what a
company offers.
Building the image of a company is not an easy task. It requires –

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• Strict planning
• Strategies
• Study
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One wrong move and publicity can ruin everything. Even

professional PRs find it a bit challenging to achieve superior public
relations and publicity.
Modern Technology and the World Wide

Fortunately, the modern technology and the World Wide Web have
made it possible for PR professionals to make the task easier and
more effective. The onset of social media and digital marketing
made it possible for small and medium businesses to venture in
publicity campaigns because the cost is cheaper. Press releases can
)
now be sent via email to thousands of prospective customers with

the single click of the mouse; Add the advent of social networking
sites. These things have made public relations and publicity
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feasible and worth trying.
Public Relations professionals don’t necessarily tell people what to

think—they tell them what to think about. When you watch the
news or peruse the daily headlines, you’re taking in information
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that has already been determined by someone else to be worthy of
Notes
your time and attention.
Behind the scenes, a skilful PR Pro crafted a message and pitched

an idea to the media - to bring to your attention. If you’ve ever
watched a program and wondered, “how did that person or business
end up being featured,” then you’v PR is chess, not checkerse seen
the result of a PR PRO at work.
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Direct Marketing
Direct marketing is as old as the written word and is a business
staple. It is also widely used by those in the non-profit arena. It is
a form of advertising that allows businesses and organisations to
communicate directly to customers through a variety of media such
as phone calls, text messaging, emails, fliers, catalog distribution,
promotional letters and targeted television campaigns known as
infomercials.
1. What is Direct Marketing?

E
Direct marketing (often known for its aggressive tactics that
attempt to reach new customers, usually by means of unsolicited
direct communications) is often used to reach out to existing, or
past, customers.
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Key factor - A key factor in the success of any direct marketing

campaign is what industry experts refer to as a "call to action."
What that means is that direct marketing campaigns should offer
an incentive or enticing message to get consumers to respond (i.e.,
act). In other words, as a direct marketer you must offer the people
a benefit, whether it is money off their next purchase, a limited
time cost coupon, or, for a non-profit, an invitation to an event or
membership reduction.
Return of investment - While direct marketing involves the

organisation attempting to locate, contact, offer and make incentive-
based information available to consumers, there also needs to be a
)
return-on-investment. If handing out flyers to drum up business at

your newly-launched pizza parlor doesn't net more customers, it's
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not worth the employees’ time.
Alternative approaches - The good thing about direct marketing

is that there are so many alternatives that if one approach doesn't
work, you can easily switch to another. Instead of flyers, try offering
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a free beverage for first-time customers and post that on your web
Notes
site as well as social media sites.
2. Types of Direct Marketing

While the world of direct marketing is ever-evolving (in a short
time span we've gone from facebook to twitter to Instagram to snap
chat), there are three main types of direct marketing include:
Telemarketing:
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Direct marketing that involves – Calling people at home or work to
ask for donations and get their opinion and support for -
• Your cause or political campaign
• Or solely for sales purposes
Email Direct Marketing:
This form of direct marketing targets consumers through their

Email accounts. Email addresses can be harvested from websites,
social media outlets, industry forums, making purchases online or
E
purchased. Some companies require you to receive announcements
in order to use their websites.
Direct Mail Marketing:

Advertising material sent directly to your home or business though
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is more predominately used by non-profits. Other types of direct

marketing include –
• Distributing flyers
• Door-to-door solicitations
• Curbside stands
• FAX broadcasting
• Television marketing (i.e. infomercials)
• Coupon ads in print media

)
• Voice mail marketing

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3. Does Direct Marketing Work?

That depends on how you define "work." Direct marketing
does ensure people know about your business. But aggressive,
misleading, or annoying direct marketing can leave people with a
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bad impression about your business.
Notes
Be sure to adhere to privacy and contact laws on a federal and
state level because there are stiff fines and penalties for direct
marketers who violate direct marketing laws.
4. Should I Consider Direct Marketing?

Every business owner should consider direct marketing. However,
the type of direct marketing that will work for your business
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depends on your industry, your business ethics and your budget.
International Trade Fairs

