1. How can you measure political risk & instability? Are they also a matter of perception?

2. What aspects international marketing are most affected by political instability in a

country?
Aspects of International Marketing
International Marketing: is the performance of marketing activities in more than one
nation.
Basic Objectives of International Marketing
a) Targeting international customer: segmenting, targeting and positioning the
international customer.
b) Finding global customer need: understand similarities and difference in customer
group across countries.
c) Satisfying global customer: adapting marketing mix to satisfy customer need
across the countries and regions.
d) Better than competition: monitoring and responding to global competition by
offering better values.
e) Maintain relationship: maintain long term relationship with foreign customer and
other business parties.
f) Coordinating world business: integrating business activities and implementing
them across the countries.
g) Global environment: consider and analysis the internal and external factors of the
foreign countries.
h) Business orientation: expand market, goodwill, profit
Domestic vs. International Marketing
Major Issues
Domestic
International
Area
Limited
Broad
Control
Easy
Complex
Buying & selling
Domestic views
International views
Objectives
Local demand
Foreign demand
Transaction
All levels
Distribution level
Terms of trade
Not necessary
Depends on it
Exchange rate
Not necessary
Basic foundation
Documents
Simple
Document oriented
Research
Initial research
Continuous research
Tariff barriers
Not problems
Great problems
Business risks
Easily identify
Difficult to identify
Mobility of FP
Moveable
Difficult to move
Phases of International Marketing
i) No direct foreign market: producers have no intension for marketing. Products may
reach foreign markets via domestic wholesalers or distributors.
ii) Infrequent foreign market: when a producer get an opportunity in the foreign
market then he sale the product, this operation is infrequent not regular.
iii) Regular foreign operation: as overseas demand grows, productions are allocated
for foreign markets, & products may be adopted to meet the needs of individual
market.
iv) International marketing: companies in this stage are fully committed and involved
in international marketing and set marketing mix for individual foreign market.
v) Global Business: companies treat the world, including their home market, as one
market. Market segments are defined by income levels, usage patterns or other
factors.
Global Marketing Involvement:
a) Individual view: production only for personal use. Fish cultivation only for family.
b) Profit orientation: meet up family demand then sell products to the neighbor and
increase production.
c) Local coverage: if it is profitable then production and sell product in the local
market.

d) Regional market: production and sell the product in the regional market with
industrial focus.
e) National program: business program for all over the country and take extensive
business program.
f) International orientation: select one or two countries for business and set
individual marketing program.
g) Global business operation: companies treat the world, including their home
market, as one market.
h) Multi product operation: when a particular product become success then starts
with additional products.
Changes In International Orientation
Changes business strategy and attitude in different stages of international marketing.
a) Traditional business: first phase of international marketing is the traditional
business operation.
b) Preparation: for infrequent foreign market, business people has to take some extra
preparation.
c) Adaptation: for regular marketing, need some basic marketing adaptation; especially
for marketing mix.
d) Integration: emphasis on i) needs and demand ii) integrated marketing iii) profit
analysis.
e) Application: all the programs are applicable not only for domestic market but also all
over the world.
Global Linkage
International marketing has forged a network of global linkage that bind us all country,
institution, individual.
a) Country: these link was first widely recognized during the worldwide oil crisis of
1970, but they continue to increase. Regional trade link between countries to
country.
b) Institutions: firm can operate in a market space rather than a market place;
newspaper now can distributed through online in all over the world.
c) Individual: communication has built new international bridge; be it through music, or
international programs transmitted by BBC, CNN, and others networks.
E-technology and Linkage:
Technology has changed international marketing dramatically: the advantages are
inexpensive, fast, easy, flexible, 24 hours transaction.
Importance of International Marketing
1. from the Consumer's Point of View:
a) Un-produced products: consumer can enjoy the goods they cannot capable to
produce in their country.
b) Products at low price: for comparative and absolute cost consumer get low price
facilities.
c) Enjoy benefits of competition: competitors of the products try to deliver the best
quality of products.
d) Consumption of new products: consumers come to know the latest information
about the products.
e) Increase in consumption: marketers arrange various types of product from all over
the world.
2. From the Producers Point of View:
a) Export to surplus production: producers can export his surplus product to the
different foreign countries.
b) Low cost of production: producers can enjoy absolute cost advantages and
comparative cost advantage.
c) Increase in production: producers have the opportunities to sell their products.
2. From the Producers Point of View:
d) Expansion of market: company can sell their additional or surplus product in other
of deficit countries.

