Business Law in the Global Market Place: the effects on international business
A business might have partners and employees half a world away, and consumers can get products from those locations in a matter of days. Global marketing is more than simply selling a product internationally. Large businesses often have offices in the foreign countries they market to; but with the expansion of the Internet, even small companies can reach customers throughout the world. See also International Marketing. Even if a company chooses not to expand globally, it may well face domestic competition from foreign companies that are.
This competition has made it nearly a necessity for most businesses to establish an international presence. Global marketing is particularly important for products that have universal demand, such as food and automobiles. Thus a beverage company is likely to be in more markets than say, a wooden toy company; but even a wooden toy company may find niche markets in diverse corners of the world. However, even today most companies are focused on the domestic market which is the largest economy in the world , with only one percent of U.
Nevertheless, the value of U. For a non-American example of global marketing, consider Ahava , which started out as a tourist stand on the Dead Sea selling bottles of mud and salt from the renowned body of water. From this inauspicious start they developed a line of cosmetics, and after partnering with an American company that already has a global distribution network, their cosmetics are being sold in high-end department stores throughout the world.
A global company must be prepared to develop multiple profiles for each of the different regions it trades in. Depending on the product, customers can be reached nearly anywhere in the world. In order to do so, global companies may rely on local distribution networks; but as they grow in particular markets, they may establish their own networks. Companies attempting to enter new markets tend to start with heavily populated urban centers, before moving out to surrounding regions.
Morgan, in a report for the Department of Commerce, estimated that only 27 percent of online shoppers speak English. Nonetheless, in Korea, 99 percent of those with Internet access shop online; in Germany and Japan, 97 percent. Thus, companies who wish to break into those markets need to not only create a good product and do what works stateside; they also need to immerse themselves in the language and culture of the international market they wish to break into.
See also E-Commerce Marketing. When marketing products globally, companies must recognize that a marketing mix that works in the domestic market may not have the same success in another market. Differences in local competition may require a different pricing strategy. In some cases, it may be more profitable to produce things locally; in others, it may be cheaper to ship them in from across the globe.
Partnerships with local businesses may be an important step in expanding into one market; while in another market, such partnerships might dilute the brand See also Local Marketing. The savvy global marketer must consider all these aspects of marketing in addition to the task of communicating cross-culturally. When promoting a product or brand globally, a company must make decisions regarding trade-offs between standard and local messages.
A single message is cheaper to produce and maintains the consistency of the brand; but it may not perform well in some regions due to differences in cultural values or expectations. A global company must carefully research the various markets, and prepare to make adjustments to its product and messaging wherever required. Sometimes it even involves changing the packaging in America, Gerber baby food has a cute baby on the label to represent the brand, but in some countries shoppers expect the picture to represent the contents of the jar, and were appalled by the image.
For example, how do you evaluate the work of someone who has translated your company website? Is it a meaningful translation, or just full of buzz words? Additionally, marketers should personally visit their target markets, and spend time in them—even moving to them for a time. Here they can develop local contacts, as well as gain a deeper understanding about how business is conducted in the area.
In Japan, for example, it is not enough just to speak Japanese; you must also conduct business the Japanese way. Learn what is valued culturally—and what is offensive.watch
While price setting and payment methods are major considerations, currency rate fluctuation is one of the most challenging international business problems to navigate. Monitoring exchange rates must therefore be a central part of the strategy for all international businesses. However, global economic volatility can make forecasting profit especially difficult, particularly when rates fluctuate at unpredictable levels.
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Major fluctuations can seriously impact the balance of business expenses and profit. For instance, if your company is paying suppliers and production costs in U. This may mean switching to more local production where possible in order to better balance your outgoings and sales revenue. Another option for mitigating the risk of unpredictable currency rates can be setting up a forward contract and agreeing a price in advance for future sales.
Of course, this potentially means missing out on greater profit should rates shift in your favor. However, it can protect your sales from the risk presented by unstable currency. The potential of online sales presents a huge international business opportunity for retailers in the 21st century, but finding reliable, fast, and cost-effective shipment and distribution methods can be a difficult balance in some markets.
