TOPIC 1: Globalization and Global Economic The History of Globalization

Environment Globalization is not a new concept. Traders traveled vast

distances in ancient times to buy commodities that were
rare and expensive for sale in their homelands. The
* Globalization refers to the spread of the flow of financial Industrial Revolution brought advances in transportation
products, goods, technology, information, and jobs across and communication in the 19th century that eased trade
national borders and cultures. In economic terms, it across borders.
describes an interdependence of nations around the globe The think tank, Peterson Institute for International
fostered through free trade. Economics (PIIE), states globalization stalled after World
War I, and nations' moved toward protectionism as they
Corporations gain a competitive advantage on multiple launched import taxes to more closely guard their
fronts through globalization. They can reduce operating industries in the aftermath of the conflict. This trend
costs by manufacturing abroad, buy raw materials more continued through the Great Depression and World War II
cheaply because of the reduction or removal of tariffs, and until the U.S. took on an instrumental role in reviving
most of all, they gain access to millions of new consumers. international trade.
One of the critical steps in the path to globalization came
with the North American Free Trade Agreement (NAFTA),
What Is an Example of Globalization? signed in 1993. One of NAFTA's many effects was to give
A simple example of globalization would be a car American auto manufacturers the incentive to relocate a
manufactured in the U.S. that sources parts from China, portion of their manufacturing to Mexico where they could
Japan, S. Korea, Sri Lanka, and South Africa. The car is then save on the costs of labor.
exported to Europe, where it is sold to a driver who fills Then, governments worldwide have integrated a free
the car's gas tank with gasoline refined from Saudi oil. market economic system through fiscal policies and trade
agreements over the last 20 years. The core of most trade
agreements is the removal or reduction of tariffs.
Globalization is a social, cultural, political, and legal
This evolution of economic systems has increased
phenomenon.
industrialization and financial opportunities in many
1. Social dimension. it leads to greater interaction among
nations. Governments now focus on removing barriers to
various populations.
trade and promoting international commerce.
2. Cultural dimension. Globalization represents the
exchange of ideas, values, and artistic expression among
cultures. Globalization also represents a trend toward the Positive Effects of Globalization
development of a single world culture. a. A larger market for goods and services
3. Political dimension. Globalization has shifted attention b. Cheaper consumer prices
to intergovernmental organizations like the United Nations c. Outsourcing can benefit both domestic firms and foreign
(UN) and the World Trade Organization (WTO). labor
4. Legal dimension. Globalization has altered how d. Increased standard of living
international law is created and enforced.

