IBM-UNIT 3 Notes

UNIT 3: INTERNATIONAL MARKETING & INTERNATIONAL HRM
UNIT 3
3.1. INTERNATIONAL MARKETING: NATURE & SIGNIFICANCE

INTERNATIONAL MARKETING
Today, marketing organizations are not restricted to their national borders. The entire world is
open for them. New markets are springing forth in emerging economies like – China, Indonesia,
India, Korea, Mexico, Chile, Brazil, Argentina, and many other economies all over the world. In
today’s global market opportunities are on a par with the expansion of economies, with the
increasing purchasing power, and with the changing consumer taste and preferences.
International marketing is the application of marketing principles by industries in one or more
than one country. It is possible for companies to conduct business in almost any country around
the world, thanks to the advances in international marketing.
In simple words, international marketing is trading of goods and services among different
countries. The procedure of planning and executing the rates, promotion and distribution of
products and services is the same worldwide.
➢ Definitions of International Marketing
According to Kotler, "Global marketing is concerned with integrating and standardizing

marketing actions across a number of geographic markets."
According to Cateora, "International marketing is the performance of business activities that

direct the flow of goods and services to consumers and users in more than one nation."
According to Cateora and Graham, "International marketing is the performance of business

activities designed to plan, price, promote, and direct the flow of a company’s goods and
services to consumers or users in more than one nation for a profit."
According to Terpstra and Sorathy, “international marketing consists of finding and satisfying
global customer needs better than the competition, both domestic and international, and of
coordinating marketing activities within the constraints of the global environment.”
• International Marketing − Overview

The word ‘International Marketing’ is defined as the exchange of goods and services across
national borders to meet the requirements of the customers. It includes customer analysis in
foreign countries and identifying the target market.
The major participants in international marketing are as follows −
• Multinational Corporations (MNCs) − A multinational corporation (MNC) is an
organization that ensures the production of goods and services in one or more countries
other than its home country. Such organizations have their offices, help desks or
industrial set-up across nations and usually have a centralized head office where they co-
ordinate global management.
MBA 2nd Year (ACET) Page 1

• Exporters − They are the overseas sellers who sell products, and provide services across
their home country by following the necessary jurisdiction.
• Importers − They are the overseas buyers who buy products and services from exporters
by complying with the jurisdiction. An import by one nation is an export from the other
nation.
• Service companies − A service company generates revenue by trading on services and
not on physical commodities. A public accounting company is the best example of a
service company. Revenue here is generated by preparing returns of income tax,
performing audit services, and by maintaining financial records.
Many companies believe that their targets are limited if they only concentrate on a single
market like the U.S. Market and Global marketplace is competitive. Thus, to enrich their market
presence such companies are always on a lookout for better opportunities worldwide.
• International Marketing - Objectives

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 same platform.
The major objectives of international marketing are outlined as follows −
• To enhance free trade at global level and attempt to bring all the countries together for the
purpose of trading.
• To increase globalization by integrating the economies of different countries.
• To achieve world peace by building trade relations among different nations.
• To promote social and cultural exchange among the nations.
• To assist developing countries in their economic and industrial growth by inviting them
to the international market thus eliminating the gap between the developed and the
developing countries.
• To assure sustainable management of resources globally.
• To propel export and import of goods globally and distribute the profit among all
participating countries.
• To maintain free and fair trade.
International marketing aims to achieve all the objectives and establish a connection among the
nations that participate in global trade. Establishing a business in one’s home country has
limited restrictions and demands but when it comes to marketing at international level, one has
to consider every minute detail and the complexities involved therein. In such instances, the
demand grows as the market expands, preferences change and the company has to abide by the
rules and regulations of two or more countries.
Some basic modes are followed to enter into the global market and the organizations planning
to expand their business globally need to know some basic terms. These have been discussed in
the next chapter.

• International Marketing - Basic Modes of Entry

The mode of entry is the path or the channel set by a company to enter into the international
market. Many alternative modes of entry are available for an organization to choose from and
expand its business. Some of the basic modes or paths companies use to enter into the global
market are as follows −
▪ Internet
For some companies, internet is a new mode of marketing while for some it is the only source of
marketing. With the change in recent trends, a large number of innovative enterprises promote
their goods and services on the internet through E-marketing. For example, online shopping
websites like Amazon provide a wide range of products for all age groups. A customer only
needs an active internet connection to browse through the website and order any product of his
choice. The product gets delivered at your doorstep and shopping is made simple and easy with
E-marketing.
▪ Licensing
Licensing is a process of creating and managing a contract between the owner of a brand and a
company which wants to use the brand in association with its product. It refers to that
permission as well which is given to an organization to trade in a particular territory. Licensing
further has different channels namely.
▪ Franchising
It is that form of business where the owner of a firm or the franchiser distributes his products
and services through affiliated dealers or the franchisees. Franchising comes with its own
benefits. The franchiser here provides brand name, right to use a developed business concept,
expertise, and also the equipment and material required for the business. For example,
Domino’s Pizza, Pizza Hut, and McDonald’s are a few fast food chains we can’t do without.
They have a significant presence around the world. However, they have standard recipes and
follow the same techniques across all the branches. Such aspects are governed and monitored by
the main branch or the franchiser.
▪ Turnkey Contracts
It is a type of project which is constructed and sold to buyer as a complete product. Once the
project is established and handed over to the buyer, the contractor no more holds any ownership
over it. For example, the local government has published an invitation for contractors to make
proposals or put in their tenders for the construction of a highway. Many contractors put forth
their proposals and the best out of all is chosen. The contractor is assigned the task of
constructing the highway. A certain amount is paid in cash to the contractor after negotiation.
The government promises to pay the remaining amount after the completion of the project. After
the work is finished, the contractor hands over the project to the concerned government. This is
an example of turnkey contracts.
▪ International Agents and Distributors
The companies or individuals who handle the business or market representing their home
country in some foreign country are called international agents and distributors. These agents
may work with more than one enterprise at a time. So, their level of commitment and dedication
towards achieving their goals should be high.
International distributors are like international agents; the only thing that makes them different
is that the distributors claim ownership over the products and services whereas agents don’t.
For example, travel agents who book tickets and deal with the passport and visa issues of their

clients are international agents. Amway with its large variety of products being distributed in
more than one country is an example of international distributor.
▪ Strategic Alliances
A large number of companies share the international market ground collaboratively. These
companies collaborate while remaining apart and distinct based on non-equity strategic alliance.
The companies may or may not belong to the same countries. For example, Maruti Suzuki’s is
a strategic alliance between the Government of India, under the United Front (India) coalition
and Suzuki Motor Corporation, Japan.
▪ Joint ventures
When two parties having distinct identities come together to establish a new company it is
known as a joint venture. The profit gained and also the loss incurred by the company is shared
or borne by both the parties. For Example, Hulu is a profitable joint venture extremely popular
as a video streaming website. It is a joint venture of NBC Universal Television Group
(Comcast), Fox Broadcasting Company (21st Century Fox), and Disney-ABC Television Group
(The Walt Disney Company).
▪ Overseas Manufacture or International Sales Subsidiary
When a company invests in a new project, plant or machinery overseas, i.e., at the global level,
it is said to be undertaking overseas manufacturing. The major advantage is that the business
suits the existing local standards, and the products match with the demands of the customers of
that particular area.
International Sales Subsidiary is to a certain extent like overseas manufacturing. However, it is
less risk prone when compared to overseas manufacturing. It comes with its own set of benefits
too. It possesses the characteristics of a distributor authorized by a local company. A project or
plant established in some foreign country but governed by a different company in the home
country is international sales subsidiary. This is also referred to as Foreign Direct Investment
(FDI).
• International Marketing - Characteristics
International marketing can be described as the various activities designed in the planning
process. Activities such as fixing pricing structures to suit local needs, formulating promotional
offers and assuring that the products and services are available to customers residing in the
home country as well as the foreign country. Identifying and satisfying the consumer needs
globally are the major functions to be taken care of. The basic characteristics of international
marketing are as follows:
▪ Broader market is available
A wide platform is available for marketing and advertising products and services. The market is
not limited to some precise local market or for people residing in a particular place, region or
country but is free for all. People from different nations sharing different cultures and traditions
can actively participate in it.
▪ Involves at least two set of uncontrollable variables
By uncontrollable variables, we mean the geographical factors, political factors prevailing in
different countries. At the global level, all the companies have to face uncontrollable variables
from different countries. While establishing business globally, a company has to learn to deal
with these variables.