A trade fair (trade show, trade exhibition, or expo) is an exhibition
organised so that companies in a specific industry can showcase
and demonstrate their latest products and services, meet with
industry partners and customers, study activities of rivals and
examine recent market trends and opportunities.
In contrast to consumer fairs, only some trade fairs are open

to the public, while others can only be attended by company
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representatives (members of the trade, e.g. professionals) and
members of the press, therefore trade shows are classified as either
"public" or "trade only".
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Personal Selling
Personal selling is an important marketing tool for small businesses,
particularly those that sell complex or high-value products and
services to other businesses, rather than consumers.
Companies can undertake personal selling by hiring sales

representatives who visit customers or by contacting customers
by telephone. Companies selling to consumers may find it
uneconomical to deal with individual customers, unless they are
selling face-to-face in a mall, marketing high-value products such
as cars or selling products that require demonstration, such as
)
smart phones or computers.
Persuading Prospects
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Sales representatives use their personal selling skills to increase

the chances of a successful sale. They aim to understand a
prospect’s needs and offer a solution to those needs in the form of
a product or service that provides strong benefits and represents
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value for money. If prospects pose objections, sales representatives
Notes
use their powers of persuasion to overcome the objections and
convince prospects that they are making the right choice by buying
a product or service.
Selling Complex Products

Companies that sell complex products must be able to demonstrate
or explain products to potential customers and deal with questions
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or queries. Sales representatives can present products in a
logical way, focusing on the benefits that are relevant to different
decision-makers, such as technical managers, purchasing officers
or finance executives. Representatives use their experience to
gauge a prospect’s response to their sales pitch and adjust their
presentation to individual prospects’ levels of understanding or
interest.
Managing the Sales Cycle

Personal selling is important to companies marketing products
that require a long sales cycle. In business-to-business marketing,
prospects move through a buying process that involves a number
E
of stages, including identification of a need, development of
a specification, selection of potential suppliers, evaluation of
suppliers’ offerings and a final purchasing decision.
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Sales representatives can influence each stage of the process by

ensuring that prospects are fully aware of a supplier’s capability
and product benefits. They also ensure that prospects receive the
product, pricing and technical information they need to make a
decision and they maintain contact with the important decision-
makers throughout the sales cycle.
Developing Customer Relationships

To build long-term revenue for the future, representatives use
personal selling skills to develop strong relationships with
customers. By contacting customers after they make a purchase,
for example, representatives can demonstrate that their company
)
offers high levels of customer care. They also maintain contact

between sales to ensure that customers consider their company
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when they are planning their next purchase.
Sponsorship Promotion
Sponsorship is the fastest growing form of marketing in the US,
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but it's still very much in its infancy. This is particularly true in
Notes
the trade show arena. You can find unlimited opportunities to
broaden your competitive advantage with this in mind.
Consider using marketing techniques to –
• Increase your credibility
• Improve your image
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• Build prestige when you sponsor events that attract your
target market
When it's done well, sponsorship offers significant opportunities

for distinct marketing and it shows support for the event.
Enhancing Image and Shaping Consumer Attitudes

Companies often looking for ways to improve how they're perceived
by their target audience. Sponsoring events that appeal to their
market are likely to shape buying attitudes and help generate
a positive reaction. For example, Coca-Cola is always looking to
generate a positive influence of their products in the minds of their
E
consumers. As such, the company regularly supports events that
it feels can influence consumer opinions, like the American Idol
television show on ABC.
Building Brand Awareness

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You can spend a lot of dollars on print advertising or on audio and

television commercials, but you'll spend a lot less and perhaps
achieve a better result if you can simply put your product in the
hands of potential consumers.
Sponsorship doesn't have to be huge along the lines of what

Coca-Cola has done with American Idol. If you own a pet store or
manufacture pet supplies, provide leashes bearing your name for
your local kennel club's annual dog show or trade show. Whenever
an owner or judge attaches a leash to a pup, your name is right
there. You're engaging your audience, meeting with them one on
)
one at the most opportune time. Now fast forward a few weeks to a
point in time when one or more of those breeders who were present
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need new leashes. Are they more likely to remember an ad they saw
in a magazine or that leash that helped to control a pooch at crunch
time?
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Driving Sales
Notes
This goes hand-in-hand with brand awareness. Sponsorship that's
geared to driving sales can be an extremely potent promotional
tool. This objective allows sponsors to showcase their product
attributes. Food and beverage companies often use sponsorship
to encourage samplings and sales. IEG’s Complete Guide to
Sponsorship cites Visa’s fund-raising effort around its sponsorship
of the Olympic Games and the US Olympic Team. They promoted
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their association by offering to make a donation to the team each
time consumers charge a purchase to their Visa card.
Increasing Reach
A good sponsorship will not only allow you to make contact with
potential buyers and customers, but it can also promote that
priceless marketing tool: word of mouth. Ideally, people who
attend the event will continue to talk about your service or product,
particularly if they had a good experience with it at the time.
Your brand name should appear on all the event's promotional

E
materials, including emails and their own advertisements. Now
you're reaching a lot of people who are interested in the sort of
thing you're selling, all part and parcel of your sponsorship.
Creating Positive Publicity and Heightening

