Political Environment Of International Marketing example essay topic

Introduction Liberi sation in India provides enormous opportunities for western firms. India has a relatively well-developed infrastructure, distribution channels and a well-trained and educated workforce "After decades of isolation and restrictions on FDI, in 1991, India opened its economy to foreign firms and investors. The government and local businessmen were convinced that the Indian economy must be integrated into the rest of the world" (Cavusgil, Ghauri, Agarwal, 2002) This assignment is going to investigate the social, legal, economic, political and technological factors that affect the Indian market place in order to give a brief analysis of the current situation to Anoadon Plc, a company that wishes to expand its operations to India. Furthermore, an analysis of various market entry strategies will follow with a selection of the best fit to the specific company provided with a rational for the selection.

And finally, an analysis of the most appropriate marketing communications will be made, identifying the key ones that Anoadon can use in order to gain awareness and competitive advantage over its rivals. SLEPT Analysis Social & Cultural Factors Social factors and culture are particularly important, since language differences, literacy, the level of education and religion have to be incorporated into market activities. "Cultural differences and especially language differences have a significant impact on the way a product may be used in a market, each brand name and the advertising campaign" (Doole and Lowe). By the 19th century, Britain has assumed political control of virtually all-Indian lands. Non-violent resistance to British colonialism under Mo chandas Gandhi and Jawaharlal Nehru led to interdependence in 1947. There is a variety of different ethnic groups, such as the Indo-Aryan, Dravidian, mongoloid and other.

In the case of India, the language barrier is not a big issue since it was a British colony for many decades so most of the Indian population knows how to communicate in English. This means that Anoadon will not face a significant difficulty when it comes to the language issue. "In India the English language enjoys associate status but is the most important language for national, political and commercial communication. Hindi is the national language and primary tongue of 30% of the people, there are 14 other official languages". (CIA World Fact Book) Because of the British colonialism over the country the British culture has left some of its marks in the Indian culture. This fact has probably an important impact of the product acceptance because there are strong ties between these two countries.

British products or services operating in the Indian territory may be accepted more easily compared to other products or services coming from different parts of the world. "To operate effectively in different counties requires recognition that there may be considerable differences in the different regions. At the stage of early internationalisation it is not unusual for western firms to experience what appear to be cultural gaps with their counterparts in Asian countries". (Doole and Lowe) On the other hand, in Asia there is evidence both for the westernization of tastes and assertion of ethnic, religious and cultural differences. These differences do not necessarily constitute unbridgeable cultural chasms in all sectors of society. Instead there are trends towards similarities both in cultures and outlooks of consumers.

Legal Factors Legal systems vary both in content and interpretation. A company is not just bound by the laws of each home country, but also by those of each host country and by the growing body of international law. Product acceptability in a country can be affected by minor regulations on such things as packaging and by more major changes in legislation. The legal environment in international marketing is more complicated than domestic since it has three dimensions: a) local domestic law, b) international law and c) domestic laws in the firms' home base. "India has been seen by many firms to be an attractive emerging market beset with many legal difficulties, bureaucratic delay and lots of red tape.

Political squabbles, bureaucratic delays, infrastructure headaches and unprofessional business practices create one obstacle after another. Companies are often viewed with suspicion". (Doole and Lowe) Legal factors concerning the product are product labeling and liability. India has established a number of labeling requirements that should follow a product in order to be accepted in the country. All product labels must be printed in English, Hindi or Devnagri and provide the following information.

"Firstly, the name and address of the manufacturer, importer, vendor or packer followed by the name, trade name or description of the product. Furthermore, a list of ingredients in descending order of composition by weight or volume should be included. Additionally, the net weight, number or volume of contents and a distinctive batch and code number. The month and the year that the product was manufactured or packed should also be mentioned". (web) These are some of the labeling requirements that Anoadon should be aware so as to be able to operate appropriately in the Indian market.

Economical Factors The economic environment is substantially important for successful marketing operations factors such as the purchasing power per capita, inflation and currency fluctuation have to be considered in marketing planning as well as the maturity of the infrastructure. India has all the attributes to be a 21st century superpower. Robust democracy, a burgeoning economy, international interests and global aspirations. India is becoming increasingly important in the global economic arena- it is the world's' 4th largest economy in purchasing power party ( ) terms and is a founding member of the WTO. "Furthermore, it is amongst the worlds' top five fastest growing economies, with real GDP growth at around 5, 5% for the past few years. The economy is gradually opening up with foreign trade increasing from 17% of GDP in 1991 to 30, 6% of GDP in 2001.

Additionally, India's substantial potential (a middle class which could eventually total 200 million people) makes it an attractive destination for FDI in a variety of sectors in manufacturing as well as services, which generates over half of India's output. Abilities of Indian entrepreneurs and technical specialists give the country a head start in the knowledge-based world economy" (web) India's economies encompass traditional village farming, modern agriculture, a wide range of modern industries and multitude of support services. "Government controls have been reduced on imports and foreign investment, and privatisation of domestic output has proceeded slowly". (web) As it has been mentioned, India is a rapidly development market that provides opportunities for UK companies' goods and services. India is the UK's 17th largest export market. Some of the benefits for a UK company to open up its business in India are the following: "Firstly, India's economy is one of the fastest growing in the world. Secondly, exports from the UK have risen to two billion pounds a year.