▪ Requires broader competence

International market requires more expertise and special management skills and wider
competence to deal with various circumstances and handle different situations like changes in
the strategies of the government, the mindset of the people and many other such factors.
▪ Competition is intense
Competition is very tough in international market, as the organizations at the global level have
to compete with both competitors in their home countries and also in the foreign lands.
Competition is high because the clash is between developed & developing countries and both
have different standards and are unequal partners.
▪ Involves high risk and challenges
International marketing with its own advantages is also prone to different and tangible risks and
challenges. These challenges come in the form of political factors, regional and cultural
differences, changing fashion trends, sudden war situation, revision in government rules and
regulations and communication barriers
The nature of international marketing is dependent on various factors and conditions and above
all, it is dependent on the policies framed by different countries which are active participants in
international marketing. International marketing tends to ensure balanced import and export to
all countries big or small, rich or poor, developed or developing.
Management of international market is tough and requires thorough market research. It is a
predefined process which is directed towards designing and delivering products based on the
demands from the overseas customers. Proper management also helps the company attain its
objectives.
• Large-scale operation
Large-scale operations involve relative amount of labor and capital to cater to the needs such as
transportation, and warehousing.
• Domination of multinationals and developed countries
International marketing is highly dominated by multinational corporations due to their
worldwide reach. These organizations apply efficient and effective business practices to all their
business operations. They have a stable position and with their global approach find themselves
fitting into the arena of international marketing.
• International restrictions
The international market needs to abide by different tariff and non-tariff constraints. These
constraints are regulated because different countries follow different regulations. All nations
tend to rationally abide by tariff barriers. All the imports and exports between the nations
participating in international marketing follow some restrictions in foreign exchange.
▪ Sensitive character
International marketing is highly sensitive and flexible. The demand for a product in a market is
highly influenced by political and economic factors. These factors can create as well as decrease
the demand for a product. In fact, use of advanced technology by a competitor or the launch of a
new product by another competitor may affect the sale of a particular firm’s product worldwide.
▪ Importance of Advanced Technology
International market is dominated by developed countries like the USA, Japan, and Germany as
they use highly advanced technology in production, marketing, advertising and establishing a
brand name. They provide admirable quality of products at reasonable prices. Presently,
Japanese products have got substantial existence in markets around the world. The Japanese

could achieve this only because of automation and effective use of advanced computer
technology.
▪ Need for specialized institutions
Marketing at global level is highly prone to risks & is very complex and knotty. It undergoes
lengthy and time taking procedures & formalities. Competent expertise is required for handling
various sections of international marketing.
▪ Need for long term planning
International marketing calls for long term planning. Marketing practices differ from nation to
nation influenced by social, economic & political factors.
▪ Lengthy & Time Consuming
The activities in international marketing are very time-consuming and knotty or complex. The
main cause of these difficulties are the local laws and policies enforced on different nations,
issues in payment as different countries use different currencies, distance between the
participating nations and time taking formalities involved therein.
The current trend of globalization does not limit companies to their national borders and invites
them for marketing on a higher platform, i.e., international platform. Every nation is free to
trade with any nation. New markets are indicating signs of growth and are marking signs of
development in economies like China, Indonesia, India, Korea, Mexico, Chile, Brazil,
Argentina, and many other economies all over the world.
▪ International Marketing - Scope

The use of internet, social media, advertisements has propelled the growth of global marketing.
Globalization is witnessing a tremendous change and giving way to the scope of international
marketing. International marketing has broadened its capacity due to some major factors.
Factors that have influenced the growth of international marketing are as follows −
• Export − Trading of goods and services from one country to another by promoting the
same on social media, and abiding by the rules and regulation of both the home country
and the foreign country with respect to the rules and regulations is known as export. In
short, exporting means shipping the products and services from one nation to another.
• Import − Buying of products and services from an external source across national
borders is known as import.
• Re-export − Re-export refers to the export of foreign goods in the same state as
previously imported, from the free circulation area, premises for inward processing or
industrial free zones, directly to the rest of the world and from premises for customs
warehousing or commercial free zones, to the rest of the world.
• Regulation on marketing activities − Re-export refers to the export of foreign goods in
the same state as previously imported, from the free circulation area, premises for
inward processing or industrial free zones, directly to the rest of the world and from
premises for customs warehousing or commercial free zones, to the rest of the world.
• Formalities and procedures of marketing − There are a number of laws and policies
framed by different countries and these make international marketing more complex,
and a time consuming process. The exporters & importers are compelled to abide by all
the formalities & procedure related to licensing, foreign exchange, customs duties &
goods clearance. These policies, rules and regulations are not static for all participating

countries. So, it is important to be well aware of the procedure and formalities and
plunge into the vast expanse of international marketing.
• Trade block and their impact − Active participation of several nations in marketing
activities builds trade block. These blocks involve EU, LAFTA, ASEAN, EFTA &
CACM. Measures should be taken to reduce trade blocks as they are harmful to the
growth of free world trade.
• Commercial policies and their impact − The countries participating in the international
marketing design their own commercial policies that suit their requirements. Different
policies of different nations invoke the commercial environment of international market.
• International marketing research − International market is important, as it deals with
marketing on a larger scale and also paves way for productive research. Research
requires complete knowledge of the in and out of target market, customers’ needs and
requirement, buying behavior, prevailing market competition and many more. Market
research at international level provides base for product planning & development,
introduction of sales promotion techniques.
▪ International Marketing - Advantages
The attainment of business exercises monitoring, directing and controlling the channel of a
company’s products and services to its customers at the global level to earn profit and satisfy
the demands internationally is the motto of international marketing. The main advantages of
international marketing are discussed below −
• 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 &
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 labor & 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. This thereby designs a
cycle wherein developed countries help developing countries in their developmental activities
and this removes economic disparities and technological gap between the countries.
• 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 & 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 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.
A company exporting goods to other foreign countries earns substantial profit through export
operation as domestic marketing is less profitable than international marketing. The loss a
company suffers in domestic marketing can be compensated from the profit earned through
exports in international marketing. Foreign exchange can be earned by exporting goods to
foreign countries. Thus, the profit earned can be used for the import of essential goods, new
machinery, technology, etc. This would further facilitate large-scale export in future.
INTERNATIONAL MARKETING MIX

When introducing a product into foreign markets, companies can utilize a standard marketing
strategy. This strategy should be chosen, according to what suits the nation the best. The
marketing mix strategy is a combination of the elements given below −
• Product
General marketing concept describes how to sell more of a product with an aim to meet the
needs of our target market. In international markets this includes considering various factors
like customer's cultural backgrounds, religion, buying habits and levels of personal disposable
income.

In some circumstances a firm adapts their product and marketing mix strategy to satisfy the
local requirements and demands that cannot be changed. For example, McDonalds is a global
player anyways, their burgers are accustomed to local needs. In India, where a cow is
worshipped and is believed to be a sacred animal, their burgers include chicken or fish but not
beef. In Mexico, McDonalds burgers is served with chili sauce. In some parts of the world,
Coca-Cola tastes sweeter than in other places.
• Promotion
Unlike international product decisions, an enterprise can either accustom or standardize their
promotional strategy and message. Promotional messages in countries should be accustomed
due to differences in language, political climate, cultural attitudes and religious practices in
different region. A promotional strategy used in one country could be offensive when used in
another. Every side of promotional brief needs to be analyzed followed by planning.
For example, people in China believe red to be a lucky color and this color is also worn by
Indian brides. Similarly, white is worn by mourners in India whereas, brides in China and
United Kingdom wear white. Some companies accustom organization promotion strategies to
suit local markets as cultural backgrounds and activities affect what appeals to consumers.
The scale of media improvement and availability should also be analyzed and considered.
Before framing promotional exercise for a foreign market, the company should complete a
PEST analysis. This would help the entrepreneur have a complete understanding of the factors
functioning in the foreign market before entering it.
• Pricing
Pricing on an international level is a very difficult task. It takes into account the traditional price
i.e. the cost of the product in the local market including fixed and variable rates. It also
determines the competition prevailing in the market between a particular company’s products
and similar products of other companies.
Apart from these factors, an enterprise should consider additional factors like −
• The cost of transport

• Tariffs or import duties
• Exchange rate fluctuations
• Personal disposal incomes of the target market
• The currency they want to be paid in and
• The general economic situation of the country and how this will influence pricing
The internet has created more difficulties for the sellers as customers can now compare the
prices of the products they are buying with similar products existing in the market. This has
increased the level of competition.
• Place
This component of marketing mix is completely about product or service distribution to the
consumer, at the right place and at the right time. Distribution of goods in a developed market
like United States probably includes goods being shipped in a chain from the producer to
wholesalers and onto retailers for consumers to buy from.
In an international market, number of countries offering same products with different varieties
is more as compared to national market.
For example, in Japan there are probably five different types of wholesalers engaged in the
distribution chain. Businesses will be required to examine the distribution chains for each nation
they would like to work with. They will also need to analyze and verify who they would like to
sell their products and services to - businesses, retailers, wholesaler or directly to customers.
Before designing an international marketing mix, an enterprise should conduct PEST analysis
for every participating nation they would like to operate in. This assists them in identifying the
major components of the marketing mix that can be standardized and which components will
need adjustments to suit local needs.
3.2. INTERNATIONAL MARKETING ORIENTATIONS
Different attitudes towards company’s involvement in international marketing process are called
international marketing orientations. EPRG framework was introduced by Wind, Douglas and
Perlmutter. This framework addresses the way strategic decisions are made and how the
relationship between headquarters and its subsidiaries is shaped.
Perlmutter’s EPRG framework consists of four stages in the international operations evolution.
These stages are discussed below.
➢ Ethnocentric Orientation
The practices and policies of headquarters and of the operating company in the home country
become the default standard to which all subsidiaries need to comply. Such companies do not
adapt their products to the needs and wants of other countries where they have operations. There
are no changes in product specification, price and promotion measures between native market
and overseas markets.

The general attitude of a company's senior management team is that nationals from the
company's native country are more capable to drive international activities forward as compared
to non-native employees working at its subsidiaries. The exercises, activities and policies of the
functioning company in the native country becomes the default standard to which all
subsidiaries need to abide by.
The benefit of this mind set is that it overcomes the shortage of qualified managers in the
anchoring nations by migrating them from home countries. This develops an affiliated corporate
culture and aids transfer core competences more easily. The major drawback of this mind set is
that it results in cultural short-sightedness and does not promote the best and brightest in a firm.
➢ Regiocentric Orientation
In this approach a company finds economic, cultural or political similarities among regions in
order to satisfy the similar needs of potential consumers. For example, countries like Pakistan,
India and Bangladesh are very similar. They possess a strong regional identity.

