controllable and uncontrollable factors of international marketing

BY- Gurleen KaurStudent of UIAMS, PU

The Uncontrollable and Controllable Factors of

Marketing. Globalization and Role of MNCs

Controllable factor - often called as "Marketing Mix". It includes: Product, Price, Place and Promotion.

Uncontrollable factors- often called as "Environmental Factors“ which are out of control.

Uncontrolled Factors Political Conditions Economic Conditions Socio-Cultural Conditions Technological Conditions Legal Conditions Competition Marketing Channels

Political ForcesThe political environment includes the characteristics and policies of the political party, the nature of the constitution and the government system and environment encompassing the economic and business policies. The most important policies are: Industrial Policy EXIM and Trade Policy Fiscal Policy

Economic Forces Global factors that are outside of the control of

individual organizations, but that can affect the way that businesses operate.

Economic factors include: Unemployment rates, Inflation rates, Labor costs, Per capita income, Market size

Socio-Cultural Forces Countries with cultural similarity can

generally be approached more easily as compared to countries with cultural diversity.

Social environment also affects the motives to make a buying decision and the communication strategy needs to be customized as per the varied social traits for different market.

Technological Conditions There are vast variations in availability of

technology between developed and emerging markets.

Bajaj Auto accounts for 85% of the market share of three-wheelers in the Bangladesh market.

Technological factors include ecological and environmental aspects, such as R&D activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality, and lead to innovation

Legal Forces Well-developed sound legal systems in the target

market help to reduce the marketing risk and a firm can expect a relatively unbiased and fair treatment.

Countries at a higher stage of economic development and democratic form generally provide a relatively independent and a more just legal system.

Competition The competition in international market

includes products imported from various parts of the world and also from the goods produced domestically in the target markets. The products imported from other competing countries that have significantly different business environment affect the competitiveness of the products.

Marketing Channels The differences in the structure of marketing

channels necessitate appropriate changes in the marketing mix. Generally, high-income countries, which have organized large-scale outlets have higher stake in business negotiations.

CONTROLLABLE FACTORS – MC DONALD’S INDIA

International Marketing Mix

Mc Donald’s – Marketing Mix India

• Indian Preferences :• Vegetarian Food• Spicy Food

• So Mc Donald’s markets a product range tailor made for Indian needs.

Product

Place

Price• Product Line Pricing:

• McDonald’s offers a range of products prices according to use. • So one can order just a Coke or a Coke with a Burger at additional

price. 

• Product Bundle Pricing: • McDonald’s combines several products in the same package.• For example one can buy a McAloo Tikki alone or buy a customized

meal.• Promotional Pricing:

• McDonald’s clubs three or four products together as one and price of this new one will be lesser than the sum total of individual product.

• Value Pricing: • McDonald’s has realized that Indian market is a price conscious

market and this has forced McDonald’s to provide value products. Examples are economy meal and value meal served by McDonald’s in India.

Advertising TV Commercials, Billboards,

Pamphlets Personal Selling

Mcdonald’s hires employees in its stores to cater customer needs.

Sales Promotion Coupons, Online Deals

Public Relations News Stories, Sponsorships,

events Direct Marketing

Home Delivery, Emails

Promotion

Globalisation Definition:

An economic phenomenon? A social phenomenon? A cultural phenomenon?

The movement towards the expansion of economic and social ties between countries through the spread of corporate institutions and the capitalist philosophy that leads to the shrinking of the world in economic terms.

Integration of Economies Made possible by:

Technology

Communication networks

Internet access

Growth of economic cooperation : trading blocs (EU, NAFTA, etc.)

Collapse of ‘communism’

Movement to free trade

ROLE OF MULTINATIONAL CORPORATIONS

MULTINATIONAL CORPORATION

It is a corporation that:

Manages production

& Operation

In more than one country

Delivers services And/

Or

How Is A Company Classified As An MNC?

Subsidiaries in foreign countries;

Operations in a number of countries;

High proportion of assets or/ and revenues from global operations;

Stakeholders are from different countries.

� Globalization is a way of corporate lifenecessitated, facilitated and nourishedby the transnationalisation of the worldeconomy and developed by corporatestrategies

The internationalization process

It is a process by which a company enters a foreign market.

� The sale of foreign subsidiaries in the hostcountries are three to four times as large astotal world exportsSignificant increase in the export intensity ofthe foreign affiliates of MNCsThe abilities of multinationals to manipulatefinancial flows by the use of artificialtransfer prices is bound to be a matter of

Reasons for The Establishment of MNCs

To increase market share.

To secure cheaper premises and labour.

Employment and Health & Safety Legislations in other countries may be more relaxed.

To avoid or minimise the amount of tax to be paid.

To take advantage of government grants available.

To save on costs of transporting goods to the market place.

To develop an international brand.

Advantages

To the Home

CountryTo the Host

Country

Benefits of MNCs to the Home Country

Acquisition of raw materials from abroad.

Technology and management expertise acquired from competing in global markets.

Export of components and finished goods for assembly or distribution in foreign markets.

Inflow of income from overseas profits, royalties and management contracts.

Benefits of MNCs to the Host Country

Transfer of technology, capital and entrepreneurship.

Increase in the investment level and thus, the income and employment in the host country.

Greater availability of products for local consumers.

Increase in exports and decrease in imports.

Drawbacks of MNCs:

Trade restrictions imposed at the government-level

Limited quantities (quotas) of imports.

Effective management of a globally dispersed organization.

Slow down in the growth of employment in home countries.

Destroy competition and acquire monopoly.

MNCs in INDIA� In India the government policy confinedthe foreign investment to the priority areaslike high technology and heavy investmentsectors of national importance and exportsectors. Firms which had been establishedin non-priority areas prior to theimplementation of this policy have,however, been allowed to continue inthose sectors.

� Several Indian outfits of MNCs are inthe low technology consumer goodssector. There are many MNCs which arein high technology area.� Since the economic liberalizationunshared in 1991, many multinationalsin different lines of business haveentered the Indian market.

Fortune Global 500 List 2011: Top 10

RANK COMPANY COUNTRY FIELD1 Wal-Mart Stores  United States Retail

2 Royal Dutch Shell  Netherlands Petroleum

3 Exxon Mobil  United States Petroleum

4 BP  United Kingdom Petroleum

5 Sinopec  China Petroleum

6 China National Petroleum  China Petroleum

7 State Grid  China Power

8 Toyota Motor  Japan Automobiles

9 Japan Post Holdings  Japan Diversified

10 Chevron  United States Petroleum

Indian companies in fortune global 500 list 2011:

COUNTRY RANK

COMPANY GLOBAL 500 RANK

CITY REVENUE($ millions)

1 Indian Oil 98 New Delhi 68,837

2 Reliance Industries

134 Mumbai 58,900

3 Bharat Petroleum

272 Mumbai 34,102

4 State Bank of India

292 Mumbai 32,450

5 Hindustan Petroleum

336 Mumbai 28,593

6 Tata Motors 359 Mumbai 27,046

7 Oil & Natural Gas

361 Dehradun 26,945

8 Tata Steel 370 Mumbai 26,065

T H A N K Y O U