ADMAS UNIVERSITY

DEPARTMENT OF BUSINESS MANAGEMENT

INTERNATIONAL MARKETING
INDIVIDUAL ASSIGNMENT- I

NAME: MULUGETA BEZA

ID.NO: 0421/18

SECTION-BM2

SUBMITTED TO: INS. MEKONNEN D. (PhD. Cand.)

SUBMISSION DATE: MAY 04/2012 E.C

ADDIS ABABA, ETHIOPIA

1. Define the term international marketing and discuss at least four benefits
and four barriers.
International marketing is the application of marketing principles to satisfy the varied needs and
wants of different people residing across the national borders.

International marketing is the application of marketing principles in more than one country, by
companies overseas or across national borders. International marketing is based on an extension
of a company’s local marketing strategy, with special attention paid to marketing identification,
targeting, and decisions internationally

Benefits of international marketing are:

 Provides higher standard of living: International marketing ensures high standard life style
& wealth to citizens of nations participating in international marketing. Goods that cannot be
produced in home country due to certain geographical restrictions prevailing in the country
are produced by countries which have abundance of raw material required for the production
and also have no restrictions imposed towards production.
 Ensures rational & optimum utilization of resources: Logical allocation of resource &
ensuring their best use at the international level is one of the major advantages of
international marketing. It invites all the nations to export whatever is available as surplus.
For example, raw material, crude oil, consumer goods & even machinery and services.
 Rapid industrial growth: Demand for new goods is created through international market.
This leads to growth in industrial economy. Industrial development of a nation is guided by
international marketing. For example, new job opportunities, complete utilization of natural
resources, etc.
 Benefits of comparative cost: International marketing ensures comparative cost benefits to
all the participating countries. These countries avail the benefits of division of labour and
specialization at the international level through international marketing.
 International cooperation and world peace: Trade relations established through
international marketing brings all the nations closer to one another and gives them the
chance to sort out their differences through mutual understanding. This also encourages
countries to work collaboratively with one another.
 Facilitates cultural exchange: International marketing makes social & cultural exchange
possible between different countries of the world. Along with the goods, the current trends
and fashion followed in one nation pass to another, thereby developing cultural relation
among nations. Thus, cultural integration is achieved at global level.
 Better utilization of surplus production: Goods produced in surplus in one country are
shipped to other countries that have the need for the goods in international marketing. Thus,
foreign exchange of products between exporting country and importing countries meets the
needs of each other. This is only possible if all the participating countries effectively use
surplus goods, service, raw material, etc. In short, the major advantages of international
marketing include effective utilization of surplus domestic production, introduction of new

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 varieties of goods, improvement in the quality of production & promotion of mutual co-
operation among countries.
 Availability of foreign exchange: International marketing eases the availability of foreign
exchange required for importing capital goods, modern technology & many more. Essential
imports of items can be sponsored by the foreign exchange earned due to exports.
 Expansion of tertiary sector: International marketing promotes exports of goods from one
country to another encouraging industrial development. Infrastructure facilities are expanded
through international marketing. It indirectly facilitates the use of transport, banking, and
insurance in a country ensuring additional benefits to the national economy.
 Special benefits at times of emergency: Whenever a country faces natural calamities like
floods & famines, it is supported by other countries in the international market. The
international market provides emergency supply of goods and services to meet urgent
requirements of the country facing the calamity. This distribution can only be facilitated by a
country which has surplus imports.