e) Reduce business loss: if one market is not profitable then producer overcome it by
the other market.
f) Reduce marketing costs: get advantages from large scale production, joint venture
or contractual methods.
3. From the Economic Point of View:
a) Increase total production: utilize factors of production and product specialization.
b) Increase export earning: due to the increase of production, export surplus product.
c) Overcome crisis: in case of natural calamities, war or face the emergency crisis.
d) Expansion of industry: for the export and production orientation and market
expansion is need.
e) Export of unusual goods: export some traditional goods to foreign countries.
3. From the Economic Point of View:
f) Proper use of resource: proper utilization of land, labor, capital and organization
due to international marketing.
g) Import of essential goods: some essential good such as medicine, technical
products can import from foreign.
h) Employment opportunity: branches, huge investment, high production that create
employment opportunity.
i) Economic development: impact on consumption, income, saving, investment, and
employment.
4. From the Social Point of View:
a) Knowledge and cultural progress: cultural, education, ideology are transmitted
from one country to another.
b) International peace: global business builds a strong relationship and cooperation
with foreign countries.
c) Image development: company has scope to expose his status; Toyota, has the good
image all over the world.
d) Technological development: underdeveloped and developing countries depend on
international business.
International Marketing Task
The international marketer's task is very complicated because the international
marketers must deal with at least two levels of uncontrollable; domestic and
foreign.
i) The inner circle: represents the domestic controllable elements that constitute a
marketer's decision area.
ii) The second circle: includes those environmental elements at home that have some
effect on foreign-operation decisions.
iii) The outer circles: represent the elements that elements of the foreign environment
for each foreign market within which the marketer operates.
Environmental Adaptation Needed: to adjust and adapt a marketing program to
foreign markets, marketers must be able to effectively interpret the influence and
impact of each of the uncontrollable environmental elements.

 International Marketing Environment

Micro- Marketing Environment
1. The Company: company is a corporate enterpriser that has a legal identity separate
form that of its members.
a) Top Management: set objectives, strategies & policies
b) Finance department: supply the available fund
c) Research (R&D): analysis problem and prospect
d) Procurement Department: collect companys resource
e) Manufacturing dept.: produce necessary product
f) Accounting dept.: maintain income and expenditure
g) Sales department: distributing and sales the product
2. The Suppliers: producers collect raw materials from supplier. Marketing managers
must watch about the following factors of the suppliers.
a) Availability: are suppliers available in the market
b) Experiences: what are their past experience?
The Suppliers:
c) Reputation: find out their goodwill in the market
d) Reliability: whether they are reliable or not
e) Flexibility: what are their levels of adaptation process?
f) Costs factor: are they expensive for the company
g) Supply shortage: can the supplier supply regularly
3) The Marketing Intermediaries:
a) Middlemen: wholesalers, retailers, and distributors
b) Physical distribution: transport or warehouse agencies
c) Services agencies: research, advertising or media firms
d) Financial intermediaries: bank, credit or insurance
4) Competitors:
a) Market leader: who lead the market?
b) Market challenger: who challenge the leader?
c) Market follower: who follow the leader or challenger?
d) Market niches: leader of a small segment
5. The Customers:
a) Consumer market: purchase for personal consumption
b) Business market: purchase for business purpose
c) Reseller market: purchase for reproduction
d) Government: govt. agencies buy goods and services
e) International market: buyers in the other countries
6. The Publics:
a) Financial publics: bank, investment house, stockholder
b) Media publics: newspaper, magazine, radio, television
c) Government publics: govt. organization and bodies

