Can international marketing benefit domestic countries

Expanding abroad can bring lots of rewards, but it would be remiss of us to not explain the challenges a business can face when bringing their business global. Below, we provide information on the potential pitfalls and risks associated with international expansion. Whether you are planning a long-term expansion, or just testing a market you need to prepare and factor in both setting up and shutting down costs.

Building infrastructure, setting up a business entity and paying local workers can be very costly. Not to mention, very time consuming.

Therefore, to work legally and compliantly, you may need to hire lawyers, local tax accountants and international HR experts. In addition, ongoing costs are required to keep running the business successfully.

In some countries, closing operations can be expensive and may take a long time—sometimes up to two years depending on the country. Entering into new markets can be complex.

These regulations may be very different from your home country. Remaining compliant is key to successful global expansion. Failure to remain compliant can lead to serious cases and costs. Culture and business operations are different in each country and as such can present some challenges.

Language issues can also cause problems. This will also help smooth the transition of expanding into the new country. Going global brings many advantages. However, hiring international employees requires a new level of HR support and administration. If you do not have the capabilities in-house, then you will need to outsource. As mentioned before, business and employment regulations may be different than in your home country.

Going global brings many opportunities but just like we have seen above, it also causes many headaches. One option to consider is to expand globally without setting up an entity. This solution avoids all the hassle, but provides you with all the advantages. If you are considering expanding and hiring staff abroad, an employer of record solution may suit your business.

Employer of record EOR is a global employment solution whereby a third-party provider hires your employees on your behalf. If a firm is completely dependent on one country, from either a supply or market perspective, negative economic, political, or natural disasters in that country can create significant difficulty, as the Japanese earthquake of proved.

Consider, for example, natural disasters such as the earthquakes and tsunami that hit Japan in If Japanese automakers such as Toyota, Nissan, and Honda sold cars only in their home country, the financial consequences could have been grave. Because these firms operate in many countries, however, they were protected from being ruined by events in Japan. In other words, these firms diversified their business risk by not being overly dependent on their Japanese operations. American cigarette companies such as Philip Morris and R.

Reynolds are challenged by trends within Canada, the United States, and Europe. In response, cigarette makers are attempting to increase their operations within countries where smoking remains popular so they can remain profitable over time. They have also introduced e-cigerettes as a separate business line to retain customers and profits. This was the biggest acquisition ever in Indonesia by a foreign company.

As of , Indonesia was the fifth-largest tobacco market in the world, trailing only China, the United States, Russia, and Japan. To appeal to local preferences for cigarettes flavored with cloves, Philip Morris introduced a variety of its signature Marlboro brand called Marlboro Mix 9 that includes cloves in its formulation T2M, Although unit sales of Philip Morris products overseas dropped 5 percent from to , profits rose by concentrating on its profitable, high-profile Marlboro brand.

Since , Philip Morris International and Swedish Match AB have operated a joint venture company that has commercialized smokeless tobacco products outside of Scandinavia and the United States. Although competing in international markets offers important potential benefits, such as access to new customers, the opportunity to lower costs, and the diversification of business risk, going overseas also poses daunting challenges.

Political risk refers to the potential for government upheaval or interference with business to harm an operation within a country Figure 7. The relative stability of Canadian, U. Similarly, in and , military conflict between Russia and Ukraine sent international oil prices upward on fears of further instability in oil-rich countries. Unstable governments associated with such demonstrations and uprisings make it difficult for firms to plan for the future.

Over time, a government could become increasingly hostile to foreign businesses by imposing new taxes and new regulations. This process is called nationalization. In recent years, for example, Venezuela has nationalized foreign-controlled operations in the oil, cement, steel, and glass industries.

Countries with the highest levels of political risk tend to be those such as Somalia, Sudan, and Afghanistan whose governments are so unstable that few foreign companies are willing to go there. This creates a dilemma for firms in that these risky settings also offer enormous growth opportunities. Firms can choose to concentrate their efforts in countries such as Canada, Australia, South Korea, and Japan that have very low levels of political risk, but opportunities in such settings are often more modest Kostigen, Executives who lead companies that do business in many different countries have to take stock of these various dimensions and try to anticipate how the dimensions will affect their companies.

Because economies are unpredictable, economic risk presents executives with tremendous challenges. Car sales by Hyundai Motor Co. Kia has achieved sales volume growth in Europe every year since , increasing market share from 1. If inflation and interest rates were to increase in a particular country, this would make it more difficult for consumers to purchase new Kias. If currency exchange rates were to change such that the euro became weaker relative to the South Korean won, this would make a Kia more expensive for European buyers Kia.

The history of business is full of colorful examples of cultural differences undermining companies. For example, a laundry detergent company was surprised by its poor sales in the Middle East.

Executives believed that their product was being skillfully promoted using print advertisements that showed dirty clothing on the left, a box of detergent in the middle, and clean clothing on the right. A simple and effective message, right? Not exactly. Unlike English and other Western languages, the languages used in the Middle East, such as Hebrew and Arabic, involve reading from right to left.

To consumers, the implication of the detergent ads was that the product could be used to take clean clothes and make them dirty. Not surprisingly, few boxes of the detergent were sold before this cultural blunder was discovered.

A refrigerator manufacturer experienced poor sales in the Middle East because of another cultural difference. Becoming less dependent on a single market may help you mitigate potential risks in your core market. Those who add international trade to their portfolio may also benefit from currency fluctuations. For example, when the U. You can also benefit from currency conversion.

Let's say you do business in Japan and the Japanese yen is strong against the U. Your company's profits from Japan will be in yen. When you convert the payments in yen against a weak dollar, that means more dollars for your American head office—a welcome boost to your bottom line. This alone could be one of the most valuable advantages of international trade. Another one of the advantages of international trade is that you may be able to leverage export financing.

Small Business Administration may be places to explore for export financing options. One of the advantages of international trade is that you may have an outlet to dispose of surplus goods that you're unable to sell in your home market. Doing business in other countries can boost your company's reputation. A survey by Wells Fargo found that 87 percent of U. However, despite the growing number of U. According to the U.

For many companies, international expansion offers a chance to conquer new territories and reach more of these consumers, thus increasing sales. For example, U. For instance, companies with international operations can offset negative growth in one market by operating successfully in another.