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Old 14-06-2011, 12:56 PM
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Exclamation Business in the Global Market


International Marketing
International marketing refers to the marketing activities that are performed across the international boundaries. The planning and control of such marketing activities are carried by the parent producing company through its strategic marketing activities that are designed and established to meet the requirements of such a market. The main goal is to introduce and familiarize the product in a manner that customers get satisfied, develop liking for the product, and build a better image of the multinational manufacturer.

Marketing strategies are adopted to overcome hindrances and restraints. Greater the multinational companies pay attention to marketing mix, greater becomes the possibility of exercising effective control or better grip over the international market. Further the success of international marketing also depends upon how the producers understand social and cultural built up economic pattern, political environment, and the technological advertisement that has been acquired by the country where goods and services are to be provided. In fact, successful international marketing depends upon how the producing company gets adjusted and fully familiarized with the conditions that prevail in the country where the goods and services are to be provided.


Balance of Trade
By balance of trade we mean the difference between what a country pays for imports and what is receives for its exports. It records all visible items that are exported to and imported from other countries through sea, air and land routes. Balance of trade, as such gives an estimation of total inflow and outflow of goods that are recorded at the inlet and outlet points.


Balance of Payment
Balance of payment refers to the net results that are drawn after recording all the visible and invisible items that are imported and exported from the country. Balance of payment, as such, provides a comprehensive statement over the net results of foreign trade and gives a true picture as to where the country stands in the international trade. It clearly exposes the economic viability, strength, and in capability by correctly measuring its imports and exports, competency in goods and services as well as technical know-how. By services we mean the services of shipping lines, insurance companies, banking concerns, and others. It also includes the foreign loan that is either provided by it or accepted from other country or countries.
Arguments for Restraints on International Trade
Free international trade is hardly found today. The most popular arguments that are given for restricting foreign trade among nations are as follows:

1. Military Argument

This argument holds that all industries vital to the national defence should be kept alive through tariff protection, if necessary.

2. The Home Industry Argument

This argument holds that if foreign goods are kept out of the country. Domestic manufacturers will enjoy a larger home market. But this argument favours selfish businessmen who are thus able to free themselves from foreign competition and charge high prices for their own goods. In this view, protective tariff unnecessarily makes imported goods costlier and render local producers to enjoy a larger home market where by losing foreign buyers.

3. The Infant Industry

The tenor of this argument is that young struggling industries should be protected from foreign competition until they are matured enough to face it. But determining how long this protection is needed for each individual industry and when it should be discarded is a difficult task.

4. The Wages Argument

This argument holds that by excluding foreign goods, goods made by higher paid domestic labour are encouraged thereby raising the domestic wage level. But by doing this:
1. The domestic prices are unduly raised.
2. Since high wages do not cause high productivity, this results in subsidizing uneconomic production to the long run disadvantage of all parties concerned.

5. Favourable Balance of Trade Argument

In an attempt to have a favourable balance of trade, a country may make every effort to reduce the import burden as much as possible by resorting to increased import duty, surcharge etc. while on the other hand, to increase exports to gain as much favourable results of foreign trade as possible.
Methods of Restricting Free Trade
Some of the methods used as barriers to free foreign trade are briefly given as follows:

1. Tariffs

Tariffs are simply taxes imposed by a nation on products imported from other nations. There are two broad types of tariffs:
(a) Revenue Tariffs, which are imposed to raise revenue, not necessary to prohibit specific imports.
(b) Protective Tariffs, which are designed to protect domestic industries against foreign competition.

Revenue tariffs are specific duty tariffs and they are levied on imports of a stated amount per unit (such as per pair, per kilo, per liter and so on). The usual objective is to produce revenue. Protective tariffs, on the other hand are based on the value of imported products, rather than the quantity. They are of often known as ad valorem taxes that aim at controlling the retail prices. They thus protect the domestic producers. If the ad valorem tax is high enough, it can keep foreign products out of the domestic market altogether.