➢ Geocentric Orientation
Geocentric approach encourages global marketing. This does not equate superiority with
nationality. Irrespective of the nationality, the company tries to seek the best men and the
problems are solved globally within the legal and political limits. Thus, ensuring efficient use of
human resources by building strong culture and informal management channels.
The main disadvantages are that national immigration policies may put limits to its
implementation and it ends up expensive compared to polycentrism. Finally, it tries to balance
both global integration and local responsiveness.
➢ Polycentric Orientation
In this approach, a company gives equal importance to every country’s domestic market. Every
participating country is treated solely and individual strategies are carried out. This approach is
especially suitable for countries with certain financial, political and cultural constraints.
This perception mitigates the chance of cultural myopia and is often less expensive to execute
when compared to ethnocentricity. This is because it does not need to send skilled managers out
to maintain centralized policies. The major disadvantage of this nature is it can restrict career
mobility for both local as well as foreign nationals, neglect headquarters of foreign subsidiaries
and it can also bring down the chances of achieving synergy.
3.3. INTERNATIONAL MARKET SEGMENTATION
Market segmentation can be defined as a technique of dividing different countries into

homogeneous groups. The rationale behind the concept of market segmentation is based on the
fact that the global market cannot be served on the basis of single set of policies.
The international market segmentation has its own usefulness. The strengths of international
market segmentations lies in better understanding of consumer needs for making international
marketing decisions and their implementations.
➢ International Market Segmentation – Introduction

A market segment is a concept which consists of group of customers having similar set of wants.
The basic purpose of market segmentation is to satisfy the needs of customers more precisely. It
is not to subdivide the market just for the sake of the segmentation.
The main purpose behind to take the maximum benefits of market segmentation is market
homogeneity. Initially a multinational company may enter just in one or few countries and
gradually develop its markets in the abroad. In order to broaden its business scope in the world
market, the company must identify different countries as to target its markets.
It is evident that there is a big difference, economically, geographically, demographically,

culturally and politically among different nations in the global arena. This vast difference in
various environmental factors makes a company logical to employ certain workable and
scientific criteria to segment the world market. The world market is segmented on the basis of
such criteria, where the company’s product do have best potential for the success.

But it is considered important for the companies to make an analysis of the world market before
grouping the different countries in segments. The questions which are important to arise that
what is the rationale behind such market segmentation? What procedures may be followed by the
company? and how in a country segmentation can be achieved?
➢ FORMS OF MARKET SEGEMENTATION
Market segmentation is a marketing strategy which involves 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 segment.
The most common forms of market segmentation practices are as follows −
• Geographic Segmentation
Dealers can segment market according to geographic criterion that is nations, states, regions,
countries, cities, neighborhoods, 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 neighborhood, 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 very essential and is
marked as the initial step to international marketing, followed by demographic and
psychographic segmentation.
• Demographic Segmentation
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.
An alternative of this strategy is called firmographic or character based segmentation. This
segmentation is widely used in business 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.
• Behavioral Segmentation
This divides the market into groups based on their knowledge, attitudes, uses and responses to
the product.

Many merchants assume that behavior variables are the best beginning point for building
market segments.
• Psychographic Segmentation
Psychographic segmentation calls for the division of market into 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 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.
• International Marketing Planning

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.
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.
• 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 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.

➢ International Market Segmentation – 6 Characteristics behind Segmenting

Market segmentation can be defined as a technique of dividing different countries into
homogeneous groups. The rationale behind the concept of market segmentation is based on the
fact that the global market cannot be served on the basis of single set of policies. It is because of
difference in cultural, economic, geographical, political & legal and demographical parameters.
The company may not be able to do business with all countries and in that case it draw certain
those segments where the business potential is comparatively higher.
The real problem arises when the population is diverse and the geographical location is also
diverse. In this case targeting all the economies in the world market may be risky. Therefore a
business firm must determine that how a consumer is responding to the particular product, price,
place and promotional efforts. It does not mean that a firm should change its focus from market
segment, it originally focused.
Rather it should be further dissected into smaller niche groups as per the requirements of
consumer needs. A niche may be defined as a narrowly defined group of the customers. It can be
understood with an example of drinkers. For example the group of drinkers can be divided into
two further subgroups (a) Heavy drinkers (b) Those who are willing and trying to stop drinking.
The niche do have following characteristics:

i. It caters those customers who do have distinct needs.
ii. It enables a customer to pay premium to those firms, who satisfy their needs.
iii. The niche never attracts other competitors in the market.
iv. It is helpful to gain certain benefits through its unique characteristics.
v. It do have substantial size.
vi. It is a profit center for the business firms and good growth potential.
The niche marketing attracts only one or two fairly small customers. Keeping in mind the
characteristics if niche marketing and the benefits there after, even the big companies have
changed their market strategy and have moved into niche marketing. The companies often
develop an excellent understanding and opportunities by turning up their attention towards niche
marketing. The niche market provides a clear vision for the overall development of business
strategies and therefore initiating action plan for the fulfillment of the objectives.
➢ International Market Segmentation – Top 5 Requisites

The international market segmentation has its own usefulness. The strengths of international
market segmentations lies in better understanding of consumer needs for making international
marketing decisions and their implementations. The weakness of segmentation is inability of a
business firms to take proper care of all the segmentations.
The requisites of effective international market segmentations can be spelled out as under:
1. It should be identifiable & measurable – The segment of the consumers should be clearly
defined. The size of the segment, the purchasing power of the consumers and other
characteristics of the consumers must be defined clearly. The analysis of the segments should be
made on the basis of geographical, demographic, social, cultural, economical & political factors.
2. Substantial – A segment should be a large possible homogeneous group. It must be followed
with a sound marketing programme. It should be large and profitable.

3. Accessible – Each segment should be concentrated geographically and could be effectively

approached and served.
4. Differentiate – A segment must make differential response to the marketing efforts put in. It
should also respond differently to different marketing mix. The differing responses will be
helpful in optimizing the international marketing operations by changing marketing efforts and
there after the amount involved. For example if a married and unmarried man responds in similar
fashions to sale on perfume, it means they do not constitute separate segments.
5. It should be stable over a period of time – A segment which emerge rapidly and disappear
quickly do not offer very good marketing opportunities for a company. Therefore it should be
relatively stable over a period of time.
➢ International Market Segmentation – Bases for Grouping Different Countries

The countries of the world can be grouped by using a variety of criteria. A business firm may
group the world countries on the basis of its per capita GNP or geographical characteristics. The
socio-cultural and political environment provide a sound criteria for grouping the countries.
A company may use few variables or may use large number of variables for grouping the world
economies. The choice of appropriate method of segmentation of world economy depends on the
reasons for segmenting the world market. It is usually related to the nature of the product and its
relative advantages.
The following criteria may be used for grouping world countries:

1. Economic Grouping:
The world countries can be divided on the basis of the GNP per individual to form different
economic groups. The world countries may be segmented as high income industrialized
countries, middle income countries and lower income countries with lesser GNP.
The economic division of world economies can be made easily when the relevant income data of
the world is available. “Rastow has used following criteria to classify world countries on the
basis of economic basis.
There are:
(a) Traditional society status
(b) Pre-take off status
(c) Take-off status
(d) Drive to maturity status, and
(e) The status of high man consumption.”
The GNP per capita basis has been used to place countries in any of these stages. The economic
grouping of the world countries is useful for developing marketing strategy in the international
business.
The Dichter has used following criteria for the classification of the world economies:
He has taken the relative size and the nature of a country’s middle class as a criterion to
classify it in one on the following six categories:
(i) The classless societies – In stable countries, it primarily includes the Scandinavian countries.
(ii) Affluent Countries – Among these groups, the United States, West Germany, Switzerland,
Holland and Canada are included.

(iii) Countries in transition – The groups are including England, France, Italy, Australia, South
Africa and Japan.
(iv) Revolutionary Countries – It is including, Venezuela, Mexico, Argentina, Brazil, Spain,
India, China and the Philippines.
(v) Primitive Countries – Among these, the newly liberated countries of Africa and the
remaining colonial countries are grouped.
(vi) New-class societies – Among new-class societies, Russia and its satellites are grouped.
The Marketing Society Institute (MSI) has developed a very refined model, which is also a latest
and most scientific one, for grouping world countries on the basis of economic parameters.
It is based upon the following factors:

(a) Demographical Parameter:
(i) Total population of a country. (ii) Density of the population.
(iii) Growth rate of the population. (iv) Average working age of the population.
(v) Literacy rate. vi) Percentage of agriculture population to total population.
(vii) Percentage of urban population (cities exceeding population 20,000 people)
(viii) Percentage of the four primary cities (metropolitan cities) to the total population.
(b) Social Parameters:
(i) Ethnographic density (ii) Religious homogeneity
(iii) Racial homogeneity (iv) Linguistic homogeneity.
The total world countries are divided on the basis of above parameters and there after
grouped into following categories:
(i) Most highly developed countries. (ii) Developed countries.
(iii) Semi developed countries. (iv) Under developed countries.
(v) Most under developed countries.
The most developed nations are characterized by the higher literacy rate and high per capita
GNP. Other characteristics may be including, small agriculture, popular, less growth rate of
population and high percentage of working population. The less developed nations do have the
characteristic opposite to the above features.
2. Geographical Segmentation of the Countries:

The world market can be segmented on the basis of geographical lines. It is practically evident
that so many multinational companies in the world are organizing their worldwide business
operations by grouping all the potential world countries into different regions.
The geographical criterion for grouping world countries can be justified on the basis of
following characteristics:
i. Easy to Manage Worldwide Market:The geographical segmentation makes it easier to

manage world market, which is grouped together. These markets can be managed from a group
headquarters, situated centrally in any one of the nation of the group. Further it is easy to manage
properly both the transportation and communication throughout the group countries. For example
Taiwan can be grouped along with South Korea and India with having regional headquarter
somewhere at the suitable destinations of these nations.
ii. Benefits of Common Socio-Cultural Traits: It is an added advantage to the grouped nations
that they can enjoy and share the benefits of their common cultural traits in the same geographic

region. The firm has a benefit to formulate similar kind of market strategy for whole of region
because of common cultural characteristics.
iii. Benefits of Trading Groups: After post-world war-II, the different countries of the world
grouped together and formed trading groups for their common and mutual benefits. Some of the
trading groups are European Economic Community (EEC) and Latin American free Trade
Association etc. These nations have grouped together to form a sound trading groups and a large
economic potentials. Basically these trading groups are regional in character.
The member nations of these trading groups agreed to trade freely with each other, without
having any trading restrictions. It is pertinent to mention here that if one country is entering into
the trading with any one member nation of the group, it will be automatically easier for entry into
another country belonging to the same trading groups.
Thus it is beneficial for the marketers to formulate a common strategy for whole of the trading
group. While segmenting the world market such types of trading groups are kept into the one
segment. Thus the geographical based division of countries always appears sound.
3. Segmentation of World Market on the Basis of Political Perspectives:

The world market can be grouped on the basis of the political perspective of the nation.
The world markets can be categorized on the basis of following political setups:
(i) Democratic nations (ii) Communist countries
(iii) Dictatorship nations (iv) Monarchies.
It may be further explained that what are the various characteristics of each type of political
setup. In democratic style one political system, two party system, one party dominance system
and the multiparty system is available. On the other hand dictatorships may be military or
civilian. First of all the different countries are grouped on the basis of political setups.
The political setup of each group is considered to be homogeneous in nature as to develop
marketing strategy for each group. It is pertinent to mention here that different marketing
strategies are developed for the different groups. It is because of different political perspectives
of the nations of different groups.
It is always beneficial for the marketer to take political base for segmenting world market. The
multinational companies can look easily about the potential economies and can develop their
marketing strategies accordingly.
4. Market Segmentation on the Basis of Different Religions:

Religion is said to be an important component of a society. It dominates our culture values to the
great extent and also influences our life style. As a result it influences the marketing efforts of a
firm in the international business. The religious factor plays an important role in the grouping of
world countries on the basis of common characteristics. The major religious forces prevailing in
the world are Animism, Hinduism, Buddhism, Judaism, Christians and the Islamic world.
Religion alone may not be a suitable criterion to segment the entire world market. However
religion along with other factors like cultural forces, political forces and economical forces can
play an important role in determining the life style of peoples of the different countries. Further it
will also be useful to determine a sound marketing strategy by the multinational companies.

5. Cultural Grouping of the World Marketing:

The world market can be grouped on the basis of cultural factors. But like religion based
grouping, it is not advisable to use only one criteria for the segmentation. It must be supported
with some other factors like religious factors and economic forces etc. It is evident that there are
so many cultural forces which are prevailing in the world. It is difficult for the marketers to
formulate separate marketing strategies for each segments grouped on the basis of different
cultures.
Herskovits, Melville J. has classified the different elements of culture as under:

(i) Material culture – According to Herskovits the material culture approach consists of the
technological advancements and other economic factors, which divide the world countries in
different perspectives.
(ii) The social institutions – The social institutions are considered to be an important element of
cultural forces. These institutions are helpful in building our socio-cultural values through
education to the society by providing a better political structure and contribution of the social
organizations to encourage and retain our cultural values.
(iii) Man and the universe – It is based upon the belief systems of human being in the universe.
The belief is said to be the basic parameter for the cultural environment.
(iv) Aesthetic – It is also a very important element of cultural forces. It is based upon the
graphics and plastic arts, folklore, music, dramas and the dance culture of nation.
(v) Language – Language of a country determine its cultural values. It is helpful to predict the
behaviour of the consumers of a particular culture. It is ultimately helpful to decide the
marketing strategy towards particular culture, society and nation as well.
All these variables can be considered as a significant factor to segment the world market on the
basis of cultural basis. It is an extensive research work which also requires tremendous efforts by
the company to undertake.
6. Segmentation on the Basis of Multiple Variables:
It is evident that there is a difference among the different countries in respect of various
environmental factors. These factors include cultural factors, religious factors, socio-economic
factors and political factors etc.
This difference in the characteristics of different nations is the basic argument behind the use of
multiple variables for grouping different nations in accordance with different factors. Therefore
rather than grouping the different nation on the basis of one or two variables, it is desirable to
form international segments by using multiple variables in all these areas.
A cluster analysis may be useful for grouping the world countries on the basis of multiple
variables. It is assumed in the multiple variable approach that the countries having different
similar perspectives should be combined together for the analysis purpose and also to formulate
marketing strategy accordingly.
7. Inter Market Segmentation of the Nations:

A particular country can be divided on the basis of different market segments. The particular
segments of a country may be similar in respect to every aspect of other countries. These similar
segments belonging to different countries may be combined together and form inter market
segment.

For example in developing countries the multinational company can make an attempt to find
small farmers as to segment the world market. These farmers whether they are belonging to any
developing country may represent common needs, requirements and their behavioural aspects.
The farmers of these countries are dependent mostly upon the government help. These farmers
belong to different countries. They speak different languages and also have different cultural
backgrounds. These farmers represent a homogeneous market segment.
8. GNP per Capita Basis Grouping of Countries:

In international market segmentation, grouping of the countries can be done on the basis of GNP
per capita of the countries. It is presumed that market behaviour is directly related to the average
income level of the individuals. But the sole criterion of GNP per capita is not adequate to be as
a basis for grouping the international market. The currency convertibility or exchange rate is
always different from one country to another country. Therefore it is advisable to take a common
base currency to measure the per capita GNP.
For example it may be per capita GNP (in dollars). The Physical Quality of Life Index (PQLI)
may be a better base as to segment the world countries. It is possible that GNP per capita is
higher along with highest PQLI of some top ranked groups. On the other hand the PQLI of some
other countries, who are not included in the top positions on GNP per capita basis may also be
highest. They may be falling in the highest PQLI group countries.
Therefore while segmenting the world countries it is always advisable to take PQLI basis for the
market segmentation. It is always based upon the perception that there are many other countries
in the world that can provide better market potential in terms of quality of life to the marketers,
who may be ignored if such classification is done only on the GNP per capita basis.
9. Strategic Planning Framework for Grouping World Countries:

This approach is given by Elias G, Rizkallah.
He has proposed to divide the nation on the basis of following three dimensions:
(a) Potential of a country (b) Competitive strengths of a country
(c) Risk factors in a particular nation.
(a) The potential of country is measured on the basis of following factors:
i. Product/Services of a company ii. Size of the population
iii. Growth rate of population iv. Economic growth rate
v. GNP per capita of a country vi. Per capita national income
vii. Production pattern viii. Consumption pattern etc.
The product/service quality of a company should be strong and the population growth rate should
be under control. Further higher economic growth rate, higher GNP per capita, higher per capita
national income and production as well as the consumption pattern are considered to be an
important variable in determining the potential of a country.
(b) The competitive strength of a nation can be studied on the basis of following two
factors: (i) Internal factors (ii) External factors
To study internal factors the following variables are considered:
i. Market share of the company
ii. Various resources of the company
iii. Facilities provided.
Among external factors the following variables are studied:
i. Competitors strengths

ii. Structure of the industry both locally and internationally.

As far as risk factors of a particular country are concerned, the following variables are
studied:
i. Political risks
ii. Financial risks
iii. Other business risks.
These factors play an important role in a nation. The political risks are including, political
instability and change in the government policies. It can influence the business operations in a
country. The financial risks and business risks should also be studied while taking any such
decision about the business operations in that particular country.
While grouping the countries, it is always considered that market potential is higher in that
particular country. That nation should have enough and strong competitive strength. It represents
the business houses operating business in that particular nation. The risk factor can never be
ignored while grouping the world market.
After analyzing all these factors the world market can be grouped on the basis of following
criterion:
By applying the above mentioned approach the following may be the benefits:
i. It divides whole of the world countries scientifically as well as equally
ii. It is helpful to the marketing
iii. It provides better bases to take marketing decision.
Thus it can be concluded that this approach presents a scientific approach for market
segmentation in the world market.
10. In Country Market-Segmentation:

When the concept of market segmentation is studied within the national boundaries, is called in
country market segmentation. There are number of sub markets in every country, which often
differ with each other by number of variables like demographic, socio-economic, geographic and
cultural bases. A marketer is to identify the potential segments and is to formulate marketing
strategy accordingly.
The process of in country market segmentation can be carried out on the basis of following
factor:
i. Demographical factors which includes age, sex, marital status, annual income etc.
ii. Geographical factors
iii. Socio-economic factors, which includes status, family characteristics, etc.
iv. Consumption behaviour – High, Average, Low
v. Product characteristics
vi. Psychological factors, including life style of an individual, personality etc.
After segmenting the market it is to be decided by the marketers that marketing strategy is to be
applied to which market segment. The strategy development must have competitive advantages
over others.

