A Presentation given for the students of MSC Food Technology for the course of Business Management and International Trade

1. S.Thiruchenduran
MSC FT
Post Graduate and Research Center
PJTSAU
Hyderabad

5. Questions?
 Why these differences in Trades?
 How many State Visits does Office
bearing PM of India HE Narendra Modi
had?

6.  9
 5of them are Asian countries.
“Neighborhood first and act
east policy”
 2015 Jan Sri Lanka

7.  Introduction
 International Marketing Environment
 Importance of IME in Business
Management
 WTO in IME
 Summary

9. Introduction
 “Global village“, “World economy“,
“Globalization” fashionable terms.
 These terms talk about a new market place
 World Economic growth renders every
corner of the earth as a potential market
 Goods and service 4 trillion $ (WTO,2013)
 Marketing goods and services on a global
scale can happen in an "engineered" way.
 Fruit Pulp from Denmark, Processed and
Packed in Sri Lanka , Exported to India under
ISFTA by an Indian company.

11. Understanding the IME
important in…
 Identify Customer Values
 Communicate Values
 Deliver Values
 Capture Values

13. Definition IME
 The international marketing environment
is a complex constellation of demands
and constraints which the firm faces as it
attempts to compete and grow in an
international arena. (Matino Gogolova,
2008)
 All the Factors effecting the International
Business in an International Market
Place are called International Marketing
Environment

14. Elements of the IME
7
Political/legal
forces
Economic
forces
1
2
Environmental
uncontrollables
country market A
Competitive
structure Competitive
Forces
Level of
Technology
Price Product
Promotion Channels of
distribution
Geography
and
Infrastructure
Foreign environment
(uncontrollable)
Structure of
distribution
Economic climate
Cultural
forces
3
4
5
6
7
Political/
legal
forces
Domestic environment
(uncontrollable)
(controllable)

15. Internal environment status
Corporate Culture
Staff Relationships
Resource Constraints
Internal
Environment
Behavior
in
dealing
with the
environm
ent

16. Internal Environment (5M)
 Management (Leadership)
 Man(Human Resource)
 Machine(Technological Advances)
 Material(Resources)
 Money(Financial Resources)

17. External Environment
 Micro
 Customer, Competitor, Supplier,
Intermediaries, Public
 Macro
 PEST-LEED

18. Micro Environment
 Micro environment is much closer to the
marketer than the macro environment
 It directly deals with the operational
environment
 It comprises of
○ Suppliers
○ Intermediaries
○ Competitors- Direct and Indirect
○ Customers of a business/marketer
○ Publics

19. Operational/ Micro Environment
Micro Environment
Intermediaries
Competitors
Suppliers
Customers
Publics

20. Macro (External)
Environment
 External environment is the elements in
the periphery of the business.
 These elements are in the larger picture
and the marketer has no control over
them

21. External Environment (PEST-
LEED)
 Political Environment
 Economic Environment
 Socio-Cultural Environment
 Technological Environment
 Legal Environment
 Ecological Environment
 Ethical Environment
 Demographic Environment

23. Economic Environment
 Important element of all
 “With money everything is possible(well
most of the things)” – For the marketer
 World Economic growth renders every
corner of the earth as a potential market

24. Changes of International
Economic Environment
 Capital movements rather than trade have become
the driving force of the world economy.
○ Goods and service 4 trillion $ (WTO,2013)
○ but London FOREX EUR/USD 400 billion$ each day world
wide 250 trillion $ per year
 The world economy dominates the scene. The
macroeconomics of individual countries no longer
control economic outcomes.
 The real secret of the economic success of Germany and
Japan is the fact that business leaders and policy makers
focus on the world economy and world markets; a top
priority for government and business in both Japan and
Germany has been their competitive position in the world
 The growth of commerce via the Internet diminishes
the importance of national

25. Economic System
 Market Economy
 Consumers “write” the economic plan by
deciding what will be produced by whom. The
market system is an economic democracy—
citizens have the right to vote with their vallets
for the goods of their choice.
 The role of the state in a market economy is to
promote competition and ensure consumer
protection.
 The United States, most Western European
countries, and Japan-the triad countries that
account for three quarters of gross world
product-are examples of predominantly market
economies.

