There are opportunities in the life of a firm that have the potential to make it a truly world-renowned company. That’s when the momentous decision of going international has to be taken by that firm. But taking the decision to go international, howsoever obvious it may seem, can be quite dicey.
|Image courtesy of twobee / FreeDigitalPhotos.net|
Consumers today are spoilt for choice in this age of world-class products. Opportunities are ripe for firms as markets around the world are opening up and demand for their products is increasing exponentially. Conversely, it means that a purely domestic firm faces a significant competitive threat from abroad, and so it must take the international route sooner than later. The million dollar question is, how?
Export is usually considered the safest mode, where the effort to market the product abroad is minimal. When some particular country market begins to appear especially attractive, then the firm might want to enter them on an ad-hoc basis, but still there is little marketing effort involved in this case as the firm tries to adapt its product to the local requirements each time it enters a new market, which involves high cost and inefficiencies in the value chain. Hence, there’s a strong incentive for a multinational firm to standardize its product offering in that scenario, but it’s easier said than done. It involves optimization according to needs of various regions and countries, and is a time-taking process that entails continual learning. Firms that succeed in this optimization process achieve the enviable dream of being truly global.
These stages actually symbolize a continuum, and all international firms lie somewhere in between these two extremes of being either purely domestic or being truly global. But this continuum is nebulous as taking firm-wide decisions to move in that continuum to reach that global stage are complicated by several factors, which are the subject matter of International Marketing. These factors include macroeconomic factors like exchange rates, GDP, Balance of Payments, population, as well as geo-political factors like political stability, cross-border laws, trade agreements, etc. Another vital factor is culture, which involves variation in knowledge, beliefs, language, art, morals, customs, and other social dimensions. Overgeneralising these factors can be a potentially disastrous decision as many international failed-entry stories have proved time and again.
|Image courtesy of tungphoto/ FreeDigitalPhotos.net|
These complexities have to be dealt with utmost care and would involve stepwise measures beginning from a detailed cross-cultural market research. Making the right entry decision is the most important aspect in this scenario. The basic marketing tools of segmenting, targeting and positioning retain their importance, only their context and scale becomes more global. Choosing the right entry mode from exporting to licensing and franchising to turnkey projects to contract manufacturing to direct entry, requires great deal of deliberation and far greater research. Important decisions regarding the marketing mix are what the firm has to decide upon at a later stage.
These nebulous complexities are what International Marketing attempts to simplify, and hence its importance in today’s increasingly globalizing marketplace cannot be underrated. What do you think about it? Do share your thoughts with us here in comments.
© Jayant Rana, 2012-Present