3.4. INTERNATIONAL PRODUCT LIFE CYCLE

The international product lifecycle (IPL) is an abstract model briefing how a company evolves
over time and across national borders. This theory shows the development of a company’s
marketing program on both domestic and foreign platforms. International product lifecycle
includes economic principles and standards like market development and economies of scale,
with product lifecycle marketing and other standard business models.
The four key elements of the international product lifecycle theory are −
• The layout of the demand for the product
• Manufacturing the product
• Competitions in international market
• Marketing strategy
The marketing strategy of a company is responsible for inventing or innovating any new
product or idea. These elements are classified based on the product’s stage in the traditional
product lifecycle. These stages are introduction, growth, maturity, saturation, and decline.
➢ International Product Life Stages
The lifecycle of a product is based on sales volume, introduction and growth. These remain
constant for marketing internationally and involves the effects of outsourcing and foreign
production. The different stages of the lifecycle of a product in the international market are
given below −
Stage one (Introduction)

In this stage, a new product is launched in a target market where the intended consumers are not
well aware of its presence. Customers who acknowledge the presence of the product may be
willing to pay a higher price in the greed to acquire high quality goods or services. With this
consistent change in manufacturing methods, production completely relies on skilled laborers.
Competition at international level is absent during the introduction stage of the international
product lifecycle. Competition comes into picture during the growth stage, when developed
markets start copying the product and sell it in the domestic market. These competitors may
also transform from being importers to exporters to the same country that once introduced the
product.
Stage two (Growth)

An effectively marketed product meets the requirements in its target market. The exporter of the
product conducts market surveys, analyze and identify the market size and composition. In this
stage, the competition is still low. Sales volume grows rapidly in the growth stage. This stage of
the product lifecycle is marked by fluctuating increase in prices, high profits and promotion of
the product on a huge scale.
Stage three (Maturity)

In this level of the product lifecycle, the level of product demand and sales volumes increase
slowly. Duplicate products are reported in foreign markets marking a decline in export sales. In

order to maintain market share and accompany sales, the original exporter reduces prices. There
is a decrease in profit margins, but the business remains tempting as sales volumes soar high.
Stage four (Saturation)
In this level, the sales of the product reach the peak and there is no further possibility for further
increase. This stage is characterized by Saturation of sales. (at the early part of this stage sales
remain stable then it starts falling). The sales continue until substitutes enter into the market.
Marketer must try to develop new and alternative uses of product.
Stage five (Decline)
This is the final stage of the product lifecycle. In this stage sales volumes decrease and many
such products are removed or their usage is discontinued. The economies of other countries that
have developed similar and better products than the original one export their products to the
original exporter's home market. This has a negative impact on the sales and price structure of
the original product. The original exporter can play a safe game by selling the remaining
products at discontinued items prices.
3.5. INTERNATIONAL HRM

➢ International Human Resource Management (IHRM)
The term human resources can be thought of as, “the total knowledge skills, creative abilities,
talents and aptitudes of an organization’s workforce, as well as the values, attitudes and beliefs
of the individuals involved. Human Resource Management (HRM) is defined as managing
(planning, organizing, directing and controlling) the functions of employing, developing,
compensating and maintaining human resources resulting in the creating and development of
human relations with a view to contribute proportionately (due to them) to the organizational,
individual and social goals. Human Resource Management practices vary from country to
country due to variations in culture, government policies, labor laws etc. Hence, the study of
international HRM needs an altogether different approach.
➢ Internationalization of Human Resource Management

As the global economy expands, as more products and services compete on a global basis and as
more and more firms operate outside their countries of origin, the impact on various business
functions becomes more pronounced. Practitioners in all business functions must develop the
knowledge, skills, and experience in the international arena which will enable them and their
firms to succeed in this new environment. This new reality is just as true for the HRM function
as it is for other business disciplines, such as finance or marketing, which often get more
attention. IHRM describe the knowledge, skills, and experiences necessary for the successful
management of the IHR function, a function that is increasingly performed by all employees in
companies, including HR professionals (in the HR department), managers and non-managers.
➢ Nature of International HRM

An international business must procure, motivate, retain and effectively utilize services of people
both at the corporate office and at its foreign plants. The process of procuring, allocating and

effectively utilizing human resources in an international business is called international human

resource management (IHRM).
IHRM is the interplay among the three dimensions: human resources activities, types of
employees and countries of operation.
• The three broad activities of IHRM, namely, procurement, allocating and utilizing, cover
all the six activities • of domestic human resource management (HRM). The six functions
of domestic HRM are: human resource planning, employee hiring, training and
development, remuneration, performance management, and industrial relations. These six
functions can be dovetailed with the three broad activities of IHRM.
• The three national or country categories involved in the IHRM categories are: the host-
country where a subsidiary • may be located, the home-country where the company is
headquartered and ‘other’ countries that may be the source of labor or finance.
• The three types of employees of an international business include host-country nationals,
parent-country nationals, • and third-country nationals. Thus, for example, IBM employs
Australian citizens in its Australian operations, often sends U.S citizens to Asia-Pacific
countries on assignment, and may send some of its Singaporean employees on an
assignment to its Japanese operations.
➢ Global role of the HR professional

Firms that have successfully globalised their human resource activities share several important
characteristics:
• The global HR role has the strong support of top management in terms of high
expectations about the contributions the IHRM function can make to the formulation and
implementation of effective global strategies and the readiness of the IHRM function to
step up to its responsibilities.
• The expectations and support of top management for the IHRM role are usually derived
from a longstanding commitment to dedicate management energy and resources to
human resource issues as a reflection of a people-oriented corporate culture.
• Cultural diversity (including national diversity) is encouraged as a natural way of life.
Ambiguity as a way of dealing with the many paradoxes imbedded in global HR issues is
also accepted as normal. Not much is seen or accepted as “black or white.” The final
condition for a successful implementation of IHRM strategies is the competence and
credibility of the IHRM staff.
• To earn that credibility, IHR managers must accept the risk and responsibility for putting
forward policies and practices that make a difference in the achievement of corporate
global strategies.
➢ Development of International Human Resource Management
HR managers, no matter the type of organization for which they work, can and do confront
aspects of IHR. The extent of this involvement will vary according to a number of factors, such
as the degree of development of the global strategy of the enterprise, and will invariably,
increase with time. But as the general internationalization of the business increases in extent and
intensity, HR managers are being called upon to contribute increasing expertise to that
internationalization.

Some of the HR-related questions that need to be answered within the MNE as it establishes its
international strategy include:
• Country selection: Which countries make the most sense for locating international
operations and where will the firm be most likely able to recruit and hire the kinds of
employees it will need at a competitive wage?
• Global staffing: How many employees will need to be relocated to foreign locations to
start up the new operations and how many will be needed to run them (and does the firm
have those people or know how to find or train them – or will the necessary people be
found locally in the host countries)?
• Recruitment and selection: What will be required to find and recruit the necessary talent
to make the new international operations successful?
• Compensation. How will the firm compensate its new global workforce, both the
international assignees from the home office as well as the new local employees?
• Standardization or adaptation. Will the firm want its HRM policies to be uniform
across all of its locations, • (standardization or global integration) or will they be tailored
to each location (adaptation or localization)?
Whether the local HR manager is from headquarters, from the host country, or from a third
country, he or she will be sandwiched between his or her own culture, and legal traditions and
those of the firm, whether headquarters or local affiliate. HR managers at the local, regional, and
headquarter level must integrate and coordinate activities taking place in diverse environments
with people of diverse backgrounds as well as with their own diverse backgrounds. Plus, they are
also frequently looked to for expertise in helping other managers to be successful in their
international endeavours, as well.
➢ Difference between International and Domestic Human Resource Management

International HRM differs from purely domestic HRM in a number of ways. Some of these
differences include IHR being responsible for:
• More HR Functions and activities, for example, the management of international
assignees which includes such things as foreign taxes, work visas and assistance with
international relocations.
• A broader expertise and perspective, including knowledge about foreign countries, their
employment laws and practices and cultural differences.
• More involvement in people’s lives, as the firm relocates employees and their family’s
from country to country.
• Dealing with managing a much wider mix of employees, adding considerable complexity
to the IHR management task – with each of the various types of global employees
requiring different staffing, compensation and benefits program.
• More external factors and influences, such as dealing with issues stemming from multiple
governments, cultures, • currencies and languages.
• As a result, a greater level of risk, with greater exposure to problems and difficulties, and
thus, exposure too much • greater potential liabilities for making mistakes in HR

decisions (for example, political risks and uncertainties, early repatriation of employees
on foreign assignments etc.).
In addition to these factors, the geographic dispersion, multiculturalism, different legal and social
system(s), and the cross border movement of capital, goods, services, and people that the
international firm faces adds a need for competency and sensitivity that is not found in the
domestic firm. The personal and professional attitudes of the IHR manager must be greatly
expanded to handle the multiple countries and cultures confronted in the international arena –
both to manage their IHR responsibilities and to contribute to successful international business
strategies by their firms-beyond those which the domestic HR manager must develop.
3.6. INTERNATIONAL STAFFING APPROACHES
➢ Global Recruitment
Recruitment means the searching for prospective candidates and stimulating them to apply for
jobs. Recruitment attracts a large number of qualified applicants who desire to work in the
company. The recruitment information given by the global companies helps the qualified
candidates who are willing to work to send their resume, along with a letter expressing their
desire to work. It also helps the unqualified candidates to self select themselves out of the job
candidacy. Thus, the accurate information provided by the global company attracts the qualified
and repels the unqualified candidates. Thus, recruitment helps the global company in finding out
potential candidates for actual or anticipated vacancies in the company.
❖ Sources of Global Recruitment

