An international marketer needs to get informed about the foreign countries’ environments that may or will affect the business in any ways, positively or negatively. Some of the key aspects of a foreign market environment that may affect international marketer’s business are:-
• Political Context: National leaders and governments, ideologies of the foreign political institutions and leaders, key institutions in forming and implementing regulations.
• Economic Growth Prospects: Level of economic affluence, level and extent of industrialization, business cycle stage.
• Per capita income levels, purchasing power of the population, disposable incomes.
• End-user industry growths trends, industrial demands are mostly derived demands and industrial buyers by materials and machinery to fulfill the end user demands.
• Government: Political and business orientation, legislation, regulation, standards, barriers to trade.
Political Risks in International Markets
The political risks in international markets are as follows;
1. Direct interference in a foreign company’s business – expropriation, confiscation, nationalization
2. Campaigns against foreign goods (from governments or people / public)
3. Kidnappings, terrorist threats and other forms of violence targeted against foreign firms or foreigners.
4. Civil wars have the potential to disrupt businesses in many foreign countries
5. Change in policies, regulations – too often and non-consistent – affect businesses in any country
6. Change in governments may also result into changing national priorities
7. Monetary and fiscal policies – inflation, currency devaluation, increased taxation, and currency controls etc.
8. Government as business competitor – when government becomes involved in a business in its own country, then it may become a formidable competitor
Legal Aspects in International Markets
The legal aspects in international markets are as follows;
1. Laws concerning employment and labor affect managing of workforce in international markets.
2. Different laws in foreign countries regulate financing or operations by foreigners.
3. Various countries around the world have different laws concerning marketing of products, especially food products, pharmaceuticals, hazardous materials and strategic products to a nation.
4. Countries also control and regulate developing and utilizing of technologies through various laws and regulations.
5. Many countries also have different laws and regulations that affect ownership of businesses by foreigners.
6. Countries also regulate / restrict remittances to foreign countries and repatriation of profits.
7. Some countries regulate closing of operations and in some countries businesses are not allowed to close shops especially when they have sold products that have guarantees and warranties.
8. Various countries around the world have implemented different trade and investment regulations.
9. Countries also have their own taxation requirements, systems and laws.
10. Legal environments of countries vary that also affect dispute resolution situations and contractual relationships.
Economical factor in International Markets
The factors influencing the state of economy are;
1. Capital controls on any foreign currency would often work to increase its exchange rates
2. Strong balance of payments statistics of any country affect that country’s currency to strengthen.
3. Higher foreign-exchange reserves of any country influence the currency of that country to appreciate in value
4. Government spending increases the money in circulation and also affects growth to certain sectors of a country’s economy
5. Large money-supply growth increases inflation and accordingly affects the value of a country’s currency
6. Technical factors (seasonal, release of statistical data) also affect exchange rates in near-term.