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Visibility
Every sponsor seeks wide exposure in both electronic and print
media and positive publicity helps create heightened visibility of
products and services. Various media covering the event sometimes
include sponsors' names or photos. This kind of media coverage is
often unaffordable if the company were to think of purchasing it—
if it was even available at all.
Differentiating from Competitors

The mere act of sponsoring an event, especially an exclusive
sponsorship, is a significant way to create competitor
)
differentiation. Your company name has the opportunity to stand

out head and shoulders above the rest. This is particularly helpful
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if your company wants to combat a competitor that has a larger

ad budget. Sponsorship allows smaller companies to compete with
industry giants.
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Helping with a Good "Corporate Citizen" Role
Notes
Another powerful sponsorship objective allows companies to be
viewed as "good neighbours." They're perceived as supporting the
community and contributing to its economic development and
this is extremely powerful and creates enormous goodwill. Target
audiences see the sponsor as making a greater effort to support
the event, often allowing more or better activities to take place as
a result. This provides another way in which you can engage your
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audience through the support of their interests and causes.
Generating New Leads

This opportunity is particularly alive and thriving at trade
shows you actually attend. You're personally present and so are
innumerable others who have an interest or need in your service
or product. Use the event to talk shop. Showcase yourself or
your product without going overboard. You've already got a good
thing going, you're a sponsor and that affords you a certain level
of respect. You don't have to clap yourself on the back. Just be
knowledgeable and helpful so attendees remember you when they
E
need what you have to offer.
Enhancing Business, Consumer and VIP Relations

Sponsorships that offer hospitality opportunities are always
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very attractive to companies. Perks can include special exclusive

networking settings, such as VIP receptions or golf tournaments.
These are opportunities to meet key customers and solidify business
relationships. It's important to evaluate each opportunity and look
for ways it can tie into your marketing objectives.
Check Your Progress
1. The globalisation of business has caused .................

companies to spend considerable time assessing their
global product and promotion strategies.
)
2. The market approach as a valuation method is used to

find the ........................by comparing it to other similar
businesses that have sold recently.
(c
3. Fortunately, the modern technology and the .........................

have made it possible for PR professionals to make the
task easier and more effective.
Contd...
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4. Sponsorship is the financial or in-kind support of an activity
Notes
and is used primarily to reach specified ...........................
5. Every sponsor seeks wide exposure in both .....................

and print media and positive publicity helps create ............
of products and services.
Summary
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The globalisation of business has caused multinational companies
to spend considerable time assessing their global product and
promotion strategies. A dilemma with both is whether to present
a universal product offering or to customise the product or
promotional efforts to each country of operations. Public Relations
is about STRATEGY; anticipating how audiences will receive
and respond to specific messages. PR PROs need to observe and
analyse trends, human behavior, history and circumstances to
stay two steps ahead. When it comes to an effective public relations
strategy, "it's chess, not checkers."
Traditionally, PR has used news releases, press conferences, wire

E
services, media kits, interviews and special events to accomplish
various communications objectives. Now we have the world of
digital and social media, which extends that reach into websites,
interactive blogs, micro-blogging, social networking platforms,
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webinars, podcasts, webisodes, video streaming and mobile

marketing apps.

1. What is direct marketing?
2. What are the steps for creating brand awareness?
3. How international trade fairs support product promotion?
4. What is importance of public relations and publicity in business

promotion?
)
5. What are the different types of direct marketing?

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Unit 20 279
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Notes
Global E-Commerce
Objectives
 E-tailing growth
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 Speed to Market
 New technologies in the rules of competition
Introduction
It goes by many names — cross-border commerce, borderless
business, international online retail. But more important than
what it is, is what it isn’t. Global ecommerce is not a luxury. It’s
not one strategy among many. Going global is a necessity. Global
ecommerce is selling products or services across geopolitical
borders from a company’s country of origin – normally defined
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as its founding or incorporating location. Products or services
are sold into non-native markets via online sales and marketing.
Cumulative data anticipates a 276.9% increase in worldwide
ecommerce sales over the most-recently tracked period.
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E-tailing Growth
Electronic retailing, commonly known as e-tailing, is one of the
most significant subsets of the global e-Commerce industry. The
global e-tailing market accounts for a significant revenue share of
the global e-commerce market, owing to its dominance in online
business and trade operations.
Increasing Proliferation of Communication

Technology and Gadgets
)
The increasing proliferation of mobile phones, smartphones and

broadband internet, 3G network expansion and comparatively
lower prices are the elemental trends sustaining the growth of the
(c
global e-tailing market. Some of the additional features that are

appealing to consumers, resulting into the growth of the global
e-tailing market are:
• Mobile payment transactions

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• Internet banking
Notes
• Feasible transaction options such as “cash on delivery” and
“easy returns policy”
Creation of Business Acquisitions and New E-tailing

