International Marketing is defined as 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. We have already discussed International Marketing Definition and Examples in an earlier article – International Marketing – Definition and Examples. In this article, we specifically discuss The Scope of International Marketing.
The Scope of International Marketing – Importance in the Global Arena
1. International Marketing Leads to Peace Among Nations
All the activities associated with a business like – development, production, and marketing, especially in the case of high-tech products, involves people from around the world to work together. Moreover, companies as a part of employee interactions enable people from all countries to meet face-to-face for both recreation and commerce. All this interaction leads to not just the mutual gain associated with business relationships but also personal relationships and mutual understanding. The latter is the foundation of global peace and prosperity and widen the scope of International Marketing. e.g. Mobile Phone Companies deploy different functions of their business in different parts of the world – say manufacturing in China, R & D in London and sales teams across the globe. In order to work as a team and drive a single agenda, the teams interact with each other frequently and occasionally meet for important agendas.
2. Global Markets Reduce Risk and Open Opportunities
Scope of International Marketing increases with global markets opening up for business. At times manufacturing a product in a country can be much cost-effective and the nation becomes the hub of all exports. e.g. Huge portion of all consumer products sold globally is manufactured in China.
Global brands rake in a significant portion of their revenues from outside their parent country. Below is the example of a few US-based companies and how they widened the Scope of International Marketing.
3. Factors Affecting the Scope of International Marketing
Of all the events and trends affecting global business today, four stand out as the most dynamic, the ones that will influence the shape of international business:
- The rapid growth of the World Trade Organization and regional free trade areas such as the North American Free Trade Area and the European Union.
- The trend toward the acceptance of the free market system among developing countries in Latin America, Asia, and eastern Europe.
- The burgeoning impact of the Internet, mobile phones, and other global media on the dissolution of national borders.
- The mandate to manage the resources and global environment properly for the generations to come.
The Scope of International Marketing – Major Types of Businesses
This is the easiest form of International Marketing a company can get into – Importing from one country and selling in the domestic market. This is possible only in a scenario where there is demand in the domestic market for imported goods or services. Companies also localise the imported product depending on the needs of the market.
Opposite of Importing and selling, companies export their finalized products to international markets or on to their other franchises in far off markets where they can sell the products to their localities for generating huge revenues.
3. Contractual Agreements
Whenever business moves beyond their domestic boundaries, its scope of international marketing exposes it to greater chances of doing a lot more business. The market expands, the consumer base expands and even volumes and profits expand. Companies grow exponentially by getting into contractual agreements with several other partners overseas.
4. Joint Venturing
Two brands can come together and enter a potential market. The investments, profit or losses are pre-decided in terms of both value and time period. At the time it is beneficial for companies to enter into a JV for raising the scope of international marketing as a result of a barrier to new entrants in foreign markets. A local partner can prove to be immensely useful for doing business not only operationally but also from a domestic understanding of the market dynamics.
5. Fully Owned Manufacturing
Relatively a higher level of engagement in the foreign soils, companies can own a fully owned manufacturing in a country. The company can use this facility to sell products within the country or export to nearby nations. Owning a fully owned manufacturing helps companies control quality.