International Marketing Strategies

1. Introduction – The history of globalization

Since the word has both technical and political meanings, different groups will have differing histories of "globalization". In general use within the field of economics and political economy, however, it is a history of increasing trade between nations based on stable institutions that allows firms in different nations to exchange goods and services with minimal friction.^[1]

The term "liberalization" means the acceptance of the neoclassical economic model which is based on the unimpeded flow of goods and services between economic jurisdictions. This led to specialization of nations in exports, and the pressure to end protective tariffs and other barriers to trade. The period of the gold standard and liberalization of the 19th century is often called "The First Era of Globalization". Based on the Pax Britannica and the exchange of goods in currencies pegged to specie, this era grew along with industrialization. The theoretical basis was David Ricardo's work on Comparative advantage and Say's Law of General equilibrium. In essence, it was argued that nations would trade effectively, and that any temporary disruptions in supply or demand would correct themselves automatically. The institution of the gold standard came in steps in major industrialized nations between approximately 1850 and 1880, though exactly when various nations were truly on the gold standard is contentiously debated. 1

In the "First Era of Globalization" is said to have broken down in stages beginning with the First World War, and then collapsing with the crisis of the gold standard in the late 1920s and early 1930s. Countries that engaged in that era of globalization, including the European core, some of the European periphery and various European offshoots in America and Oceania, prospered. Inequality between those states fell, as goods, capital and labour flowed remarkably freely between nations. 1

Since World War II the era of Globalization has been driven by trade negotiation rounds, originally under the auspices of GATT, which led to a series of agreements to remove restrictions on "free trade". The Uruguay round led to a treaty to create the World Trade Organization or WTO, to mediate trade disputes. Other bi- and trilateral trade agreements, including sections of Europe's Maastricht Treaty and the North American Free Trade Agreement have also been signed in pursuit of the goal of reducing tariffs and barriers to trade. 1

Globalization/internationalisation has become identified with a number of trends, most of this they have developed since World War II. These include greater international movements of commodities, money, information, and people; and the development of technology, organizations, legal systems, and infrastructures to allow this movement. 2

At no time before globalization has reached the present extent. Current technological, economical, and political developments in form of new transport-, information-, and communication-technologies, deregulated capital and goods markets, as well as an increasing loss of importance of national borders in politics and society led to the situation that a global exchange takes place.^[2]

On the following pages we will explain the globalization and the appearing problems as well as come closer on the necessity of the international marketing.

2. Globalization

2.1. Role of international marketing

“To understand the role of international marketing in the firm it is necessary to consider decisions being made on the continuum outlined above and not discrete components corresponding to the various madalities used to transfer assets internationally.”^[3]

Interest in international marketing as a sub-discipline of marketing is a relatively recent phenomen. It appears that practitioners of international marketing are much further advanced in their thinking than are researchers. Research in the area has built upon theories and paradigms developed in other areas, especially international trade theory, industrial organization and strategic marketing. Valuable insights into conditions under which international exchange of assets occurs may be gleaned from international trade theory, especially the effect of fluctuating exchange rates on marketing programmes. From industrial organization theory the role of the firm in the internationalization process and especially the reasons for foreign direct investment may be understood. Because the firm international markets must deal with relatively high transaction costs it is necessary to consider various ways of transferring assets abroad. The different modes of foreign market entry identified are exporting, comtetitive alliances based on licensing, joint ventures and foreign direct investment. It is necessary to examine each in the context of a theory or set of paradigms.

A number of marketing theories and paradigms were identified and discussed, many of which have components which are relevant to the firm in international markets.

The interaction pragadigm in the context of a systems-exchange framework appears to hold high promises, with this it is possible to identify the transactions costs and measure the attainment of other non-financial marketing objectives.^[4]

2.2. “Going International”

Within the scope of the development of foreign markets enterprises will become actively for the first time at foreign markets or they will increase the number of land markets.

On this occasion, are initial decisions which are dependent on each other to hit concerning the market choice and the market development.^[5]

Reasons for going international:^[6]

On the hand we consider the reactive reasons (from reaction – to receive information, then act):

- the company is responding to demand it discovers in another location
- it sees it competitors going to a particular place
- regulations – environmental / work safety may be “easier” overseas
- costs of production at home force it to cheaper areas
- chance occurrence.

On the other hand we consider the proactive reasons (to actively look for an opportunity):

- strategically seeking out advantages
- launch and offense into a new market before competitors does
- power and prestige
- incentives
- lower costs of labour, production, energy.

