a) International Marketing Environment:

• Cultural Environment : Concept , Elements of Culture (Language, Religion, Values and

Attitude , Manners and Customs, Aesthetics and Education), HOFSTEDE’s Six Dimension
of Culture , Cultural Values ( Individualism v/s Collectivism

• Economic Environment : International Economic Institution (World Bank, IMF, IFC)

,International Economic Integration (Free Trade Agreement, Customs Union, Common
Market, Economic Union)
• Political and Legal Environment: Political System (Democracy, Authoritarianism,
Communism), Political Risk, Political Instability, Political Intervention. Legal Systems
(Common Law, Civil Law, Theocratic Law), Legal Differences, Anti Dumping Law and
Import License.
Cultural Environment
Culture is:

 Learned
 Shared
 Trans generational
 Symbolic
 Adaptive
Elements of Culture
 Language
 Non Verbal Language
 Religion
 Values and Attitude
 Manners and customs
 Aesthetics (idea of beauty and taste; colour etc)
 Education
Hofstede’s Cultural Dimension
Theory
Individualism vs. Collectivism (IDV):
 Individualism versus Collectivism pertains to the extent to
which individuals in a society prioritize their personal
interests over group interests. In individualistic cultures,
people value personal freedom, autonomy, and individual
achievements. In collectivist cultures, people prioritize the
group's needs, loyalty, and harmony.

 Example:
 Individualism: The United States is known for its individualistic culture, where
people often prioritize personal goals and achievements, and individual
rights are highly valued.

 Collectivism: In Japan, collectivism is prominent, and people place great

importance on maintaining social harmony, group cohesion, and strong
relationships with their families and communities.
Masculinity vs. Femininity (MAS):
Masculinity versus Femininity refers to the distribution of
roles and values between genders in a society. Cultures
with high masculinity emphasize assertiveness, ambition,
and material success, while those with high femininity
prioritize nurturing, cooperation, and quality of life.

 Example:
 Masculinity: In South Korea, masculinity is emphasized, and there is
a strong focus on competition and career success. Work-life balance
might be less prioritized as a result.

 Femininity: Norway is an example of a more feminine culture, where

societal values are centered around quality of life, social welfare, and
equal opportunities for all genders.
Uncertainty Avoidance (UAI):
 Uncertainty Avoidance reflects the degree to which a
society feels uncomfortable with ambiguity, uncertainty,
and risk. Cultures with high uncertainty avoidance tend to
have strict rules, structured systems, and resist changes,
while those with low uncertainty avoidance are more
open to flexibility and adaptability.
 Example:

 High Uncertainty Avoidance: Germany has a high uncertainty avoidance

culture, leading to strict regulations and a preference for well-defined rules
and procedures in both business and social interactions.

 Low Uncertainty Avoidance: Denmark has a low uncertainty avoidance

culture, where there is a higher tolerance for ambiguity and experimentation,
making it more receptive to new ideas and innovations.
Power Distance (PDI):
 Power Distance refers to the extent to which less powerful
members of a society accept and expect power and authority to
be distributed unequally. In countries with high power distance,
there is a significant gap between those in positions of power and
the general population. On the other hand, countries with low
power distance tend to value equality and emphasize a more
egalitarian society.

 Example:

 High Power Distance: In Saudi Arabia, there is a considerable power

distance, and people show great respect to those in authority, like
government officials and religious leaders.

 Low Power Distance: In Sweden, power distance is relatively low,

and there is an emphasis on equality and open communication
between superiors and subordinates in the workplace.
TIME ORIENTATION
 Long-Term vs. Short-Term Orientation (LTO):

 Long-Term versus Short-Term Orientation refers to the degree to which a

society emphasizes long-term planning, perseverance, and tradition versus
short-term gratification and flexibility.

 Example:

 Long-Term Orientation: China often embodies long-term orientation, as it

values persistence, saving for the future, and respecting traditional values
passed down through generations.

 Short-Term Orientation: The United States, with its focus on immediate

results and entrepreneurial spirit, is an example of a more short-term-
oriented culture.
Indulgence vs. Restraint (IND):
 Indulgence versus Restraint relates to the extent to which a
society allows free gratification of natural human desires and
emotions. Indulgent cultures have a greater acceptance of leisure
and enjoyment, while restrained cultures place a higher emphasis
on controlling desires and maintaining social norms.

 Example:

 Indulgence: Brazil exemplifies an indulgent culture, where people

celebrate life, festivals, and emotions with a sense of freedom and
enjoyment.

 Restraint: Saudi Arabia represents a restrained culture, where strict

adherence to Islamic customs and traditions govern social behavior
and personal expressions of emotions.
Hofstede’s cultural dimension
theory
 Individualism vs. Collectivism (US vs. Japan)
 Power distance (US, Australia vs. China, Saudi)
 Masculinity vs. Femininity
 Uncertainty avoidance (Pakistan, Arabs vs. Japan)
 Long term vs. Short term orientation (East vs. West)
 Indulgence vs. Restraint
Political Environment
 Political system accepted by the country
 Constitutional provisions

 Party in power

 Legislation and judiciary system

 External Affairs and relationships

 Political events: Revolution, instability, death of a
political leader, political scandals, war etc
Political Systems
 Anarchism

 Capitalism

 Communism

 Socialism

 Democracy
Political Risks
 Confiscation: Government taking ownership of property
without compensation (Eg: for default of tax payment)

