1. How can you measure political risk & instability? Are they also a matter of perception?

2. What aspects international marketing are most affected by political instability in a country?

• Aspects of International MarketingInternational Marketing: is the performance of marketing activities in more than one nation.Basic Objectives of International Marketinga) Targeting international customer: segmenting, targeting and positioning the international customer.b) Finding global customer need: understand similarities and difference in customer group across countries.c) Satisfying global customer: adapting marketing mix to satisfy customer need across the countries and

regions.d) Better than competition: monitoring and responding to global competition by offering better values.e) Maintain relationship: maintain long term relationship with foreign customer and other business parties.f) Coordinating world business: integrating business activities and implementing them across the countries.g) Global environment: consider and analysis the internal and external factors of the foreign countries.h) Business orientation: expand market, goodwill, profit

• Domestic vs. International MarketingMajor Issues Domestic InternationalArea Limited BroadControl Easy ComplexBuying & selling Domestic views International viewsObjectives Local demand Foreign demandTransaction All levels Distribution levelTerms of trade Not necessary Depends on itExchange rate Not necessary Basic foundationDocuments Simple Document orientedResearch Initial research Continuous researchTariff barriers Not problems Great problemsBusiness risks Easily identify Difficult to identifyMobility of FP Moveable Difficult to move

• Phases of International Marketingi) No direct foreign market: producers have no intension for marketing. Products may reach foreign markets

via domestic wholesalers or distributors.ii) Infrequent foreign market: when a producer get an opportunity in the foreign market then he sale the

product, this operation is infrequent not regular.iii) Regular foreign operation: as overseas demand grows, productions are allocated for foreign markets, &

products may be adopted to meet the needs of individual market.iv) International marketing: companies in this stage are fully committed and involved in international

marketing and set marketing mix for individual foreign market.v) Global Business: companies treat the world, including their home market, as one market. Market segments

are defined by income levels, usage patterns or other factors.• Global Marketing Involvement:

a) Individual view: production only for personal use. Fish cultivation only for family.b) Profit orientation: meet up family demand then sell products to the neighbor and increase production.c) Local coverage: if it is profitable then production and sell product in the local market.d) Regional market: production and sell the product in the regional market with industrial focus.e) National program: business program for all over the country and take extensive business program.f) International orientation: select one or two countries for business and set individual marketing program.g) Global business operation: companies treat the world, including their home market, as one market.h) Multi product operation: when a particular product become success then starts with additional products.

• Changes In International OrientationChanges business strategy and attitude in different stages of international marketing.a) Traditional business: first phase of international marketing is the traditional business operation.b) Preparation: for infrequent foreign market, business people has to take some extra preparation.

c) Adaptation: for regular marketing, need some basic marketing adaptation; especially for marketing mix.d) Integration: emphasis on i) needs and demand ii) integrated marketing iii) profit analysis.e) Application: all the programs are applicable not only for domestic market but also all over the world.

• Global LinkageInternational marketing has forged a network of global linkage that bind us all – country, institution, individual.a) Country: these link was first widely recognized during the worldwide oil crisis of 1970, but they continue to

increase. Regional trade link between countries to country.b) Institutions: firm can operate in a “market space rather than a market place; newspaper now can

distributed through online in all over the world.c) Individual: communication has built new international bridge; be it through music, or international

programs transmitted by BBC, CNN, and others networks.E-technology and Linkage:Technology has changed international marketing dramatically: the advantages are inexpensive, fast, easy,

flexible, 24 hours transaction.• Importance of International Marketing

1. from the Consumer's Point of View:a) Un-produced products: consumer can enjoy the goods they cannot capable to produce in their country.b) Products at low price: for comparative and absolute cost consumer get low price facilities.c) Enjoy benefits of competition: competitors of the products try to deliver the best quality of products.d) Consumption of new products: consumers come to know the latest information about the products.e) Increase in consumption: marketers arrange various types of product from all over the world.2. From the Producer’s Point of View:a) Export to surplus production: producers can export his surplus product to the different foreign countries.b) Low cost of production: producers can enjoy absolute cost advantages and comparative cost advantage.c) Increase in production: producers have the opportunities to sell their products.