Also another reason to go international is to gain prestige which can be applied to customers at home – if a company has overseas offices, it appears to be more impressive at home i.e. law firms, CA firms.

Reasons and forms of the foreign engagement:^[7]

- Market development, fulfilment of customer wishes and nearness to the customer stand in the foreground of an engagement abroad
- International Sourcing for the optimisation of the cost structure plays an important role
- Foreign active German enterprises place on the export of her goods and services

Target markets and successful rates^[8]

- the enterprises estimate European target markets as especially positive concerning her shops - presently as well as in future
- the biggest dynamism of the commercial development is expected during the next years for Russia, India, Poland, Romania / Bulgaria and China

Preparation of the foreign engagement ⁸

- the better and more intensely the market knowledge is the more successfully - this runs the foreign business / a careful search of information about the concerning purpose regions is essential
- successful foreign business requires a thorough, from about 1 to 2-year-old preparation time
- travelling, measuring, market analyses and consultations are the most important springs to the investigation of new foreign markets for German enterprises
- a successful engagement of the enterprises at foreign markets is often stamped by a mixture of different activity forms which contain easy commercial transactions and capital investments
- with the personnel choice in the foreign business German enterprises place in general on manager of the purpose land - and in all enterprise areas
- especially important requirements by enterprise to her general manager, marketing and distribution manager as well as chief buyer abroad are put, good contacts, relations and market knowledge in the purpose land

Commercial development and success abroad 8

- Successful activities of German enterprises in the foreign business are: export, import / purchase and subsidiary
- the foreign-active enterprises plan her foreign business to develop clearly as well as to raise the degree of her internationalisation
- almost all abroad investing enterprises also pursued international trade - above all export shops
- the height of the investment sum rises with the interlinking in the purpose land
- Capital participation from abroad plays up to now only at few German enterprises with foreign business a role

Main problems of the foreign engagement^[9]

- Main problems appear at foreign activities of German enterprises, above all, because:
- the search / choice for dependable partners is difficult
- the strong competition in the respective market
- own prices abroad are too high
- the right contacts are absent
- dependable business partners abroad, competitive prices and a well-balanced financing are a key to the success

Successful factors in the foreign business 9

- the most important factors for the success in the foreign business are: good product qualities, dependable partners in the target market, thorough market knowledge’s
- for the success in the foreign business it depends next to the product quality, above all, on:
- a thorough preparation of the engagement,
- the search for suitable business partners,
- the knowledge of the market,
- the careful human research on site and
- a soundly worked out commercial draught.

2.3. Concept of Globalization

“ Globalization (or globalisation), is an umbrella term for a complex series of economic, social, technological and political changes that have been identified since the 1980s. These changes and processes are seen as increasing interdependence and interaction between people and companies in disparate locations.”^[10]

At a top political and economic level, globalization is the process of denationalization of markets, politics and legal systems, i.e., the rise of the so-called global economy. The consequences of this political and economic restructuring on local economies, human welfare and environment are the subject of an open debate among international organizations, governmental institutions and the academic world. This portal does not take part in this debate or offer any information on this matter. At a business level, we talk of globalization when companies decide to take part in the emerging global economy and establish themselves in foreign markets. First they will adapt their products or services to the final user's linguistic and cultural requirements.

Then, they might take advantage of the Internet revolution and establish a virtual presence on the international marketplace with a multilingual corporate web site or even as an e-business.^[11]

[...]

^[1] Cp. http://en.wikipedia.org/wiki/Globalization, 26.05.06.

^[2] Cp. Czinkota, M.R.; Ronkainen, I.A. (2004), p. 421 c.a.

^[3] Bradley, F. (1991), p.58.

^[4] Cp. Czinkota, M.R.; Ronkainen, I.A. (2004), p. 346 c.a.

^[5] Cp. Backhaus, K.; Büschken, J.; Voeth, M. (2000), p.99.

^[6] Cp. www.wikipedia.de, 05.07.06.

^[7] Cp. http://wfbi.de/imperia/md/content/aussenwirtschaft/going_international.pdf, 05.06.06.

^[8] Cp. http://wfbi.de/imperia/md/content/aussenwirtschaft/going_international.pdf, 05.06.06.

^[9] Cp. http://wfbi.de/imperia/md/content/aussenwirtschaft/going_international.pdf, 05.06.06.

^[10] www.wikipedia.de, 04.06.06.

^[11] Cp. Hennessey, J. (2004), p.38 c.a.