By Dr B K Mukhopadhyay
A s the world is fast becoming one marketplace of inter-dependent people any firm / economy which concentrates solely on a single domestic / overseas market / product is bound to witness doomsday today or tomorrow or at best have a stunted growth pattern.
By now it is well known a fact that maging an intertiol business is more complex than maging a domestic business, especially keeping in view that things are changing very fast necessitating more attention to be focused on this are if the developing economies target to have more say in the intertiol affairs. In these days of globalization, autarky is out of date and every country has to enter into this process of integration and interdependence.
It is clear in this age of intense competition backed by technological revolution that businesses have to expand from their domestic base to go intertiol [reasons relate to size: the intertiol are has more customers, more opportunities and more resources for exploitation than the domestic are, plus a range of difficulties not encountered domestically].
Globalization of markets implies that the world is one large marketplace and globalization of production implies that firms locate their production facilities for maximum efficiency and lowest cost, so that products are no longer seen as Indian, Australian products or Japanese or German products, but ‘global’ products in ture. On this score even the staunch critics have to remember that things are changing at jet speed where one technology is fast replacing the earlier one.
Keeping Track With Fast Changing Environment
Though in some ways, intertiol business is an extension of domestic business, but it is different mainly for two reasons (i) intertiol business objectives are likely to be different from domestic business objectives; (ii) the environmental conditions in which intertiol business is conducted are usually of greater complexity than is the case with domestic business. These complexities arise from differences in culture, currencies, legal systems and the endowment of tiol resources, among others. Today’s developments in communication and transportation technology have been facilitating trade worldwide, leading to the cliché that ‘all business is now intertiol business’ - people working in maritime industries are inevitably involved in intertiol business
On this score: the forces that promote globalization are not to lose sight of: (a) the lowering of tariff and non-tariff barriers (free trade); (b) developments in technology [viz. jet aircraft, containerization, the microprocessor, the Internet and robotics].Who thought that in economies like India the airlines will be competing with the railways? It is appropriate strategy and the implementation back up that lead the way. Who could question today that developments in communication and travel has not made it possible for intertiol business to coordite its activities and to view the world as a single marketplace? Changes in the economic and political domains are conducive to the rise and fall of tion-states. Though the US is the world’s domint economy, yet it is likely to be challenged more and more by fast emerging economies like BRICS, and among other economies inclusive of Bangladesh, Vietm, who are coming up steadily.
So one has to impartially look into the costs and benefits of globalization.
On this score the core competencies, the desire for location economies, the experience curve, and local responsiveness form the basis
The flip side, of course, requires proper attention: the obvious obstacle - facing a multiplicity of political, economic, legal, social and cultural environments. It also remains a fact that there are complex interactions between these and its host countries because of tiol sovereignties, widely disparate economic and social conditions, among others. What is more: (i) geographical locations, cultural and tiol differences, variations in business practices, and other differences make communication difficult between the multitiol enterprises and its subsidiaries; (ii) economic, marketing and other information required for strategic planning vary to a great extent as well as depth and reliability between countries; (iii) differences in industrial structure and business practices make alysis of future competition difficult to undertake; and then the domint factor - regiol economic integration and the activities of global institutions [such as World Bank] may have to be confronted!.
Appropriate Strategy is the Basis
In intertiol business, as in domestic business, the appropriate strategy for a firm is largely determined by the environment in which the firm must compete. This environment is not static and, indeed, one of the factors causing change in the operating environment is the strategies pursued by intertiol firms. The very strategy is tied to the purpose of the firm - value creation through a series of activities known as the value chain. One has to look at the taxonomy of strategy in as much as there are more than a dozen ‘strategies’ and an almost infinite range of combitions of those strategies [vide Bartlett’s and Ghoshal’s taxonomy - the three ‘traditiol’ strategies (global, intertiol and multi-domestic) and transtiol]. The choice of strategy, in turn, depends on the relative importance of cost pressures and pressures for local responsiveness. The strategy ultimately chosen will be a compromise forced upon the firm by such pressures.
That is why: intertiol strategy formulation requires the firms to deal not only with the ‘normal’ strategic considerations of markets, technology and competition, but also with tiol sovereignty and intertiol political relationships. There is considerable potential for conflict between the firm and the tion because firms want to develop strategies and allocate resources ratiolly to maximize profits while tions want maximum contributions to their development and future prosperity. The result can be mutual advantage through cooperation, or intense conflict. To minimize conflict, strategies must be flexible enough to adapt to environments of countries that are diverse.
Filly, the macro view: though the WTO economists forecast that growth in global trade volume would recover, the warning is there that “severe downside risks for growth that could have even greater negative consequences for trade if they came to pass,” and cited the European debt crisis, rising oil prices and geopolitical risks as being of particular concern!! Needless to say, that in the absence of global cooperation it is very difficult to say good bye to protectionism!!
The upshot: better not to forget the crucial need for intertiol marketing research. Marketing research process is consistent for both domestic and intertiol markets, where variety of market environments affect intertiol marketing research process - economic environment; social-cultural environment; political and legal environment plus technological, multimedia and infrastructural aspects- which must not lose sight of keeping in view the continuously changing wants, needs and demands.
Marketing abroad calls for excellence
By Dr B K Mukhopadhyay