Global Marketing Final Exam Essay
The essay is a discussion about international marketing strategies. The aspects discussed within the context of the paper are: the impact of international relations on international trade, economic growth and development in modern times; the role of multi-national corporations in international relations; the advantage of a standardized versus customized approach to global advertising; some of the concerns involved in establishing global brand names and the concept of transfer pricing; the impact of different tax structures and governmental relations on transfer prices.
Multinational organizations deal with ensuring free and fair trade and relationships between the countries of the world. International marketing strategies have influenced many multinational corporations adopt strategies to accommodate the differences between the citizens of the different countries in which they operate. The opening up of domestic markets to international trade has influenced the growth of international trade. Global economic activities are attributed to the growth and expansion of the economies of many countries. As countries are involved in trade, they interact and exchange ideas.
International relationships have improved with the introduction of the international organizations. Marketing strategies in multinational corporations need adopting advertising and branding strategies which will capture the different cultural aspects of all the people involved in the
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International relations refer to the co-existence between two or more countries. International trade is defined as the commercial transactions between two or more countries. Private businesses, governments, international investors and other parties are involved in the transactions of international business. Economic growth and development is described as the increase in the wealth, infrastructure and the living standards of the people living in a country. When countries are at peace with each other, international trade becomes more possible and exchange of goods and services is enhanced.
International relations have improved globalization of the economies in many countries. The globalization of economies has improved trade between countries. Improved trade promotes economic growth and development since there are many economic gains from international trade. Trade creates income to both the private and public sector. Poverty alleviation strategies involve improving trade to generate more income to the citizens of a country. A wide variety of goods and services are made available in the market when global trade increases.
Production, according to comparative advantage has been encouraged by the improvement in international trade. Countries are encouraged to produce goods which they can produce most economically. Different countries have different resources which give them the potential to create income generating products. Through international trade, resources are utilized optimally since an economy will specialize in the production of products which it has greater advantages (Bernard et al. 2007). Globalization has improved the exchange of technologies and knowledge.
This has increased the capacity of businesses to increase the number of innovative products in the market. International trade has encouraged countries to specialize in the production of goods and services. The mobility of factors of production has been accelerated by globalization. More industries are encouraging division of labor to increase the productivity of labor factors of production. More industries have developed with the expansion of international trade. These industries create more employment opportunities to the citizens of a country.
As the par capita income of the people increases, their living standard is improved. Poverty alleviation campaigns have encouraged improved international trade as one of the strategies to enhance development of nations (Bernard et al. 2007). International trade increases the employment opportunities and therefore people have increased incomes which improve their living standards. The public sector alone cannot accommodate all the skilled labor in a country and trade provides more opportunities for the people in a nation. International trade attracts private and foreign investment and this generates more capital in the economy.
The gross domestic product of a country increases with increase in trade since more income is generated from the different economic sectors. Growth and development of an economy is accelerated by trade since more income is generated and the living standards of the people are improved. The improvement in the infrastructure of a country is possible with increase in the number of economic activities. Therefore, improvement in international trade improves international trade and the economy of the countries involved in the trade rapidly grows and develops (Daniels, Radebaugh & Sullivan, 2007).
The role of multi-national corporations in international relations Multinational corporations are organizations established to regulate trade, political stability and peace between countries of the world. Most of the multinational organizations, such as WTO, IMF, World Bank and others are established to regulate trade and to ensure fewer barriers to trade are placed by the trade members. Other organizations are established to promote peace among countries and to resolve disputes, for example, the United Nations.
When countries interact in trade or other activities, people may have conflicts which require a negotiating partner. The international organizations are involved in the negotiations for peace or promoting trade by encouraging the member countries to practice good laws which are favorable to other countries (The Community of Democracies’ Conference Washington, D. C. , February 20-21, 2001). The increase in globalization has forced many countries to form regulatory organizations to avoid bad trade practices and to promote good international relationships between member countries.
To enhance trade, many countries have created trade agreements to remove barriers to trade. Economic integration is the most important aspect discussed by the trade agreement organizations such as WTO. The UN is involved in promoting peace between the members. It solves political disputes which may arise between countries. The organization conducts humanitarian activities to enhance good human survival in the world. It assists people suffering from different problems (The Community of Democracies’ Conference Washington, D. C. , February 20-21, 2001).
The trade organizations aim at achieving an integrated economy where countries can trade with each other. As countries trade with each other they can interact and understand each other. International trade has promoted cultural understanding among different countries and this has brought about peaceful co-existence among the nations of the world. After the World War II, many leaders of the world felt that the economies of the destroyed countries could only be improved through trade (Anderson, 2005). In addition, the war had brought about poor international relationships between the countries involved in the war.