26. Economic System
 Command Economy
 The state has broad powers to serve the
public interest. These include deciding which
products to make and how to make them.
Consumers are free to spend their money
on what is available, but decisions about
what is produced and, therefore, what is
available are made’ by state planners.
Because demand exceeds supply, the
elements of the marketing mix are not used
as strategic variables. Earlier USSR India
and China. Cuba

27. Economic System
 Mixed
 There are, in reality, no pure market or
command allocation systems among the
world’s economies. All market systems have
a command sector, ‘and all command
systems have a market sector; in other
words, they are “mixed.”
 32% of GDP in the United States Planned
Allocation
 64% in Sweden

28. Development stages of
Market
 GNP is used to categories markets in IME
 Low Income Countries
 less than $786 per capita
 37 percent of the world population but less than 3
percent of world GNP (Rich get Richer, Poor gets
Poor)
 Limited industrialization and a high percentage of the
population engaged in agriculture and subsistence
farming
 High birthrates
 Low literacy rates
 Heavy reliance on foreign aid
 Political instability and unrest

29. Development stages of
Market
 Concentration in Africa, south of the Sahara
 Bangladesh, GNP per capita is $366 (Cheap
labour)
 LIRNEasia – Learning Initiative (2007), Pro Poor
(2014)
 Lower Middle Income Countries
 More than $786 and less than’ $3,125,
39percent of the world population but only 11
percent of world GNP.
 These countries are at the early stages of
industrialization.
 Indonesia, Sri Lanka

30. Development stages of
Market
 Upper Middle Income Countries
 Industrializing countries
 Between $3,126 and $9,6$5
 Most of the Countries
 Malaysia – “Truly Asia”

31. Development stages of
Market
 High Income Countries
 Advanced, industrialized, postindustrial,
 GNP per capita above $9,655
 16 percent of world population but 82 percent of
world GNP.
 Basket cases
 A basket case is a country with economic, social,
and political problems that are so serious they make
the country unattractive for investment and
operations.
 Ethiopia, Mozambique
 Civil struggles, Terrorist prone,
 What you will market to Basket Countries?

32. Income and PPP in IME
 A market can be also defined as a group of people willing
and able to buy a particular product.
 For some products, particularly those that have a very low
unit cost - cigarettes, for example population is a more
valuable predictor of market potential than income.
 For the vast range of industrial and consumer products in
international markets today, the single most valuable and
important indicator of potential is income.
 The per capita GNP for Brazil and Chile are similar,
$4,986 and $5,822, respectively. However, the PPP per
capita GNP is quite different, $5,536 and $12,035,
respectively. The typical” consumer in Chile has more
than twice the purchasing power than the Brazilian
consumer.

33. Economic Reality
 Wealth and income are concentrated
regionally, nationally, and within nations.
The implications of this reality. Are
crucial for the global marketer. A
company that decides to diversify
geographically can accomplish this
objective by establishing operations in a
handful of national markets.

34. Economic Reality

35. Location of Population With
high PPP
 The 10 most populous countries in the
world accounted for 59 percent of world
income, and the 5 largest accounted for
48 percent.
 US, Japan, Russian Federation, China,
India.

36. GDP
 A general quick indicator of Economic
Environment
 India 1870bn$ China 9181 bn$ (WTO, 2013)
 Can be misleading.
 What is the nation which almost doubled it’s
GDP in one night?
 How?