• 2. From the Producer’s Point of View:d) Expansion of market: company can sell their additional or surplus product in other of deficit countries.e) Reduce business loss: if one market is not profitable then producer overcome it by the other market.f) Reduce marketing costs: get advantages from large scale production, joint venture or contractual methods.3. From the Economic Point of View:a) Increase total production: utilize factors of production and product specialization.b) Increase export earning: due to the increase of production, export surplus product.c) Overcome crisis: in case of natural calamities, war or face the emergency crisis.d) Expansion of industry: for the export and production orientation and market expansion is need.e) Export of unusual goods: export some traditional goods to foreign countries.

• 3. From the Economic Point of View:f) Proper use of resource: proper utilization of land, labor, capital and organization due to international

marketing.g) Import of essential goods: some essential good such as medicine, technical products can import from

foreign.h) Employment opportunity: branches, huge investment, high production that create employment

opportunity.i) Economic development: impact on consumption, income, saving, investment, and employment.4. From the Social Point of View:a) Knowledge and cultural progress: cultural, education, ideology are transmitted from one country to

another.b) International peace: global business builds a strong relationship and cooperation with foreign countries.c) Image development: company has scope to expose his status; Toyota, has the good image all over the

world.d) Technological development: underdeveloped and developing countries depend on international business.

• International Marketing TaskThe international marketer's task is very complicated because the international marketers must deal with at

least two levels of uncontrollable; domestic and foreign.i) The inner circle: represents the domestic controllable elements that constitute a marketer's decision area.

ii) The second circle: includes those environmental elements at home that have some effect on foreign-operation decisions.

iii) The outer circles: represent the elements that elements of the foreign environment for each foreign market within which the marketer operates.

Environmental Adaptation Needed: to adjust and adapt a marketing program to foreign markets, marketers must be able to effectively interpret the influence and impact of each of the uncontrollable environmental elements.

• International Marketing EnvironmentMicro- Marketing Environment1. The Company: company is a corporate enterpriser that has a legal identity separate form that of its

members.a) Top Management: set objectives, strategies & policiesb) Finance department: supply the available fundc) Research (R&D): analysis problem and prospectd) Procurement Department: collect company’s resourcee) Manufacturing dept.: produce necessary productf) Accounting dept.: maintain income and expenditureg) Sales department: distributing and sales the product2. The Suppliers: producers collect raw materials from supplier. Marketing managers must watch about the

following factors of the suppliers.a) Availability: are suppliers available in the marketb) Experiences: what are their past experience?

• The Suppliers:c) Reputation: find out their goodwill in the marketd) Reliability: whether they are reliable or note) Flexibility: what are their levels of adaptation process?f) Costs factor: are they expensive for the companyg) Supply shortage: can the supplier supply regularly3) The Marketing Intermediaries:a) Middlemen: wholesalers, retailers, and distributorsb) Physical distribution: transport or warehouse agenciesc) Services agencies: research, advertising or media firmsd) Financial intermediaries: bank, credit or insurance4) Competitors:a) Market leader: who lead the market?b) Market challenger: who challenge the leader?c) Market follower: who follow the leader or challenger?

d) Market niches: leader of a small segment• 5. The Customers:

a) Consumer market: purchase for personal consumptionb) Business market: purchase for business purposec) Reseller market: purchase for reproductiond) Government: govt. agencies buy goods and servicese) International market: buyers in the other countries6. The Publics:a) Financial publics: bank, investment house, stockholderb) Media publics: newspaper, magazine, radio, televisionc) Government publics: govt. organization and bodiesd) Citizen-action publics: CAB, municipality, policee) Local publics: neighborhood residents and communityf) General publics: public's attitude toward the productg) Internal publics: include workers, managers, volunteers