Depending on the volume and destination of your shipments, will you send by land, sea, air, or a combination? Your choice of shipping method can be a major influence on your revenue and may be a limiting factor to the products you can viably sell overseas. There are also country-specific regulations and shipping requirements to take into account. For a quick check of costs and compliance, UPS International has created an online tool called TradeAbility to help businesses and individuals manage the movement of good overseas.
Good communication is at the heart of effective international business strategy. However, communicating across cultures can be a very real challenge. At Hult, developing cross-cultural competency and communication skills are a core focus inside and outside of the classroom. Effective communication with colleagues, clients, and customers abroad is essential for success in international business.
Do your research and know how different cultural values and norms — such as shaking hands — can and should influence the way you communicate in a professional context. Being aware of acceptable business etiquette abroad , and how things like religious and cultural traditions can influence this, will help you to better navigate potential communication problems in international business.
Discover the subtle nuances of body language for different countries and nationalities you may be doing business with:. Source: BusinessInsider. It helped me gain perspective towards people from different countries such that I can go to any country and start working without any culture shock. Cultural differences can also influence market demand for your product or service. The need your business may address at home may already be met or not exist at all overseas. For instance, American coffee company Starbucks seriously struggled in Australia , where the demand for local, independent cafes and coffee shops vastly outweighed the appeal of the corporate giant.
Small practical considerations can also be easily overlooked, such as creating quality translations of product and marketing materials, and even ensuring your brand name works well abroad. A number of well-known companies have had to consider adapting the names of their brand or product when launching in a foreign market. An obvious risk for international business is political uncertainty and instability.
Countries and emerging markets that may offer considerable opportunities for expanding global businesses may also pose challenges, which more established markets do not.
Before considering expansion into a new or unknown market, a risk assessment of the economic and political landscape is critical. Issues such as ill-defined or unstable policies and corrupt practices can be hugely problematic in emerging markets. Changes in governments can bring changes in policy, regulations, and interest rates that can prove damaging to foreign business and investment. A growing trend towards economic nationalism also makes the current global political landscape potentially hostile towards international businesses.
For instance, companies like Facebook are banned in China , partially in preference for national social networks and also due to government regulation over internet content. Monitoring political developments and planning accordingly can mitigate political risks of doing business abroad. When it comes to sourcing products and services from overseas, managing suppliers and supply chains can also be a tricky process.
Unfortunately, the length and complexity of supply chains increases the chance of working with suppliers who have unethical — and even illegal — business practices. Of growing concern is the risk in international business of forced labor and worker exploitation.
To raise awareness and help local and international businesses respond more effectively to this issue, their published research report presents case studies of businesses who have implemented practices at the leading edge of the fight against modern slavery. As the research team continues to bring their findings to light, developing and supporting ethical and sustainable business practices remains a focus in the Hult classroom. Businesses can play an important role in addressing modern slavery.
As the environmental risks and effects of climate change are becoming better understood, sustainability is high on the agenda of many major global corporations. The Ashridge Centre for Business and Sustainability at Hult researches innovative ways that organizations can develop and implement more environmentally sustainable business models.
Some key considerations include how your production methods might impact the local environment through waste and pollution. Beyond a legal or ethical incentive to be more eco-friendly, establishing environmentally conscious business practices can attract new, forward-thinking consumers to your company.
With a number of brands such as Dell , Renault , and MUD Jeans leading a shift towards the circular economy , there is an opportunity and demand for changing production methods and consumer behavior to establish a more sustainable future for the environment and society as a whole. In the video below, Dr. Mark Esposito discuss the global business and societal benefits of the circular economy:.
As we see what the first months of the new year will bring for international business, new opportunities, challenges, and uncertainties will continue to arise. How are you preparing to make the most of the opportunities of doing business overseas in ?
Comment below on any further issues or challenges and how your organization is overcoming them. Want to learn more? Make the most of what your career has to offer with a Masters in International Business from Hult. Download a brochure or get in touch today to find out how Hult can help you to explore everything about the business world, the future, and yourself.
Blog Post. Katie Reynolds , 3 years ago 2 14 min read. Foreign laws and regulations Along with getting your company structure in place, gaining a comprehensive understanding of the local laws and regulations governing your target markets is key. International accounting Of the main legal areas to consider when it comes to doing international business, tax compliance is perhaps the most crucial. Cost calculation and global pricing strategy Setting the price for your products and services can present challenges when doing business overseas and should be another major consideration of your strategy.