Sources of global recruitment include: Parent country nationals, Host country nationals and
Third country nationals.
Parent country nationals

Parent country nationals are employees (of a company or its subsidiaries located in various
countries) who are the citizens of the country where the company’s headquarters are located.
Parent country nationals in international business normally are managers, heads of subsidiary
companies, technicians, trouble-shooters and experts. They visit subsidiary companies and
operations (ii) to help them in carrying-out their operations to make sure that they run smoothly
to provide advice and control them. However, sending parent country nationals involves cost and
causes ego and cultural problems. Hence, the North American companies stopped sending the
parent country nationals to subsidiary companies operating in other countries.
Host country nationals

Host country nationals are the employees of the company’s subsidiary who are the citizens of the
country where the subsidiary is located. Employing host country nationals is advantageous as:
they are familiar with native culture. They are familiar with local business norms and practices.
They manage and motivate the local workers efficiently. They are familiar with local
bureaucrats, market intermediaries and suppliers of inputs, familiar with the taste and preference
of the local customers. However, there are certain disadvantages associated with the host country
nationals. They are not familiar with the objectives, goals and strategies of the parent company.
They are unaware of the needs of the headquarters. They view the company only from the local
perspective rather than from the global perspective. It would be difficult to train the host country

nationals due to variations in the views about achievement, equity, the work ethic and
productivity of the host country nationals from those of the parent country nationals.
Third country nationals

For example, Mr. Akhil - an Indian citizen - is working for an American subsidiary in France.
Mr. Akhil, is called third country national. Third country national is an employee of a company’s
subsidiary located in a county, which is not his home country. The software professionals of
India who work in American subsidiaries located in various countries of Europe are called third
country nationals. The advantages of employing third country nationals include: Less cost with
required expertise, skill knowledge and foreign skills. They have a cultural fit due to their
experience in working in a multicultural environment However, the local government may
impose conditions and regulate in employing third country nationals.
➢ Global Selection Process

Global business firms need people with higher order skills, balanced emotions, ability to adjust
to multi-cultural recruitment, etc. Hence, the selection process of global companies varies from
that of a domestic company. Now, we study the selection process of a global firm. Selection
process includes selection procedure, selection approach and selection methods.
Global selection approach

Selection policy is vital in global business as it deals with the various types of people, jobs and
placement. In fact, selection policy contributes for the achievement of the strategic goal of global
business i.e., ‘thinking globally and acting locally’. There are three types of approaches followed
in selection policies in global business viz., the ethnocentric approach, the polycentric approach
and the geocentric approach.
The ethnocentric approach: Under this approach, parent country nationals are selected for all
the key management jobs. This approach was widely followed by Procter and Gamble, Philips,
Matsushita, Toyota etc. When Philips filled the important vacancies by Dutch nationals, non-
Dutch employees referred them to as Dutch Mafia. Some of the international firms follow this
approach due to the following reasons: Non-availability of qualified personnel in developing
countries & to maintain a unified corporate culture. Japanese firms mainly follow this reason.
P&G also preferred this reason. To transfer the core competencies of the company when the core
competencies are held by the existing employees of parent country nationals.
The polycentric approach: Under this approach, the positions including the senior management
positions of the subsidiaries are filled by the host country nationals. The reasons for adopting this
approach include: Host country nationals are familiar with the culture of the country. Level of
job satisfaction of the employees of the subsidiaries can be enhanced. It is less expensive as the
salary level of host country nationals is lower than that of home country nationals in case of
MNCs of advanced countries. It reduces overall cost of staff of subsidiaries. Though this
approach is a welcoming factor from the point of view of host country, it suffers from the
following limitations: This approach limits the mobility of employees among subsidiaries and
between subsidiaries and the headquarters. Organizational culture of the parent company cannot
be completely adopted in the subsidiaries. Culture of the subsidiaries and the headquarters cannot
be exchanged as it isolates the headquarters from their subsidiaries. These limitations forced

some organizations to employ the best candidates from any part of the globe (referred to as
geocentric approach).
The geocentric approach: Under this approach, the most appropriate candidates are selected for
jobs from any part of the globe. Global firms follow this approach due to the following reasons:
To have the most appropriate human resources. To develop the people with multiculture and
meet the challenges of cultural diversity. To build multi skilling as a core competency and
transfer it to all the subsidiaries. To avert the problems of cultural myopia and enhance local
responsiveness of the host country.
Though this approach seems to be superior to the other two approaches, it also suffers from the
following limitations: Most of the countries insist that MNCs should employ their citizens.
MNCs are allowed to employ foreign nationals only in the rarest cases. Implementation of this
policy takes time as the MNC has to train and develop the people in multicultures.
Implementation of this policy is also expensive.
Business Implications: MNCs with very limited geographic scope in culturally related countries
can adopt the ethnocentric approach, whereas MNCs with wide geographic scope in culturally
unrelated countries may adopt polycentric approach. However, the transnational companies
whose geographic scope is very wide may adopt geocentric approach. Geocentric approach is
appropriate for Coca-Cola, P&G and the like. Companies should take utmost care in selecting the
candidates for overseas jobs.
This is because the candidate should be competent in job knowledge, skills and ‘competency in
addition to having the skill of adaptability to the new culture and environment. Further, the
employee’s adaptability is not enough, what is equally important is the adaptability of the
employee’s spouse and family members to the new environment.
The outcome of the research studies indicate that for global jobs she must possess:
• A variety of individual, interpersonal and organizational skills.
• Job performance track record.
• Multi-cultural exposure and cultural fit.
• Relational abilities.
❖ Selection technique for global jobs

Global companies require the human resources adaptable not only to the job and organizational
requirements, but also to the emotions of the people of different countries of the world. As such,
the selection techniques for global jobs vary from that of domestic jobs. Now, we shall discuss
the selection techniques for global jobs.
• Screening the applicant’s background. •
• Conducting tests to determine the candidate’s suitability to the job norms. •
• Conducting tests to evaluate the candidate’s suitability and adaptability to the new culture
and environment. •

• Conducting tests to evaluate the suitability and adaptability of “candidates, spouse and
family members” to the • new culture and environment.
• Predicting the adjustment of the candidate, his spouse and family members to the new
job, culture of the company, • country and the new environment.
Rosalie Tung proposed a selection method for selection of expatriates.

The candidate should be asked questions relating to:
• His adjustment
• Interaction with the host nationals
• Technical competence
• Cultural novelty
• Family situation
• Communication skills
The company has to measure the candidate on various adjustments. The variables to be measured
include:
The Individual Dimension: The variables used to measure the candidate’s suitability in this area
include:
• Candidate’s self-efficiency
• Relational skills of the candidate
• Perceptional skills of the candidate
• Job skills
• Stress reduction skills
3.7. EXPATRIATE MANAGEMENT
➢ Expatriates
Global companies, after selecting the candidates place them on the jobs in various countries,
including the home country of the employee. But, the employees of the global companies are
also placed in foreign countries. Even those employees who are placed initially in their home
countries are sometimes transferred to various foreign countries. Thus, the employees of global
companies mostly work and live in foreign countries and their family members also live in
foreign countries. Employees and their family members working and/or living in foreign
countries are called expatriates in the foreign country. Expatriates are those living or working in
a foreign country. The parent country nationals working in foreign subsidiary and third country
nationals are expatriates. Large number of expatriates normally has adjustment problems with
the working culture of the company, country’s culture, laws of the country etc. Some expatriates
adjust themselves easily, while some others face severe problems of adjustments. Many Indian
expatriate employees in Maldives could not adjust to the culture and returned to India before
their assignments were completed. Thus, the major problem with expatriates is adjustment in the
new international environment.

International adjustment
The international adjustment is the degree to which the expatriate feels comfortable living and
working in the host culture. This significantly influences job performance. The expatriate is
completely new to the host country environments, social rules, norms etc. The expatriates have a
strong desire to reduce psychological uncertainty in the new environment. Psychological
uncertainty is also called cultural shock. Nancy Adler defines cultural shock as, “the frustration
and confusion that result from being bombarded by uninterruptable clues.”
For example, students in the USA drink beverages in the class-room, students in African
countries leave the class immediately after the close of the lecture but before the teacher leaves
the class, people in the USA wish you immediately when there is eye-to-eye contact with you.
These cultural differences cause cultural shock to Indians. Researchers found that to a large
degree culture shock follows the general pattern of a U-shaped curve. This pattern presents the
relationship between culture shock and the length of time the expatriate has been working in the
host country’s culture. The ‘U’ is divided into four stages, viz., honeymoon, culture shock,
adjustment and mastery. Honeymoon stage: like expatriate and his family members are
fascinated by the culture of the host country, the accommodation, the transportation facilities,
educational facilities to the children etc., during the early stage of arrival. This stage lasts up to
2-3 months period.
Culture shock stage: The company takes care of the new arrivals and completely neglects the
previously arrived employee and his family after three months. During this stage, the employee
has to take care of himself and his family members. Expatriate gets frustrated, confused and
unhappy with living and working abroad. His social relations are disillusioned during this stage.
He gets the shock of the existing culture.
Adjustment stage: The expatriate slowly learns the values, norms, behavior, of the people, their
culture etc. He slowly adjusts himself to the culture of the foreign country. Mastery stage: The
expatriate after adjusting himself with the culture of the foreign country, can concentrate on
working efficiently. He learns and adopts to the new environment completely and becomes like a
citizen. He behaves and functions like a citizen at this stage.
❖ Dimensions of international adjustment

