Discuss the need of entering International or Global markets.

The organisations try to enter international markets because of many reasons. If the domestic market is profitable and the organisation has a good market share, it would not like to take its business abroad. It is a challenge to learn the culture, habits, environment and needs of wants of target market in a different country. The organisation has to reinvest in designing marketing strategies, developing new or modified products for these new customers. But there are major factors that drive organisations to go international –

Market – First reason is lack of growth opportunities in the domestic market. To sustain its growth, an organisation moves to lure customers in more attractive markets. Since the organisation has a vast experience in marketing in domestic market, they rely heavily on the experience and brand value to enter new markets.

Competition – It is because of entry of competitors which can be domestic as well as international that an organisation sees no new customer base in the domestic market. The organisation tries to invest in an international market to maintain its profitability and counter competition. Sometimes the organisation enters into the competitor country. This helps reduce the organisations dependence on one market.

Environment (technology, Government policies) – The world is constantly shrinking into a global village with the advent of technology in past few decades. The organisations today have ample of opportunities in different countries to market their products. To improve standard of living and invite investments in their country, governments have also relaxed their laws which paved the way for international trading and foreign investments.

Increase in sales – In a domestic market, an organisation can serve its countries population. And majority of the population resides outside the country of operations. For example, 96% of the US population lives outside US. This means that the company can easily increase its sales if it goes international and serves customers outside its country of operations. If the organisations product is unique it has great potential in binging more revenues by entering international market.

Increase in profits – increase in revenue will result in increased profits. Because of less competition, organisations are not under pressure to keep prices low. They can put a reasonable price on the product to earn profits.

Exclusive market information – The organisation can have exclusive market information, situation, information on new government policy, information on buyers in the international market that may not be available with other organisation. For example, an organisation which manufactures cars may have information that a government in a certain country is interested in inviting car manufacturers to manufacture cars in their country to boost employment, etc.

Security – An organisation with operations in more than one country is less vulnerable to economic fluctuations in one country. The changes in marketing environment like climate change, life-style change, government policy change, etc. in one country rarely has effect on the same organisation in another country. The organisation which has global presence is less affected. If the organisation is working only in domestic market, environmental changes can has drastic effects.

Cost – Some of the foreign markets are more profitable than domestic markets. Exporting is most of the times favourable than domestic operations. To achieve economies of scale an organisation needs high sales. This can be achieved by gaining more customers in new markets.

For US companies 75% of the market for their offerings is outside the country. For a country like Japan, which is geographically small as compared to other nations like US, Germany, China; 90% of the market for its offerings is outside the country.

Innovations – increase in revenues and profits helps as organisation to finance new product development or any other new processes.