Ventures
Since, the early 2000s, several leading IT- and retail-companies
have been carrying out business acquisitions and developing new
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e-tailing ventures to reap benefits by actively participating in the
growth global e-tailing market. Starting with PayPal’ acquisition
by eBay, the e-tailing market has witnessed numerous mergers
and acquisitions. Amazon.com selling about 500 Mn SKUs in the
US and Groupon turning down Google’s offer to start its IPO is
indicative of the business activity in the global e-tailing market.
Key Drivers and Restraints Impacting the Global

E-tailing Market
The fundamental factors driving the demand for e-tailing trade
and business transactions include –
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• Independent access to online trade portals
• Open platforms for seller or buyers
• Ever-inflating costs of products available in brick-and-mortar

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retail shops
• Favourable government regulations
• Rise in regional GDPs
• Rise in per capita expenditure
These are some factors supplementing the growth of the global

market for e-tailing transactions.
Key Restraints-Hampering Growth of Global

E-tailing Market
)
Key restraints hampering the growth of global e-tailing market

include –
(c
• Lack of immediate product possession
• Traditional consumer preferences buying directly from retail

outfits
Unit 20: Global E-Commerce
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• Lack of internet usage
Notes
Some of the longstanding challenges in the global e-tailing market
that key players have been working on addressing include:
• Security concerns
• Growing consumer scepticism towards product quality
E-tailing companies and manufacturers are also addressing other
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resolvable challenges such as –
• Delay in product deliveries due to inefficient collaboration with

local warehousing, packaging and transportation mechanism
E-tailing Market: Competitive Landscape

Alibaba Group, valued at $ 25 Bn, is currently the largest global
IPO in the world. In 2011, eBay acquired GSI Commerce, an online
shopping sites developer, for $ 2.4 Bn.
The top key players in global e-tailing market include –
• Amazon.com, Inc.
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• ASOS.com
• Futurebazaar.com
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• eBay Inc.
• Walmart.com
• Alibaba.com
• Bourbon and Boots, Inc.
• Dafiti.com
Factors for the Growth of E-Tailing in India

Electronic Payment System
E-tailing encourages the buying and selling products, information
)
and services on the internet and other online environment. In this

environment, payment take the form of money exchange in an
(c
electronic form, and are therefore called Electronic Payment.
Enhanced communication with the client: E-tailing enables

personalised interaction with customers.
No rent or land costs: E-retailers do not require sophisticated

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showrooms in prime locations and operate through their websites
Notes
or portals. This significantly saves the store maintenance costs,
which are pretty high for physical store retailers.
Effortless and joyful shopping: Online shopping saves time.

Shopping in the comfort of our home through the Internet is a huge
attraction for customers.
Universal reach: A supermarket has a limited geographical area
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of operation. It caters only to a limited number of customers of a
particular locality, but a website can be accessed from any part
of the globe, which increases its market multi-fold. Such websites
also serve as a good medium of advertising at a minimum cost and
reach out to the world.
Any time accessibility: The online store is accessible 24×7 and

delivers your products home. That saves time and effort. Prices
can be compared. Online shoppers can compare the prices of the
products they want to buy with competitive sites and then go for
the purchase.
No duplication of products: Branded products are sold at

E
competitive prices on credible online portals. This reassures the
consumer that no duplicated, low quality products will be sold on
these sites.
Barriers to Growth of E-Tailing Market

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External Barriers to E-Tailing

There are many external barriers to the diffusion and
implementation of e-commerce. These barriers include:
• The high cost of internet access
• Lack of effective payment facilities and banking services
• Advanced retail network
• A cultural lack of trust

)
• Lack of government policy and legal frameworks
• Lack of education in e-commerce

(c
• Customers' need for the physical shopping experience
Internal Barriers to E-Tailing

Barriers to the implementation of e-commerce implementation not
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only exist in the external environment, but also in the internal
Notes
organisational environment.
These barriers are:
• Business processes
• Strategic direction
• Senior management commitment to e-commerce
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• Senior management knowledge of e-commerce
• Investment
• IT/IS expertise
• Organisational mission
• Profit objectives
• Information systems
• Integration
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• Organisational culture
• Product categories and prices
Challenges to Growth of E-Tailing Market

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We have identified about several impediments for the growth of

e-tailing. They are:
• Consumers can not touch and feel products
• Orders can take several days to be delivered
• Shipping costs are often excessive
• Customer service is often poor
• Returns can be difficult
A number of consumer characteristics as potential obstacles to

)
Internet growth, include –
• Consumer traditional shopping experiences

(c
• An aversion or lack of access to the required technology
• Perceived risks of electronic shopping

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No Negotiations Possible
Notes
Online shopping does not allow negotiations or bargaining, which
price conscious Indian consumers love doing. Lack of touch-and-
feel experience of the products:
Customers cannot physically examine the products they buy online.

