Political and Economic Factors Affecting International Business - Case Study Example

Marketing Name Institution Tutor Date Executive Summary This paper is on marketing in international business operations specifically for the automobile industry in United Kingdom. Issues affecting international marketing are both internal and external to the organization. Internal factors include size and capacity of the organization and realignments due to foreign policies and regulations. External factors influencing marketing are mostly political, legal barriers and consumer trends. Marketing is a major part of a global business to be able to get the necessary customers for its products. The paper comprehensively handles the factors affecting marketing at global level. Introduction Marketing is an activity that sets institutions and processes to create communications, delivery, and exchange of offerings that are valuable to the clients, customers, partners, and the society. Businesses do marketing to create value for customers and establish strong relationships in order to capture value from the clients. Depending on the business marketing, intend to create value for either long term or short- term targets in relation to building brands of company or organizations. The major strategy for marketing underpinned in the need to enhance sales, business communications and develop the entity. The major root of marketing is identification of the customer, offer the customer satisfaction, and keep the customer. A successful marketing strategy has a shift from production to the perceived needs of the customers ensuring the business stays profitable. The concept of effective marketing requires the knowledge of target market and their desires. This is hard to meet when dealing with international markets due to the difference in market environments. The business has to anticipate the needs and preferences of the market ensuring they provide better products than their competitors do. This will enable businesses to meet the target of marketing in manner that is sustainable and favorable to management (Thesis, 2005). Operating business at an international level is not a new factor in the world of trade. Worlds large companies like Microsoft and Coca-Cola have had successful international presence in profits and customer base. This is because of high quality products and largely to massive and effective marketing of their products in a manner that does not infringe on their profitability. There has been advancement in technology and communication making the international business market to be volatile and subject to changes. The changes lead to great shift in market holdings and competition complexities. In the past 50 years international business was not facing a lot of difficulty in recruiting and establishing presence because communication was not very high to support flow of information. Presently the business world has many obstacles to monopoly due to technology hence the flow of information makes clients to have a lot options due to digital marketing. Technology has enabled competitors to be able to respond fast to issues of competitions .The-purchasing patterns of customers have also changed with new trends taking up. Invention of online shopping and trading has brought a lot of marketing shift for international business suppliers and operators. Customers prefer greater convenience and more choices (Hanke, 1998). Scope and challenges of international marketing International marketing generally deals with performance of businesses outside their national borders. The challenges to international marketing in the automobile industry are not just the obstacles of environment but also ethnocentrism and our self-reference criterion. There are numerous issues of the environment, which are unchangeable by international business ventures. Factors like trade laws, political good will, and the cultures of the people cannot be influence by global marketers. They pose great barriers to economic operations of global business negating operations and compromising profitability. Automobile companies in the UK Automobile producers from all over the world play and define the market of UK .Over the years there has been cooperation and integration of manufacturers which has lead to development of powerful groups controlling the car market .The major players are form America ,Japan ,Korea ,Germany ,France and the up. Having introduced over 15 million, cars in production the American production are the second largest producers in the world. They are the traditional producers of the big three; GM, Ford and Daimler Chrysler. Producers from France supply 25% of the European market hence are the second largest producers. The producers are producing cars from good technology, impressive pricing and extraordinary designs. Their main car products are Renault, Peugeot, and Citroën. Germany is traditional car producers being the home of Benz and diesel engine. Their main cars are Volkswagen, Damien Chrysler and BMW .Japanese started car production 30 years later than the Europeans and the Americans. Japanese production has increased tremendously over the years and they are producers of Honda, Toyota, Mitsubishi, Subaru, Mazda, Suzuki, and Nissan. The Japanese firms have grown and the largest of them all present is Toyota, which is found all over Europe and world over. Toyota is not only establishing its position in Europe but also in America. It is reported that the main reason for their success is a combination of competitive prices and up to date technology. The car producers in UK are also a celebrated group in UK having been successful in producing racing cars and upper class cars like Bentley, Roll Royce, Jaguar, and Rover (David, 2004). Marketing of Honda in the UK Honda has been producing a wide variety