2. Quotas

It is a trade restriction technique where a country simply sets an upper limit on the amount of a certain product that may be imported. Quota is fixed to restrict import of a certain commodity, to avoid foreign competition and the home industry operates without any major upset.

3. Embargo

An embargo is a completed prohibition on imports of certain products or from certain countries. It is more a political motivated action that puts a ban on imports rather than an economic one. Example may be given of the United States tat prohibited the imports of products from certain communist countries.

4. Difficult Custom Procedures

The creation of complicated and expensive custom procedures can be effective in limiting imports. It can also be used to discourage exports. Importers and exporters get fed up with difficult custom procedures that are intelligently introduced by the government.
Organization for Multinational Operation
Multinational operations are conducted by companies with the help of one of different organizational structures. The four identified organizational structures are:

1. International Division

Some companies set up a separate division, which looks after the multinational operations. The international division created for the purpose assumes its own-identity apart from the principal organization.

2. Geographical Division

Some companies have separated divisions to handle business independently in different parts of the world.

3. Functional Division

A third form of organizational structure is based on function. The marketing for the world wide organization is planned by the Marketing Division. The Finance Department manages international finance along with domestic finance.

4. Product Division

A company divides its operations according to products of the company. A specific department handles the complete activity of producing and marketing its products.
Problems of Multinational Operation
Problems tend to sneak up on executives of multinational firms in the most unexpected ways, including the following:

1. Language Differences

Differences in language constitutes one of the outstanding barriers to international trade. Failure to communicate properly and adequately through correspondence, advertising and conversation retards attainment of the full possibilities of a foreign market.

2. Different Monetary Standards

Every nation has its own peculiar currency. Rupee in Pakistan yen in Japan, Lira in Italy etc. This situation requires not only a mechanism whereby the seller may be paid in his own currency while the buyer makes payment in his, but also a method whereby each of these national currencies may be value in terms of every other one. The non-existence of gold standard, which at one time served as a common denominator, has greatly complicated the problem.

3. Local Attitudes

Local attitudes about certain products may become very important. If a product is thought to be mainly for men or mainly for children, its sales could certainly be affected. Furthermore, stereotypes about foreign countries are often incorrect and misleading.

4. Difference of Tastes

Tastes vary from country to country and even within a country from person to person. This difference of taste may cause drastic problems to multinational companies, which intend to have their plan of operations in many countries.

5. Lack of Marketing Information

Lack of precise, current marketing information about most foreign countries may also cause a hindrance .Helpful data can be secured from such sources as foreign trade associations, banks etc. but this information is usually quite general and can be applied only in part to problems concerning specific products and markets.

6. Trade Barriers

Practically all countries for one reason or another, interpose barriers that tend to restrict the free flow of goods across their borders. These barriers can make the free practice of business very difficult. They consist of tariffs, quotas, exchange restrictions, barter arrangements, laws and occasionally absolute prohibitions to the import of certain commodities.

7. Climate Difference

In this area, difficulty is anticipated but still encountered. For some commodities, which are sensitive to climate conditions, special scheduling, and packaging are often required for protection from exceptional moisture, heat or cold.

8. Business Customs and Bargaining Customs

Business customs and bargaining customs are rarely part of written law. Nevertheless they are sure to affect marketing strategy.

9. Shortage of Qualified Management Personnel

There is critical shortage of qualified management personnel for multinational operations. Schools are now training for international management. Some companies are beginning to try to make overseas experience attractive and a requisite for advancement within the corporation.

10. Interface of Divisions

A final difficulty often occurs in the upper echelons of multinational companies at the critical interface of divisions. Relationships between divisions can become strained and aggressive when the competitiveness of division executives is increased by nationalistic pride. Hence great care, for detail and fairness must be tied, into the agreements and plans for marketing areas and responsibilities of each corporate arm.

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