 Expropriation: Takeover of a foreign firm in host country,

by host country government. Compensation is given,
though firm may not be selling itself to government by
choice, but by coercion

 Domestication: Host country takes steps to transfer foreign

investments to national control and ownership. Private
players are then allowed to operate the property
 Nationalisation: Government owns and operates the
business being taken over. This affects an entire industry
and not just a single firm

 Deprivation: Host government interferes with foreign

firm’s acecss to or utilisation of its assets, without taking
possession

 Instability risks: They arise from power struggle between

political parties, mass riots etc E.G.: Military coups in
Pakitan
Political risks management
 Stimulation of local economy (e.g: ancillary units, pay
taxes)
 Employment of nationals
 Sharing ownership with local companies
 Maintain political neutrality
 Train employees on local culture and respecting the
same
Political instability: Indicators
 Social evils – mass unemployment, poverty, inequality
 Power hunger
 Social unrest- may be due to religious, cultural, racial
differences, economic hardships etc
 Attitudes of nationals- inhospitable towards foreign
citizens and firms
 Policies of government (can change with change in
leadership)
 Black money and corruption
Political Intervention
Positive:
 Establish and enforce laws
 Maintenance of law and order
 Control of money supply and credit
 Promotion of orderly growth- employment, balanced
regional development etc
 Development of infrastructure
 Provision of information
 Assistance to MSMEs
 Transfer of technology
 Inspection for quality and licenses
Negative
 Regulatory role- too much regulation restricts business
 Nationalisation and reservation for public sector, SSIs etc
 Trade barriers
 Limiting conversion of own currency into foreign, to limit
imports
 Local content requirement – certain % of local content in
manufactured goods may be restrictive
 Restrict excessive growth by curbing monopolies
Economic environment
International Economic Institutions
1) World Trade Organisation (WTO)

 Started functioning in 1995

 India- one of the founder nations

 WTO has wider scope than GATT, since it is an

organisation, not just an agreement

 Uruguay round negotiations resulted in formation of WTO

 Objectives of WTO: Free world trade, growth of less

developed nations, environment protection and
preservation, optimum utilisation of world resources,
procedures to settle disputes among member nations
2) United Nations Conference for Trade and
Development (UNCTAD)

 Established in 1964

 The organisation grew from the view that GATT, IMF

and World Bank were not organised to handle problems
of developing countries

 Goals:
 Reduce trade gap between developed an developing countries
 Accelerate the rate of economic growth in developing world
International Financial Institutions
1) World Bank : since 1946

 Has 2 divisions – International Bank for

reconstruction & Development (IBRD) & International
Development Association (IDA)
 Originally aimed to help reconstruction of nations
devastated in World War II
 Shifted its focus from advanced industrialised nations
to developing third world countries
 IBRD gives low or no interest loans for infrastructure
projects (Power plants, roads, rails, ports, telecom,
water systems etc)
2) International Monetary Fund (IMF): since 1947

 Short term credit institution

 Provides machinery for orderly adjustment of
exchange rates/BOP adjustments
 Maintains reservoir of all member nation currencies
which can be borrowed by other nations
 Does not grant loans for capital transactions
3) International Finance Corporation (IFC): since 1956

 Specific aim of providing aid to private sector

 Member of World Bank group, but has separate fund
and functions
 Particular thrust, on aid to private sector in less
developed nations
 Financing strictly for profit, commercial projects
which will reduce poverty and promote development
International Economic Integration
 Preferential Trade Agreement

 Free Trade Area

 Customs Union

 Common Market

 Economic Union

 Political Union
Legal system: Types
 Common law: Based on past practices, precedence

 Code law: Written rules of law – commercial, civil and

criminal

 Theocratic law: Based on religion, morality than

commercial requirement of human behaviour
e.g.: Islamic law - Sharia
Legal Issues in International Market
 Legal differences between countries: Common law,
code law or theocratic law

 Anti Dumping Law

 Import License
International Marketing Research
Need:
 To identify opportunities and threats in International
market
 To understand IM environment

 To facilitate smooth introduction of new products

 To take pricing decisions

 To select suitable distribution channel

 To decide promotion mix

 Improve decision making in international market

IM research process
1) Problem identification:

 To go international or no

 Product identification for internationalisation

 Deciding country/region to internationalise

 Mode of entry decisions

 Marketing mix decisions

 Implementation and control of marketing plans

2) Elimination of influence of SRC (Self reference
criteria) of own culture to foreign culture

3) Appointment of research agency

4) Formulating research methodology: Depends on

nature of marketing problem
 Decision on product includes motivation research or
product testing
 Decision on pricing includes price sensitivity studies etc
5) Deciding data needs: Depends on type of issue. Eg
Market selection: Data needed regarding size of
market, attractiveness etc

6) Identifying source of information:

 IMF
 UN
 World Bank
 WTO
 Indian sources: Ministry of commerce, finance, Export
Promotion Councils (EPCs), RBI Chambers of
commerce etc
7) Preparing research design: Exploratory, descriptive
or causative

8) Collection of data: Field study, observation,

experimentation

9) Analysis and interpretation of data

10) Preparing research report

Scope of IM research
 Consumer Research

 Market Research

 Product Research

 Sales Research

 Advertising Research

 Sales promotion Research