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I.B.O – 02
International
Marketing Management IGNOU IBO 02 Solved
Assignment 2023-24
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NOTE: All
questions are compulsory.
Q1. (a)
Why do firms go international? Explain with the help of examples from Indian
context.
Firms go
international for various reasons, seeking opportunities for growth, market
expansion, access to resources, diversification, and competitive advantage. In
the Indian context, several examples illustrate why firms from India choose to
venture into international markets:
Market
Expansion: Indian firms often go international to tap into larger consumer
markets and increase their customer base. By entering foreign markets,
companies can access new customers, expand their reach, and generate additional
revenue. For instance, Tata Motors, an Indian automobile company, expanded
internationally by acquiring Jaguar Land Rover, allowing them to enter the
global luxury car market and access a wider customer base.
Resource
Acquisition: Indian firms may go international to secure access to essential
resources. This includes raw materials, technology, expertise, or even capital.
Reliance Industries, one of India's largest conglomerates, has made significant
international investments in the energy sector, acquiring stakes in global oil
and gas assets to ensure a steady supply of resources for their operations.
Cost Efficiency
and Competitive Advantage: Firms often seek to leverage cost advantages or gain
a competitive edge by expanding internationally. This can involve establishing
production facilities in countries with lower labor costs or accessing advanced
technology or infrastructure. For example, the Indian IT services company,
Infosys, has established global delivery centers in various countries to
benefit from cost efficiencies, proximity to clients, and access to skilled
talent.
Diversification
and Risk Management: Indian firms may expand internationally to diversify their
business portfolios and reduce risk by operating in different markets. By
diversifying geographically, firms can mitigate the impact of domestic market
fluctuations or regulatory changes. Aditya Birla Group, a conglomerate with
interests in various sectors, has pursued international expansion across
industries such as metals, textiles, telecommunications, and retail, reducing
their reliance on any single market.
Brand Building
and Global Presence: Going international allows firms to enhance their brand
reputation, establish a global presence, and compete with multinational
corporations. Indian pharmaceutical companies like Sun Pharmaceuticals and Dr.
Reddy's Laboratories have expanded internationally, building a strong presence
in global markets and establishing their brands as trusted players in the
pharmaceutical industry.
Technological
Leadership and Innovation: Indian firms with cutting-edge technology or
innovative solutions may seek to expand internationally to gain recognition and
market share. For instance, Indian software companies like TCS (Tata
Consultancy Services) and Wipro have expanded globally, offering IT services
and software solutions to clients worldwide, leveraging their technological
expertise and innovation capabilities.
These examples
illustrate that Indian firms go international for a variety of reasons,
including market expansion, resource acquisition, cost efficiency,
diversification, brand building, and technological leadership. Going global
allows them to access new opportunities, compete on a larger scale, and
strategically position themselves in the global marketplace.
(b) In
what manner do political system and economic factors influence international
marketing? Answer with suitable examples.
Political
systems and economic factors play a significant role in shaping international
marketing strategies and operations. Here's how these factors can influence
international marketing, along with suitable examples:
Political
System: The political system of a country, including its government structure,
policies, regulations, and stability, can impact international marketing in the
following ways:
a) Trade
Policies and Regulations: Governments enact trade policies and regulations that
can affect international marketing activities. For example, import tariffs,
quotas, or restrictions on certain products can influence pricing, market
access, and distribution channels. Companies need to navigate and comply with
these policies to effectively market their products in foreign markets.
b) Political
Stability and Risk: Political stability is crucial for a conducive business
environment. Unstable political conditions, such as political unrest or
frequent changes in government, can create uncertainty and risks for
international marketers. For instance, political instability in a country may
deter foreign companies from investing or expanding their marketing efforts.
c) Political
Relations and Diplomacy: Bilateral or multilateral political relations between
countries can impact international marketing. Trade agreements, diplomatic
ties, or strained relations between nations can affect market access, trade
barriers, and consumer preferences. For example, the political relationship
between India and Pakistan has influenced trade and marketing opportunities
between the two countries.
