Importance of Economic Environment in International Marketing

INTERNATIONAL MARKETING-ECONOMIC ENVIRONMENT
In appraising the international marketing environment, the economic environment of a
country is the most important consideration for an enterprise
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INTERNATIONAL MARKETING-ECONOMIC ENVIRONMENT
The economic environment of a country is the most important consideration for an
enterprise
Introduction
International marketing is process of conducting business activities that is creating,
understanding, designing, delivering and communicating the goods and services to the end
consumer of more than one nation (Cavusgil & Knight,2014). In case of international marketing
the activities are conducted in more than one country which is different from domestic
marketing. Marketing concepts are universally accepted everywhere. But what sets aside
international marketing from domestic marketing is that in former, the environment within which
marketing plans are implemented has huge impact and are difficult to understand. There are
multiple uncontrollable elements in international marketing such as political, economic, social,
technological, legal and environmental(Anton,2015). A business which is conducted in home
country feels more comfortable in understanding the uncontrollable aspects of the country. But a
business which operates in foreign land might find extremes in evaluating these critical elements.
It is necessary to put all these elements into consideration in order to put effective strategies in
international marketing.
One key element is the economic environment of the host country. It comprises of
countries GDP, GNP and per capita income. It provides information about consumer buying
power, their income level and wealth which are essential market indicators. It is also necessary to
understand the dynamic nature of economy of the foreign land. This shift can have significant
effect on various strategic decisions. Therefore, before a company designs or executes its
international market plan, it should understand home country’s economics. This essay establishes
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INTERNATIONAL MARKETING-ECONOMIC ENVIRONMENT
the point that the economic environment of a country is the most important consideration for an
enterprise.
Argument 1: The enterprises would be benefited only when the nation has good GDP
growth as growth provides the platform for organizations to grow
The economy of local nation influences how the enterprise reach to customers.
International economic framework limits the ability to manufacture the goods as per local
customers’ requirement and then deliver goods efficiently. The economic environment of
country impacts the marketing design for different nations (Eteokleous & Katsikeas, 2016).
Some economies are closed so enterprise has to enter through strategic alliances like joint
venture etc. A country has strong economic position relative to other countries when it has higher
GDP, free market, high FDIs and diverse economy. The factors like unemployment rates, labor
cost, inflation rates, currency exchange rates, tariffs and many others are part of economic aspect
of the country.
Unemployment rate is one of the significant factor that is linked with the GDP. The
higher the nation’s unemployment rates the less money is generated in economy (Christiano &
Eichenbaum, 2016). The consumer thus has less income and less money to spend.
Counter Argument 1: Enterprises would not be able to grow their business if they do not
have the understanding of local political, cultural and social environment
In the end, the businesses are run for the people and business would not be successful if it
lacks and in-depth consumer understanding.
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