India is regarded by many firms as an attractive emerging market beset with many legal difficulties, bureaucratic delay and lots of red tape. For example, shoes cannot be imported in pairs but have to be imported one at a time – which causes huge problems for shoe manufacturers who need to import shoes as production samples. The way many of them overcome the problem is by importing the left shoe via Madras and the right shoe via Mumbai. Companies such as Mercedes Benz, Coca-Cola and Kellogg have found the vast potential of India’s market somewhat hard to break into. Its demanding consumers can be difficult to read and local rivals can be surprisingly tough. Political squabbles, bureaucratic delays and infrastructure headaches are also major obstacles.
3. Economic environment
The purchasing power of people in a country is a crucial factor in determining the demand for products. Marketers must pay close attention to major trends in income and consumer spending patterns. In short, the economic conditions of a country – the nature of the economy, the stage of development of the economy, economic resources, the level and distribution of income, etc. are all very important factors in marketing. Further economic factors like inflation, productivity, shortages, unemployment etc have a tremendous impact on prices and incomes. Hence, marketers must incorporate these factors while preparing marketing programmes. This understanding is important at a world level in terms of the world trading infrastructure such as world institutions and trade agreements developed to foster international trade, at a regional level in terms of regional trade integration and at a country/ market level. Firms need to be aware of the economic policies of countries and the direction in which a particular market is developing economically in order to make an assessment as to whether they can profitably satisfy market demand and compete with firms already in the market.
4. Political Environment
The political environment of international marketing includes any national or international political factor that can affect the organization’s operations or its decision making. Politics has come to be recognized as the major factor in many international business decisions, especially in terms of whether to invest and how to develop markets. Politics is intrinsically linked to a government’s attitude to business and the freedom within which it allows firms to operate. Unstable political regimes expose foreign businesses to a variety of risks that they would generally not face in the home market. This often means that the political arena is the most volatile area of international marketing. The tendencies of governments to change regulations can have a profound effect on international strategy, providing both opportunities and threats.
Political Factors include:
A. Laws
There are laws in some countries that will greatly affect your ability to do business in them or prohibit it altogether. One such example is Thailand which has specific laws stating no foreign person or company can own more than 49% of business in Thailand, so you must be willing to take on a Thai partner in order to do business there. You must be aware of laws like this if part of your product marketing strategy includes manufacturing or distributing your wares in a foreign target market country.
B. Licensing and Permits
There is a chance that the only way you can do business in a foreign country is to give out an expensive permit or license of another business in that country to manufacture and sell your product for you. Governments do these things as a way of making sure a larger percentage of income from sales stays in the home country. An example of this is Pepsi’s license to Heineken to bottle and sell Pepsi products in the Netherlands.