Economic
Factors: Economic factors, including economic growth, inflation, exchange
rates, and consumer purchasing power, significantly influence international
marketing strategies and operations:
a) Market Size
and Demand: Economic growth and the size of a market influence marketing
decisions. Companies seek markets with strong economic growth, a rising middle
class, and increased consumer purchasing power. For example, multinational
fast-food chains like McDonald's and KFC target emerging markets like India and
China due to their growing consumer base and rising disposable incomes.
b) Exchange
Rates and Currency Fluctuations: Exchange rates impact pricing, profitability,
and market competitiveness. Fluctuations in exchange rates can affect the costs
of importing/exporting, pricing strategies, and profit margins. For instance, a
strengthening domestic currency can make exports more expensive, affecting
pricing and demand for products in foreign markets.
c) Economic
Development and Infrastructure: Economic development levels and infrastructure
influence market potential and distribution capabilities. Developing countries
may have limited infrastructure, affecting logistics, supply chains, and
reaching remote areas. Companies need to consider these factors when developing
marketing strategies. For example, multinational consumer goods companies
invest in developing distribution networks in rural areas of India to reach a
wider consumer base.
d) Consumer Behavior
and Spending Patterns: Economic factors shape consumer behavior and spending
patterns. Consumer preferences, buying power, and willingness to spend vary
based on economic conditions. Marketers must adapt their strategies
accordingly. For instance, during economic downturns, companies may focus on
value-based marketing strategies or offer affordable products to cater to
price-sensitive consumers.
These examples
highlight how political systems and economic factors influence international
marketing. Understanding the political and economic landscape of target markets
is crucial for developing effective marketing strategies, pricing decisions,
market entry approaches, and managing risks and opportunities in global
business environments.
Q2. Under
which mode of entry the international business firm can start international
marketing without any investments abroad? Explain it along with its merits and
limitations.
The mode of entry
that allows international business firms to start international marketing
without any investments abroad is through Exporting. Exporting involves selling
products or services produced in the domestic market to foreign customers or
intermediaries.
Low Financial
Risk: Exporting allows firms to enter international markets with minimal
financial risk. Since there is no need for significant upfront investments,
companies can avoid the costs associated with establishing production
facilities, distribution networks, or subsidiaries in foreign countries.
Quick Market
Entry: Exporting enables companies to enter international markets relatively
quickly. By leveraging existing production capabilities and resources, firms
can initiate export activities promptly, thereby gaining access to foreign
markets without the time-consuming setup of local operations.
Economies of
Scale: Exporting allows firms to achieve economies of scale by expanding their
customer base beyond the domestic market. Selling larger volumes of products or
services to international customers can lead to cost efficiencies and increased
profitability.
Learning and
Adaptation: Exporting provides an opportunity for firms to learn about foreign
markets, customer preferences, and international trade dynamics. By engaging in
export activities, companies can gather valuable market insights and adapt
their products, marketing strategies, or pricing to better suit the needs of
international customers.
Limited Market
Control: Exporting without investments abroad may limit the firm's control over
marketing activities in foreign markets. Companies rely on intermediaries or
distributors to handle marketing, distribution, and customer relationships.
This dependence can potentially impact the firm's ability to directly manage
marketing efforts and tailor strategies to specific market conditions.
Intense
Competition: Exporting often involves competing with local and international
competitors in foreign markets. Without a local presence, firms may face
challenges in building brand awareness, establishing customer relationships,
and differentiating themselves from competitors.
Trade Barriers
and Regulations: Exporting may be subject to trade barriers, import
restrictions, or regulatory requirements in foreign markets. Companies need to
navigate and comply with various customs regulations, licensing procedures, and
product standards, which can pose challenges and increase administrative
complexities.
Limited Market
Knowledge: Operating solely through exporting may limit the firm's
understanding of foreign markets. Without a physical presence or direct interaction
with local customers, companies may have limited insights into market trends,
cultural nuances, or specific customer needs, potentially hindering their
ability to develop tailored marketing strategies.
It's important
to note that while exporting provides an initial entry point for international
marketing without investments abroad, firms may eventually consider other modes
of entry, such as licensing, franchising, joint ventures, or direct investment,
to gain more control, expand operations, and further penetrate foreign markets.
The choice of entry mode depends on various factors, including the firm's
objectives, resources, market conditions, and long-term growth strategies.
Q3. Write
short notes on the following:
(a)
Telemarketing
(b) GATS
(c)
Personal selling
(d) Packaging
for international markets
Q4. Differentiate
between the following:
(a) Direct
and indirect selling channel
(b)
Domestic agents and domestic merchants.
(c)
Domestic and international marketing communications.
(d)
Primary and Secondary data
Q5.
Comment briefly on the following statement:
(a)
International marketing research is full of complexities.
(b) Price
is an important element of marketing mix.
(c)
Analysis of legal conditions is a very critical component in selecting foreign
markets.
(d) Poor
presentation will undo the entire market research exercise.
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