d) Citizen-action publics: CAB, municipality, police

e) Local publics: neighborhood residents and community
f) General publics: public's attitude toward the product
g) Internal publics: include workers, managers, volunteers
Macro Environment
1. The Demographic Environment:
a) Changing age structure: age under 6, 6-11, 12-20 etc.
b) Changing family life: solvent, marriage, unemployed
c) Geographic shifts: income, service facilities, location
d) Education: education level of the people
e) Profession: different professional status of the people
f) Increasing diversity: sub & cross culture, values
2. The Economic Environment:
a) Consumption: mass or liberal consumption oriented
b) Income: earning pattern and density of the people
c) Saving: saving tendency of people and government
d) Debt and credit: internal and external debt and credit
e) Investment: trend of investment of the country
f) Employment: condition and opportunity of the country
g) Development & growth: stages and their trend
3. The Natural environment :
a) Resource availability: gas, electricity, oil, mineral
b) Limited raw material: limited resources, air pollution
c) Increased population: impact on environment
d) Govt. role: influence natural environment
4. Technological Environment:
a) Changes rapidly: technologies are changing very fast
b) Innovation opportunities: huge scope to innovation
c) Research budget: invest on research and development
d) Quality: try to produce defect free product to customer
e) Regulation: technological control through regulation
5. The Political and Legal Environment:
a) Business regulation: have different business regulation
b) Fiscal policies: different country have different policy
c) Protect company: program in favor of the company
5. The Political and Legal Environment :
d) Protect consumer: program in favor of the consumer
e) Protect society: program in favor of the society
f) Political situation: careful about political risk
g) Government relationship: maintain lesion with govt.
6. The Cultural Environment:
a) Culture: society hold many value and beliefs
b) Sub-culture: cultural segment within culture
c) Cross-culture: combination of different sub-culture
People views of themselves:
i) People views: people want to be with and serve others
ii) Society: vary in their attitude toward their society
iii) Nature: vary in their attitude toward their nature
iv) Universe: vary in their attitude toward their world
v) Organization: vary in their attitude toward corporation
Self-Reference Criterion (SRC)
Frame of Reference: one of the major barriers of international marketing; use of our
personal knowledge, experience, perception, values in selecting products.
Difference between your perception, values, ideology and international marketer. British
marketers prefer sex appeal but it is not applicable in Bangladesh.
Self-Reference Adjustment: there are no hard and fast rules but it may be minimized
by the following:

a) Internal analysis: define business objectives by the domestic culture and the
domestic issues.
b) External analysis: define business objectives by the foreign culture and the foreign
issues.
c) Identify distinguishing factors: identify distinguishing factors between domestic
and foreign culture.
d) Evaluate the factors: what will be the possible reactions, conflicts and feedback of
distinguish factors.
e) Formulate strategy:
Formulate strategy: take some strategy to overcome and balance the distinguish
situation.
f) Self-reference: re-define the policy and strategy in respect of new culture for
building frame of reference.
Developing a Global Awareness:
Build the awareness through the following:
a) Potential knowledge: about culture, history, economics and other fundamental
issue of the country.
b) Tolerance: of cultural difference or ideologies that have huge impact on international
marketing.
c) Accepting: other behavior may difference form you; identify and try to accept them.
d) Relationship: maintain strong relationship with international customer through
marketing strategy.
International Marketing Concepts
i) EPRG Model: this is a business philosophy or concept for international marketing.
a) E = ethno-centric: our culture is the best, we are leader
b) P = poly-centric: consider different and multi-factors
c) R = region-centric: consider a region or subculture
d) G = geo-centric: emphasis on universal or globalization
ii) Market Concepts:
a) Market Extension (ethno-centric): company tries to sell local product to the
foreign countries; no change in marketing mix. It is just exporting product.
b) Multi-domestic market concept (poly-centric): company initiated different
marketing program for different countries; company need separate marketing
strategy and program for different country.
c) Global Market concepts (geo-centric): the company think whole world to be a
single market. The company needs global marketing strategy.
The Task Density
The task density: task of the international marketer is more difficult than that of the
domestic marketer.
1. Difficult trade pattern: policies and practices impose certain constraints and
restrictions on international trade.
2. Regulatory measures: every country in the world aims at export more than its
import; favorable trade balance.
3. Economic unions: negative aspect is the increasing tendency among nations to form
of economic unions.
4. National policy: achieve self-sufficiency in industrial production by developing
necessary infrastructure.
5. Procedural difficulties: different countries have evolved different procedures,
practices and documents.
6. Other problems: there are many other internal difficulties, consequently affect the
foreign earnings.
a) Inflation b) politics c) business ethic d) reputation
World Wide Marketing Opportunities
Marketing Opportunities: any prospect to begin operation must be evaluating
multinational marketing opportunities.
a) Environmental opportunities: at first company has to identify what kinds
environmental opportunities he has.