• Macro Environment1. The Demographic Environment:a) Changing age structure: age under 6, 6-11, 12-20 etc.b) Changing family life: solvent, marriage, unemployedc) Geographic shifts: income, service facilities, locationd) Education: education level of the peoplee) Profession: different professional status of the peoplef) Increasing diversity: sub & cross culture, values2. The Economic Environment:a) Consumption: mass or liberal consumption orientedb) Income: earning pattern and density of the peoplec) Saving: saving tendency of people and governmentd) Debt and credit: internal and external debt and credite) Investment: trend of investment of the countryf) Employment: condition and opportunity of the countryg) Development & growth: stages and their trend

• 3. The Natural environment :a) Resource availability: gas, electricity, oil, mineralb) Limited raw material: limited resources, air pollutionc) Increased population: impact on environmentd) Govt. role: influence natural environment4. Technological Environment:a) Changes rapidly: technologies are changing very fastb) Innovation opportunities: huge scope to innovationc) Research budget: invest on research and developmentd) Quality: try to produce defect free product to customere) Regulation: technological control through regulation5. The Political and Legal Environment:a) Business regulation: have different business regulationb) Fiscal policies: different country have different policyc) Protect company: program in favor of the company

• 5. The Political and Legal Environment :d) Protect consumer: program in favor of the consumere) Protect society: program in favor of the societyf) Political situation: careful about political riskg) Government relationship: maintain lesion with govt.6. The Cultural Environment:a) Culture: society hold many value and beliefsb) Sub-culture: cultural segment within culturec) Cross-culture: combination of different sub-culture

People views of themselves:i) People views: people want to be with and serve othersii) Society: vary in their attitude toward their societyiii) Nature: vary in their attitude toward their natureiv) Universe: vary in their attitude toward their worldv) Organization: vary in their attitude toward corporation

• Self-Reference Criterion (SRC)Frame of Reference: one of the major barriers of international marketing; use of our personal knowledge,

experience, perception, values in selecting products.Difference between your perception, values, ideology and international marketer. British marketers prefer sex

appeal but it is not applicable in Bangladesh.Self-Reference Adjustment: there are no hard and fast rules but it may be minimized by the following:a) Internal analysis: define business objectives by the domestic culture and the domestic issues.b) External analysis: define business objectives by the foreign culture and the foreign issues.c) Identify distinguishing factors: identify distinguishing factors between domestic and foreign culture.d) Evaluate the factors: what will be the possible reactions, conflicts and feedback of distinguish factors.

• e) Formulate strategy:Formulate strategy: take some strategy to overcome and balance the distinguish situation.f) Self-reference: re-define the policy and strategy in respect of new culture for building frame of reference.Developing a Global Awareness:Build the awareness through the following:a) Potential knowledge: about culture, history, economics and other fundamental issue of the country.b) Tolerance: of cultural difference or ideologies that have huge impact on international marketing.c) Accepting: other behavior may difference form you; identify and try to accept them.d) Relationship: maintain strong relationship with international customer through marketing strategy.

• International Marketing Conceptsi) EPRG Model: this is a business philosophy or concept for international marketing.a) E = ethno-centric: our culture is the best, we are leaderb) P = poly-centric: consider different and multi-factorsc) R = region-centric: consider a region or subcultured) G = geo-centric: emphasis on universal or globalizationii) Market Concepts:a) Market Extension (ethno-centric): company tries to sell local product to the foreign countries; no change in

marketing mix. It is just exporting product.b) Multi-domestic market concept (poly-centric): company initiated different marketing program for different

countries; company need separate marketing strategy and program for different country.c) Global Market concepts (geo-centric): the company think whole world to be a single market. The company

needs global marketing strategy.• The Task Density

The task density: task of the international marketer is more difficult than that of the domestic marketer.1. Difficult trade pattern: policies and practices impose certain constraints and restrictions on international

trade.2. Regulatory measures: every country in the world aims at export more than its import; favorable trade

balance.3. Economic unions: negative aspect is the increasing tendency among nations to form of economic unions.4. National policy: achieve self-sufficiency in industrial production by developing necessary infrastructure.5. Procedural difficulties: different countries have evolved different procedures, practices and documents.6. Other problems: there are many other internal difficulties, consequently affect the foreign earnings.a) Inflation b) politics c) business ethic d) reputation

