24 Jun THE ALLOCATION OF RESOURCES WITHIN THE ECONOMY
SESSION 1
The Allocation of Resources within the Economy
Introduction
In the following session, you will learn exactly how to define context. You will also learn how imperative strategy and contingency
is, to keep up with the ever evolving world of business. You will hear terms such as foreign direct investment, subsidiaries,
mergers and acquisitions, and we’ll go on to explain some of this terminology in greater depth.
A business branching outside of its own culture and knowledge depends wholly on efficient research into the international countries
they plan to enter, and a successful participation strategy into that specific part of the world.
By understanding the nature of international marketing and how to apply that knowledge, a business can decide on where they plan to
open. They can also decide on who they plan to market to, and how they will put their strategy into action. In order to do this, a
firm needs to consider the culture and legislation of their new market. They must take into account factors such as the local
politics and consumer behaviour when marketing this idea.
In the final part of this section, we’ll look at the benefits of expanding internationally, not solely for the company but also for
the benefits it can bring to that country and workforce.
By the end of this section, you’ll have a better understanding of what is meant by international expansion, and you will have
gained the knowledge for adequately assessing market approach. You will also have an idea of how to develop your own personal skill
sets, and where best to apply them when considering doing business overseas.
Here, we’re going to be examining what is meant by international marketing. So, let’s begin by defining it. Well, international
marketing is the application of a strategic plan across national borders. It’s important for the international marketing strategy
to recognise that there are different needs for people all over the world. Not every country will consume the same product at the
same capacity, thus the marketing approach must also reflect those differing dynamics. International marketing therefore, is
country specific and takes into account many dimensions that affect consumer behaviour. Such dimensions include culture, currency,
politics and the law.
Now, international marketing should not be confused with the term global marketing. While it has become a linguistic trend to dub
both as referring to the same one method, they actually do not share the same definition.
Global vs. International
So how are they different?
Well, global marketing is selling a product all over the world and looking at the world as one market. Whereas international
marketing can mean setting up offices and headquarters overseas, to cater to the business of that particular country’s needs.
A good example of global marketing would be a chain store selling certain products, or a service like McDonalds that is famous for
its French fries all over the world. Those fries are standard and are not adapted to fit each different market, thus the world is
one consumer and one market that has one global marketing strategy. The French fry has its own fame and the market comes to the
fry, so to speak. It sells itself because of the knowledge of its brand name that has existed many years. Standardisation is a term
referring to a brand not differentiated between global markets.
When it comes to international markets, many firms are adapting their branding to fit the demographics of that market and are
having to become more flexible to keep up. Consumers might have a few choices when it comes to purchasing a product, so a company
must ensure that affordability and quality is high on their list. These days, marketing on an international level is far more
complex than simply exporting, because competition is rife. International marketing is considered to be an extension of a company’s
local marketing strategy. Their targeting and positioning however, has been refined to fit a new and different market.
Standardisation has its benefits in that a global product can obtain economies of scale in manufacturing and produce higher
quantities. Atop this, a global brand will be recognised as consumers travel across countries and may be more likely to purchase
what they already know. For example, when a Brit travels outside of the UK to the USA and sees their PG Tips in the local
supermarket, it’s certainly going to be of more appeal to them than the distinctly different teas the US offers, such as iced tea
varieties.
The physical environment will affect a product’s innovation as adaptions may be required. For example, appliances made for the US
and for Europe must run on different voltages. They would need different plug sockets and wiring. This isn’t simply an issue of not
selling well in another country. The issue is that this would be an unusable product if not physically adapted, and unlikely to
even be accepted
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