b) Market opportunities: company has to analysis about a) market potential b)

existing market c) future market.
c) Future sales opportunities: what will be the prospects of future sales and
prospective new sales areas?
d) Competitive opportunities: what are the possibilities of its being a market leader
and additional advantages?
e) Profit opportunities: what are the expected returns from the factors of production
and other investment?
f) Benefits opportunities: all benefits such as strength and weakness create positive
opportunities.
g) Risks opportunities: all risks such as opportunities and threats create negative
opportunities.
h) Strategic opportunities: perception of the customers and different strategies taken
by the company.
International Trade Theory: 01
Inter-regional vs. International Trade: inter-regional trade is trade between
difference regions within same country; international trade is between different
countries.
Why a Separate Theory of International Trade?
a) Mobility of factor of production: within country, labor and capital are more mobile
than outside the country.
b) Natural endowments: some countries may have the particular natural resources
like coal, oil, iron or land.
c) Human capabilities: people in some countries are physically fit whereas in others
intellectually superior.
d) Political sovereignty: independent policies with respect to the movement of goods,
wages, prices.
e) Stock of capital: some countries possess large stock of capital goods like the UK
and the USA.
f) Currency system: different countries have different currency system and this create
complexity.
Why a Separate Theory of International Trade?
g) Separate market: the British use right hand drive cars, whereas the French use left
hand drive cars.
h) Economic nationalism: striving for increasing consumption, income, saving,
investment, production.
i) Trade and exchange control: obstruct movement of goods and services from one
country to another.
j) Consumption behavior: consumption pattern is difference between one countries to
another.
k) Production balance: some countries have the high producing ability and need
production balance.
l) Exchange rate: to balance the exchange rate between one country to another
country.
m) Trade balance: maintain and develop smooth trade relationship among the different
nations.
1) Absolute Cost Theory (Adam Smith)
When one nation is more efficient than another in the
Production of one commodities, he will produce that
Product and export that product to the foreign countries.
Country
Labor
Jute
Wheat
Ratio
Bangladesh
10
40
20
2:1
India
10
20
40
1:2
Limitations:
a) Labor is only elements of factor of production
b) Absence of mobility of labor in international level.

c) Cost of production is constant.

d) Not consider transport costs.
e) Based on free trade.
f) Consider full employment.
2) Comparative Cost Advantages (David Ricardo)
Even if one nation is less efficient than the other nation in the production of both
commodities there will be trade based on comparative cost advantages.
Country
Labor
Jute
Wheat
Ratio
Bangladesh
10
40
40
1:1
India
10
10
30
1:3
Criticism:
a) Factors of production: labor is only element
b) Labor factor: efficiency and cost of labor are same
c) Constant cost: assumption of constant cost
d) Mobility of factors: is absence
e) No transport costs: ignore the transport cost.
f) Free trade: ignores all trade barriers
g) Emphasis on only supply: ignore demand factor
h) Technology: the impact of technology is absence
i) Specialization: complete specialization is difficult

2) Comparative Cost Advantages

Comparative cost with many goods:
Bangladesh: Jute + Tea + Rice + Wheat + Cotton
Trade will be occurred according to the comparative cost of the many goods. Firstjute, second- tea, third- rice, fourth- wheat, fifth- cotton.
Comparative cost with many countries:
India (wheat) Bangladesh (jute) --- Pakistan (cotton)
Trade will be occurred according to the comparative cost of the country. India can
import jute from Bangladesh and cotton from Pakistan.
3) Theory of Opportunity Cost (Prof. Haberler)
Definition: the value of the next best use (or opportunity) for the economic good, or the
value of the sacrificed alternatives is called opportunity cost.
Facts: according to Haberler, each country exports goods which it produces at lower
opportunity cost and imports those with higher opportunity cost.
i) Increasing opportunity cost: when a country has an absolute cost advantages for a
particular product then his opportunity cost gradually increasing.
#) When opportunity cost is more than unit.

ii) Decreasing opportunity cost: when a country has no an absolute cost advantages
for a particular product then his opportunity cost gradually decreasing.
#) Opportunity cost is less than unit.
iii) Constant opportunity cost: when the opportunity cost unit is equal; sacrifice one
unit, opportunity will be one.

