Product is probably the most crucial element of a marketing program. To a very important degree a company’s products define its business. Pricing, communication, and distribution policies must fit the product. Its research and development requirements will depend upon the technologies of its products. Indeed, every aspect of the enterprise is heavily influenced by the firm’s product offering. In the past, managers have been prone to committing (often simultaneously) two types of errors regarding product decisions in global marketing. One error has been to fall victim to the “Not Invented Here” (NIH) syndrome, ignoring product decisions made by subsidiary or affiliate managers. Managers who behave in this way are essentially abandoning any effort to influence or control product policy outside the home-country market. The other error has been to impose product decisions policy upon all affiliate companies on the assumption that what is right for customers in the home market Continue reading
International Business Basics
International Trade Theory of Country Size and Technology Gap
Trade Theory of Country Size Country size has some definite relation to international trade as to what is traded, how much is traded and so on. The classical trade theories do not go into country-by-country differences in size to deal with the lines of specialization. When a small and big country are involved, the small country may be pushed into specialization, but not the big one for all its need for the other product can’t be produced by the other small country, nor that small country take all export surplus of the big nation resulting from specialization. Thus a nexus exists between global trade and country size. Vastness of Country size and Variety of Resources go together: Size of a country is measured by the geographical space here. Big countries have vast space and hence more and diverse resources. With that they could be self reliant. Considering their size, their Continue reading
Intellectual Property Rights (IPR) – Concept, Benefits and Weakness
For a sustainable growth and economic development of a country, innovation and creativity is a very important dimension. Industries and the global markets of the 21st century rest on the intellectual property protection as it is one of the central public policy. By the mid-1990s, a minimum global standard for IPR had been preserved in the WTO Charter through the incorporation of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The transfer in international economic policy and the lowering of tariff and non-tariff trade barriers to the embrace of strong IPR is genuinely an issue of controversy. Intellectual property rights (IPR) are legal claims settled by governments within their relevant sovereignties that grant trademark, patents and owners of copyright the exclusive right to exploit their intellectual property for a certain period. The fundamental right for IPR protection is to provide an incentive for innovation by granting IP owners Continue reading
Factors Affecting Organizational Structure in Multinational Companies
The organization structure is an approach that helps and guides in organizing the employees of the organization into a structured and organized pattern for better coordination and communication. The structure in a multinational company defines the architecture of the business competence, functional relationship and management function. It helps in reducing confusion in the business environment and also supports in carrying out the business function smoothly and efficiently. The organization structure is affected by various internal and external factors which are also known as the organizational environment since organization works around these factors and the environment. The organizational environment consists of all those factors that influences the organizational working and thus can also influence the organizational structure since in each country and geographical areas the organizational environment would change. The external organizational environment that would influence the organizational structure is the economic, political and legal, socio-economic, technological and natural factors. All Continue reading
Transnational Strategy in International Business
Over the years, several companies have decided to carry out their business activities in overseas markets and hence, have expanded as international or global businesses in efforts to be known as multinational enterprises (MNEs) and enjoy the perks of being a global business. In order to come up with strategies for entering and sustaining in international markets, companies invest a lot of time, effort, and money, and yet many do not succeed in their international business planning and/or execution. We can come across several big names that have been unable to prove themselves successful in the international market such as Walmart, Starbuck’s initial launch in Australia, and Amazon in China. These examples depict that managing international operations is a challenging task for any business and therefore, not every business has the capability or the resources for it and some just do not have enough knowledge. Companies can benefit from global Continue reading
Modes of Entry into International Business with Advantages and Disadvantages
The different types of entry modes, to penetrate a foreign market, arise due to globalization. The latter has drastically changed the way business conduct at international level. Owing to advances in transportation, technology and communications, nowadays practically every business of any size can supply or distribute goods, services, or intellectual property. However, when companies deal with international markets, it is complicated as the companies must be prepared to surmount differences in currency issues, language problems, cultural norms, and legal and regulatory regimes. Only the largest companies have the capital and knowledge to overcome these complications on their own. Many other businesses simply do not have the means to efficiently and affordably deal with all those variables in foreign jurisdictions, without a partner in the host country. Foreign market entry mode has been defined as an institutional arrangement that makes possible the entry of a company’s products, technology, human skills, management, Continue reading