International presence
Introduction
Due to the competition in global company, many businesses are interested in expanding internationally after maintaining the local customers. In modern world, internet and IT have created the path of entering in foreign markets. Developing an international presence is an important decision for organization expansion as it is the best path of gaining international opportunities and increasing sales and proceeds. Due to the saturated local market which lacks opportunities, organizations see the need to move into the new markets to search for new customers in order to increase income and market share. In addition, organization expands internationally to gain geographic advantage or in other word to develop synergies, develop effective international systems, boost capability and gain new talent. It is also important to note that operating in global level brings greater insulation as a result of economic downturns. Due to the high level of competition, organizations develop an international presence to expose their brands and gain recognition and maintain its operations. However, understanding the global markets is an important aspect in order to examine opportunities and risk. In international marketing, most organizations focus on customers’ needs and wants, best approach of meeting customers’ demand and meeting the set objectives. Thus, organizations must be well prepared to gain the competitive advantage and this can be achieved by following the controllable functions. According to the findings, there are important considerations which firms reflects on when moving the organization from local to global level.
Factors to consider when expanding abroad
Socio-cultural factors
Socio- cultural factors play a great role in understanding culture and language differences. Culture and language have a significant effect on business success. For example, the Coca-Cola Company expanded globally and it faced challenges since Chinese could not understand the real meaning of the word Coca-cola. The findings have confirmed that many businesses such as general motors, Pepsi Cola, Apple and other have failed in international market since initial they did not consider cultural factors before entering into the new markets (Nahata, Hazarika & Tandon, 2014). Thus, in order to operate effectively in international markets, it is important to recognize the significant differences in different countries. APSALONE & ŠUMILO, (2015) brings a new aspect of culture in international marketing and asserts that culture is an important environmental force which play role in peoples’ perception and behavior. In addition, culture has a signnificant impact on relationship marketing as it manipulates emotional process and social information and it helps to understand the usefulness of relationship marketing. Thus, managers consider the cultural dimensions in order to get an insight for implementing strategies and effectively evaluate the relationship marketing. Nahata, Hazarika & Tandon, (2014) asserts that cultural factors in international marketing are significant since they positively impacts international competitiveness in terms of improvement, productivity and cooperation. External environment do not affect cultural factors and this means that they are sustainable and they play a great role in providing competitiveness strategies in international marketing. Note that competitiveness is associated with affluence and potentials for organization development. According to the findings, cultural factor such as values and attitudes is a key determinant of international competitiveness since culture provides the organization an insight of providing mutual aid, knowledge transfer, entrepreneurship and productivity (Calabrese et al, 2015).
Growing the business in global presence requires a deep understanding of culture in order to evaluate and eliminate the intercultural impediments. Kumar, (2014) asserts that modern international business has introduced internationalized culture and it plays a great role in international presence as it eliminates the collision between cultural backgrounds. Cultural factors helps the business to understand foreign cultural in order to develop an empathetic approach of doing business. According to the findings, it is important to first understand your culture and how it fluctuates with foreign culture in order to have better negotiations (Kumar, 2014). The important point in understanding the culture is for running an effective communication process. Communication is an important factor in international business for face-to-face negotiation. International business requires a deep understanding of different styles of communication and be in a position to articulate. Having understood the communication of different culture it will be easier to communicate about the technology and products and be able to listen to what people say about the same. Understanding culture is also an important aspect in non-verbal communication. International business is slowed down by effective language and in this case non-verbal communication may have an impact on cross-culture interactions (APSALONE & ŠUMILO, 2015). Note that some culture uses body movement and hand gestures and all have unusual meaning. Thus, it is important to understand information accurateness and to read body language in order to negotiate effectively. Apart from negotiation, understanding culture is an effective approach of innovation. For a company to have a competitive advantage it must produce quality products and it must also focus on people, culture, management and inventiveness. Culture impacts innovation in that different countries have different eccentricity, masculinity and others and all these characteristics have different values. Thus, it will be easier to accelerate growth with respect to specific culture through understanding what they need (Nahata, Hazarika & Tandon, 2014).