Barriers of international marketing are:

 Tariff Barriers: Tariff barriers indicate taxes and duties imposed on imports. Marketers of
guest countries find it difficult to earn adequate profits while selling products in the host
countries. Sometimes, to prevent foreign products and/or promote domestic products,
strategically tariff policies are formulated that restricts international marketing activities.
 Administrative Policies: Bureaucratic rules or administrative procedures, both in guest
countries and host countries, make international (export and/or import) marketing harder.
 Considerable Diversities: Global customers exhibit considerable cultural and social
diversities in term of needs, preferences, habits, languages, expectations, buying capacities,
buying and consumption patterns, and so forth. Social and personal characteristics of
customers of different nationalities are real challenges to understand and incorporate.
 Political Instability or Environment: Different political systems (democracy or
dictatorship), different economics systems (market economy, command economy, and mixed
economy), and political instability are some of real challenges that international markers
have to face. Political atmosphere in different courtiers offer opportunities or pose
challenges to international marketers.
 Place Constraints (Diverse Geography): Trade in foreign countries of far distance itself
practically difficult. In case of perishable products, it is a real challenge. Exporting and
importing products via sea route and making arrangements for effective selling involves
more time as well risks. Segmenting and selecting international markets require the
marketers to be more careful.
 Variations in Exchange Rates: Every nation has its currency that is to be exchanged with
currencies of other nations. Currencies are traded every day and rates are subject to change.
Indian Rupee, European Dollar, US Dollar, Japanese Yen, etc., are appreciated or discounted
at national and international markets against other currencies. In case of extraordinary and
unexpected moves (ups and downs) in currency/exchange rates between two courtiers create
serious settlement problems.

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 Norms and Ethics Challenges: They are deeply reflected in formal laws and regulations. In
different parts of the world, different codes of conduct are specified that every international
business player has to observe. However, globalization process has emphasized some
common ethics worldwide. Corruption is another issue relating to business ethics.
 Terrorism and Racism: Terrorism is a global issue, a worldwide problem. People of the
world are living under constant fear of terrorists attracts anywhere in the world. To trade
internationally is not economically risky, but there is the threat to life. Racism also restricts
international trade activities.
2. What do we mean by comparative and foreign marketing?
Comparative advantage is an economic term that refers to an economy's ability to produce
goods and services at a lower opportunity cost than that of trade partners. A comparative
advantage gives a company the ability to sell goods and services at a lower price than its
competitors and realize stronger sales margins.

Comparative advantage is a fundamental tenet of the argument that all actors, at all times, can
mutually benefit from cooperation and voluntary trade. It is also a foundational principle in the
theory of international trade. It is a key insight that trade will still occur even if one country as an
absolute advantage in all products.

Foreign marketing is the phenomenon of marketing in an environment different from that of the
home or base environment.

Foreign market is part of a nation's internal market, representing the mechanisms for issuing and
trading securities of entities domiciled outside that nation. Selling in foreign markets involves
dealing with different languages, cultures, laws, rules, regulations and requirements. Companies
looking to enter a new market need to carefully research the potential opportunity and create a
market entry strategy.

3. Explain the difference between domestic andinternational markets.

The significant differences between domestic and international marketing are:

a) The activities of production, promotion, advertising, distribution, selling and customer

satisfaction within one’s own country is known as Domestic marketing. International
marketing is when the marketing activities are undertaken at the international level.
b) Domestic marketing caters a small area, whereas International marketing covers a large area.
c) In domestic marketing, there is less government influence as compared to the international
marketing because the company has to deal with rules and regulations of numerous countries.
d) In domestic marketing, business operations are done in one country only. On the other hand,
in international marketing, the business operations conducted in multiple countries.
e) In international marketing, there is an advantage that the business organisation can have
access to the latest technology of several countries which is absent in case domestic
countries.