37. Answer
 Nigeria
 2014 GDP is 509bn $
 By shifting the base year from 1990 to
2010.

38. Results
 Africa’s Largest Economy
 World #26
 Inflow of Investments
 Nestle, Heiniken, Standard Bank, MTB
Ngozi Okonjo-Iweala

39. Other Economic environment
Indices
 Currency floating (Open/fixed) issue.
 Balance of Payment (BOP) status
 Economy base (Import/Export).
 Rate of Economic Growth.
 Occupational Pattern.
 State of Inflation.
 Trade Patterns

41. International Trading
Environment – Barriers
 Tariffs
 Duties imposed when goods or services
cross the border
 Non-Tarrifs
 Developing Countries - Licensing, Quotas
 Developed Countries – Voluntary export
restrains

42. Quota
 Export Quota (Protect Local consumer),
Import Quota (Protect Local producer)
 Quotas are implemented through
licensing. (limited number of licenses
issued for Importers and exporters)

43. Voluntary Export Restrains
 Exporting country voluntarily restricts its
export to a country to protect the interest
of the importing country.
 To reduce trade deficits

44. Levels of EI
 Free Trade Area/Agreement
 Customs Union
 Common Market
 Economic Union
 Economic and Monetary Union

45. FTA
 Free Trade Area is a group of countries
that have agreed to abolish all internal
barriers to trade among themselves.
 ASEAN, NAFTA, EU-EFTA, GCC (Oman-UAE)
 Free Trade Agreement is a bilateral or
multi lateral agreement which the
signatories agrees to trade certain goods
and services without barriers.
 FTA for Professional Services in ISLFTA
 PSLFTA, CSLFTA

46. ISFTA
 1998 December
 4227 2802
 Quotas Zero Duty Tea 15mn Kg/yr , 8mn
pieces of garments , 2500 MT Pepper

50. Customs Union
 Countries group together and form a
single entity which has
 Same a Tariff rates with non members
 Commercial Sovereignty is lost for Individual
country
 It also includes Free Trade Area among
members
 South African Customs Union (SACU)

51. Common Market
 Total elimination of Internal tarrifs
 Common external tariffs
 Goods as well as services
 It includes Customs Union
 E.g: European Economic Area, EFTA,
Common Economic Space(CEA)

52. Economic Union
 Is a type of trade bloc which is composed
of a common market with a customs union.
The participant countries have both
common policies on product
regulation, freedom of movement
of goods,services and the factors of
production (capital andlabour) and a
common external trade policy.
 E.g. Russia-Belarus, Monaco-EU,
CARICOM

53. Economic and Monetary Union
 Economic Union With single currency.
 E.g: East Caribbean Currency Union,
EU

54. Other Economic Integration
 Commodity Agreement – Food for Oil
Iraq USA
 Quota Agreement – Fixed price
commodity trading.
 Buffer Stock Agreement – Stabilizing
commodity prices
 Cartels – OPEC, IATA
 Trade blocks and Intra Regional Trade –
ASEAN, SAARC

55. EI and IME
 Create conducive Marketing
Environment through
 Lifting barriers
 Freedom of movement
 Huge market access
 Single trade negotiations
 Single rules and tariffs
 Single Currency

57. Political Environment
 German law, “verpackungerordun”, has
forced manufacturers to eliminate
nonessential packaging materials that
cannot be recycled and to adopt other
innovative approaches to producing and
packaging products.
 Companies are developing new packaging
that uses less material and includes more
recycled content. More than 1,900 non-
German companies are currently
participating in the program.

58. Political Environment
 The German packaging law is one
example of the impact that political, legal,
and regulatory environments can have
on marketing activities

59. Political Environment
 National Interests
 National Controls
 Political system
 Activities of political parties
 Labor movement
 Foreign Relations

60. National Interest
 Make in India
 Refreshingly Sri Lanka
 God’s Own Country
 Act East
 Eradicating Micro-Nutrient Deficiency
 Mangalyan
 Economic, Technological, IT, Business,
Agriculture

61. Foreign Relations
Hmmm
“There are no
permanent
friends, only
permanent
interests”

62. Elements to Consider
 Governing Parties Attitude towards
 Sovereignty
 Political Instability
 Threat of equity dilution
 Expropriation

63. Sovereignty
 Supreme and Independent Political
authority.
 Developing countries exercise
Protectionism with extreme laws and
regulations to encourage domestic
economic development
 Changes in policies are frequent and risk for
investment
 Developed countries consider any practice
against free trade is illegal.
 Changes in policies are less frequent and
considered less risky