Limitations of Opportunity Cost

i) Perfect mobility: all the elements of the factor of production is not absolute
moveable.
ii) No transport cost: in the modern business transport cost is one of the vital factor
for price fixation.
iii) Cost difference: in this theory there is no clear explanation about the price
difference.
iv) Full employment: this based on full employment but actually we cannot find full
employment in economics.
v) Value of proportion policy: it is based on value of proportion but very difficult to
implement it.
Business Customs and Practices
International Adaptation: willingness to adapt the business custom, practices,
attitude of other countries.
Guide to Adaptation
a) Open tolerance: you have to accept the miss behavior of the people for the sake of
business interest.
b) Flexibility: to adapt with new culture, marketers should show their flexible attitude.
c) Humility: polite and gentleness can win the world; it is not only for domestic but also
for global business.
d) Justice and fairness: avoid all kinds of fraud and cheating; maintain a basic
principles and ethics.
e) Adjustability to varying tempo: you have to adjust yourself with changing
environment.
f) Curiosity: show your interest and curiosity about the history, culture and tradition of
the country.
Guide to Adaptation:
g) Knowledge of the country: different aspects of the country such as politic, legal,
social or govt.
h) Linking for others: maintain a strong relationship, identify their sensitive issues and
do accordingly.
i) Ability to commend respect: you must behave in such a way that other person
must respect you.
j) Integrated ability: adjusting ability with every situations
Degree of Adaptation

a) Awareness level: if the awareness level of the people is very high then adaptation
process will be first.
b) Communication level: if the communication level of the people is very high then
adaptation will be first.
c) Education level: if the education level of the people is very high then adaptation
process will be first.
d) Personalization: if personal interest level of the people is very high then adaptation
process will be first.
Adaptation Forms
Business customs can be grouped into three categories
i) Cultural imperatives: are those business customs that are not avoidable. Friday is
holiday.
ii) Cultural electives: customs to which adaptation is helpful but not necessary.
Offering tea or gifts.
iii) Cultural exclusives: customs in which an outsider must not participate. A Christian
attempting to act like a Muslim.
Adaptation Aspects:
Different methods of doing business or different aspects of adaptation in international
marketing.
1) Authority Level:
a) Ownership: sole trade, joint venture, Joint Stock Company
b) Size: small, average or large size of firm orientation
c) Contract: person to contract or communicate first
d) Public accountability: level of public awareness
e) Cultural values: differ from culture to culture
2. Authority Patterns
a) Top-level management decision: top authority take decision and direct control the
business operation.
b) Decentralized decision: it allow executives at different levels of mgt. to exercise
authority over their own function.
c) Committee decision: is by group or consensus. It may be operated on centralized or
decentralized basis.
3) Management Objectives: of the foreign delegates
a) Personal goal: American executives emphasis on salary; Bangladeshi executives
emphasis on other benefits.
b) Security: To American, security means financial benefits; To Bangladeshi, security
means job security.
c) Personal life: To Japanese, personal life means company life, Bangladesh, family life
is personal life.
d) Social acceptance: To Japanese, business executives have the high social status;
opposite in Bangladesh.
e) Power: To Japanese, Govt. people hold the high power; political people hold the high
power in Bangladesh.
4) Communication: status in the foreign country
a) Internal communication: downward, upward, vertical, horizontal, formal or informal
communication.
b) Face to face communication: foreign marketers use translators; English is
preferable by the British.
c) E-communication: communication through e-media.
4) P-time vs. M-time
a) P-time: (poly-chronic): highly flexible and humanistic; human transaction is highly
emphasis than work schedule, (may come from 8 to 12).
b) M-time: (mono-chronic): not flexible and robotic; work schedule is highly emphasis
than human transaction, (close at 8 pm).
5. Formalities: in Japan, business formalities is very simple and dynamic; in
Bangladesh, business formalities is very complex and traditional.