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f) The risk involved and challenges in case of international marketing are very high due to
some factors like socio-cultural differences, exchange rates, setting an international price for
the product and so on. The risk factor and challenges are comparatively less in the case of
domestic marketing.
g) International marketing requires huge capital investment, but domestic marketing requires
less investment for acquiring resources.
h) In domestic marketing, the executives face fewer problems while dealing with the people
because of similar nature. However, in the case of international marketing, it is quite difficult
to deal with customers of different tastes, habits, preferences, segments, etc.
i) International marketing seeks deep research on the foreign market due to lack of familiarity,
which is just opposite in the case of domestic marketing, where a small survey will prove
helpful to know the market conditions.
4. Describe in detail the mode of entry in the international market.
Modes of entry in foreign market are:

1) Exporting: It is the process of selling goods and services produced in one country to other
country. Exporting may be direct or indirect.
Under direct export: A company capitalizing on economies of scale in production
concentrated in the home country, establishes a proper system for organizing export
functions and procuring foreign sales.
Indirect export: involves exporting through domestically based export intermediaries. The
exporter has no control over his product in the foreign market.

Advantages:

 It helps in distribution of surplus

 It is less costly
 It is less risky
 Under direct export the exporter has control over selection of market
 It helps in fast market access

Disadvantages:

 High start-up cost in case of direct exports

 The exporter has little or no control over distribution of products
 Exporting through export intermediaries increase the cost of product
2) Joint Venture: It is a strategy used by companies to enter a foreign market by joining hands
and sharing ownership and management with another company. It is used when two or more
companies want to achieve some common objectives and expand international operations.
The common objectives are:
 Foreign market entry
 Risk/reward sharing
 Technology sharing
 Joint product development

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  Conforming to government regulations
 It is useful to meet shortage of financial resources, physical or managerial resources

Advantages:

 Technological competence
 Optimum use of resources
 Partners are able to learn from each other

Disadvantages:

 Conflicts over asymmetric investments

 It may be costly
 Cultural and political stability may pose a threat to successful operations
 Conflicts in management
3) Outsourcing: It is a cost effective strategy used by companies to reduce costs by transferring
portions of work to outside suppliers rather than completing it internally. It includes both
domestic and foreign contracting and also off shoring (relocating a business function to
another country).

Advantages:

 Swiftness and expertise in operations

 Concentration on core process rather than supporting ones
 Risk sharing
 Reduced costs

Disadvantages:

 Risk of exposing confidential data

 Hidden costs
 Lack of customer focus
4) Franchising: It is a system in which semi-independent business owners (franchisees) pay
fees and royalty to a parent company (franchiser) in return for the right to be identified by its
trademark, to sell its product or services, and often to use its business format or system.

Advantages:

 It is less risky
 Advantage of expertise of franchiser
 Highly motivated employees

Disadvantages:

 Difficulty in keeping trade secrets

 Franchisee may become a future competitor
 A wrong franchisee may ruin company’s name and goodwill

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5) Turn Key Project: It involves the delivery of operating industrial plant to the client without
any active participation. A company pays a contractor to design and construct new facilities
and train personnel to export its process and technology to another country. Turn key projects
may be of various types:
 BOD – Build, Owned and Develop
 BOLT – Build, Owned, leased and Transferred
 BOOT – Build, Owned, Operate and Transfer
6) Foreign Direct Investment: It is a mode of entering foreign market through investment.
Investment may be direct or indirectly through Financial Institutions. FDI influences the
investment pattern of the economy and helps to increase overall development. The extent to
which FDI is allowed in a country is subjected to the government regulations of that country.
It can be done by purchasing shares of a company, property and assets.

Advantages:

 Modifications can be made at any point of time

 It is an easy mode of entry

Disadvantages:

 The government policies may not be helpful

 The return on Investment may be low
7) Mergers & Acquisitions: A merger is a combination of two or more district entities into
one, the desired effect being accumulation of assets and liabilities of distinct entities and
several other benefits such as, economies of scale, tax benefits, fast growth, synergy and
diversification etc. The merging entities cease to be in existence and merge into a single
servicing entity.
Acquisition implies acquisition of controlling interest in a company by another company. It
does not lead to dissolution of company whose shares are acquired. It may be a friendly or
hostile acquisition or a bail out takeover.
8) Licensing: Licensing is a method in which a firm gives permission to a person to use its
legally protected product or technology (trademarked or copyrighted) and to do business in a
particular manner, for an agreed period of time and within an agreed territory. It is a very
easy method to enter foreign market as less control and communication is involved. The
financial risk is transferred to the licensee and there is better utilization of resources.