Furthermore, cumulative UK investment stands around three billion pounds. Additionally, tariff and trade barriers are fast disappearing and finally, there is an open, positive attitude to business, a substantial and growing market for imported goods and services". (web) It is important that the international marketer has an understanding of economic developments and how they impinge on the marketing strategy. This understanding is important at a world level in terms of the world-trading infrastructure, such as world institutions and trade agreements. Firms need to be aware of the economic policies of countries and the direction in which a particular market is developing economically in order to make assessment, as to whether they can profitably satisfy market demand and compete with firms already in the market. In countries such as India, there is a huge and growing demand for everything.

Many of the countries that were seen only a few years ago as 'lesser developed countries' have shown considerable economic advancement. In these emerging markets, India in particular, there is an evolving pattern of government directed economic reforms, lowering of restrictions of foreign investment and increasing privatisation of state-owned monopolies. All these herald significant opportunities for the international marketing firm. Political Environment "The political environment of international marketing includes any national or international political factor that can affect the organisation's operations or its decision making. Politics are intrinsically linked to a government's attitude to a business and the freedom within which it allows firms to operate" (Doole and Lowe). The tendencies of governments to transform the existing regulations can severely affect an international strategy providing both threats and opportunities.

"Indo-British political trade and investment links continue to flourish. Both nations play a positive and active role in world affairs and co-operate on international level. Britain is working with India to achieve a permanent seat on the UN Security Council" (web). Furthermore, UK-India bilateral trade has grown by nearly 70% since the Indo-British partnership was formed in 1993.

The two-way trade flow touched almost 5 billion pounds in 2001. Indo-British partnership stretches from trade, investment and environment through reforming international finance, development and technology. "The developing countries, such as India, must reduce tariffs. High tariffs was the reason for low Foreign Direct Investment in India.

Tariffs affect competitiveness of an industry and abolishing all tariff and non-tariff barriers would be advantageous to India (and to other developing countries) (web) "If the WTO remained like a club, it would not be of benefit to many countries. Procedures within the WTO must be reconstructed to make the forum more inclusive and effective. On the issue of linking trade and labour standards, the UK appreciated the Indian concern that economic circumstances in all countries were different, and no country had the right to impose moralistic judgements" (web). Risks emerge as companies from the emerging countries start to compete internationally. "Political risk is defined as being a risk due to a sudden or gradual change in a local political environment that is disadvantageous to foreign firms and markets" (Doole & Lowe). Investment restrictions are a common way governments interfere politically in international markets by restricting levels of investment, location of facilities, choice of local partners and ownership percentage.

That was the case in India a few years ago but now governmental intervention is becoming less and less". Go bally, trade agreements have been making consistent progress over the last forty years. The WTO has led to a series of worldwide agreements which have expanded quotas, reduced tariffs and introduced a number of innovative measures to encourage trade amongst countries" (Doole & Lowe). Technological Environment "Technology is a major driving force both in international marketing and more towards a more global marketplace.

The impact of technological advances can be seen in all aspect of the marketing process" (Doole & Lowe). Satellite communications, the Internet and the World Wide Web, client server technologies, ISDN, cable as well as e-mail, faxes and advanced telephone network have all led to dramatic shrinkage's in worldwide communications. IT is one of the fastest growing sector in India registering an average annual growth of 50%. About 25% of Fortune 1000 companies outsource from India. Furthermore, Telecom industry is today the most rapidly growing infrastructure sector in India growing at an annual rate of 23%.

India is expected to be one of the fastest growing telecom markets by 2006 (web)

Bibliography

Books O Cavusgil S T, Ghauri N P, Agarwal R M (2002) "Doing Business In Emerging Markets: Entry and Negotiation Strategies", SAGE Publications O Czinkota M R & Roy kaine I A (2001) "International Marketing", 6th edition, Harcourt College Publishers O Doole & Lowe (2001) "International Marketing Strategy: Analysis, Development and Implementation", 3rd edition, Thomson Learning O Johnson & Scholes (1999) "Exploring Corporate Strategy", 5th edition, FT / Prentice Hall O Keegan J W, green C M (1997) "Principles of Global Marketing", Prentice Hall O Kotler P (1999) " Kotler on Marketing: How to Create, Win and Dominate Markets", The Free Press Internet O web O web O web O web O web O web O web O web O web O web O web Journals O Anonymous (Apr 2002) "Foreign Players to Ride Asian Dragons", Asian Business, Hong Kong O Guru murthy R (Aug 1999) "The Chicken or The Egg?" , Asian Business, Hong Kong.