4.6 - International Marketing (HL)

Question 1

The opportunities and threats posed by entering and operating internationally:

Define the term “International Marketing”

Answer 1

International Marketing: the marketing of an organization’s goods and services in overseas markets. Multinational companies can earn significantly more sales revenue from international trade.

Question 2

The opportunities posed by entering and operating internationally (AO3):

Define the term “Opportunities” and give 4 different examples of such when a business uses international marketing.

Answer 2

Opportunities: These are factors in the external business environment that create prospects or openings for a firm’s growth and development.

Examples with regards to international marketing include:
1. Lower costs of production – International marketers can benefit from lower production costs in foreign countries, such as cheaper labor costs by operating in low-income countries.

2. Laws and regulations – Businesses can benefit from less stringent laws and regulations in other countries. For example, less well-established labor union powers and minimum wage legislation.
3. Financial incentives – Multinational companies may be enticed by foreign governments that offer financial incentives for them to locate in their country. Examples of such incentives include subsidies and tax allowances (discounts).
4. Greater economies of scale – Businesses can gain greater economies of scale by catering for a larger customer base across different international markets.

Question 3

The threats posed by entering and operating internationally (AO3):

Define the term “Threats” and give 4 different examples of such when a business uses international marketing.

Answer 3

Threats: the negative external factors that create challenges for an organization wishing to expand in overseas markets.

Examples with regard to international marketing include:

1. The additional costs of operating in foreign countries. For instance, there may be additional costs for market research, as well as workforce planning and training.
2. Legal constraints (different in every country) - rules and regulations about issues such as intellectual property rights, health and safety laws, competition law, consumer protection
3. Cultural differences can also cause challenges for international marketers. In addition, there are major differences in business etiquette in different parts of the world.
4. Exchange rate fluctuations can affect the price competitiveness of a business. A higher exchange rate means that the price of exports will be higher for foreign buyers. This can reduce the firm’s sales and profitability