They get to do that only when the product is delivered to them.
The Trust Factor
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Sometimes, online consumers are unable to trust new e-retailers
with respect to safe and timely delivery of a product that is ordered
online.
Increased Competition
Big e-tailers are already dominating the Indian market, making
the entry and survival of small e-retailers tough. Privacy concerns.
Consumers fear that the information they provide may lead to
spam e-mails or identity fraud.
Possibilities of Fraud
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Unscrupulous e-tailers can damage the faith of the common
consumer. No direct interaction. In e-tailing, there is no face-to-
face interaction between the customer and seller. Some consumers
are not comfortable about this.
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No Direct Interaction
In e-tailing, there is no face-to-face interaction between the
customer and seller. Some consumers are not comfortable about
this.
Delivery of Products
E-tailers who do not deliver on time spoil the market for other
genuine e-Tailers.
Language
)
To reach a wider base of consumers in India, websites must enable

communication in local languages. At present, most e-tailers use
(c
only English as the mode of communication.
Controlling Customer Data

As the delivery services are becoming more modern in using
information technology, e-tailers may face some risks to properly
285
ES
handle on their consumer data. The data related to the socioeconomic
Notes
status of customers to their buying patterns and preferences, helps
intermediaries and shippers reduce costs.
Problems with the Payment System

People in India are not accustomed to the online shopping system
and moreover the online payment system through the credit card
is also totally alien to them. Most of them do not avail of the
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transaction facilities offered by the credit cards. They are also
dubious regarding the online payment system through the credit
cards.
Companies should protect their system from hackers as customers

often worry about theft of their personal information, such as a
credit card number. Both technological and legal tools should be
used to enhance the security of e-commerce.
Lack of Full Cost Disclosure

It is easy to compare the basic price of an item online, it may not
be easy to see the total cost up front as additional fees such as
E
shipping are often not be mentioned.
Handling Returns
The problem of returns is very much prominent in e-tailing
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businesses in India. The customers can return defective or

unwanted merchandise which he receives. E-commerce retailers,
with their emphasis on convenience and customisation, must
match this standard of service. At present, they do not.
Delivering the Goods Cost-effectively

At present, every single transaction challenges e-tailors to deliver
the goods quickly, cheaply and conveniently. The existing mode for
home delivery works well for letters and flat packages but not for
e-tailing as it encompasses with high volumes and wide variety of
package shapes and sizes.
)
Problems with Shipping

The customers using the online shopping channel should be assured
(c
that the products that they have ordered would reach them in due
time.
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Offline Presence
Notes
The customers of India should be assured that the online retailers
are not only available online but offline as well. This gives them
psychological comfort and trust. The concept of e-tailing or online
retailing in India has not gained prominence as Indians prefer to
touch the products physically before buying them.
Studies have also revealed the preferences of the customers towards
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the traditional shopping methods. Hence the online retailer in
India should first make it a point to spot the potential customers
and accordingly plan out the product.
Language Problem
Most internet retail shops use English as their mode of
communication. English may not be comprehensible to the majority
of the Indian population. To increase the customer base, content in
the online retail shops should be provided in local language.
Opportunities on E-Retailing in India

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Convenience
Normally online stores are usually available 24 hours a day, and
many consumers have internet access both at work and at home.
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Price and Selection

One of the biggest advantages of online shopping is to find out
quickly deals for items at services with many different vendors.
Search engines, on-line price comparison services and discovering
shopping items can be used to find out sellers for a particular
products or services.
Some retailers also offer free shipping on sufficiently large orders.

Searching an online catalogue can be faster than browsing the
physical catalogue of a brick and mortar store.
Market Research
)
Retailers can use their online presence as a tool to gain valuable

(c
customer information to forecast future customer demand. Online

market research has some powerful advantages, such as monitoring
real-time buying decisions. In addition, online customers have the
knowledge and experience necessary to answer the questions,
which produces more accurate and reliable data.
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Online Customer Service
Notes
In India, websites are becoming new channels for conducting
customer service; therefore their general acceptance level will
increase, due to the benefits provided to customers. For example,
a customer could ask for a product introduction or a personalised
product in the pre-purchase stage and could also check the delivery
status online. All such services can be available uninterrupted
online, which is almost impossible in the physical world, due to
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the cost.
Promotional Tool
A website can be used as a medium to conduct promotional
experiments, due to the wide reach of the internet, and the low
cost. Therefore, it will be a great opportunity for Indian companies
to promote their businesses.
Marketing Tool
A website is also an effective channel to communicate with customers.
Organisations do not need to rely solely on one-way communication
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media, such as TV and newspapers. The internet provides a two-
way communication channel. As a new communication channel,
the internet can provide benefits to retailers, such as low costs,
interactivity, personalisation and continuous communication.
CC
Speed to Market
Every business constantly seeks a competitive advantage, that one
thing that makes customers choose them over others. Regardless
of size, sector or budget, to remain in business, there has to be
a unique something that they do ‘better’ than the everyone else.
Some use strategic alliances, technology or employees, as sources
of competitive advantage, but not all of these can be used in every
situation.
Improving Speed of Market