of engines for the international business market. Their products range from small general purpose engines with a specialty in sport engines and cars. The company has its base in Japan and uses the slogan” the power of dreams” as its positioning statement. The mainstream companies have been playing a major part in the automobile market in UK. Internal factors influencing the auto market in UK The country is base of many auto manufacturers from different parts of the world. It therefore offers a lucrative market for the industry making it to be premium market for the manufacturers of different companies to compete for it. The internal factors affecting sales and marketing include promotion, brand image, advertising, quality, innovation, and technology applied by the company. Companies who apply the factors comprehensively overcome the complications and have a higher competitive advantage .Toyota has applied technology to its products and made policies ensuring quality and fair price. These combinations of factors have made the company to counter barriers in its marketing strategy in international automobile market. External factors affecting sales and marketing in International Business Organizational issues due to change in environment The organizational issues will be a combination of strengths and weaknesses of the company in relation to the environment. The major organizational issues of automobile industry are size and capacity. The size will be determined by the number of employees hence its man power which will in turn reflect on its ability to compete with others in the market. Large companies undergo changes slowly at compared to the smaller ones .The recent recession hit big companies like VW and Chrysler in the UK but smaller ones like Benz adapt fast and do not get hit much However, exceptions are for companies like Toyota. Toyota is the £rd largest automobile company in the world but was not hit by the recession much because Japanese companies are flexible to changes in the environment (Castro, 2010). Market effects These are factors affecting the company and develop from microenvironments. The effects originate from all the stakeholders in the market ranging from customers, competitors, and suppliers. There is a high level of competition in the Market from high car importation from Japan and Korea. The Japanese and Korean suppliers are the major threats since they supply vehicles at a lower price yet they are efficient and at lower prices. The United Kingdom car manufacturers and other suppliers have to work hard to regain the confidence necessary to stabilize the market. However, there has been development of barriers to the industry by the country to protect its companies through legislations like higher import tax. Saturation The most crucial problem facing car marketing in the European market is saturation. There are many suppliers and car manufacturers in Europe coupled with recession the market has been facing dwindling sales over the past decade. This has lead to launching of new vehicles and negotiation of prices to attempt recovery of the industry. Political Influence and development of Economy Political and legal forces have influence on the marketing strategy taken by automobile industry. Political conditions shape the mode of decisions and directions taken by the industry. In cases where the company is in close understanding with the political bodies then its operations are protected but in cases where there are conflicts of interest, the operations undergo a lot of turbulence and barriers. These issues have massive influence on policies developed and the actions by government both at local and international level. The effects of supply and demand in the economy of UK have a lot of influence on the purchasing of cars in the country. During the recession there were cases of retrenchment and unemployment in the UK, this leads to low spending and has negative influence on the purchase of cars in the country (Evans, 2004). Consumer behavior and socio cultural effects This has had an effect on the car producers in Europe and UK due to the change in the population profile .There has been a shift in cultural movement, behavior of consumers and social responsibilities. Consumer behavior has effects on the purchasing of products and has had a massive change in the marketing strategies in the UK automobile industry. Conclusion Numerous issues in relation to their marketing attempts face firms in international business. The issues are both internal and external factors. Some are because of the need by organizations in international business to realign their marketing and operational strategies and some are because of external factors of the environment. Automobile marketing in the UK face changes in consumer behavior and cultural effects, Political influences and development of the economy, saturation of the market, organizational issues due to change of environment. These issues have massive influence on operations of companies. Bibliography Castro, J. (2010). Political and Economic FactorsAffecting International Business. Managing International Financial Risks . http://www.dpcdsb.org/NR/rdonlyres/0535EFD9 639D-4D95 B7AA-461E34742340/68683/Chapter_94_NOTES1.pdf David, J. (2004). Principles and Practice of Marketing (4th ed.). McGraw Hill. Evans, P. (2004). The Changing Culture of European Car Industry. European Political Issues Hanke, B. (1998). Industrial Restructuring and Industrial Relationship in European Car Industry.https://studentservices.ebsglobal.net/studentserviceopen/synopsis/pdfs/h17ik ik-a3-1 2009.pdf Thesis. (2005). factors Affecting Sales of Automobiles in Europe. Nottingham City: University of Nottingham Business School. http://www.grin.com/en/e book/111658/factors-affecting-sales-of-the-automotive-industry-in-europe Read More