64. Risks under Sovereignty
 Taxes
 Dilution of Equity Control
 Expropriation
 Confiscation

65. Taxes
 Taxing policies will vary with the ruling
party’s monetary policies.
 Companies usually avoid taxes by
shifting its operation base to suitable
countries.
 Bangladesh, Sri Lanka

66. Dilution of Equity
 Host nation governments sometimes
attempt to control ownership of foreign
owned companies operating within their
borders. In underdeveloped countries,
political pressures frequently cause
companies to take in local partners.

67.  Expropriation
 Governmental action to dispossess a
company or investor.
 Confiscation
 Government’s taking ownership of a
property without compensation

68. Political Instability
 Social Unrest
 Social disorder is caused by such underlying conditions
as economic hardship, internal dissension and insurgency,
and ideological, religious, racial, and cultural differences.
 Lebanon, Greece, Sri Lanka, Telangana
 Attitudes of Nationals
 Negative attitudes towards the firms home country.
 Anti US, Anti China, Anti Pakistan, Anti NGOs
 Labour movements
 Student movements
 For the best long-term interests of the company, it is
wise not to become involved in political disputes
among local groups or between countries.

70. Three Groups
 Common Law
 Civil Law
 Theocratic Law

71. Legal Environment
 The international legal environment
 International Court of Justice
 International Criminal Court
 How these laws and conventions are Rectified in Constitutions
 Export controls
 WTO, Agreements
 Investment Controls
 Legal systems
 New Sharia Laws – Women selling to women in KSA
 Consumer Protection Laws
 Environmental Laws
 Anti Dumping acts
 National Treatment by Law

72. Settlement of Disputes
 Some are settled by WTO.
 Judicial dispute settlement.
 Extra judicial Dispute settlement.

74. Culture
1. Atificial man-made environment - no human
society is without culture
2. Complex material, institutional and spiritual
creations used to satisfy human need
3. Personality of the group
 As the second definition suggests, culture is
characterized by human creations of cultural
elements. From a marketing perspective we are
trying to capture a unifying or differentiating
power of cultural elements on the purchasing
behaviour of consumers.

75. Cultural Characteristics
 The effects of culture are linked to the relevant
factors that may affect the marketing approaches to
customers.¨
 Culture is learned.
 Culture is not inherited issues - genetic, not innate.
 Culture must be learned. The process of acquiring culture
is called enculturation. It can be consciously and
subconsciously. (nationality, religion)
 Culture is transmitted from generation to
generation. Cultural factors have a great
momentum in its effect on consumer behavior. A clear
manifestation of a cultural tradition. Another important
feature is the maintenance of cultural continuity, which
makes signs and returns the response in retromarketin

76. Cultural Characteristics
 Culture is shared. It is a common concern
groups and therefore consumer groups. The
similarity in consumer culture leads to the
application of the same marketing approach
in a given cultural environment. Considering
the cultural similarities is to decide what size,
what criteria used for evaluationof cultural
homogeneity.
 Culture is different. The content varies with
the culture of the area. Cultural environment
is different in content, there are differentiated
culture. At the same time, there are
distinctive in parallel cultures.

77. Cultural Characteristics
 From a marketing perspective, it is essential
that manifests itself in different cultures,
different consumer behavior. As an
example for the relationship to cosmetics -
French women acceding to more coherent
than Scandinavian women.
 Levi Strauss. Jeans in
 France - sexy direction,
 UK - Theme of cowboys and the Wild West
 Japan - Topic Heroes.
 Fox Brand – Fox And Deer Story

78. Culture is Contagious
Culture spreads in verbal and nonverbal communication.
 Culture is adaptive - dynamic. Although a relatively inertial effect
that does not mean that it does not change.
 Early understanding of cultural change brings:
 The potential competitive advantage
 Decrease the potential weaknesses of the company ("green behaviour"),
India follows US in style. India is not sensitive to Gluten. Marketers are
pro active and market with the name gluten free
 The cultural change can be understood as a change in some cultural
elements with subsequent changes in social behavior.
 Endogenous or internal changes - cultural innovation is based on
the invention. (I-phone Proposal)
 Exogenous or external cultural changes.

