Not only are the risk factors underlying the mode of entry largely contingent on the nature of the foreign environment, but these environmental forces also influence the development of marketing strategies. Decision making for expansion into global markets is strategically similar to the decision-making process guiding domestic marketing endeavors. More specifically, four marketing strategy variables product, price, distribution, and promotion need to be as systematically addressed in the context of international marketing as they are in formulating domestic marketing strategies. What is different about international marketing, however, is the environment in which marketing decisions must be made and the influence that environment has in shaping marketing strategies. The principal components of the international marketing environment include cultural, political, legal, commercial, and economic forces. Each of these forces represents informational inputs that must enter into the strategy formulation process.

Culture Culture refers to learned behavior over time, passed on from generation to generation. This behavior manifests itself in the form of social structure, habits, faith, customs, rituals, and religion, each of which tends to affect individual lifestyles, which in turn shape consumption patterns in the marketplace. Thus, what people of a particular country buy, why they buy, when they buy, where they buy, and how they buy are largely culturally determined. There are five elements of culture: material culture, social institutions, man and universe, aesthetics, and language. Each of these elements varies from country to country. The importance to marketers of understanding these often subtle variations has been illustrated by Dichter: In puritanical cultures it is customary to think of cleanliness as being next to godliness. The body and its functions are covered up as much as possible. But in Catholic and Latin countries, to fool too much with one’s body, to overindulge in bathing or toiletries, has opposite meaning. Accordingly, an advertising approach based on puritanical principles, threatening Frenchmen that if they didn’t brush their teeth regularly, they would develop cavities or would not find a lover, failed to impress. To fit the accepted concept of morality, the French advertising agency changed this approach to a permissive one. Similarly, language differences from one country to another could lead to problems because literal translations of words often connote different meanings. Two classic examples of marketing blunders include “Body by Fisher,” which when literally translated into Flemish meant “Corpse by Fisher,” and “Let Hertz Put You in the Driver’s Seat,” which when literally translated into Spanish meant “Let Hertz Make You a Chauffeur.”16 Even the choice of color for packaging and advertising may influence marketing decisions. For example, in the United States, white is equated with purity. In most Asian countries, however, white is associated with death in the same way that black is a symbol of mourning in American culture. In short, culture could have and has had far-reaching effects on the success of overseas marketing strategies.

Politics The laissez-faire era when governments had little if anything to do with the conduct of business is past history. Today, even in democratic societies, governments exercise a pervasive influence on business decisions. In fact, it is not uncommon to find that the governments of many overseas countries actually own and operate certain businesses. One example of a government-owned and governmentoperated business is Air France, the French airline company. Although the degree of intervention varies across countries, developments in developing countries perhaps represent situations where government policies are most extreme. Therefore, to be successful overseas, a global marketer should determine the most favorable political climates and exploit those opportunities first. Robinson suggests that the degree of political vulnerability in a given overseas market can be ascertained by researching certain key issues. Positive answers to the following questions signal political troubles for a foreign marketer:

1. Is the supply of the product ever subject to important political debates? (sugar, salt, gasoline, public utilities, medicines, foodstuffs)

2. Do other industries depend upon the production of the product? (cement, power, machine tools, construction machinery, steel)

3. Is the product considered socially or economically essential? (key drugs, laboratory equipment, medicines)

4. Is the product essential to agricultural industries? (farm tools and machinery, crops, fertilizers, seed)

5. Does the product affect national defense capabilities? (transportation industry, communications)

6. Does the product require important components that would be available from local sources and that otherwise would not be used as effectively? (labor, skill, materials)

7. Is there competition or is it likely from local manufacturers in the near future? (small, low-investment manufacturing)

8. Does the product relate to channels of mass communication media? (newsprint, radio equipment)

9. Is the product primarily a service?

10. Does the use of the product, or its design, rest upon some legal requirements? 1

1. Is the product potentially dangerous to the user? (explosives, drugs) 1

2. Does the product induce a net drain on scarce foreign exchange?

Legal Aspects Despite the best intentions, differences may reasonably arise between parties doing business. What recourse exists for the resolution of differences and whose laws will apply are of vital concern to global marketers. Although there is no simple solution to such a complex problem, it is important that marketers anticipate areas where disputes are likely to arise and establish beforehand agreements on the means to use and which country will have jurisdiction in the resolution of differences. Legal difficulties in marketing are most prevalent regarding the following issues:

1. Rules of competition about a. collusion b. discrimination against certain buyers c. promotional methods d. variable pricing e. exclusive territory agreement.

2. Retail price maintenance laws.

3. Cancellation of distributor or wholesaler agreements.

4. Product quality laws and controls.

5. Packaging laws.

6. Warranty and after-sales exposure.

7. Price controls and limitations on markups or markdowns.

8. Patents, trademarks, and copyright laws and practices. Needless to say, the marketer in conjunction with legal counsel should probe these areas and establish with the buyer various contingencies prior to the making of commitments.

Commercial Practices An international marketer must be thoroughly familiar with the business customs and practices in effect in overseas markets. Although some evidence suggests that business traditions in a country may undergo a change as a result of dealing with foreign corporations, such transformations are long-term processes. Thus, local customs and practices must be researched and adhered to in order to gain the confidence and support of local buyers, channel intermediaries, and other business operatives. The specific customs and practices of a country may be studied with reference to the following factors: Business Structure Size Ownership Various business publics Sources and level of authority Top management decision making Decentralized decision making Committee decision making Management Attitudes and Behavior Personal background Business status Objectives and aspirations Security and mobility Personal life Social acceptance Advancement Power Patterns of Competition Mode of Doing Business Level of contact Communications emphasis Formality and tempo Business ethics Negotiation emphasis

Economic Climate Only a small percentage of people in the world approach the standard of living experienced in the United States and in other advanced industrialized countries. The level of economic development in various countries can be explained and described through a number of measures. One common measure used to rank nations economically is per capita GNP. According to Rostow, the countries of the world can be grouped into the following stages of economic development: (a) the traditional, (b) the precondition for takeoff, (c) the takeoff, (d) the drive to maturity, and (e) mass consumption. Most African, Asian, and Latin American countries would be categorized as underdeveloped, having lower living standards and limited discretionary income. The amount of work required to earn enough to purchase a product varies greatly among different countries. For example, to buy one kilogram of sugar, a person in the United States needs to work a little over five minutes; in Greece it takes 53 minutes of labor to earn an equivalent amount. In many African and Asian countries, the effort needed to buy a kilogram of sugar and, for that matter, other similar products is even higher.