• World Wide Marketing OpportunitiesMarketing Opportunities: any prospect to begin operation must be evaluating multinational marketing

opportunities.a) Environmental opportunities: at first company has to identify what kind’s environmental opportunities he

has.

b) Market opportunities: company has to analysis about a) market potential b) existing market c) future market.

c) Future sales opportunities: what will be the prospects of future sales and prospective new sales areas?d) Competitive opportunities: what are the possibilities of its being a market leader and additional

advantages?e) Profit opportunities: what are the expected returns from the factors of production and other investment?f) Benefits opportunities: all benefits such as strength and weakness create positive opportunities.g) Risks opportunities: all risks such as opportunities and threats create negative opportunities.h) Strategic opportunities: perception of the customers and different strategies taken by the company.

• International Trade Theory: 01Inter-regional vs. International Trade: inter-regional trade is trade between difference regions within same

country; international trade is between different countries. Why a Separate Theory of International Trade?a) Mobility of factor of production: within country, labor and capital are more mobile than outside the

country.b) Natural endowments: some countries may have the particular natural resources like coal, oil, iron or land.c) Human capabilities: people in some countries are physically fit whereas in others intellectually superior.d) Political sovereignty: independent policies with respect to the movement of goods, wages, prices.e) Stock of capital: some countries possess large stock of capital goods like the UK and the USA.f) Currency system: different countries have different currency system and this create complexity.

• Why a Separate Theory of International Trade?g) Separate market: the British use right hand drive cars, whereas the French use left hand drive cars.h) Economic nationalism: striving for increasing consumption, income, saving, investment, production.i) Trade and exchange control: obstruct movement of goods and services from one country to another. j) Consumption behavior: consumption pattern is difference between one countries to another.k) Production balance: some countries have the high producing ability and need production balance.l) Exchange rate: to balance the exchange rate between one country to another country.m) Trade balance: maintain and develop smooth trade relationship among the different nations.

• 1) Absolute Cost Theory (Adam Smith)When one nation is more efficient than another in the Production of one commodities, he will produce that Product and export that product to the foreign countries. Country Labor Jute Wheat RatioBangladesh 10 40 20 2 : 1 India 10 20 40 1 : 2 Limitations:a) Labor is only elements of factor of production b) Absence of mobility of labor in international level.c) Cost of production is constant.d) Not consider transport costs.e) Based on free trade.f) Consider full employment.

• 2) Comparative Cost Advantages (David Ricardo)Even if one nation is less efficient than the other nation in the production of both commodities there will be trade based on comparative cost advantages.Country Labor Jute Wheat RatioBangladesh 10 40 40 1 : 1India 10 10 30 1 : 3 Criticism:a) Factors of production: labor is only element b) Labor factor: efficiency and cost of labor are samec) Constant cost: assumption of constant costd) Mobility of factors: is absence

e) No transport costs: ignore the transport cost.f) Free trade: ignores all trade barriersg) Emphasis on only supply: ignore demand factor h) Technology: the impact of technology is absencei) Specialization: complete specialization is difficult

• 2) Comparative Cost AdvantagesComparative cost with many goods:

• Bangladesh: Jute + Tea + Rice + Wheat + Cotton• Trade will be occurred according to the comparative cost of the many goods. First- jute, second- tea,

third- rice, fourth- wheat, fifth- cotton.Comparative cost with many countries:

• India (wheat) – Bangladesh (jute) --- Pakistan (cotton)• Trade will be occurred according to the comparative cost of the country. India can import jute from

Bangladesh and cotton from Pakistan.• 3) Theory of Opportunity Cost (Prof. Haberler)

Definition: the value of the next best use (or opportunity) for the economic good, or the value of the sacrificed alternatives is called opportunity cost.

Facts: according to Haberler, each country exports goods which it produces at lower opportunity cost and imports those with higher opportunity cost.

i) Increasing opportunity cost: when a country has an absolute cost advantages for a particular product then his opportunity cost gradually increasing.

