International marketing can be simply said as trading of goods and services across boundaries to meet more customer needs and requirements. Earlier, companies didn’t have an option to expand their business across the nation, but recently they are open to the international markets without being restricted to their own national boundaries.
Evolution of International marketing has helped many business organizations to set up their business across nations and grow rapidly along with earning a good rate of income as well as being able to expand their business to greater heights. There are several reasons behind firms developing international marketing.
Most commonly firms go for international marketing because of growth opportunities, profitability, availability of cheap labor and competition. Apart from these factors there are numerous reasons for firms going global. CITATION tut18 l 1033 (tutorialspoint)Firms can grab more opportunities from international markets than from their own nation. Different countries may be having different opportunities which can be utilized by firms that go international.
Having more opportunities also helps the firms to have more scope for expanding their business. This can also lead to an increase in the profitability of the organization, which can be said as another important reason for going global. International business has always proven to be more profitable than domestic businesses, and thus it encourages firms to opt for international marketing.
Availability of cheap labor in foreign markets also creates opportunities for developing international markets. Foreign countries with cheap and efficient labor are always an attractive factor while considering international marketing. For example, china is a country with large number of efficient labor available at cheap cost, and this makes china a better option for firms and MNC’s to set up their business within their regions.
Another important factor to be considered as a pushing force behind international marketing is competition. When there is huge competition, firms decide to develop international marketing so as to remain in the market as well as to grow rapidly beyond boarders. For example, the Indian government didn’t entertain foreign companies as well as flow of FDI into their country during the year 1991, but gradually the Indian markets where open to foreign companies and they also encouraged the flow of FDI with the introduction of trade liberalization.
When more foreign companies started to take root in India, the competition in Indian markets grew tough and the local firms found it difficult to remain within the market. The increased competition led the Indian markets to go global and to improve and expand their business in local as well as foreign countries.
Government rules and regulations also encourage firms in developing international marketing. Government in many countries provides various incentives and greatly supports their local firms to go global as well as to invest in foreign markets. For example the Birla group, an Indian based company was not given the permit to set up a fiber plant within India, which finally ended up in a decision to go global and set up the plant. Birla group was heartily welcomed by the Thailand government and was given the permission to set up various plants within the country. They then produced and processed fiber in Thailand and exported the same to the Indian markets.
Going global also enables firms to get more customers, than in their local markets. Small markets within the domestic country may only have less number of customers, but on the other hand developing international marketing will help firms to get more customers with varied taste and preferences. More customer base will also lead to more revenue generation and growth prospects. Various firms go for international marketing with an aim to diversify their business.
Firms set up their business in various countries and generate revenue through satisfying customer demands, needs and wants across borders. Even if there is a decline in the local markets, the businesses in international market can catch-up the risk and carryout business accordingly. This also helps the firms to develop brand recognition in different countries among different customers worldwide. CITATION Nei17 l 1033 (Kokemuller, 2017)
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- Kokemuller, N. (2017, september 26). bizfluent. Retrieved may 12, 2018, from bizfluent.com: http://bizfluent.com/facts-5256365-do-companies-go-international.html
- R.Cateora, P. (2011). international marketing. In P. R.Cateora, international marketing 15th edition (p. 659). New York : MC Graw-hill/Irwin NYC.tutorialspoint. (n.d.). Retrieved may 12, 2018, from tutorialspoint.com: http://www.tutorialspoint.com/international_marketing/international_marketing_introduction.htm