International adjustment has three dimensions, viz., adjustment to the overseas workplace,
adjustment to interacting with the host nationals and adjustment to the general environment. The
research studies discovered certain skills which would help both the individual expatriate and
international organizations in dealing with the adjustments. Figure below presents a framework
of international adjustment. There are four dimensions of adjustment, viz., individual, job,
organization culture, and non-work.
Individual Dimension: Individual dimension includes the skills and the capabilities that the
expatriate possess. These skills include cross-cultural skills. There are three sets of individual
skills, viz., self efficacy, relational and perception skills. Now, we discuss these three types of
skills. Self-Efficacy Skills The expatriate should have self-confidence, self-esteem and mental
hygiene. He should be able to keep mental and social health with a feeling of being able to
control or deal with surprises from the host cultural environment. Areas of self efficacy are:
stress reduction, technical competence and reinforcement substitution.
Stress Reduction: Stress reduction abilities include abilities to deal with interpersonal conflict,
financial difficulties, and variations in business systems, social alienation, pressure to conform,

loneliness, differences in housing, climate etc. These factors affect the expatriate job
performance. Expatriates should have an on-going clear strategy to reduce the stress.
Technical Competence: Technical competence of the employee is an important factor that

determines the degree of employee adjustment in the foreign country. Reinforcement
Substitution: This skill involves “replacing activities that bring pleasure and happiness in the
home culture with similar -’yet different - activities that exist in the host culture.” The common
interests would be sports, music, art, dance, and social groups. Relational Skills Relational skills
include expatriate’s ability, desire and tendency to interact, mix or involve and develop
relationships with host nationals. The skills in this regard include: Finding
Mentors: The expatriates find the host nationals, who have similar interests and can guide them.
My own personal experience, while I was working in Eritrea, I found common interests in Dr.
Tesfa-Yesus Mehary and in myself. I also found guiding and mentoring skills in Dr. Tesfa Yesus
Mhary and I accepted him as my mentor. He helped me in building relations with other Eritreans
and adjust to Eritrea with least problems.
Willingness to Communicate: Fluency in the host country’s language is not a pre-condition for
building relations with the foreign nationals. What is more important is making efforts to learn
the language as a means for familiarizing with the foreign nationals and their culture.
Strategically using the proverbs, popular songs, famous incidents from the history, jokes,
information about religion, sports of the host country is called, “Conversational Currency.”
Using these titbits fastens the process of building the relations with the foreigners.
Perception Skills: These skills include expatriate’s ability to understand the behaviour of the
host nationals, their practices, culture etc. These skills reduce the degree of psychological

uncertainties associated with cross-cultural experiences. The expatriate should not view the host
nationals as backward, or stupid or unsophisticated.
Non-work Dimension: The non-work dimensions include culture novelty and family/spouse
adjustment. Culture Novelty: Culture novelty includes differences in beliefs, values, norms,
religious faith, sex roles, etc. The degree of culture novelty is more, if these factors of the host
country vary much from those of the home country of the expatriate. The results of the research
study conducted by Ingemar Torbiorn regarding host countries ranked according to expatriate
satisfaction are presented in Exhibit 6.4.
Family-Spouse Adjustment: The employee may take a decision, to leave the host country
before the contract expires, if the employee’s spouse and family members fail to adjust to the
host country’s culture. Some of the Indian housewives fail to adjust to foreign culture regarding
sex and marriage system, particularly when their female children enter the teenage and force the
husbands to leave the foreign job and country. However, the research studies found that: The
spouse was in favour of accepting the assignment from the start. The spouse engaged in self-
initiated, cross-cultural training. The spouse had a social support network of host country
nationals. The standard of living in the overseas assignment was acceptable to the spouse. The
firm sought the spouse’s opinion regarding the international assignment from the beginning of
the selection process. The spouse could adjust to the degree of culture novelty.
➢ Performance Appraisal
Performance appraisal is a method of evaluating employee behaviour relating to expected work
and behaviour, normally including ‘both the quantitative and qualitative aspects of job
performance. Performance refers to the degree of accomplishment of the tasks that make up an
individual’s job. Appraising the employee performance on foreign jobs is a highly complicated
task as the expectations of global company are multifarious. In addition, employees of various
countries view the meaning of jargons quite differently. Added to this, work related practices,
organizational culture and job dimensions vary from country to country. Hence, global company
should take due care in appraising the performance of employees.
Objectives: The objectives of performance appraisal are to create and maintain a satisfactory
level of performance, to contribute to the employee growth and development through training
and to guide the job changes with the help of continuous ranking.
Appraisers: The appraiser may be any person who has a thorough knowledge about the job
content, content to be appraised: standards of content and the one who observes the employee
while performing a job. Typical appraisers are:
• Supervisors
• Peers
• Subordinates
• Consultants
• Customers (internal and/or external) Users of services
➢ Performance Appraisal
3600 performance appraisal refers to the performance appraisal of an employee by his superiors,
subordinates, peers, customers, consultants and users of his services. Methods of Performance
Appraisal A number of performance appraisal techniques traditional methods include:

Graphic Rating Scales Ranking Method Paired Comparison Method ‘- have been developed. The
Forced Distribution Method
• Check List Method
• Essay or Free From Appraisal
• Group Appraisal
• Confidential Reports
Modern performance appraisal methods include: Behaviourally Anchored Rating Scales ·
Assessment Centres Human Resource Accounting Management by Objectives Psychological
Appraisal.
Performance Appraisal in Global Companies Appraising the perf6rmance of expatriate

employees objectively is very difficult. Performance appraisal of expatriate employees is done
by both host nation managers and home country managers. The host nation’s managers may be
biased due to their cultural frame and expectations. In order to reduce the problems of
performance appraisal, the US companies give more weightage to the self appraisal done by the
foreign employee for himself rather than by the superiors. Japanese companies introduced
participative management in Indian subsidiaries.
➢ Training and Development

It is often said that a good selection process reduces the training effort. It might be true in the
case of domestic business. But, the global companies should have enough training and
development effort as the candidates are strangers not only to the jobs, but also to the soil,
climate, environment, people and culture of foreign country where they are expected to work and
live along with their family members. After the candidate is selected and placed on the job, he
must be provided with adequate training and developmental facilities. Training is the act of
increasing the knowledge and skill of an employee for doing a particular job. Development is a
systematic process of growth and by which the executives develop their abilities to manage. In
fact, executive development/education has become global.
❖ Importance of Training and Development for Global Jobs

Even the most valuable employees in the global companies fail to work and stay with the
company due to poor training and developmental efforts. Global companies should make not
only the employee, but also his family members more comfortable with the company, people and
the country. Hence, training and development assume greater significance in global companies.
Training and development are the most important techniques of human resource development
Training and development lead to:
• Improved job knowledge and skills at all levels of the organization.
• Improved morale of the human resources.
• Improved profitability and/or more positive attitudes towards improved relationship
between boss and subordinate.
• Improved understanding of culture of various countries.

❖ Cross- Cultural Training

Cross-cultural training enables the expatriates to learn the cultural norms, values, aptitudes,
attitudes, beliefs, behaviours, practices of the host country. The expatriate, after training can use
this cross-cultural knowledge to behave according to the cultural requirements of the host
country. The adage “Do in Rome as the Romans do” holds good here. The trainee expatriate can
transfer the knowledge gained in the training programme into new cognitive and physical
behaviour. This process gives the trainee more satisfaction in their foreign assignment. Procter
and Gamble trained their selected candidates for their company in Japan regarding the Japanese
culture that Japanese like more of informality, they hesitate to say no and they finalize more of
their business dealings outside the office and mostly in restaurants in the evenings.
The employees transferred this knowledge into their cognitive and physical behaviours and
became successful in dealing with the Japanese. Thus, they became efficient in doing their jobs
and interacting with the host country’s nationals. However, some companies do not train their
expatriates due to the following reasons:
• Brief cross-cultural training programmes are ineffective.
• The failure of such dissatisfaction. programmes in the past resulted in employee
• Lack of enough time between selection and departure
• High cost of training
Though the company cannot provide training before the departure of the employee, it can plan to
provide the same in the host country.
3.8. INTERNATIONAL LABOR RELATIONS

➢ Industrial Relations : Industrial relations or employment relations encompasses the
interrelations between employers and employees, labor/trade unions, employer
organizations and the state/ government.
➢ International Industrial relations: International industrial relations deals with the

complex relationships among employers employing foreign national, employees of
different nationalities, home and host country governments and trade unions of the
organizations operating in various countries and their national & international
federations.
➢ Key Players - Government • Employers and their organisation • Employees and their
Organisation(Trade Unions)
Unitarist- Mutual cooperation, teamwork, sharing common objectives, conflict is seen as

destructive
Pluralist - Conflict is inevitable, and trade unions are seen as legitimate to counter management
authority
Marxist - Industrial conflict is because of division in the society , the solution being the
overthrow of the capitalist system
➢ Trade unions/ Labour Unions- Labour unions or trade unions are organizations formed
by workers from related fields that work for the common interest of its members. • They

help workers in issues like fairness of pay, good working environment, hours of work and
benefits. .
➢ Industrial relations strategies of MNCs