79. Cultural Integrations
• Acculturation: constant intercourse of two or more
different cultures leads to changes in the original
cultural patterns. Sri Lankan Tamils, Sri Lankan
Muslims
 Cultural diffusion: the dispersion from the
original culture center
 Arabian culture diffused to all other regions
 Bhudism from India to Easter par of the world
 Social networking culture – US to Everywhere
 Direct migration
Aggression - forcing the cultural elements
 Forcing to wear certain dress code as a rule
Stimulation - In culture, there is a need of reception -
cultural elements that are part of other cultures

80. Cultural Values Analysis
 Rokea set of Values
 Terminal values - a comfortable life - the
excitement
○ equality - pleasure -safety - freedom - happiness
 Instrumental values: ambition - thoughtfulness -
cleanliness - honesty – obedience
 Hofstede's value
 Distribution of power
 Individuality
 Masculinity
 Uncertainty avoidance
 Long-term orientation

81. Men and Women
 Who is the purchase decision maker
 Syria, Nigeria, Hyderabad, Sri Lanka
 Metro sexual – Men (sharing traditional
house chores)
 Working Women
 Fundamentalism
 New Traditionalism – MBA/MSC/PhD
House wives 
 How many of you?

82.  High context cultures – Japanese, Indian
 Context is equally important as words
 Body language, a person's status, and tone of
voice
 Low context cultures – US
 Words is the major means of communication
(Hall, 1976)

83. The Elements of Culture
 Language – Verbal, Written, Multi Lingual,
Mono Lingual
 Religion – Secular, Dominant Religion,
Mono Religious society.
 Aesthetics
 Manners and Customs
 Education
 Attitudes and values
 Social organization
 Demographic

84. Language
 Mark Zuckerberg CEO of FB addressed
30 mins in Pure Mandarin to the
Chinese Students of Tsinghua Lab.
 Why?
 Does he loves Mandarin?
 Every internet user is his
potential customer.
 One third of them are
from China. 0.6bn.

85. Calculations
 One Click on Face Book advertisement
assume = 0.01 $
 One click per person per month.
 600 mn X 0.01$ = 6mn$ per Month
 Not Amazing Isn’t it???
 Talk Mandarin walk Mandarin even
sleep Mandarin…. To tell it in slang
English 

87. Ecological Environment
 Nature and All living beings
 Ecological diversity, Bio-diversity
 Natural resource management
(Sustainable)
 Pollution
 Health effects
 Waste management
 Environmental Impact Assessment
 Environmental Friendly Attitude

89. Technological Environment
 Technology is changing always
 Marketers have to be vigilant about it
and adapt to change
 Innovations are faster than
implementations.
 Some innovations make products and
processors improve dynamically and
some times they even replaces the old
products and make them obsolete

90. Elements of Technological
Environment
 Internet Penetration
 9.7bn $ budget for broadband in India
 Demography of Internet Usage
 Electricity Usage
 Infrastructure
 2G, 3G, 4G
 Satellite subscriptions (One communication
satellite for South Asia)
 Electronic Payments
 E-banking

91. Obsoletion
 What happened to typewriters,
records, audio and video cassettes,
analogue phones
 What happened to standard post with
email and SMS
 What will happened to CDs
 Nano technology
 Genetic engineering
 Robots doing dangerous factory
processors

92. Internet Usage Infographics

93. The Challenge
 A Key Challenge For International
Marketers Is To Develop A Good
Understanding Of The International
Business Environment.
 EPG model is one way
 Ethnocentric (Based on Ethnicity)
 Polycentric (political orientations and
alliances India-Fiji)
 Geo-centric (Based on Geography)

94. International Marketing
Today
 For US-based companies, 75% of sales
potential is outside the US.
 About 90% of Coca-Cola’s operating income
is generated outside the US.
 For Japanese companies, 85% of
potential is outside Japan. (Toyota)
 For German and EU companies,
94% of potential is outside Germany.