Legal factors
In growing in global presence, firms consider the legal factors in order to understand the customers’ behavior as well as laws which affect the business operations. Both political and legal factor play a great role in global presence as they determines the success of a business. The first thing to consider is the measures of regional tax and other regulatory measures which are imposed by the government (Kirca, Bearden & Roth, 2011). Having a deep insight helps to promote organizational growth and to adapt to the regional business environment. Before integrating in international business, many organizations consider the tax issues as a one of the legal factors which affects the business. It is important to understand that tax can either support or limit business operations in that the government can increase and decrease tax. Other thing which organization needs to understand is that tax can be imposed to individual, company, fiscal balance and other areas and so business are interested to know the source where tax will be derived in order to be in a position of running the business effectively (Tianjiao, 2014). Trade policies such as monetary policies, government polices and more are also part of legal factors which impacts the business. In global presence, organizations understand the trade policies to decide whether the business will succeed or not. Under legal factors, politics can affect the business growth and organizations consider the political environment in order to have smooth operations (MOROZOV & TASKAEVA, 2016). It is important to understand the role of government in political environment since a stable environment will boots development and unstable environment will undermine. In addition, economic policies which are imposed by the government impact the business both positively and negatively. Favorable police promotes growth and unfavorable policies such as high costs of operations puts restrictions which hinders effective operations (MOROZOV & TASKAEVA, 2016).
Regulatory conditions provide an insight of legal aspects which determines the sustainability standards. Legal aspects help the business to apply marketing strategy and curtail the sanctions risk by understanding the regulatory system. Various countries have different legal system and they implement the business laws in different ways. For example, U.S has a unique legal system with common law and litigious society and court cases are costly and they hinder the marketing opportunities. On the other hand, Japan has a traditional legal system of code law with limited cost and uncertainties (Zeriti et al, 2014). Therefore, organizations consider such law in order to have a competitive advantage in international marketing. Some countries implements laws which hinders the organization ability in international marketing in terms of entry of good and health standards restrictions. Government also imposes rules based on genetic technology and rules based on reduction of imports and these hinder the development of economy in international market (Tianjiao, 2014). Thus, organizations understand both legal factors and political system in order to succeed in international market. Managers tend to understand the important of the system in order to gain an insight of how to operate in global presence. By having a deep insight, managers can choose to either pay no attention to the country rules or concur with the rules. Many firms consider the legal issues with an aim of understanding the jurisdictional disputes and this helps the country to identify which law to follow in case of any conflict. Under the legal matters, corporate also considers the ethical issues in order to understand the ethical route for effective operations.
Technological factors
In international marketing, organization considers the technological condition in order to understand the resources, skills as a well as changes required to sustain business operations internationally (Czinkota, 2007). Customers in global have changed and now they are technologically sophisticated and modern organization must implement technological innovation in order to satisfy the customers’ demand (Ireland, Hoskisson & Hitt, 2008).Thus, organization is interested in understanding the technological changes for them to reduce the risk which may occur in developing products. Technical improvements help the business to achieve sustainability improvements and it is also easier to implement standardized strategies of marketing which are significant factors in export markets. When planning to enter in international marketing, organization introduces the Information Technology as the key aspect to organization success. Organizations use IT as a tool which enables the global enterprise to have an effective coordination and communication (Šarapovas, Huettinger & Ričkus, 2016). Organization employs different strategies to maximum performance as well as operations. IT acts as a strategy and it impacts the organization performance positively in global level compared with organizations which lack a well defined IT structure. It is important to note that organizations ensure that there is an effective IT structure by focusing on availability of human resources (Czinkota, 2007).