Negative Effects of Globalization

Some Facts About Globalization
On one hand, globalization has created new jobs and [Link] wealth in richer countries
economic growth through the cross-border flow of goods, b. Some poorer countries can be left behind
capital, and labor. On the other hand, this growth and job c. Poorer countries can be exploited of their labor and
creation are not distributed evenly across industries or physical & intellectual resources
countries. d. Cultures and the products consumed around the world
Specific industries in certain countries, such as textile can become homogenized
manufacturing in the U.S. or corn farming in Mexico, have
suffered severe disruption or outright collapse as a result Arguments of Globalization Proponents
of increased international competition. Proponents of globalization believe it allows developing
Globalization's motives are idealistic, as well as countries to catch up to industrialized nations through
opportunistic, but the development of a global free market increased manufacturing, diversification, economic
has benefited large corporations based in the Western expansion, and improvements in standards of living.
world. Its impact remains mixed for workers, cultures, and Outsourcing by companies brings jobs and technology to
small businesses around the globe, in both developed and developing countries, which helps them to grow their
emerging nations. economies. Trade initiatives increase cross-border trading
by removing supply-side and trade-related constraints.
Globalization has advanced social justice on an Globalization has both Positive and Negative Effects
international scale as well, and advocates report that it has Proponents of globalization will point to the dramatic
focused attention on human rights worldwide that might decline in poverty that has taken place throughout the
have otherwise been ignored on a large scale. world over the past several decades, which many
economists attribute in part to increased trade and
investment between nations.
Arguments that Counter Globalization Similarly, they will argue that globalization has allowed
One clear result of globalization is that an economic products and services such as cellphones, airplanes, and
downturn in one country can create a domino effect information technology to be spread far more widely
through its trade partners. For example, the 2008 financial throughout the world. On the other hand, critics of
crisis had a severe impact on Portugal, Ireland, Greece, and globalization will point to the negative impact it has had on
Spain. specific nations’ industries, which might face increased
All these countries were members of the European Union, competition from international firms.
which had to step in to bail out debt-laden nations, which
were thereafter known by the acronym PIIGS. Globalization can also have negative environmental
Globalization detractors argue that it has created a impacts due to economic development, industrialization,
concentration of wealth and power in the hands of a small and international travel.
corporate elite that can gobble up smaller competitors
around the globe.
Globalization has become a polarizing issue in the U.S. with How Does Globalization Impact Society?
the disappearance of entire industries to new locations Globalization has had a large impact on societies around
abroad. It's seen as a major factor in the economic squeeze the world, leading to massive migrations from rural to
on the middle class. industrial or urban areas, leading to the rapid growth of
For better and worse, globalization has also increased cities and trade hubs.
homogenization. Starbucks, Nike, and Gap dominate While this has led to an overall increase in incomes and a
commercial space in many nations. The sheer size and higher standard of living in general, it has also led to
reach of the U.S. have made the cultural exchange among problems of urbanization including crime, domestic
nations largely a one-sided affair. violence, homelessness, and poverty. Concepts of national
identity, culture, and consumption patterns also change as
goods from around the world become increasingly
Why Is Globalization Important? available and at low prices.
The competitiveness of global capitalism may also lead to
In essence, globalization is about the world becoming more individualistic ideals that contradict the cultural
increasingly interconnected. Countries today are more orientations of certain, more collectivist societies.
connected than ever before, due to factors such as air
travel, containerized sea shipping, international trade
agreements and legal treaties, and the Internet. International Business Environment
In the world of business, globalization is associated with International business refers to trading services and goods
trends such as outsourcing, free trade, and international in a worldwide market. It can also be recognized as the
supply chains. Globalization is important as it increases the globalization of trade. An International Business
size of the global market, and allows more and different Environment (IBE) refers to the surroundings in which
goods to be produced and sold for cheaper prices. international companies carry on their businesses. It plays
Globalization is also important because it is one of the a critical role in the development and growth of a country.
most powerful forces affecting the modern world, so much An International Business Environment (IBE) involves
so that it can be difficult to make sense of the world different aspects like political risks, cultural differences,
without understanding globalization. For example, many of exchange risks, and legal and taxation issues. Thus, it is
the largest and most successful corporations in the world mandatory for the people at the managerial levels to work
are in effect truly multinational organizations, with offices on factors comprising the international business
and supply chains stretched right across the world. environment as it is crucial for a country’s economy.
These companies would not be able to exist if not for the
complex network of trade routes, international legal
agreements, and telecommunications infrastructure that Forms of International Business Environment
were made possible through globalization. Important 1. Cross border trading (Import and export). Cross
political developments, such as the ongoing trade conflict Border Trade means the business of the Licensee and any
between the United States and China, are also directly Affiliate or related enterprise of the Licensee of the import,
related to globalization. export or transit of capacity or power carried out under
the terms of this license, and any associated billing,
collection, and customer service activities.
2. Franchising. A franchise (or franchising) is a method of related to the machines and materials used in
distributing products or services involving a franchisor, manufacturing services and goods. As organizations do not
who establishes the brand's trademark or trade name and have control over the external environment, their success
a business system, and a franchisee, who pays a royalty depends on how they will adapt to the external
and often an initial fee for the right to do business under environment.
the franchisor's name and system. A significant aspect of the international business
3. Licensing. Licensing is defined as a business environment is the level and acceptance of technological
arrangement, wherein a company authorizes another innovation in countries. The last decade of the twentieth
company by issuing a license to temporarily access its century saw significant advances in technology, and it is
intellectual property rights, i.e. manufacturing process, also continuing in the twenty-first century. Technology
brand name, copyright, trademark, patent, technology, often gives organizations a competitive advantage.
trade secret, etc. for adequate consideration and under Hence, organizations compete to access the latest
specified conditions. technology, and international organizations transfer
4. Joint venture. A joint venture (JV) is a business technology to be globally competitive.
arrangement in which two or more parties agree to pool 4. Cultural Environment in International Business. The
their resources for the purpose of accomplishing a specific cultural environment is one of the crucial components of
task. This task can be a new project or any other business the international business environment. It is the most
activity. difficult to understand as the cultural environment is
5. Foreign Direct Investment (FDI). It is a category of unseen. It has been described as a commonly held and
cross-border investment in which an investor resident in shared body of general values and beliefs that determine
one economy establishes a lasting interest in and a what is right for one group.
significant degree of influence over an enterprise resident National culture is defined as the body of general values
in another economy. and beliefs shared by a nation. Beliefs and values are
usually formed by factors such as language, history,
Types of International Business System geographic location, religion, education and government.
1. Political Environment in International Business. The Thus, organizations begin a cultural analysis by
political environment means the political risk, the understanding these factors.
government’s relationship with a business, and the type of 5. Competitive Environment. The competitive
government in the country. Conducting business environment differs from country to country. The political,
internationally implies dealing with different kinds of economic, and cultural environmental factors help
governments, levels of risk and relationships. determine the degree and type of competition that exists in
There are different types of political systems, such as one- a country. The most likely sources of competition can be
party states, multi-party democracies, dictatorships well understood for a domestic organization, but it isn’t
(military and non-military) and constitutional monarchies. the case when an organization moves to compete in a new
2. Economic Environment in International Business. environment.
The economic environment refers to the factors Competition can come from various sources, such as it can
contributing to the country’s attractiveness to foreign come from the private or public sector, large or small
businesses. It can differ from one nation to another. Better organizations, domestic or global organizations and
infrastructure, education, healthcare, technology, etc., are traditional or new competitors.
also often associated with high levels of economic c. There is equal growth in wealth, availability of goods and
development. services and price stability
The levels of economic activities combined with d. It brings a new environment of development, alliance,
infrastructure, education, and the degree of government affluence, stability, modernization, and technology across
control affect the facets of doing a business. Usually, the globe
countries are divided into three main economic categories,
i.e. more industrialized or developed, less developed or
third world, and the newly emerging or industrialiszng Benefits of the International Business Environment
economies. There are significant variations within each a. It unites and brings countries together, making the
economic category. world a big global village
Overall, the more developed countries are rich, the less b. It increases employment opportunities as it results in
developed are poor, and the newly industrializing are the exchange of information, ideas, capital across borders
those moving from poor to rich. These distinctions are and services
made based on the Gross Domestic Product per capita
(GDP/capita). TOPIC 2: Financial, Political and Legal Environment
3. Technological Environment in International What Is an International Financial Environment?
Business. The technological environment includes factors An international financial environment represents the
conditions for activity in the economy or in the financial travelers, and tourists who exchange one currency for
markets around the world. It can be influenced by another in the form of currency notes or traveler cheques.
something major, such as the credit worthiness of one
country's debt. Governments, corporations, and other
investors around the world participate in purchasing the 2. Currency Convertibility. Foreign exchange market
debt of other nations as profit opportunities arise. assumes that currencies of various countries are freely
A downgrade of a country's debt by a rating's agency could convertible into other currencies. But this assumption is
damage the value of that country's debt and suggest that a not true, because many countries restrict the residents
default might be imminent. These conditions have the and non-residents to convert the local currency into
potential to trigger a sell-off, which is when there are more foreign currency, which makes international business
sellers than buyers of risky debt in the markets. more difficult.
Just as an international financial environment can be Many international business firms use “counter trade”
influenced in a negative way, it can also be impacted in a practices to overcome the problem that arises due to
positive fashion. An attractive international financial currency convertibility restrictions.
environment is one where investment and economic
growth are ripe or already happening. When an economy 3. International Monetary System. Any country needs to
is growing, it leads to greater infrastructure development have its own monetary system and an authority to
and often a greater number of available jobs. maintain order in the system, and facilitate trade and
Subsequently, international investors might recognize an investment. India has its own monetary policy, and the
opportunity to allocate capital to these growth initiatives Reserve Bank of India (RBI) administers it. The same is
in an attempt to profit, while corporations could develop the case with world, its needs a monetary system to
partnerships or create new locations in the overseas promote trade and investment across the countries.
markets. All of this activity is likely to create a good International monetary system exists since 1944.
financial environment. The International Monetary Fund (IMF) and the World
Sometimes, macroeconomic events occur that cause a Bank have been maintaining order in the international
ripple effect throughout the international financial monetary system and general economic development
environment. Even if a condition or event unfolds in a respectively.
single country, the influence of that country's economy has
the potential to move the markets around the world. This 4. International Financial Markets. International financial
could be due to the fact that other countries are creditors market born in mid-fifties and gradually grown in size and
of the nation where an event, positive or negative, has scope. International financial markets comprises of
occurred or is likely to unfold. international banks, Eurocurrency market, Eurobond
The influence of a major global economy or an emerging market, and international stock market. International
market has the potential to cause a stir in the financial banks play a crucial role in financing international
environment, which could impact borrowing costs, cross- business by acting as both commercial banks and
border deals, and profit opportunities. investment banks.
Most international banking is undertaken through
reciprocal correspondent relationships between banks
Components of International Financial Environment located in different countries. But now a days large bank
1. Foreign Exchange Market. Foreign exchange market is have internationalized their operations they have their
the market in which money denominated in one currency own overseas operations so as to improve their ability to
is bought and sold with money denominated in another compete internationally.
currency. It is an over the counter market, because there is
no single physical or electronic market place or an
organized exchange with a central trade clearing 5. Balance of Payments. International trade and other
mechanism where traders meet and exchange currencies. international transactions result in a flow of funds
It spans the globe, with prices moving and currencies between countries. All transactions relating to the flow of
trading somewhere every hour of every business day. goods, services and funds across national boundaries are
World’s major trading starts each morning in Sydney and recorded in the balance of payments of the countries
Tokyo, and ends up in the San Francisco and Los-Angeles. concerned.
The foreign exchange market consists of two tiers: the Balance of payments (BoPs) is systematic statement that
inter bank market or wholesale market, and retail market systematically summarizes, for a specified period of time,
or client market. The participants in the wholesale market the monetary transactions of an economy with the rest of
are commercial banks, investment banks, corporations and the world. Put in simple words, the balance of payments of
central banks, and brokers who trade on their own a country is a systematic record of all transactions
account. between the ‘residents’ of a country and the rest of the
On the other hand, the retail market comprises of
world. can be prevented with certain checks and balances.