)
Here are five ways to improve on speed to market:
1. Implement a Well-Defined yet Scalable Process

(c
Faster speed to market starts with a thorough examination of

your business process. Take a few steps back and examine what
is working; use this 10,000 foot view to identify bottlenecks
in moving from an idea to a finished concept. When you have
288
ES
identified the processes that work, it’s time to build a scalable
Notes
process that eliminates downtimes and minimises handoffs.
By detailing the steps required, valuable resources are also not

dissipated across too many projects, which is a major cause of
projects stalling. Concentrating limited resources on deserving
projects ensures the right tasks get done better and faster.
2. Automate Essential Processes
UP
A well-defined workflow allows you know what resources (tools
and personnel) need to be deployed to achieve desired goals.
The pursuit of faster speed to market can benefit from process
automation. By making these essential operations, approval
of processes and reporting, as automated as possible, faster
management decisions can be made. This ultimately leads to
quicker signing off on projects.
3. Use Outsourcing
Visualising the process is one thing; but what if you don’t have
the resources required to complete said process?
E
Purchasing new equipment and training new staff is possible,
but it defeats the pursuit of speed. To counter this, businesses
are encouraged to contract or outsource services that are
required for business growth, but they lack the in-house
CC
capacity for.
4. Minimum Viable Product First

The concept of increasing speed to market allows businesses
test the market and see what it will bear. In creating a product
or services that satisfies this, it’s helpful to remember that it
doesn’t have to 100% perfect from the beginning. The point of
offering it to consumers quickly is so you can get feedback, just
as quickly. Some analysts call it experimenting, others say it’s
‘failing fast,’ we simply say ‘get the minimum viable product
out there and let your customers choose which features they
)
want.’
5. Aim to Remain Flexible

(c
In every industry, there seem to be companies that seem to

be ‘moving at warp speed.’ However, this is simply a function
of being responsive, flexible and constantly innovating. Being
loose enough to react to changes and pivot where needed,
289
ES
while staying rigid enough not to be totally derailed, is what
Notes
gives companies like Apple their ‘inexhaustible’ staying power.
By continually collecting and analysing market information,
teams can remain agile especially when making important
decisions.
Increase your speed to market this quarter, by implementing these

five tips. They will help your business get ready and stay ready.
UP
New Technologies in the Rules of Competition
A common trend we find with our customers is their need to cut
costs to remain competitive. Technology can and is a catalyst for
cutting costs, but it is time to stop looking at technology as merely
an operational expense and see it as a competitive advantage.
With the advances in technology and the evolution of IT, many

large corporations are fundamentally shifting their view of IT as
a way to –
• Gain market share

E
• Launch competitive products
• Enhance their services
For small businesses, these advancements are great news as they

CC
can –
• Often realise the same benefits of IT as their large business

counterparts
At the center of this fundamental shift in IT are mobile and cloud-

based technologies. Mobile devices already play a significant role
in our everyday lives, but they should be playing a stronger role
in your business. Businesses are looking to have a mobile strategy
that could give employees secure access to their business data,
apps and productivity suites, regardless of where they are located.
The ability of an employee to respond to an email from a lead, or

)
access a file and deliver a proposal in a timely fashion, can be the

difference between winning the business or not. Thus, the business
(c
with a mobile strategy is at a significant advantage for landing

that new account or retaining an existing one.
Emergence of Cloud Technologies

This advantage is fuelled by the emergence of cloud technologies.
290
ES
More and more customers are beginning to see the value of cloud
Notes
services and how they can not only support an effective mobile/
digital strategy but modernise operational technology. Some
of the biggest, recent success stories of where mobile and cloud-
based technologies provided a significant competitive advantage
and created a new marketplace include car services like Uber
and Lyft. These companies leveraged technology to enhance and
revolutionise the outdated concept of taxi services. The result is an
UP
efficient business model that meets the needs of today's mobile and
connected consumer.
Michael Porter from the Harvard Business Review says "new

technology changes the nature of competition," by:
• Changing industry structure and, in so doing, altering the

rules of competition
• Creating competitive advantage by giving companies new ways

to outperform their rivals
• Spawning whole new businesses, often from within a company's

existing operations
E
These are only a few reasons why any business owner should use
technology to their advantage. If you're looking for that competitive
edge, here are a few tips to get you started:
CC
• Identify areas of your business that could potentially benefit

from these strategies
• Insist on having a mobile and cloud strategy
• Apply these strategies to employee's day-to-day workflow
Computer-Based Technology Offering New

