The Pros And Cons Of International Marketing

The first step in international marketing is deciding whether to go abroad. At this step, companies must weigh the pros (better profit opportunities than domestic markets, larger customer base to achieve economies of scale, can reduce dependence on any one market) and cons (company might not understand foreign preferences, business culture, or regulations) of international business and also their company’s situation (size, financial resources, HR, expertise, experience). If they decide expanding internationally is a viable option, they must then decide which market(s) to enter. This is a very important question for a company to address and I will keep it short for the outline portion of this answer but will get into more detail later.

Every potential nation is going to have its own unique features. Its attractiveness as a market and its readiness for different products and goods depends on its demographic, economic, sociocultural, and political-legal environments. Before jumping into the international market, company leaders should educate themselves and key staff about the local market, consumers, politics, laws and business practices. A thorough risk assessment includes political and legal issues, such as the government 's stability and the level of political corruption or civil unrest. Politics can be a huge concern for companies operating abroad and can be the most volatile aspect of international marketing. Unstable political situations can expose businesses to numerous risks that they would rarely face at home. Financial issues like currency stability as well as investment and trade conditions, such as tariffs, and trade agreements should also be assessed. It is also important to take the socio-cultural aspect into account. This includes evaluating a country’s labor skills, cost and availability of labor. When choosing an international market, it can be a good idea to choose one that is geographically and culturally close to the domestic firm 's environment. If you’re an American company, Canada and Mexico are great options due to their proximity to the United States, as well as their participation in the North American Free Trade Agreement (NAFTA). Additionally, when picking foreign markets, you should also take into consideration the foreign country’s purchasing power/income, economy, level of competition from similar products, need for service/product you’re providing, and population. All of these factors help play a role in determining which market(s) would be best for your