Definition of political environment 3. Press Freedom. The press provides the platform for a
Government actions which affects the operations of a multiplicity of voices to be heard. At national, regional and
company or business. These actions may be on local, local level, it is the public’s watchdog, activist and guardian
regional, national or international level. Business owners as well as educator, entertainer and contemporary
and managers pay close attention to the political chronicler. Press freedom is an essential pillar to any
environment to gauge how government actions will affect democracy. As the eyes and ears of the public, journalists
their company. must be able to report upon matters of public interest
without fear of arrest or other forms of interference.
Importance of Political Environment on International
Business
International business is important to individual 4. Tariffs. A tariff is a tax imposed by one country on the
companies and the economy generally. With Internet goods and services imported from another country to
globalization of the world marketplace, companies are influence it, raise revenues, or protect competitive
competing with businesses from around the world advantages.
whether they want to or not. Knowing how to take
advantage of international business opportunities can
ensure a company's continued success. 5. Trade Controls. Trade Controls are restrictions imposed
Also, a measure of the strength of the economy is based on on the transfer of items from one country to another by
the quantity of business exports and imports to and from any individual, company, government or public body.
the international marketplace, making international These controls can help to prevent certain goods and
business extremely important to the quality of life in any technologies from falling into the wrong hands. These
country. 'wrong' hands may often be countries with embargoes
imposed.

Objectives of Political Environment

Each of the world’s national governments regulates trade 6. Government Stability. It quantifies the government
and commerce with other countries and attempts to functioning in office and reduced risks of violence
control the access of outside enterprises to national motivated by political interests. It also checks the
resources. Every country has its own unique legal and independence of the government from social pressures
regulatory system that affects the operations and activities from different political entities in the country.
of the global enterprise, including the global marketer’s
ability to address market opportunities and threats. 7. Other Political Factors Affecting Business. Among these
Laws and regulations constrain the cross-border other factors are Education Law, Anti-trust law,
movement of products, services, people, money, and know- Employment law, Discrimination law, Data protection law,
how. The global marketer must attempt to comply with Environmental Law, Health and safety law, Competition
each set of national constraints. The fact that laws and regulation, Regulation and deregulation, Tax policy (tax
regulations are frequently ambiguous and continually rates and incentives),
changing hamper these efforts. Government involvement in trade unions and agreements,
Factors Affecting Political Environment Import restrictions on quality and quantity of product,
1. Bureaucracy. The term bureaucracy refers to a complex Intellectual property law (Copyright, patents), Consumer
organization that has multilayered systems and processes. protection and eCommerce and Laws that regulate
The systems and processes that are put in place effectively environment pollution.
make decision-making slow. They are designed to maintain
uniformity and control within the organization. Legal Environment in International Business
The term legal environment includes various legislations
2. Corruption. Corruption is dishonest behavior by those in that have been passed by the government authorities,
positions of power. Those who abuse their power may be Court judgments or any of the government administrative
individuals or they may belong to organizations, such as orders, or any of the decisions that have been taken by
businesses or governments. various commissions or agencies which is applicable at the
Corruption can entail a variety of actions, including giving center, state, and also at local levels.
or accepting bribes or inappropriate gifts, double-dealing, To exist, a company needs to follow all the rules and
and defrauding investors. Corrupt behavior is often the regulations set up by the legal environment. The structure
result of government intervention in the economy but it of the legal environment is very complex and dynamic,
which plays a crucial role in shaping and structuring our
society and economy as a whole. Culture is complex, and fully appreciating its influence
takes significant time, effort, and expertise. Various
features of a culture can create an illusion of similarity, but
Types of The Legal Environment marketers need to dig deeper to make sure they truly
1. Social environment. Under the social environment, rules, understand the people and environments in which they
and regulations govern various social issues and concerns work.
like environmental protection, discrimination, and issues Even a common language does not guarantee similarity of
like human rights. interpretation. For example, in the U.S. we purchase “cans”
of various grocery products, but the British purchase
2. Competitive environment. Under a competitive “tins.” Dimensions of cultures include language, customs
environment, there are specific rules and regulations and taboos, values, time and punctuality, business norms,
which are followed by companies to avoid unethical acts. religious beliefs and celebrations.
This includes intellectual property rights, protecting trade
secret laws, and antitrust laws. These are the laws that Aspects of the Significance of Culture in International
provide a framework for companies to maintain a healthy Business
competition level. 1. Entry into new markets. Conducting international
business involves entering new markets. Companies must
3. International legal environment. The international legal display sensitivity towards different cultures when dealing
rules and regulations are made to govern the business with foreign clients or planning a marketing campaign for
activities between two different countries. International their foreign subsidiaries. Business executives should start
laws are like trade laws, contractual agreements between by studying the local market’s beliefs, values, and customs.
different countries, regulation of certain kinds of
industries. Through these international legal laws, it is 2. Business negotiations. Different cultures have distinct
possible to have good communication and smooth trading perspectives on business negotiations. While some
of goods in services between different countries. consider negotiations a signed contract between two
parties, others view it as the beginning of a strong business
4. Regulatory environment. Regulatory environment rules relationship.
and regulations are generally made by government Therefore, you must understand how your counterpart
Agencies and authorities for the concern of public safety views a negotiation’s purpose, whether they want to build
and fair competition. The government’s communications a long-term rewarding relationship or are looking at it as a
commission and the security and exchange commission are one-time deal.
examples of regulatory bodies.
3. Personal styles. Culture in international business
5. Domestic legal environment. A company in a specific strongly influences personal style, from an individual’s
country operates under certain rules and regulations of dressing sense to interacting with others. Each culture has
that country, which is regarded as a domestic legal its customs and formalities for business negotiations and
environment. Examples of domestic legal environment meetings. Hence, knowing the subtleties of foreign cultures
laws are trade laws of a country, taxation laws of a specific and respecting appropriate formalities go a long way in
country, labour laws, and other commercial and making the right impression and bagging crucial business
environmental laws. deals.