Before entering in global presence, organizations ensure that there is availability of skilled and capable professionals and human resources in order to achieve its goals in international market. It also considers socio-cultural factors to ensure that there are powerful members who effective use the information technology (Czinkota, Ronkainen & Kotabe, 2009). Availability of technological infrastructure also matters since it helps to achieve a competitive advantage. In international market an organization must support local telecommunications in order to have a reliable communication network for coordination and integration (Kim, Hoskisson & Lee, 2015). In addition, an organization must support hardware and software merchants in order to develop compatible hardware systems. Last, the government must ensure well structure IT by developing a well defined legal system which supports the entrance in international market. Due to the rapid growth of technology, organizations must first understand the global technological patterns in order to apply effective way of technology utilization (Pick & Rasool, 2011). Having a deep insight of how to implement and utilize technology will limit the economic uncertainties. Organizations tend to focus on socioeconomic levels such as working age and education in order to understand the required technology to sustaining the economy.
Strategies that firms might use to reduce their exposure
Bromiley & Rau (2014) asserts that a strategy known as practice-based view (PBV) which is based on standards management practices such as introducing a apparent performance measure and eliminating poor performance can be applied in reducing exposure in global market. Firms must focus on specific practices and relate them with existing practices in the organization. On the point of practices, firms must evaluate the competitions behavior in order to apply the available techniques. PBV introduces new research topics which firms should use in order to evaluating performance (Bromiley & Rau, 2014). PBV helps the managers to understand the performance variation in public domain. Beck, Chapman & Palmatier (2015) brings other strategic concept and asserts that relationship marketing and loyalty programs are strategies which firms can apply in marketing activities. These two strategies help the managers to focus on different cultures and impose specific mechanisms which will benefit the particular cultures. For example, LP may focus on masculine culture and provide mechanism which they demand (De, 2006). In countries where there is resource inequality, RM and LP provide a substantial effects and a strong reputation.
Relationship between the findings and own experience from my organization
The findings relate and at the time contradict with my organization activities of growing in global presence. My organization considers different factors to ensure effective operation in international markets. It considers culture, technology and legal factors but it faces some challenges due to lack of clear understanding of these factors but the new findings have provided a deep insight of importance of considering these factors. My organization focuses on cultural sensitivity and communication style to ensure monetary gain and enjoy success in global arena. It also focuses on technological factors y ensuring that the organization has developed in terms of technology and understands the technological aspects such as changes and innovations in global (Pride & Ferrell, 2010). However, it fails to meet customers’ demand due to lack of strategic factors of market standardization and international marketing strategies.
Current literature to current organization
According to the findings, firms should go beyond and focus on standardization and performance in global market (Doole & Lowe, 2008). In addition, firms should focus on competitive strategies in order to achieve success. In this strategy, firms must apply differentiation and cost leadership and both are important factors in strategic management. These strategies will help firms to different itself from competitors and gain a competitive advantage through the use of superior information, effective distribution channels and other resources (Doole & Lowe, 2008). In addition, firms must understand the international culture in terms of cultural mindsets for technological development. Culture plays a significant role and so it is important to have general domains in order to capture the meaning of different culture. Firms must focus on strategy and innovation in order to implement economic and social value and boost the organization capacity. Technology and innovation should focus on improving communication, human capital, mobility and efficiency. In legal factors, firms must understand the legislative framework and its implication to human rights and business environment (Kvint, 2015).
Conclusion
Due to the rapid growth of markets, local organization tends to expand their business internationally to enjoy a competitive advantage. Growing in global presence helps the organization to build a relationship with global markets and to enjoy the economies of scale. However, entrance to global market requires a consideration of important factors which determines the success of a firm. Cultural, social, legal and technological factors play a great role of ensuring that the organization fits in global arena and it’s able to operate smoothly. By understanding the culture factors and technology, a firm is able to reduce its exposure since it will not only produce the required products needed with respect to specific culture but it will also apply strategic approach. Last, firms must apply the new approach in international marketing for better management. Not only culture, legal and technology will lead to success, but also understanding these factors in a deep manner.