#) When opportunity cost is more than unit.ii) Decreasing opportunity cost: when a country has no an absolute cost advantages for a particular product

then his opportunity cost gradually decreasing. #) Opportunity cost is less than unit.iii) Constant opportunity cost: when the opportunity cost unit is equal; sacrifice one unit, opportunity will be

one.

• Limitations of Opportunity Costi) Perfect mobility: all the elements of the factor of production is not absolute moveable.ii) No transport cost: in the modern business transport cost is one of the vital factor for price fixation.iii) Cost difference: in this theory there is no clear explanation about the price difference.iv) Full employment: this based on full employment but actually we cannot find full employment in economics.v) Value of proportion policy: it is based on value of proportion but very difficult to implement it.

• Business Customs and PracticesInternational Adaptation: willingness to adapt the business custom, practices, attitude of other countries.Guide to Adaptationa) Open tolerance: you have to accept the miss behavior of the people for the sake of business interest.b) Flexibility: to adapt with new culture, marketers should show their flexible attitude.c) Humility: polite and gentleness can win the world; it is not only for domestic but also for global business.d) Justice and fairness: avoid all kinds of fraud and cheating; maintain a basic principles and ethics.e) Adjustability to varying tempo: you have to adjust yourself with changing environment. f) Curiosity: show your interest and curiosity about the history, culture and tradition of the country.

• Guide to Adaptation:g) Knowledge of the country: different aspects of the country such as politic, legal, social or govt.h) Linking for others: maintain a strong relationship, identify their sensitive issues and do accordingly.i) Ability to commend respect: you must behave in such a way that other person must respect you.j) Integrated ability: adjusting ability with every situationsDegree of Adaptationa) Awareness level: if the awareness level of the people is very high then adaptation process will be first.b) Communication level: if the communication level of the people is very high then adaptation will be first.c) Education level: if the education level of the people is very high then adaptation process will be first.d) Personalization: if personal interest level of the people is very high then adaptation process will be first.

• Adaptation FormsBusiness customs can be grouped into three categoriesi) Cultural imperatives: are those business customs that are not avoidable. Friday is holiday.ii) Cultural electives: customs to which adaptation is helpful but not necessary. Offering tea or gifts.iii) Cultural exclusives: customs in which an outsider must not participate. A Christian attempting to act like a Muslim.Adaptation Aspects: Different methods of doing business or different aspects of adaptation in international marketing.1) Authority Level:a) Ownership: sole trade, joint venture, Joint Stock Company b) Size: small, average or large size of firm orientationc) Contract: person to contract or communicate firstd) Public accountability: level of public awareness

e) Cultural values: differ from culture to culture• 2. Authority Patterns

a) Top-level management decision: top authority take decision and direct control the business operation.b) Decentralized decision: it allow executives at different levels of mgt. to exercise authority over their own function.c) Committee decision: is by group or consensus. It may be operated on centralized or decentralized basis.3) Management Objectives: of the foreign delegatesa) Personal goal: American executive’s emphasis on salary; Bangladeshi executive’s emphasis on other benefits.b) Security: To American, security means financial benefits; To Bangladeshi, security means job security.c) Personal life: To Japanese, personal life means company life, Bangladesh, family life is personal life.d) Social acceptance: To Japanese, business executives have the high social status; opposite in Bangladesh.e) Power: To Japanese, Govt. people hold the high power; political people hold the high power in Bangladesh.

• 4) Communication: status in the foreign countrya) Internal communication: downward, upward, vertical, horizontal, formal or informal communication.b) Face to face communication: foreign marketers use translators; English is preferable by the British.c) E-communication: communication through e-media.4) P-time vs. M-timea) P-time: (poly-chronic): highly flexible and humanistic; human transaction is highly emphasis than work schedule, (may come from 8 to 12).b) M-time: (mono-chronic): not flexible and robotic; work schedule is highly emphasis than human transaction, (close at 8 pm).5. Formalities: in Japan, business formalities is very simple and dynamic; in Bangladesh, business formalities is very complex and traditional.6. Negotiation: it is the fundamental business rituals; the basic elements are the same in any country; they related to product, price, place, promotion or other business issues but terms and conditions are different.