TOPIC 3: Cultural Issues and Buying Behaviors 4. Team organization. Culture is a decisive factor that
Cultural Factors Shaping the Global Marketing affects how organizations negotiate a deal. While some
Environment believe in consensus decision-making, others believe in the
Culture refers to the influence of religious, family, supremacy of a single leader who takes all decisions.
educational, and social systems on people, how they live Whether the culture promotes hierarchical roles or
their lives, and the choices they make. Marketing always societal equality, these values affect all parties in a
exists in an environment shaped by culture. business deal.
Organizations that intend to market products in different
countries must be sensitive to the cultural factors at work 5. Inclusion and diversity. An organization that welcomes
in their target markets. Even cultural differences between cross-cultural people, ideas, and customs create a
different countries–or between different regions in the benchmark as an inclusive and diverse workspace.
same country–seem small, marketers who ignore them Sensitivity and acceptance of diverse cultures help create a
risk failure in implementing their programs.
dynamic and talented workforce. Plus, these values leave a discrimination, and cultural conflicts are barriers to
lasting impression on clients, customers, investors, and international trade.
stakeholders.

6. Adapting management practices. Every organization has

International Business and Cross-cultural Challenges unique management models and practices with specific
1. Understanding local business practices. One of the core underlying cultural principles. While it sounds perfect, the
cultural issues in international business is the failure of problem arises when these practices dissipate across
organizations to understand local business customs. cultures without factoring in cultural variations. It
Ignorance of how to conduct business in a foreign country becomes the organization’s responsibility to educate its
without considering cultural, political, and economic staff on how to overcome the multiple layers of cultural
influences is a significant roadblock in international trade. barriers.
Hence, business executives should understand how teams
in different cultures organize and participate in decision-
making. Addressing the Cultural Barriers in International
For instance, in some Asian countries, culture strongly Business
influences how the workforce responds to management 1. Create a culturally aware workplace. One of the best
roles. In Japan, social hierarchies are valued, and seniors ways to overcome cultural differences in global business is
are paid the utmost respect. However, in the US, there is a to create space for the cultural requirements of your
comparatively flat organizational structure. colleagues and employees in a foreign country. For
instance, factor in cultural and religious holidays, customs,
and dietary needs and integrate them into your
2. Identifying regional differences. Most often, organization’s policies to make everyone feel included.
organizations focusing on the bigger picture overlook
regional differences in emerging markets. Subcultures go
beyond regional and ethnic variations to include other 2. Promote open communication. International business
elements, such as differences in female and male consumer and cross-cultural communication go hand-in-hand.
behavior and thinking. Promoting a culture of open communication is the only
way culturally diverse teams can overcome their
differences and work together. Global leaders must lead by
3. Adapting business models to the local market. Culture example.
strongly influences consumer attitude and behavior. They should promote open communications, listen to
However, many companies go by the one-size-fits-all everyone’s opinions, and create a safe and transparent
approach without realizing that personalization is the workspace. Employees should have a safe space to talk
secret to creating a large and diverse customer base. They about their challenges without any judgment.
must restructure their business models to reflect local
customs, habits, and preferences of different buyer
personas. 3. Engage in diversity training. When companies try to
include and accept people from diverse cultural
backgrounds, they take one step in the right direction of
4. Adapting human resource policies. Attracting, retaining, overcoming cultural barriers in international business.
and leveraging global talent can be challenging for a Diversity training is an effective tool that allows employees
culturally ignorant foreign company that employs local to identify hidden prejudices, biases, and other obstacles
staff. Organizational commitment, job satisfaction, and create opportunities wherein employees can learn
motivation, and conflict resolution vary across cultures. how to embrace diversity.
The key to understanding these differences is rethinking
the human resource policies to accommodate local cultural
profiles. Human Resource teams should be aware of the 4. Cultivate a shared company culture. When you have a
cultural differences while recruiting and communicating culturally diverse team, the best way to unite the members
with foreign employees. is by establishing a strong company culture reflecting the
interests of all team members. As a team leader, you must
ensure that your team functions like one unit to discuss
5. Creating a diverse and inclusive workplace. A diverse differences, voice grievances, and find solutions to
and inclusive workplace attracts and retains top global business challenges. When members work remotely, it’s
talent, responds to the diverse needs of customers, crucial to create a team culture beyond stereotypes.
increases access to new clients, fosters creativity, and
drives innovation. Diversity and inclusion issues vary
across nations, and one shall take note that bias, 5. Understand the local culture. Before you get busy
conducting business operations in a new market, focus on
understanding the region’s business practices. Instead of Ghana, or Nigeria, arriving late for meetings is acceptable.
taking a full-blown global approach, start with a localized
mindset and gradually implement changes in your
business. 5. Negotiation Style. While engaging in international
business, negotiation becomes a principal component. The
way people behave and communicate reflects their
Cultural Differences in International Business negotiation style. Organizations must understand the
1. Interaction. Professional gestures and interactions that accepted negotiation norms in different countries and act
are acceptable in one culture may be offensive or accordingly. For instance, in some Asian countries,
inappropriate in a different cultural setup. Thus, if you are negotiations are deemed crucial for building stronger
accustomed to shaking hands, making eye contact, and business relations. However, it is seen as a contract
kissing people on the cheek as part of formal interactions focusing on a win-lose process in Spain.
in your country, the same may not apply to foreign clients
and business partners.
Learning about acceptable and suitable business etiquette Consumer Behavior Types
becomes crucial. For instance, while the Japanese consider 1. Complex Buying Behavior. Complex buying behavior
addressing someone by their first name in a first meeting occurs when an individual buys an expensive and
disrespectful, Americans are more comfortable using first infrequently purchased product, such as a car, new home,
names in a formal setup. or treadmill. Consumers are often highly involved with this
type of purchase, and they take time to research the
significant differences between various brands. Complex
2. Communication. Communication methods vary across purchases often involve a deep sense of buyer
cultures. So, understanding the language and commitment based on their associated costs.
communication style of your target market is an excellent
way to bridge cultural gaps in the international business
arena. For example, Israeli and American cultures 2. Dissonance-Reducing Buying Behavior. Dissonance-
emphasize straightforward methods of communication, reducing buying behavior occurs when a consumer is
unlike the Japanese, who rely on indirect communication. highly involved in the purchase of an item, but they have a
Likewise, Finns tend to be brief and use direct hard time pinpointing the difference between various
communication strategies, whereas Indians typically brands. For example, if someone wants to purchase a flat-
communicate in indirect and subtle ways. screen TV, and each model they are looking at has the
same screen resolution, they may feel a strong sense of
conflict or tension.
3. Organizational hierarchy. Different cultures perceive
organizational hierarchy differently. When expanding into The “dissonance” occurs when a consumer is worried they
new markets, you must realize that your host country’s will make the wrong choice and will regret their decision
approach and attitude towards the corporate structure later. Dissonance-reducing buying behavior can also
may differ from yours. Hence, it could be challenging to happen with other types of purchases, such as
define roles in cross-cultural teams or determine who has lawnmowers and engagement rings.
the authority on the other side.
While Japan has a straightforward organizational structure 3. Habitual Buying Behavior. Habitual buying behavior
promoting hierarchy, Sweden has a flat organizational happens when consumers purchase something on a
hierarchy that emphasizes equality. Furthermore, while regular basis, but they are not emotionally attached to a
the Chinese and Japanese stress consensus decision- brand. The purchase of items such as bread, milk, eggs, and
making, it is more common for American teams to have a gasoline are possible examples of habitual buying
leader with ultimate authority. behavior.