Advantages:

 Easy appointment
 Less investment is involved
 Low cost of labour

Disadvantages:

 This method is time consuming

 Decline in product quality may harm the reputation of licensor

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9) Contract manufacturing: When a foreign firm hires a local manufacturer to produce their
product or a part of their product it is known as contract manufacturing. This method utilizes
the skills of a local manufacturer and helps in reducing cost of production. The marketing
and selling of the product is the responsibility of the international firm.

Advantages:

 Low cost of production

 Development of medium and small scale industries
 No dilution of control

Disadvantages:

 Difficulty in maintaining quality standards

 Local manufacturers in foreign market may lose business
10) Strategic Alliance: It is a voluntary formal agreement between two companies to pool their
resources to achieve a common set of objectives while remaining independent entities. It is
mainly used to expand the production capacity and increase market share for a product.
Alliances help in developing new technologies and utilizing brand image and market
knowledge of both the companies.

5. Explain briefly the environmental forces that influence organizational

marketing activities.
The environmental factors that are affecting marketing activities can be classified into:

I. Internal environment and

II. External environment

I. Internal Environment of Marketing:

This refers to factors existing within a marketing firm. They are also called as controllable
factors, because the company has control over these factors:

 Top Management: The organizational structure, Board of Director, professionalization of

management, etc. Factors like the amount of support the top management enjoys from
different levels of employees, shareholders and Board of Directors have important influence
on the marketing decisions and their implementation.
 Finance and Accounting: Accounting refers to measure of revenue and costs to help the
marketing and to know how well it is achieving its objectives. Finance refers to funding and
using funds to carry out the marketing plan. Financial factors are financial polices, financial
position and capital structure.
 Research and Development: Research and Development refers to designing the product
safe and attractive. They are technological capabilities, determine a company ability to
innovate and compete.

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 Manufacturing: It is responsible for producing the desired quality and quantity of products.
Factors which influence the competitiveness of a firm are production capacity technology
and efficiency of the productive apparatus, distribution logistics etc.,
 Purchasing: Purchasing refers to procurement of goods and services from some external
agencies. It is the strategic activity of the business.
 Company Image and Brand Equity: The image of the company refers in raising finance,
forming joint ventures or other alliances soliciting marketing intermediaries, entering
purchase or sales contract, launching new products etc.
II. External Environment of Marketing.

External factors are beyond the control of a firm; its success depends to a large extent on its
adaptability to the environment.

The external marketing environment consists of:

a) Macro environment, and

b) Micro environment

a) Micro environment: The environmental factors that are in its proximity. The factors
influence the company’s non-capacity to produce and serve the market. The factors are:
 Suppliers: The suppliers to a firm can also alter its competitive position and marketing
capabilities. These are raw material suppliers, energy suppliers, suppliers of labour and
capital.
 Market Intermediaries: Every producer has to have a number of intermediaries for
promoting, selling and distributing the goods and service to ultimate consumers. These
intermediaries may be individual or business firms. These intermediaries are middleman
(wholesalers, retailers, agent’s etc.), distributing agency market service agencies and
financial institutions.
 Customers: The customers may be classified as:
1) Ultimate customers: These customers may be individual and householders.
2) Industrial customers: These customers are organizations which buy goods and services
for producing other goods and services for the purpose of other earning profits or
fulfilling other objectives.
 Resellers: They are the intermediaries who purchase goods with a view to resell them at a
profit. They can be wholesalers, retailers, distributors, etc.
 Government and other non-profit customers: These customers purchase goods and
services to those for whom they are produced, for their consumption in most of the cases.
 International customers: These customers are individual and organizations of other
countries who buy goods and services either for consumption or for industrial use. Such
buyers may be consumers, producers, resellers, and governments.
 Competitors: Competitors are those who sell the goods and services of the same and similar
description, in the same market. Apart from competition on price, there are like product
differentiation. Therefore, it is necessary to build an efficient system of marketing. This will
bring confidence and better results.