95. Quote…
 In his famous book “Rich Dad, poor
Dad” Guy Kawashaki quotes The
Founder of McDonald’s as
 “They think I do Hamburger Business
but what I really do is Real Estate
Business”
 Correct Environment is Half The
Success.
 My Case

96. Conclusion
 Understanding, Adapting and
Manipulating the Environmental Factors
are the basis of a Successful Marketing
in Business
 Internal Factors as well as the External
Factors are too Important
 The difference between Domestic and
International Marketing is the Extent of
Variation in External Factors.

99. Composition and Direction
 Increasing Share of Gross National
Income
 Less percentage of World Trade
 Oceanic Trade
 Increase in Volume and Value of Trade
 Change in the Composition of Export
 Change in the Composition of Imports

100. Increasing Share of Gross
National Income
 In 1990-91, share of India’s foreign trade
(import export) in net national income
was 17 per cent
 In 2006-07 rose to 25 per cent. Exports
and imports as percentage of GDP were
14.0 per cent and 21 per cent
respectively.
 21% growth in Exports from 2005-2014
 16% growth in Imports

101. Less Percentage of World
Trade:
 Share of India’s foreign trade in world
trade has been declining. In 1950-51,
India’s share in total import trade of the
world was 1.8 per cent and in export
trade it was 2 per cent.
 According to World Trade Statistics,
India’s share in world trade has gone-up
from 1.4 per cent in 2004 to 1.5 per cent
in 2006. 1.7 in 2013

102. Oceanic Trade:
 Most of India’s trade is by sea, India has
very little trade relations with its
neighboring countries like Nepal,
Afghanistan, Myanmar, Sri Lanka, etc.
 68 % of India’s trade is oceanic trade
 Share of these neighboring countries in
India’s export trade was 21.8 per cent
and in import trade 19.1 per cent. 2014

103. Increase in Volume and Value
of Trade:
 Since 1990-91, volume and value of
India’s foreign trade has gone up. India
now exports and imports goods which
are several times more in value and
volume.
 In 1990-91, total value of India’s foreign
trade was Rs 75,751 and in 2008-09, it
rose to Rs 22, 15,191 crore. Of it, value
of exports was Rs 8, 40,755 crore and
that of imports was Rs 13, 74,436 crore

104. Change in the Composition
of Exports:
 Since independence, composition of export
trade of India has undergone a change. Prior
to independence, India used to export
agricultural products and raw materials, like ,
cotton, tea, oil seeds, leather, food grains,
cashew nuts, and mineral products. It also
exported manufactured goods.
 But now in its export included mostly
manufactured items like, machines, ready-
made garments, gems and jewellery, tea, jute
manufactures, Cashew Kernels, electronic
goods, especially hardware’s and software’s
which occupy prime place in exports.

106. Change in the Composition
of Imports:
 Since Independence, composition of
India’s import trade has also witnessed a
sea change.
 Prior to Independence, India used to import
mostly consumption goods like medicines,
cloth, motor vehicles, electrical goods, iron,
steel, etc.
 Now it has been importing mostly petrol
and petroleum products, machines,
chemicals-, fertilizers, oil seeds, raw
materials, steel, edible oils, etc.

108. Attracting FDI
Rank Country
Inflows
(million USD)
Inflows (%)
1 Mauritius 50,164 42.00
2 Singapore 11,275 9.00
3 USA 8,914 7.00
4 UK 6,158 5.00
5 Netherlands 4,968 4.00

110. Conclusion
 India has been dramatically increased
its global Marketing share since trade
liberalization
 Service sector is rapidly increasing its
share in International Marketing of India
 Current government policy indicates that
India will be a global manufacturing
powerhouse in future.

112. References
 Philip Kotler., Marketing Management,
12th Edition.,
 http://www.yourarticlelibrary.com/foreign-
trade
 http://stat.wto.org/CountryProfile