Marketing is concerned with satisfying the needs of people. International marketing seeks out the whole world as its marketplace. Therefore, for an international marketer to know how to satisfy the needs of the international market, he must be familiar enough with geography to know what the various causal factors of the people’s needs are. Understanding the geography and history of a country can help a marketer have a better appreciation for many of the characteristics of its culture. A culture of a people evolves in response to the environment, which it confronts.
The geography of a country, its topography, climate, and physical position relative to other countries affect a culture’s evolution including its marketing and distribution systems. It’s important for a marketer to understand that geography plays an important role in the economy of a country and its marketing system. Consider the diverse nature of South America, for example. The channels of distribution that a domestic marketer has been accustomed to using might not even exist because of natural barriers. These same natural barriers also cause quite varied levels of economic development within the same country.
The history of a country is also important in understanding many aspects of a culture. Marketers are constantly in the process of adjusting their efforts to the demands of the culture as a result of their efforts; most current activity involves reconciling marketing activity to the immediate culture. The importance of “cultural empathy” to the foreign marketer is that being culturally sensitive allows him/her to objectively see, evaluate and appreciate another culture; he/she can obtain it by studying the culture and living with it. He/she should study the culture in order to avoid making blunders, which would not be made if he/she had cultural knowledge. It’s imperative that an international marketer making a long-term commitment in a country has some knowledge of its history. One cannot fully understand how businesspeople negotiate, how they conduct business, their attitudes toward foreign investment, the legal system and other aspect of the market/business system without a historical perspective. History is what helps define a nation’s “ mission”, how it perceives its neighbors, and how it sees its place in the world. To understand a country’s attitudes, prejudices, and fears it is necessary to look beyond the surface or current events to the inner subtleties of the country’s entire past for clues.
A crucial element in understanding any nation’s business and political culture is the subjective perception of its history.
To a Mexican, the U.S. is seen as a threat to their political, economic and cultural independence. To most U.S. citizens, the causes for such feelings are a mystery.
All the cultural elements are important in international marketing but the political element is by far the most pervasive and must always be examined from both domestic and foreign country perspectives. Regardless of where a company does business, the political element is always a partner and further, often an unpredictable one. Governments both encourage and control business and the goal of a Multinational corporation (MNC) is to take steps to lower the political vulnerability. While confiscation and expropriation have rarely been imposed in the last decade, they are the most severe political risk and can always be imposed. Today, most governments encourage foreign investment by attempting to create a favorable business climate, minimizing investment risks, offering tax exemption, protection against competing import, and unimpeded movement of capital and profits. But this does not mean that there are no political risks.
Government instability affects marketing because of the risks, which are inherent in foreign marketing. Much can be lost if a company invests money in a plant or an operation within a foreign country and is later subjected to restrictions, controls, or expropriation by the present or the new government. The most frequently encountered risks in foreign business are: Expropriation, exchange control, import restrictions, taxes, price control and labor problems.
Companies investing in foreign countries can minimize the political and economic risk by:
• Establishing a management of foreigners and nationals
• Employing nationals and having the national work with you, not for you
• Selling stock in the company to nationals
• Sharing the profits and earnings in a fair manner
• Understanding the traditions of the people in the host country.
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