6. Negotiation: it is the fundamental business rituals; the basic elements are the same
in any country; they related to product, price, place, promotion or other business issues
but terms and conditions are different.
7. Gender Bias
It is a very sensitive issues in international marketing; against women managers that
exists in some countries (Saudi Arabia); some countries are women dominated.
8) Business Ethic: serious problems in international marketing; that which is commonly
accepted as right in one country may be completely unacceptable in another. In many
countries of the world gifts are accepted and in many countries gifts are not allowed.
9. Bribery:
In some culture bribe is crime and in some culture it is highly accepted; it is not only
money matter but also have other forms.
a) Bribery and Extortion:
i) Bribery: willingly or voluntary offered payment by someone seeking unlawful
advantages is bribe. Executives offer secretary for appointment.
9. Bribery:
ii) Extortion: not willingly or pressurizes offered payment by someone seeking unlawful
advantages is extortion. Secretary offer executives for giving permission.
b) Lubrication and Subornation
i) Lubrication: relatively small sum of cash or gifts or a service given to a low ranking
officials in country where such offerings are not prohibited by low.
ii) Subornation: large sum of money designed to enteric an official to commit an illegal
act on behalf of the one offering the bribe.
c) Agents fee: when a business person in uncertain of a countrys rules and
regulations, an agent may be haired to represent the company in that country.
Cultural Change:
i) Borrowing: learn from other culture; our food habit, dress, have been change due to
cultural borrowing.
ii) Similarities: different language same culture (France- Canada), same language
cultural difference (US-Inland).
iii) Resistance to change: changes influence on values or ideology; now Bangladeshi
people accept birth control.
iv) Cultural change agent: when marketers want to change a part of culture; three
strategies for changes
a) Planned change: free offering by company and they become habituated, tea
offering by British company.
b) Unplanned change: first identify the issue then offer the product; first food or
mineral water accepted by people.
c) Forced change: marketers take some aggressive marketing strategy, promotional
appeal change culture.
Changing Dimensions:
a) Cultural variability: refers to the degree to which conditions within a culture are
changing at a low or high and stable or unstable rate (fashion is very unstable).
b) Cultural complexity: refers to the degree to which understanding within a culture is
depend on information processing (convert from suspect to partners).
c) Cultural hostility: refers to the degree to which conditions within a culture are
threatening to organizational goal (acceptance by the stakeholder).
d) Cultural heterogeneity: refers to the degree to which separate cultures are
dissimilar or similar. Dissimilarity means company needs to take centralized decision.
e) Cultural independency: refers to the degree to which conditions in one culture are
sensitive to developments in other culture. It reduce subsidy, autonomy.
Attitude Changes Strategies
a) Classical conditioning: a stimulus audience like such as music is consistently paired
with the brand name.
b) Advertising: use advertising appeal and slogan; bank for saving attitude using a
woman with ornaments.

c) Mere exposure: repetition is critical for affect-based campaigns, repetition can

change the attitude.
d) Change beliefs: American cars are not as well made as Japanese cars; about the
performance of brand.
e) Shift importance: more important than others; vegetables roles reduces the risk of
heart disease.
f) Add beliefs: add with beliefs structure; we are born to die; so, what is the harm of
drinking beer.
g) Change ideal: change the perception of people; change the perception about food
habit or product use or brand.
h) Group pressure: accept drink when offered by friend, some people use alcohol
within group involvement.
Attitude Changes Strategies
i) Social system: sometime we should avoid or accept the products or services by the
new rules and regulations.
j) Learning: coupons, free sampling or price reduction are common techniques for
including trail behavior.
k) Use of fear: fear can causes some people to change their attitude; target selling
change attitude of salesman.
l) Co-opting approach: customers are very much attached with a supervisor; he can
influence customers.
j) Creative program: through mass media such as talk shows in the television, open
discussion change attitude.
k) Word of caution: some word of caution such as highest production, stock limited, no
smoking have impact.
l) Information: provide new and informative information create confidence to the
people and influence attitude.
m) Persuasion: it is a common methods to change attitude of people; implement
different motivational strategies.