4. Workplace etiquette. Differences in workplace etiquette 4. Variety Seeking Buying Behavior. Variety seeking buying
are a vital consideration when discussing culture’s impact behavior happens when individuals decide to buy a
on international business. When you engage with different product in the same product line, such as a new
multinational teams, you will encounter stark differences brand of toothpaste, not because they were dissatisfied
in workplace etiquette, reflecting cultural diversity. Let’s with their initial purchase, but because they want to try
consider punctuality. something new. Other examples may include buyers opting
You must reach in time when dealing with American, for a new brand of cologne or a new type of hair styling
Japanese, Russian, or South Korean clients and colleagues. product.
On the other hand, arriving early for an appointment is
standard in Germany. But when in Malaysia, China, Mexico,
Integrating Consumer Behavior Patterns in Marketing insufficiently large, or has negligible spending power. A
Strategies viable market segment is usually a homogenous group
1. Branding Strategies. Branding strategy is about more with clearly defined characteristics such as age group,
than creating a logo and a tagline. For a brand to be socio-economic background and brand perception.
successful, it must understand who its customers are, the Longevity is also important here: no market segmentation
problem it solves for those customers, and the personality expert would recommend focusing on an unstable
it wants to convey via marketing efforts. Companies must customer group that is likely to disperse, or change beyond
understand why their brand exists, what purpose it serves, recognition within a year or two.
and the problem it fixes, to effectively communicate their
brand’s story.
3. Accessible: When demarcating a market segment, it is
important to consider how the group might be accessed
2. Technology. Marketers must also understand how tech- and, crucially, whether this falls within the strengths and
adapted their target clientele is. For example, if a brand’s abilities of the company’s marketing department. Different
target demographic is college degree holders over the age segments might respond better to outdoor advertising,
of 65, it may not be inclined to spend its marketing dollars social media campaigns, television infomercials, or any
on Instagram ads, since Instagram is not a place where that number of other approaches.
demographic spends much time.
Technological advances in areas such as voice-activated
searches can also be used to collect data that, in turn, can 4. Differentiable: An ideal market segment should be
be used to provide data-driven insights into consumer internally homogeneous (i.e. all customers within the
behavior. Marketers should also consider whether target segment have similar preferences and characteristics), but
audiences are comfortable shopping online, or whether externally heterogeneous. Differences between market
they prefer in-person shopping experiences. segments should be clearly defined, so that the campaigns,
products and marketing tools applied to them can be
implemented without overlap.
3. Engagement. Marketers who study buyers’ behavior
patterns understand how to use a brand’s identity to
connect with its client base. In addition to helping cultivate 5. Actionable: The market segment must have practical
stronger relationships with current and potential value – its characteristics must provide supporting data for
customers, developing a deep knowledge of consumer a marketing position or sales approach, and this in turn
behavior can also help marketers forge communication must have outcomes that are easily quantified, ideally in
and engagement strategies. relation to the existing measurements of the market
segment as defined by initial market research.

TOPIC 4: Global Segmentation and Positioning

What Is Market Segmentation? Types of Market Segmentation
Market segmentation is a marketing term that refers to 1. Demographic Segmentation. Demographic segmentation
aggregating prospective buyers into groups or segments is one of the simple, common methods of market
with common needs and who respond similarly to a segmentation. It involves breaking the market into
marketing action. Market segmentation enables companies customer demographics as age, income, gender, race,
to target different categories of consumers who perceive education, or occupation. This market segmentation
the full value of certain products and services differently strategy assumes that individuals with similar
from one another. demographics will have similar needs.

Example: The market segmentation strategy for a new

Market segmentation criteria video game console may reveal that most users are young
1. Measurable: Market segments are usually measured in males with disposable income.
terms of sales value or volume (i.e. the number of
customers within the segment). Reliable market research 2. Firmographic Segmentation. Firmographic segmentation
should be able to identify the size of a market segment to a is the same concept as demographic segmentation.
reasonable degree of accuracy, so that strategists can then However, instead of analyzing individuals, this strategy
decide whether, how, and to what extent they should focus looks at organizations and looks at a company's number of
their efforts on marketing to this segment. employees, number of customers, number of offices, or
annual revenue.
2. Substantial: Simply put, there would be no point in Example: A corporate software provider may approach a
wasting marketing budget on a market segment that is multinational firm with a more diverse, customizable suite
while approaching smaller companies with a fixed fee,
more simple product. Phase 3: Evaluate Potential Segments
a. What risks are there that our data is not representative of
the true market segments?; b. Why should we choose to cater
3. Geographic Segmentation. Geographic segmentation is to one type of customer over another?; c. What is the long-
technically a subset of demographic segmentation. This term repercussion of choosing one market segment over
approach groups customers by physical location, assuming another?; and d. What is the company's ideal customer
that people within a given geographical area may have profile, and which segments best overlap with this "perfect
similar needs. This strategy is more useful for larger customer"?
companies seeking to expand into different branches,
offices, or locations.
Example: A clothing retailer may display more raingear in Phase 4: Develop Segment Strategy
their Pacific Northwest locations compared to their a. How can the company test its assumptions on a sample
Southwest locations. test market?; b. What defines a successful marketing
segment strategy?; and c. How can the company measure
whether the strategy is working?
4. Behavioral Segmentation. Behavioral segmentation
relies heavily on market data, consumer actions, and
decision-making patterns of customers. This approach Phase 5: Launch and Monitor
groups consumers based on how they have previously a. Who are key stakeholders that can provide feedback after
interacted with markets and products. the market segmentation strategy has been unveiled?; b.
This approach assumes that consumers prior spending What barriers to execution exist, and how can they can be
habits are an indicator of what they may buy in the future, overcome?; c. How should the launch of the marketing
though spending habits may change over time or in campaign be communicated internally?
response to global events. Example: Millennial consumers
traditionally buy more craft beer, while older generations
are traditionally more likely to buy national brands. Benefits of Market Segmentation
1. Increased resource efficiency. Marketing segmentation
allows management to focus on certain demographics or
5. Psychographic Segmentation. Often the most difficult customers. Instead of trying to promote products to the
market segmentation approach, psychographic entire market, marketing segmentation allows a focused,
segmentation strives to classify consumers based on their precise approach that often costs less compared to a broad
lifestyle, personality, opinions, and interests. This may be reach approach.
more difficult to achieve, as these traits (1) may change
easily and (2) may not have readily available objective
data. 2. Stronger brand image. Marketing segment forces
However, this approach may yield strongest market management to consider how it wants to be perceived by a
segment results as it groups individuals based on intrinsic specific group of people. Once the market segment is
motivators as opposed to external data points. Example: A identified, management must then consider what message
fitness apparel company may target individuals based on to craft.
their interest in playing or watching a variety of sports. Because this message is directed at a target audience, a
company's branding and messaging is more likely to be
very intentional. This may also have an indirect effect of
How to Determine Your Market Segment causing better customer experiences with the company.
Phase I: Setting Expectations/Objectives
a. What is the purpose or goal of performing market
segmentation?; b. What does the company hope to find out 3. Greater potential for brand loyalty. Marketing
by performing marketing segmentation?; and c. Does the segmentation increases the opportunity for consumers to
company have any expectations on what market segments build long-term relationships with a company. More direct,
may exist? personal marketing approaches may resonate with
customers and foster a sense of inclusion, community, and
a sense of belonging.
Phase 2: Identify Customer Segments In addition, market segmentation increases the probability
a. What segments are the company's competitors selling to?; that you land the right client that fits your product line and
b. What publicly available information is relevant and demographic.
available to our market?; c. What data do we want to collect,
and how can we collect it?; and d. Which of the five types of
market segments do we want to segment by? 4. Stronger market differentiation. Market segmentation
gives a company the opportunity to pinpoint the exact
message they way to convey to the market and to
competitors. This can also help create product Positioning Dynamics
differentiation by communicating specifically how a Market Positioning enables businesses to establish a
company is different from its competitors. competitive advantage and a distinct value proposition in
Instead of a broad approach to marketing, management the market. It can be achieved through various strategies,
crafts a specific image that is more likely to be memorable such as emphasizing specific features, appealing to certain
and specific. customer segments, or highlighting particular benefits.
When done effectively, it attracts the desired customer
base and fosters brand loyalty. Market positioning,
5. Better targeted digital advertising. Marketing targeting, and segmentation is an inevitable part of
segmentation enables a company to perform better customer acquisition for firms in the current competitive
targeted advertising strategies. This includes marketing scenario.
plans that direct effort towards specific ages, locations, or
habits via social media.
Steps in Effective Positioning
1. Determine the brand’s current position, including its
Limitations of Market Segmentation markets, target audience, mission, vision, Unique Selling
1. Higher upfront marketing expenses. Marketing Proposition (USP), and problem-solving ability.
segmentation has the long-term goal of being efficient.
However, to capture this efficiency, companies must often
spend resources upfront to gain the insight, data, and 2. Conduct competitor analysis, i.e., analyze market
research into their customer base and the broad markets. acquisition, strengths, and weaknesses.