Multinational corporations have to deal with the employees of various countries with varied
cultural, social, political and religious environments. The industrial relations strategy of the
MNC’s are mostly applied to the environment of only one country and it has to formulate
another strategy for another country. Industrial relations are seen in the larger interest of social
class struggle in Switzerland, France and ‘ Italy. In most of the other countries this is seen only
as the relationship between workers and management. MNCs decentralize their industrial
relations policies and practices. MNCs use the strategy of relegating the industrial relations
problems like work stoppages, strikes, etc., to the specialists in the various countries. Employees
working in various subsidiaries of MNCs formed international trade union.
Current employee relation issues

Ferocious global economic competition has spawned a relentless search by MNCs for the lowest
production and operational costs. Their competitive survival often depends on their success in
this search. On the supply side, the increasing accessibility of the world’s workers has created a
huge pool of labor vying to compete for MNCs’ low-paying jobs, with little ability to refuse the
unsafe working conditions that contribute to low operational costs. And many governments,
desperate for increased jobs and national economic strength provided by MNC foreign direct
investment, also compete in attracting MNCs for access to cheap and/or skilled labor.
Fortunately, market imperatives compete with the tendency to seek the lowest labor cost and
help to maintain employment in traditional markets— the advantage of locating business
operations near consumers for company recognition and acceptance as well as for logistics
savings.
Given this background of global competitive pressure and opportunities for achieving lower
labor costs, much of the global labor force is vulnerable to workplace abuse by some short
sighted, unethical organizations— those that seek to maximize their benefits at the expense of
workers and their communities. Other organizations with no malicious intent may inadvertently
contribute to employee workplace difficulties and abuse due to lack of awareness of the impact
of their business activities, such as through their distantly managed operations that are
outsourced and contracted to foreign companies and state-owned enterprises. We now will
examine current critical global ER issues and challenges related to worker protection that
companies should be aware of and consider in their ongoing business planning, including in
cooperation with local governments, unions, and other parties concerned with employee
protection. These issues include forced labor, harmful child labor, workplace discrimination,
health and safety hazards, and job insecurity and displacement.
Influence of MNCs and unions on global ER

The practice of ER throughout the world can differ dramatically, and in each business
environment context the practice of ER can have several external sources of influence. On the
other hand, internal company factors such as company culture, general management philosophy,
and prevailing management style also can be very influential in determining ER practices despite

heavy government regulation and union presence in the external context, such as the case of
McDonald’s in Germany.
As mentioned earlier, the parties that constitute the primary employment relationship underlying
an organization’s ER are the company and employees, both individually and collectively, such as
when employees are organized in a union. Both the employees and the MNC (including
managers and executives representing the MNC who determine and carry out company policy)
have a principal influence on the nature and duration of the employment relationship in which
ER takes place. Although we now will focus on the part played by MNCs in the employment
relationship, we want to emphasize the importance of the active voice and participation of
individual employees in determining the nature of this relationship and how they are treated and
managed in organizations. And although unions are often considered external to the primary
company-employee employment relationship, we also will examine their influence on ER
because they often represent the voice of employees. Finally, MNCs should also be familiar with
other external forces, such as governments, intergovernmental organizations, and NGOs, which
can have a powerful impact on MNC ER decisions and activities. International and local NGOs
in particular, compared to the overall waning influence of unions, are increasingly vocal and
influential in bringing changes and improvements in employee safety and rights protection.
Role of MNCs in global employee relations

How should MNCs be involved with the pressing ER issues and challenges presented earlier?
Certainly they should expect to follow local regulations of all kinds, including those regarding
the treatment of employees. But do MNCs have an ethical responsibility to respect and adhere to
the same home country ER practices in their host country operations, even though the host
country might not have any such standards or regulations, or if they have them, ignore them
through virtually nonexistent enforcement? In our competitive global economy, the decisions and
actions of MNCs entering new countries can become moral dilemmas.
However, as MNC operations come under greater scrutiny around the world, consumers,
shareholders, communities, and other stakeholders increasingly demand that corporations play a
positive role in promoting and upholding high corporate social responsibility. We believe that for
a long-term sustainable strategy of success, companies must adopt as part of their core values
common high standards for managing their global human resources, including ER practices,
which will meet or surpass individual country standards and regulations. Nike, Wal-Mart, and
Reebok are just a few companies that have been under intense pressure to improve their global
workforce ER acts, both in their home countries and abroad.
And overall, they have responded very favorably to this pressure, raising the expectations for
corporate social responsibility. In its own home country of the United States, Wal-Mart has been
charged, based on its own workplace data patterns, with a huge class-action lawsuit for sex
discrimination related to compensation and career advancement. Although companies like Wal-
Mart may truthfully deny conscious discriminatory practices, their human resource records and
data patterns, unless they can be reasonably defended, may still provide sufficient evidence of
discrimination and adverse “disparate impact” against a legally protected group, such as women
or minorities. Even though business leaders and managers may not intentionally put individuals
from one or more groups at a disadvantage, deep cultural influences may still affect human

resource decisions leading to systematic unfair discrimination. Disparate or adverse impact, with
its focus on actual statistical patterns of ER practice, is a tool to surface unfair discriminatory
practice regardless of conscious intention or motive. More recently Wal-Mart agreed to pay $11
million to settle a lawsuit accusing it of being complicit in contracting janitorial services for its
stores where the contracted employees were illegal aliens.
REFERENCES:
• https://www.businessmanagementideas.com/marketing/marketsegmentation/international
-market-segmentation/21129
• https://www.tutorialspoint.com/international_marketing/international_marketing_product
_lifecycle.htm
• https://www.tutorialspoint.com/international_marketing/international_marketing_eprg_fr
amework.htm
• T.A. Christopher. (2020). The Institute of Company Secretaries of India .(2014).
International Business-Laws and Practices. Laser Typesetting by AArushi Graphics,
Prashant Vihar, New Delhi, and Printed at Tan Prints/July 2014. Retrieved from
https://www.icsi.edu/docs/webmodules/Publications/9.5%20International%20Business.p
df
• https://www.tutorialspoint.com/international_marketing/international_marketing_market
_segmentation.htm
• https://www.slideshare.net/koshyligo/international-labour-relations
• https://www.tutorialspoint.com/international_marketing/international_marketing_mix.ht
m
• https://www.tutorialspoint.com/international_marketing/international_marketing_quick_g
uide.htm
NOTES COMPILED BY: DR. NIKHAT FATIMA

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UNIT 3: INTERNATIONAL MARKETING & INTERNATIONAL HRM

3.1. INTERNATIONAL MARKETING: NATURE & SIGNIFICANCE

➢ Definitions of International Marketing

According to Kotler, "Global marketing is concerned with integrating and standardizing

According to Cateora, "International marketing is the performance of business activities that

According to Cateora and Graham, "International marketing is the performance of business

• International Marketing − Overview

MBA 2nd Year (ACET) Page 1

• International Marketing - Objectives

MBA 2nd Year (ACET) Page 2

• International Marketing - Basic Modes of Entry

MBA 2nd Year (ACET) Page 3

MBA 2nd Year (ACET) Page 4

▪ Requires broader competence

MBA 2nd Year (ACET) Page 5

▪ International Marketing - Scope

MBA 2nd Year (ACET) Page 6

• Facilitates cultural exchange

INTERNATIONAL MARKETING MIX

MBA 2nd Year (ACET) Page 8

• The cost of transport

3.2. INTERNATIONAL MARKETING ORIENTATIONS

MBA 2nd Year (ACET) Page 10

MBA 2nd Year (ACET) Page 11

3.3. INTERNATIONAL MARKET SEGMENTATION

Market segmentation can be defined as a technique of dividing different countries into

➢ International Market Segmentation – Introduction

It is evident that there is a big difference, economically, geographically, demographically,

MBA 2nd Year (ACET) Page 12

➢ FORMS OF MARKET SEGEMENTATION

MBA 2nd Year (ACET) Page 13

• International Marketing Planning

MBA 2nd Year (ACET) Page 14

➢ International Market Segmentation – 6 Characteristics behind Segmenting

The niche do have following characteristics:

➢ International Market Segmentation – Top 5 Requisites

MBA 2nd Year (ACET) Page 15

3. Accessible – Each segment should be concentrated geographically and could be effectively

➢ International Market Segmentation – Bases for Grouping Different Countries

The following criteria may be used for grouping world countries:

MBA 2nd Year (ACET) Page 16

It is based upon the following factors:

2. Geographical Segmentation of the Countries:

i. Easy to Manage Worldwide Market:The geographical segmentation makes it easier to

MBA 2nd Year (ACET) Page 17

3. Segmentation of World Market on the Basis of Political Perspectives:

4. Market Segmentation on the Basis of Different Religions:

MBA 2nd Year (ACET) Page 18

5. Cultural Grouping of the World Marketing:

Herskovits, Melville J. has classified the different elements of culture as under:

7. Inter Market Segmentation of the Nations:

MBA 2nd Year (ACET) Page 19

8. GNP per Capita Basis Grouping of Countries:

9. Strategic Planning Framework for Grouping World Countries:

MBA 2nd Year (ACET) Page 20

ii. Structure of the industry both locally and internationally.

10. In Country Market-Segmentation:

MBA 2nd Year (ACET) Page 21

3.4. INTERNATIONAL PRODUCT LIFE CYCLE

Stage one (Introduction)

Stage two (Growth)

Stage three (Maturity)