Competitive Opportunities
As it moves from a strictly supporting role in the back office,
computer-based technology offers new competitive opportunities.
A company can use this technology, for example, to –
)
• To build a barrier to entry

(c
• To build in switching costs
• To completely change the basis of competition
This author shows how some companies have seised the advantage,
while others, more complacent, have ended up playing the difficult
291
ES
and expensive game of catch-up ball. He also points out that it
Notes
is important for executives to make this competitive analysis in
assessing where IS fits in their companies, since in some cases it
appropriately plays a support role and can add only modestly to the
value of a company’s products, while in other settings it is at the
core of their competitive survival. Understanding where a company
fits on this spectrum can help the CEO determine both the proper
level of expenditures and the proper management structure for IS.
UP
On-Line Network to Key Customers
To solve customer service problems, a major distributor installs an
on-line network to its key customers so that they can directly enter
orders into its computer. The computer’s main purpose is to –
• Cut order-entry costs
• To provide more flexibility to customers in the time and process

of order submission
The system yields a larger competitive advantage, adding value

for customers and a substantial rise in their sales. The resulting
E
sharp increase in the company’s market share forces a primary
competitor into a corporate reorganisation and a massive systems
development effort to contain the damage, but these corrective
actions have gained only partial success.
CC
Examples:
A regional airline testifies before the US Congress that it has

been badly hurt by the reservation system of a national carrier.
It claims that the larger airline, through access to the reservation
levels on every one of the smaller line’s flights, can pinpoint all
mutually competitive routes where the regional is performing well
and take competitive pricing and service action. Since the regional
airline lacks access to the bigger carrier’s data, it allegedly is at
decided competitive disadvantage.
A large aerospace company has required major suppliers to

)
acquire CAD (computer-aided design) equipment to link directly to

its CAD installation. It claims this has dramatically reduced total
cost and time of design changes, parts acquisition and inventory,
(c
making it more competitive.
These examples are not unusual. With great speed, the sharp
reduction in the cost of information systems (IS) technology (i.e.,
computers, remote devices and telecommunications) has allowed
292
ES
computer systems to move from applications for back-office support
Notes
to those offering significant competitive advantage.
Computer Advances
In m any cases, the new technology has opened up a singular,
one-time opportunity for a company to redeploy its assets and
rethink its strategy. The technology has given the organisation the
potential for forging sharp new tools that can produce lasting gains
UP
in market share.
Of course, such opportunities vary widely from one company to

another just as the intensity and the rules of competition vary
widely from one industry to another. Similarly, a company’s
location, size and basic product technology also shape potential
IS technology applications. Computer advances have affected
even the smallest companies. (Recently, for example, a $6 million
manufacturer of electronic components profitably acquired CAD
technology.) Further, in different situations, a company may
appropriately attempt to be either a leader or an alert follower.
The stakes can be so high, however, that this must be an explicit,
E
well-planned decision.
The Challenge
Achieving advantages requires broad IS management and user
CC
dialogue plus imagination. The process is complicated by the fact

that many IS products are strategic though the potential benefits
are very subjective and not easily verified. Often a strict ROI
focus by senior management may turn attention toward narrow,
well-defined targets as opposed to broader strategic opportunities
that are harder to analyse. Visualising their systems in terms
of a strategic grid, senior and IS management in a number of
organisations have concluded that their company or business unit
is located in either the support or the factory quadrant.
A New Point of View

Addressing the issues raised here requires management to change
)
the way it operates.
• The CEO must insist that the end products of IS planning clearly
(c
communicate the true competitive impact of the expenditures

involved. This is accomplished by identifying priorities for the
allocation of financial and staff resources.
In this connection, managers should realise that an embarrassingly

293
ES
large amount of development effort must be devoted to repair
Notes
worn-out systems and to maintain them to meet changed business
conditions. Also, a vital but often unrecognised need exist for
research and development to keep up with IS technology and to
ensure that the company knows the full range of possibilities (for
appropriate investments in the early phases).
Check Your Progress
UP
1. Global ecommerce is selling products or services across
.................borders from a company’s country of origin –
normally defined as its founding or incorporating location.
2. Electronic retailing, commonly known as ....................,

is one of the most significant subsets of the global
e-Commerce industry.
3. Barriers to the implementation of .................