References
APSALONE, M., & ŠUMILO, Ē. (2015). SOCIO-CULTURAL FACTORS AND INTERNATIONAL
COMPETITIVENESS. Business, Management & Education / Verslas, Vadyba Ir Studijos, 13(2), 276-
- doi:10.3846/bme.2015.302
Beck, J. T., Chapman, K., & Palmatier, R. W. (2015). Understanding Relationship Marketing and Loyalty
Program Effectiveness in Global Markets. Journal Of International Marketing, 23(3), 1-21.
Bromiley, P., & Rau, D. (2014). Towards a practice-based view of strategy. Strategic Management
Journal, 35(8), 1249-1256. doi:10.1002/smj.2238
Calabrese, A., Capece, G., Costa, R., & Di Pillo, F. (2015). Global Market and Commercials: Understanding
Cultural Diversities. Knowledge & Process Management, 22(3), 167-179. doi:10.1002/kpm.1472
Czinkota, M. R., & A, R. I. (2007). International marketing. United States: Thompson.
Czinkota, M. R., Ronkainen, I. A., & Kotabe, M. (2009). Emerging trends, threats, and opportunities in
international marketing: What executives need to know. New York: Business Expert Press.
De, . M. J. (2006). Innovation strategies in interdependent states: Essays on smaller nations, regions and
cities in a globalized world. Northampton [etc.: Edward Elgar Pub.
Doole, I., & Lowe, R. (2008). International marketing strategy: Analysis, development and
implementation. London: Cengage Learning.
Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. (2008). Understanding business strategy: Concepts and
cases. Mason, OH: South-Western Cengage Learning.
Kim, H., Hoskisson, R. E., & Lee, S. (2015). Why strategic factor markets matter: 'New' multinationals'
geographic diversification and firm profitability. Strategic Management Journal, 36(4), 518-536.
doi:10.1002/smj.2229
Kirca, A., Bearden, W., & Roth, K. (2011). Implementation of market orientation in the subsidiaries of
global companies: the role of institutional factors. Journal Of The Academy Of Marketing
Science, 39(5), 683-699. doi:10.1007/s11747-010-0234-1
Kumar, V. (2014). Understanding Cultural Differences in Innovation: A Conceptual Framework and
Future Research Directions. Journal Of International Marketing, 22(3), 1-29.
Kvint, V. (2015). Strategy for the Global Market: Theory and Practical Applications.
MOROZOV, V. S., & TASKAEVA, N. N. (2016). Basic Market Factors Affecting Innovative Activities. Journal
Of Internet Banking & Commerce, 21(S4), 1-20.
Nahata, R., Hazarika, S., & Tandon, K. (2014). Success in Global Venture Capital Investing: Do
Institutional and Cultural Differences Matter?. Journal Of Financial & Quantitative Analysis,
49(4), 1039-1070. doi:10.1017/S0022109014000568
Pick, J. B., & Rasool, A. (2011). A Global Model of Technological Utilization Based on Governmental,
Business-Investment, Social and Economic Factors. Journal Of Management Information
Systems, 28(1), 49-83.
Pride, W. M., & Ferrell, O. C. (2010). Marketing. Australia: South Western Cengage Learning.
Šarapovas, T., Huettinger, M., & Ričkus, D. (2016). THE IMPACT OF MARKET-RELATED FACTORS ON THE
CHOICE OF FOREIGN MARKET ENTRY MODE BY SERVICE FIRMS. Organizations & Markets In
Emerging Economies, 7(1), 34-52.
Tianjiao, Q. (2014). Product Diversification and Market Value of Large International Firms: A
Macroenvironmental Perspective. Journal Of International Marketing, 22(4), 86-107.
Zeriti, A., Robson, M. J., Spyropoulou, S., & Leonidou, C. N. (2014). Sustainable Export Marketing
Strategy Fit and Performance. Journal Of International Marketing, 22(4), 44-66.