2. Increased product line complexity. Marketing 3. Compare and find the features that differentiate a
segmentation takes a large market and attempts to break it product or service from that of the competitors.
into more specific, manageable pieces. This has the
downside risk of creating an overly complex, fractionalized
product line that focuses too deeply on catering to specific 4. Summarize and present the identified unique feature or
market segments. benefit to form a positioning statement for the brand
Instead of a company having a cohesive product line, a
company's marketing mix may become too confusing and 5. Add a slogan or tagline that justifies the brand’s
inconsistently communicate its overall brand. positioning statement to inform and attract potential
customers
3. Greater risk of misassumptions. Market segmentation is
rooted in the assumption that similar demographics will 6. Test the positioning strategy using various qualitative
share common needs. This may not always be the case. By and quantitative research tactics to understand customer
grouping a population together with the belief that they responses
share common traits, a company may risk misidentifying
the needs, values, or motivations within individuals of a
given population. Positioning Strategies
1. Preemptive: This is a positioning strategy where the
company promotes itself as the first (pioneer) to offer a
4. Higher reliance on reliable data. Market segmentation is specific product, service, benefit, or feature.
only as strong as the underlying data that support the
claims that are made. This means being mindful of what
sources are used to pull in data. This also means being 2. Value-Based or Pricing: Per this positioning type, the
conscious of changing trends and when market segments company emphasizes the affordability and cost-
may have shifted from prior studies.. effectiveness of a product or service to target price-
conscious customers.

What Is Market Positioning?

Market Positioning refers to creating a unique proposition 3. Quality: This approach focuses on the product or service
for a product, brand, or enterprise in the minds of offering’s superiority, reliability, and performance to
prospective customers, distinguishing it from competitors. appeal to customers seeking quality or premium products
It involves interpreting and meeting the requirements and and services.
preferences of target customers and presenting the
product or service offering in a unique and attractive
manner.
4. Differentiation: The differentiation positioning considerably. For example, the messaging, advertising, and
highlights the unique features or attributes that set a PR approach can change in every new market.
product or service apart from its competitors.