implementation not only exist in the external environment,
but also in the internal organisational environment.
E
4. A .............can be used as a medium to conduct promotional
experiments, due to the wide reach of the internet, and
the low cost.
Summary
CC
Online retailers are now facing their greatest chance in industry

history to expand internationally, especially as the growth of these
individual markets directly correlates with profitable opportunities
in cross border e-commerce itself. While Stat Trade Times calls
cross border e-commerce “the new growth buzzword ticking the
world,” there’s more to this trend than talk: It’s slated to expand
at twice the rate of domestic through 2020. Forty percent of non-
US shoppers have made online purchases from a foreign site, with
cross border purchases averaging higher than domestic. Global
e-retailers are currently growing 1.3 times more quickly than
)
single-country sites.
By 2023, retail ecommerce sales in Asia Pacific (APAC) are

(c
projected to be greater than the rest of the world combined. This is

due to (1) rapid urbanisation and technological advancements, (2)
more than 85% of new middle-class growth residing in APAC and
(3) a host of government and private-led initiatives in China.
294
ES
Notes
1. What is the effect of increasing proliferation of communication
technology and gadgets in marketing?
2. What are the key drivers and restraints impacting the global
E-tailing market?
3. What are the five ways to improve on speed to market?
UP
4. What are the opportunities on E-Retailing in India?
E
) CC
(c
(c
)C
CE
UP
ES

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MBCM765D International Marketing Management Ebook

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(c

Dr. Kamal Bansal Ms. Deepa Verma Mr. Ashok Sahu

SLM Development Team

Dr. Raju Ganesh Sunder Dr. Rajesh Gupta

Dr. Debasish Rout, Co Author Dr. Arvind Kumar Jain

Course Code: MBCM-765D

Unit 2 Opportunities and Challenges in International Marketing ......................................16

Unit 3 Cultural Environment of Global Markets ...................................................................25

Unit 5 International Economic Environment .......................................................................64

Unit 6 Dynamics of International Trade Objectives ............................................................108

Unit 9 Product Strategy for International Markets .............................................................144

Unit 10 Branding in International Markets ...........................................................................159

Unit 13 Entering International Markets ................................................................................196

Unit 14 International Logistics and Distribution ...................................................................205

Unit 15 International Marketing Channels ...........................................................................220

Unit 16 International Export-Import Policy ...........................................................................230

Unit 17 Communication Decisions for International Markets ..............................................244

Unit 18 Integrated Marketing Communication and International Advertising ...................256

Unit 19 Global Promotional Strategies ...................................................................................268

Unit 20 Global E-Commerce ....................................................................................................279

International marketing is the performance, of business activities

Globalisation: Evolution and Overview

“GLOBALISATION” has become the buzzword since the last two

and capital around the world as well as technological innovation

According to Amartya Sen, a Nobel-Prize winning economist,

Early economists would certainly have been familiar with the

Some modern economic historians dispute Smith’s argument

The rapid convergence of the silver market in early modern period

is only one example of “globalisation”, some historians argue. The

such as Tony Hopkins and Christopher Bayly have also stressed

Globalisation has not always been a one-way process. There

• The interwar period in the twentieth

There is some evidence that globalisation has retreated in the

the foreign exchange markets of the world, of which less than 2%

However, there are areas where globalisation is incomplete, even

What explains this globalisation? It is certainly not attributable to

single economic system held sway over a vast geographical terrain.

The source lies instead in the development of technology. The costs

It is clearly the availability of cheap, rapid and reliable

costs is also a key factor underlying the growth in trade.

Of course, it needed a reasonably peaceful world to induce economic

output. Whether as a result of the old Heckscher-Ohlin theory

theories that explain trade by increasing returns to scale, that will

International capital flows can transfer savings from countries

It seems more difficult to doubt that exports of labour-intensive

way to bring negative impacts. On the other hand, some of the

Globalisation and Long-Term Economic Growth

What impact is globalisation likely to have on the long-term

possibilities of economic growth in developing countries?

Globalisation is tending to make the technologies and the

But it is surely also true that globalisation is bringing new dangers.

In order to raise living standards progressively over time, it is

relatively closed economy. If one asks what distinguishes those

Furthermore, one needs to ask whether there are mechanisms

the crisis in the past year. A globalised world is going to have to

• "At a very simple level, international marketing implies the

• "International Marketing is the provision of commercial

• "International Marketing is the orientation and implementation

• "The international market exceeds the export merchant and

• "Global/multinational Marketing jib to effectively employ

• "Global Marketing refers to the marketing activities that are

International Marketing Definition

Every day, marketing is gaining greater importance, both on micro

We can expand the definition and say that it is a business