Global Market Environments

By M. Isi Eromosele

There are always risk factors involved when a company decides to enter the foreign market. Of course, these risk factors depend on the character of a particular environment, which in turn influences the mode of entry and the marketing strategy developed for that market. In entering the international market, there are issues that need to be focused on. These include product, price, distribution and promotion. These four issues need to be systematically assessed as they are most crucial to formulating a global marketing strategy. The major components present in a foreign market environment include cultural, political, business and economic forces. Each of these must be considered in the design of global market entry strategy.

Culture

The culture present in any given foreign market is obvious in the form of social structure, habits, religion, customs and rituals. All of these influence the lifestyle of the consumers in that particular market environment, which in turn affects consumer purchasing behavior. What the people in a particular country buy and why they buy is uniquely peculiar to the cultural influence inherent within its society. The four basics of culture in any given international society are material, social, aesthetic and language.

Language differences vary from country to country, which could inevitably lead to problems such as semantic translation of English to the native tongue. The choice of color and the style of packaging need to be carefully considered in entering a foreign market. Different colors mean different things to people in divergent cultures. In the western world, the color white is associated with innocence. In the Asian culture, white is associated with death. Effectively, culture does have influence on the design and implementation of international marketing strategies.

Politics

In today’s global economy, governments exert a high level of influence on the economic practices of individual countries, even democratic ones. In many countries, the government owns and operates specific sectors of businesses. Even though government intervention in economic policies varies from country to country, it is most pervasive in emerging economies. As such, a global company needs to consider the political climate in a country in planning the mode of their market entry. The countries that provide the most favorable political climate should be considered first. The degree of political risk can be determined by researching for answers to the following questions, among others:

• Is your product considered economically essential?
• Does the product require parts that could be purchased locally?
• Will the product encounter competition from local manufacturers in the short-term?
• Is your product primarily a service?
• Do other products depend upon the manufacture of your product?

Legal Aspects

There is always the possibility that disputes may arise after market entry. It is imperative that a global company expect certain areas where there may be disputes with host government and forestall this by reaching agreements that will minimize the effects of or facilitate quick resolutions of such problems. Appropriate proactive steps should be taken by the global company to make resources available to resolve disputes that may occur. It is most common to have legal disputes in the marketing area, possibly revolving around the following:

• Rules of competition
• Retail pricing
• Product quality laws
• Packaging laws
• Price controls and limitations
• Patents, trademarks and copyright laws

Commercial Practices

It is imperative that a global marketer be very familiar with business customs and practices in every targeted global market it intends to enter. These customs and practices must be thoroughly explored and complied with so as to gain the trust and confidence of the company’s business partners within the local market. The following are some of the varied issues that would need to be looked into:

• Business Structure
• Management Attitudes and Behavior
• Competitive Environment
• Mode of Doing Business

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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