Effective global marketing

5. Niche: Under this positioning tactic, a brand offers a If you implement strategies effectively, it can benefit the
specialized product or service to target and cater to a bottom line of a company in various ways, including better
specific, well-defined market segment with a refined public perception and increased profit margins. Embracing
customer base. new markets can help you discover business potential and
allow for new opportunities and stronger international
relationships.
6. User group: This method involves positioning a product It's important to know your target audience.
based on its target user groups, such as women, senior Understanding who needs your products, and how to
citizens, or infants. deliver the messaging in a way that grows the company, is
the core of global marketing. If a business chooses not to
7. Convenience: Companies adhering to this strategy use expand internationally, it can face immediate competition
convenience positioning to promote their product or from international companies that are extending their
service. Convenience is attached to a specific attribute, presence.
such as availability, top-notch service, high usability, or
anything else that makes the product or service seem Tips for developing a successful global marketing
convenient and effortless to customers. strategy
1. Know your audience. Familiarizing yourself with your
8. Customer Service: This strategy is commonly adopted by customers' regions of origin and why they are choosing to
all kinds of businesses. Both services and products can be support your products or services can help determine
covered under this category. It aims to address specific where a business is in higher demand.
customer needs or problems by focusing on maintaining a
user-friendly approach, ensuring effective communication, 2. Set achievable goals. It's important to determine what
and offering adequate support from time to time. kind of customer retention you can realistically expect in
every region where you expand. By setting specific goals,
9. Social Media: Social media is one of the biggest you can use them as benchmarks for your progress.
marketing channels in today’s times. Companies often
target social media users by constantly running ads, 3. Recognize your competitors. As you expand
campaigns, and events online. They may also use targeted internationally, it's important to identify other businesses
advertising techniques to prompt customers to view their that sell similar services and products. Understanding the
products and services. culture of local competition in every region and how they
approach the market can help you develop a better
TOPIC 5: Global Marketing Strategies and Market Entry strategy.
Modes
What are global marketing strategies? Types of marketing strategies
Global marketing strategies are a part of an overall 1. Standardization. In a standardization strategy, you sell
business plan. It is the process of adjusting the marketing the same products in every location. A standardization
strategies of a company to better fit the needs of potential strategy keeps all of the company's control centralized
customers in other countries. Entering a new international rather than delegating decisions to other local markets.
market can give a company access to a new customer base, Some of the benefits of a standardization strategy include
which can increase company revenue. the ability to develop products quicker and easily
This may also have several other benefits, such as reduced coordinate activities across locations.
labor costs, access to additional resources, and the ability Imagine that you run a luxury purse company, and are
to diversify risks. Creating a consistent brand that feels choosing to expand the business on a global scale. Using
familiar to everyone is a priority when expanding to the standardization strategy, you may sell essentially the
international markets. When executing your marketing same purses at every location. Less variation in your
strategies, some aspects of the business can remain the products/services is important with this strategy. This
same, while other aspects can be greatly affected. strategy allows you to keep your products consistent in
For example, the name and logo can likely remain the every market.
same, although some businesses choose to change these
aspects as well. Your marketing approach may also change
2. International. An international strategy involves Whether it be your website, marketing materials or the
importing and exporting products. Using an international actual product or service you sell, it's important to make
strategy can allow you to work with foreign suppliers and consumers feel like it's designed and developed in their
sell to customers around the world while keeping your country of origin. This form of marketing may rely on
physical premises within your home country. Typically, instilling a sense of national pride in some cases.
international strategies still focus on the company's home
market while doing some business overseas.
This strategy incorporates ideals from many countries. For Global standardization
context, the physical production of purses would still occur A global standardization strategy is the ability to use
in your home country, but you would still export some consistency in every aspect of your brand. Using consistent
purses internationally. messaging across your brand can create trust between the
consumer and the company. Although global
standardization can oftentimes cost less since it requires
3. Multinational. When you use a multinational strategy, fewer campaigns, it's important to recognize when a global
you can cater your products to each individual market. standardization strategy can be the most effective.
This includes physical business locations and staff based in Global standardization requires universal appeal despite
these various locations. The key benefit of using a cultural or locational differences. If there are no barriers in
multinational strategy is the ability to alter the business to terms of understanding the product or service you're
individual locations. selling in each country, then a global standardization
Using the multinational strategy, you create different approach can be a good strategy for a business.
luxury purses for each location that you sell. More
variation in your products/services is important with this
strategy. This allows you to adjust your purses to appeal to Market entry strategies for international markets
different markets. Prices may also vary depending on the 1. Exporting. Exporting involves marketing the products
demographic or the demand for the product in a market. you produce in the countries in which you intend to sell
them. Some companies use direct exporting, in which they
sell the product they manufacture in international markets
Utilizing e-commerce to your benefit without third-party involvement. Companies that sell
E-commerce enables companies of all sizes to expand luxury products or have sold their goods in global markets
internationally with the help of good global marketing in the past often choose this method.
approaches. The internet alters the way people shop and Alternatively, a company may export indirectly by using
the way business owners are marketing their products. E- the services of agents, such as international distributors.
commerce allows companies to easily expand into other Businesses often choose indirect exporting if they're just
markets and reach a wider range of consumers without beginning to distribute internationally. While companies
having a physical store in every region. pay agents for their services, indirect exporting often
Although expansion is more easily accessible, it creates a results in a return on investment (ROI) because the agents
competitive market. Brands prove their products or know what it takes to succeed in the markets in which they
services worthy to gain customers' trust. Through social work.
media, websites, and live chats, businesses can adopt new
consumer shopping habits and learn what's trending. It's
important to create an online presence for potential 2. Piggybacking. If your company has contacts who work
customers to learn about your brand. for organizations that currently sell products overseas, you
Plus, online platforms store data and can track results to may want to consider piggybacking. This market entry
improve the relationship between the business and the strategy involves asking other businesses whether you can
consumer. You can use online data from your platforms to add your product to their overseas inventory.
refine your marketing campaigns and specify your goals. If your company and an international company agree to
There is more to global marketing than simply selling your this arrangement, both parties share the profit for each
products or services internationally, but keep in mind that sale. Your company can also manage the risk of selling
e-commerce relies heavily on trends and is a competitive overseas by allowing its partner to handle international
field. marketing while your company focuses on domestic retail.

Localization 3. Countertrade. Countertrade is a common form of

The goal of localizing your strategies is to create an indirect international marketing. Countertrading functions
experience for customers that makes them feel like the as a barter system in which companies trade each other's
company personalizes it for them. Determining what goods instead of offering their products for purchase.
connects your customers is the most important factor in While legal, the system does not have specific legal
localizing your strategies. regulations like other forms of market entry do.
This means companies may solve problems like ensuring for your company. As a market entry strategy, it refers to
other companies understand the value of their products making an agreement with another company to handle
and attempting to acquire goods at a similar level of international product sales on your company's behalf.
quality. Countertrading is a cost-effective choice for many Companies that choose to outsource may relinquish a
businesses because the practice may exempt them from certain amount of control over the sale of their products,
import quotas. but they may justify this risk with the revenue they save on
employment costs.