• 7. Gender Bias It is a very sensitive issues in international marketing; against women managers that exists in some countries (Saudi Arabia); some countries are women dominated.8) Business Ethic: serious problems in international marketing; that which is commonly accepted as right in one country may be completely unacceptable in another. In many countries of the world gifts are accepted and in many countries gifts are not allowed.9. Bribery: In some culture bribe is crime and in some culture it is highly accepted; it is not only money matter but also have other forms.a) Bribery and Extortion:i) Bribery: willingly or voluntary offered payment by someone seeking unlawful advantages is bribe. Executives offer secretary for appointment.

• 9. Bribery:ii) Extortion: not willingly or pressurizes offered payment by someone seeking unlawful advantages is extortion. Secretary offer executives for giving permission.b) Lubrication and Subornationi) Lubrication: relatively small sum of cash or gifts or a service given to a low ranking officials in country where such offerings are not prohibited by low.ii) Subornation: large sum of money designed to enteric an official to commit an illegal act on behalf of the one offering the bribe.c) Agents fee: when a business person in uncertain of a country’s rules and regulations, an agent may be haired to represent the company in that country.

• Cultural Change: i) Borrowing: learn from other culture; our food habit, dress, have been change due to cultural borrowing.ii) Similarities: different language same culture (France- Canada), same language cultural difference (US-Inland).iii) Resistance to change: changes influence on values or ideology; now Bangladeshi people accept birth control.

iv) Cultural change agent: when marketers want to change a part of culture; three strategies for changesa) Planned change: free offering by company and they become habituated, tea offering by British company.b) Unplanned change: first identify the issue then offer the product; first food or mineral water accepted by people.c) Forced change: marketers take some aggressive marketing strategy, promotional appeal change culture.

• Changing Dimensions:a) Cultural variability: refers to the degree to which conditions within a culture are changing at a low or high and stable or unstable rate (fashion is very unstable). b) Cultural complexity: refers to the degree to which understanding within a culture is depend on information processing (convert from suspect to partners).c) Cultural hostility: refers to the degree to which conditions within a culture are threatening to organizational goal (acceptance by the stakeholder). d) Cultural heterogeneity: refers to the degree to which separate cultures are dissimilar or similar. Dissimilarity means company needs to take centralized decision. e) Cultural independency: refers to the degree to which conditions in one culture are sensitive to developments in other culture. It reduce subsidy, autonomy.

• Attitude Changes Strategiesa) Classical conditioning: a stimulus audience like such as music is consistently paired with the brand name. b) Advertising: use advertising appeal and slogan; bank for saving attitude “using a woman with ornaments”.c) Mere exposure: repetition is critical for affect-based campaigns, repetition can change the attitude.d) Change beliefs: American cars are not as well made as Japanese cars; about the performance of brand.e) Shift importance: more important than others; vegetables roles reduces the risk of heart disease.f) Add beliefs: add with beliefs structure; we are born to die; so, what is the harm of drinking beer. g) Change ideal: change the perception of people; change the perception about food habit or product use or brand.h) Group pressure: accept drink when offered by friend, some people use alcohol within group involvement.

• Attitude Changes Strategiesi) Social system: sometime we should avoid or accept the products or services by the new rules and regulations.j) Learning: coupons, free sampling or price reduction are common techniques for including trail behavior.k) Use of fear: fear can causes some people to change their attitude; target selling change attitude of salesman.l) Co-opting approach: customers are very much attached with a supervisor; he can influence customers.j) Creative program: through mass media such as talk shows in the television, open discussion change attitude.k) Word of caution: some word of caution such as highest production, stock limited, no smoking have impact.l) Information: provide new and informative information create confidence to the people and influence attitude.m) Persuasion: it is a common methods to change attitude of people; implement different motivational strategies.