There was need for multinational organizations to bring together the leaders of the different countries involved in the war. The multinational organizations were established to ensure the countries cooperated and that no more war could emerge between the countries of the world. Trade organizations were established to promote trade as one of the tools of reconstructing the destroyed economies. During the war, many countries created strict barriers to trade to protect their economies from external influence (The Community of Democracies’ Conference Washington, D. C. , February 20-21, 2001).
The advantage of a standardized versus customized approach to global advertising Standardized advertisement strategies involve using similar approaches when promoting the products in the international markets. Customized advertisement strategies involve the application of marketing strategies which match a particular market a multinational company is working with. Since different markets have different tastes, fashions and cultural aspects, the customized advertising strategies are required to match the approaches of promoting the products to the market demand of the particular market.
Standardized advertising strategies are cheaper to operate since the organization is required to design only one policy which will be used in the entire market. However, the standardized advertising strategies might not suit the particular market demands of the people involved in the
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Some of the concerns involved in establishing global brand names The brand name of a company is the label that products are provided with. The brand name indicates the different aspects of the product and differentiates the products of a particular company from another. Branding strategies require adopting brand names which display a good image of the products and the company. Good brand names attract many potential customers and ensure the existing customers are loyal to the products of the company.
The brand name of a company determines the demand that will be generated by the customers in the market. Branding strategies in the global marketing arena requires matching the different aspects of the customers in the global markets. The government laws and policies of all the countries involved in the global markets must be incorporated in the brand name of the products being marketed by the company (Aaker & Keller, 1990). Culture is the most important aspect in global marketing strategies. Culture determines the strategies to be adopted by the companies operating in the global markets.
International business activities require integrating different cultures in the activities of the organization. The marketing strategies require incorporating the brand image to the product. All marketing aspects of a company must consider the cultural differences of the different customers the company is working with. The culture of a country determines the ability of a foreign company to penetrate domestic markets (Krueger & Nandan, 2008). The concept of transfer pricing; the impact of different tax structures and governmental relations on transfer prices According to Williamson (2004),
Transfer pricing refers to the pricing of contributions (assets, tangible and intangible, services, and funds) transferred within an organization (a corporation or similar entity). For example, goods from the production division may be sold to the marketing division, or goods from a parent company may be sold to a foreign subsidiary (para. 3). In transfer pricing, one system of an organization charges another system using the goods or services produced from that department. To account for the inputs and outputs is very important in the transfer pricing system.
This system ensures that costs are allocated and apportioned to all profit centers and cost centers within an organization. In a multinational organization transfer pricing is affected by the different tax systems of the governments where the company operates. The different branches of the company must indicate the goods and services obtained or delivered to other branches in other countries. Difference in tax systems causes differentials in the costs and profits made by the different branches of multinational companies. Conclusion International trade is the exchange of goods and services between countries.
Globalization has increased trade between nations and has also enabled access to many technologies and knowledge about production. Trade has been used as a tool for alleviating poverty in many countries. International marketing has benefited many international corporations by encouraging quality products and efficiency production systems as companies react to competition in the global markets. Transfer pricing affects the profitability of multinational organizations. The tax systems of different countries affect the transfer prices upon which the multinational charge the different subsidiaries.
The branding strategies of a company require adopting brand names which match all the market aspects of the different countries involved in the trade. References Aaker, D. A, & Keller, K. L. (1990). “Consumer Evaluations of Brand Extension. ” Journal of Marketing, 54(1), pp. 27-41. Bernard, A. D. , Jensen, J. B. , Redding, S. J. , Schott, P. K. (April 2007). Firms in International Trade. <http://mba. tuck. dartmouth. edu/pages/faculty/andrew. bernard/jep. pdf. > Daniels, J. , Radebaugh, L. , Sullivan, D. (2007). International Business: environment and operations, 11th edition. Prentice Hall. ISBN 0131869426
Jain, S. C. (1989), “Standardization of international marketing strategy: some research hypothesis”, Journal of Marketing, 53(1), 70-80. Krueger, D. & Nandan, S. (spring 2008). Branding in the global arena: the role of culture. Marketing management journal. The Community of Democracies’ Conference Washington, DC (February 20-21, 2001). The Role Of Regional And Multinational Organizations In The Promotion And Defense Of Democracy. <http://www. demcoalition. org/pdf/oas_report. pdf. > Williamson, D. (2004). Transfer Pricing. Retrieved May 12, 2010 from; <http://www. duncanwil. co. uk/tranprice2. html>