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 Public: It is duty of the company to satisfy the people at large along with its competitors and
the consumers. It is necessary for future growth.The action of the company do influence the
other groups forming the general public for the company. A public is defined as ‘any group
that has an actual or potential interest in or impact on a company’s ability to achieve its
objective.’ Public relations are certainly a broad marketing operation which must be fully
taken care of.
b) Macro Environment: Macro environment factors act external to the company and are
quite uncontrollable. These factors do not affect the marketing ability of the concern
directly but indirectly the influence marketing decisions of the company.
These are the macro environmental factors that affect the company’s marketing activities:
1) Demographic Forces: Here, the marketer monitor the population because people forms
markets. Marketers are keenly interested in the size and growth rate of population in different
cities, regions, and nations; age distribution and ethnic mix; educational levels; households
patterns; and regional characteristics and movements.
2) Economic Factors: The economic environment consists of macro-level factors related to
means of production and distribution that have an impact on the business of an organization.
3) Physical Forces: Components of physical forces are earth’s natural renewal and non-renewal
resources. Natural renewal forces are forest, food products from agriculture or sea etc. Non-
renewal natural resources are finite such as oil, coal, minerals, etc. Both of these components
quite often change the level and type of resources available to a marketer for his production.
4) Technological Factors: The technological environment consists of factors related to
knowledge applied, and the materials and machines used in the production of goods and
services that have an impact on the business of an organization.
5) Political and Legal Forces: Developments in political and legal field greatly affect the
marketing decisions. sound marketing decision cannot be taken without taking into account,
the government agencies, political party in power and in opposition their ideologies, pressure
groups, and laws of the land. These variables create tremendous pressures on marketing
management. Laws affect production capacity, capability, product design, pricing and
promotion. Government in almost all the country intervenes in marketing process irrespective
of their political ideologies.
6) Social and Cultural Forces: This concept has crept into marketing literature as an
alternative to the marketing concept. The social forces attempt to make the marketing
socially responsible. It means that the business firms should take a lead in eliminating
socially harmful products and produce only what is beneficial to the society. These are
numbers of pressure groups in the society who impose restrictions on the marketing process.

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REFERENCE

 International Marketing Handout, prepared by Ins. Mekonnen D.(PhD. Cand)

 https://businessjargons.com/international-marketing.html, May 06/2020 @10:08 PM
 https://www.marketing-schools.org/types-of-marketing/international-marketing.html,
May 07/2020 @08:55 AM
 https://www.tutorialspoint.com/international_marketing/international_marketing_advantages.
htm, May 07/2020 @09:13 AM
 http://www.yourarticlelibrary.com/marketing/top-9-problems-faced-by-international-
marketing/48739, May 07/2020 @09:46 AM
 https://www.monash.edu/business/marketing/marketing-dictionary/f/foreign-marketing,
May 07/2020 @11:16PM
 https://www.investopedia.com/terms/c/comparativeadvantage.asp,
May 08/2020 @10:54 PM
 https://www.bdc.ca/en/articles-tools/entrepreneur-toolkit/templates-business-
guides/glossary/pages/foreign-market.aspx,
May 08/2020 @11:02 PM
 https://www.advfn.com/money-words_term_7209_Foreign_Market.html,
May 08/2020 @11:21 PM
 https://keydifferences.com/difference-between-domestic-and-international-marketing.html,
May 08/2020 @11:53 PM
 https://bbamantra.com/modes-of-entry-in-foreign-market/, May 09/2020 @12:06 PM
 https://ebstudies.wordpress.com/2012/07/19/various-environmental-factors-affecting-
marketing-function/, May 10/2020 @06:16 PM

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