Globalisation – is a growing trend towards worldwide markets in products, capital and labour,

unrestricted by barriers.

Key features impacting business strategy:

 Increased international trade as barriers to trade are reduced.

 Growth of mncs as there is freedom for capital to be invested from one country to another
 Freer movement if workers between countries.

Potential Benefits:

 Greater opportunity for selling goods in other countries, potentially leading to higher sales,
economies of scale and improved profitability.
 Increased competition gives firms incentives to become more internationally competitive as
hiding behind trade barriers breeds inefficiency.
 Wider choice of locations offering lower costs and direct access to local markets.
 Greater freedom to arrange mergers and takeovers with firms from other nations as restrictions
on foreign acquisitions are reduced.

Potential Limitations and threats:

 Increased competition will drive firms that are not internationally competitive out of business.
 Strategies may fail to consider the cultural and taste differences between consumers of different
nations.
 International locations may lead to significant transport and communications problems.
 Increasing activity from anti-globalisation pressure groups may result in bad publicity fir
multinationals.
 Gvt will have much less influence on business decisions.

Why sell products in other countries:

 Saturated home markets where competition is severe, movement cab offer rapid sales
increases.
 Profits as rapid sales growth combined with low production costs can offer higher profit
margins.
 Spreading risks as sales and profits of a business will ve much less dependent on economic and
legal constraints in the home country
 Legal differences allowing for sale and advertisement of an otherwise banned product.

Why International Marketing is different :

1. Political differences
 Changes of gvts can cause instability in some countries increasing risk of doing
business.
 Acts of civil violence and terrorism can lead to destruction of a company’s assets.
2. Economic and social differences
 Average living standards differ around the globe.
 
Location decisions will have to take into consideration differences in tax rates, interest
rates and age structure of population.
3. Legal differences
 Some goods illegal to sell in other countries
 Product safety and labeling controls stricter in some countries compared to others.
4. Cultural differences
 Key factor to consider in IM.
 Failure to recognize cultural differences including language can have disastrous effect on
a firms marketing strategy.
 Some words have unfortunate meanings when translated into another language. Etc
5. Differences in business practices
 Accounting standards and rul3s cab vary in different parts of the world.

INTERNATIONAL MARKETS – different methods if entry:

1. Exporting
 Undertaken either by selling a product to a foreign customer through company website
or indirectly through an export intermediary such as an agent or trading company based
in the country.

Benefits :

 Exporting directly means company has complete control over the international
marketing if it products.
 Agents may represent several other companies Exporting goods so may not give priority
to a new Exporting business and its products
 No commission is taken by intermediaries so profit margins are not reduced.

Limitations:


Dedicated sales personnel may be needed to deal with foreign buyers and company
management may have to travel abroad to meet customers.
 Business does not have a local agent or trader supporting them so may lack important
local knowledge.
 Exporting business has to handle logistics of transporting and storing the product and
dealing with all paperwork.
2. International Franchising
 Foreign franchisees are used to operate a firms activities abroad.
3. Joint Ventures

4. Licensing
 Involves business allowing another firm in country being entered to produce its branded
goods or patented products under license which will involve strictly control terms over
quality.
5. Direct Investment In Subsidiaries
Mnc – businesses that have operations in more than one country

Free international trade – trade allowed to take place without restrictions such as tariffs and quotas.

Tariff – tax imposed on an imported product.

Quota – a physical limit placed on the quantity of imports of certain products.