4. Licensing. Licensing occurs when one company transfers

the right to use or sell a product to another company. A 9. Greenfield investments. Greenfield investments are
company may choose this method if it has a product that's complex market entry strategies that some companies
in demand and the company to which it plans to license the choose to use. These investments involve buying the land
product has a large market. For example, a movie and resources to build a facility internationally and hiring
production company may sell a school supply company the a staff to run it.
right to use images of movie characters on backpacks, Greenfield investments may subject a company to high
lunchboxes and notebooks. risks and significant costs, but they can also help
companies comply with government regulations in a new
market. These investments typically benefit large,
5. Joint ventures. Some companies attempt to minimize the established organizations as opposed to new enterprises.
risk of entering an international market by creating joint
ventures with other companies that plan to sell in the
global marketplace. Since joint ventures often function like 10. Turnkey projects. Turnkey projects apply specifically
large, independent companies rather than a combination to companies that plan, develop and construct new
of two smaller companies, they have the potential to earn buildings for their clients. The term "turnkey" refers to the
more revenue than individual companies. idea that the client can simply turn a key in a lock and
This market entry strategy carries the risk of an imbalance enter a fully operational facility.
in company involvement, but both parties can work You might consider this market entry strategy if your
together to establish fair processes and help prevent this clients comprise foreign government agencies.
issue. International financial agencies usually manage
arrangements between companies and their overseas
clients to ensure the companies provide high-quality
6. Company ownership. If your company plans to sell a service and the client pays the full amount due.
product internationally without managing the shipment
and distribution of the goods you produce, you might
consider purchasing an existing company in the country in
which you want to do business.
Owning a company established in your international TOPIC 6: Global Product Development
market gives your organization credibility as a local What is product development?
business, which can help boost sales. Company ownership Product development is the process of building a new
costs more than most market entry strategies, but it has product, from ideation all the way through launch. Product
the potential to lead to a high ROI. development begins with those initial brainstorming
sessions, when you’re just discussing a budding idea. From
there, the process is creative but strategic, and you may
7. Franchising. A franchise is a chain retail company in have seen it done in a million different ways.
which an individual or group buyer pays for the right to But without clear organization, it can be hard to mesh
manage company branches on the company's behalf. creativity and strategy effectively. Which is where the
Franchises occur most commonly in North America, but product development process comes in—a six step
they exist globally and offer businesses the opportunity to framework to help you standardize and define your work.
expand overseas.
Franchising typically requires strong brand recognition, as
consumers in your target market should know what you Stages of Product Development
offer and have a desire to purchase it. For well-known 1. Idea generation (Ideation). The initial stage of the
brands, franchising offers companies a way to earn a profit product development process begins by generating new
while taking an indirect management approach. product ideas. This is the product innovation stage, where
you brainstorm product concepts based on customer
needs, concept testing, and market research.
8. Outsourcing. Outsourcing involves hiring another It’s a good idea to consider the following factors when
company to manage certain aspects of business operations initiating a new product concept:
a. Target market: Your target market is the consumer idea to think about this when defining your product to
profile you’re building your product for. These are your begin planning ahead of time.
potential customers. This is important to identify in the
beginning so you can build your product concept around
your target market from the start. 3. Prototyping. During the prototyping stage, your team
b. Existing products: When you have a new product will intensively research and document the product by
concept, it’s a good idea to evaluate your existing product creating a more detailed business plan and constructing
portfolio. Are there existing products that solve a similar the product. These early-stage prototypes might be as
problem? Or does a competitor offer a product that doesn’t simple as a drawing or a more complex computer render of
allow for market share? And if yes, is your new concept the initial design. These prototypes help you identify areas
different enough to be viable? Answering these questions of risk before you create the product.
can ensure the success of your new concept. a. Feasibility analysis: The next step in the process is to
c. Functionality: While you don’t need a detailed report of evaluate your product strategy based on feasibility.
the product functionality just yet, you should have a Determine if the workload and estimated timeline are
general idea of what functions it will serve. Consider the possible to achieve. If not, adjust your dates accordingly
look and feel of your product and why someone would be and request help from additional stakeholders.
interested in purchasing it. b. Market risk research: It’s important to analyze any
d. SWOT (Strength-Weaknesses-Opportunities and potential risks associated with the production of your
Strengths) analysis: Analyzing your product strengths, product before it’s physically created. This will prevent the
weaknesses, opportunities, and threats early in the process product launch from being derailed later on. It will also
can help you build the best version of your new concept. ensure you communicate risks to the team by documenting
This will ensure your product is different from competitors them in a risk register.
and solves a market gap. c. Development strategy: Next, you can begin working
e. SCAMPER method: To refine your idea, use through your development plan. In other words, know
brainstorming methods like SCAMPER, which involves how you’ll be assigning tasks and the timeline of these
substituting, combining, adapting, modifying, putting to tasks. One way you can plan tasks and estimate timeline is
another use, eliminating, or rearranging your product by using the critical path method.
concept. d. MVP: The final outcome of the prototyping stage is a
minimum viable product (mvp). Think of your MVP as a
product that has the features necessary to go to launch
2. Product definition. Once you’ve completed the business with and nothing above what’s necessary for it to function.
case and discussed your target market and product For example, an MVP bike would include a frame, wheels,
functionality, it’s time to define the product. This is also and a seat, but wouldn’t contain a basket or bell.
referred to as scoping or concept development, and Creating an MVP can help your team execute the product
focuses on refining the product strategy. launch quicker than building all the desired features,
a. Business analysis: A business analysis consists of which can drag launch timelines out. Desired features can
mapping out distribution strategy, ecommerce strategy, be added down the road when bandwidth is available.
and a more in-depth competitor analysis. The purpose of
this step is to begin building a clearly defined product
roadmap. 4. Initial design. During the initial design phase, project
b. Value proposition: The value proposition is what stakeholders work together to produce a mockup of the
problem the product is solving. Consider how it differs product based on the MVP prototype. The design should be
from other products in the market. This value can be useful created with the target audience in mind and complement
for market research and for developing your marketing the key functions of your product. A successful product
strategy. design may take several iterations to get just right, and
c. Success metrics: It’s essential to clarify success metrics may involve communicating with distributors in order to
early so you can evaluate and measure success once the source necessary materials.
product is launched. Are there key metrics you want to a. Source materials: Sourcing materials plays an important
look out for? These could be basic KPIs (Key Performance role in designing the initial mockup. This may entail
Indicators) like average order value, or something more working with various vendors and ordering materials or
specific like custom set goals relevant to your organization. creating your own. Since materials can come from various
d. Marketing strategy: Once you’ve identified your value places, you should document material use in a shared
proposition and success metrics, begin brainstorming a space to reference later if needed.
marketing strategy that fits your needs. Consider which b. Connect with stakeholders: It’s important to keep tight
channels you want to promote your product on—such as communication during the design phase to verify your
social media or a blog post. While this strategy may need to initial design is on the right track. Share weekly or daily
be revised depending on the finished product, it’s a good progress reports to share updates and get approvals as
needed. market research.
c. Receive initial feedback: When the design is complete,
ask senior management and project stakeholders for initial
feedback. You can then revise the product design as 2. Project management: A project manager may be
needed until the final design is ready to be developed and involved in the product development process to assist with
implemented. cross-departmental communication. They might also assist
with task delegation and goal tracking.

5. Validation and testing. To go live with a new product,

you first need to validate and test it. This ensures that 3. Design team: The design team helps during the
every part of the product—from development to prototyping and designing phase to support the visual
marketing—is working effectively before it’s released to product concept. It’s important to connect product designs
the public. with brand guidelines and UX best practices.
a. Concept development and testing: You may have
successfully designed your prototype, but you’ll still need 4. Development: The development team helps with the
to work through any issues that arise while developing the implementation of the product on your website. Most
concept. This could involve software development or the commonly, a team of developers will work together to
physical production of the initial prototype. Test build the new product offering depending on the
functionality by enlisting the help of team members and complexity of the concept.
beta testers to quality assure the development.
b. Front-end testing: During this stage, test the front-end 5. Marketing: The marketing team will assist with
functionality for risks with development code or developing the marketing strategy and testing it before the
consumer-facing errors. This includes checking the product goes live. They will also measure the success of the
ecommerce functionality and ensuring it’s stable for marketing initiatives.
launch.
c. Test marketing: Before you begin producing your final 6. Sales: The product manager works with the sales team
product, test your marketing plan for functionality and to come up with an effective strategy and report on success
errors. This is also a time to ensure that all campaigns are metrics after the product has been implemented.
set up correctly and ready to launch.

7. Senior management: Senior stakeholders may need to

6. Commercialization. Now it’s time to commercialize your give final approval before the product can go to launch.
concept, which involves launching your product and
implementing it on your website. By now, you’ve finalized What is Global Product Development?
the design and quality tested your development and Global product development is a phenomenon impacting
marketing strategy. You should feel confident in your final more businesses in the modern age. It involves creating
iteration and be ready to produce your final product. new products that can function well in various countries
a. Product development: This is the physical creation of worldwide. Global product development is effectively an
your product that will be released to your customers. This extension of globalization, which in business refers to a
may require production or additional development for company's ability to operate well on an international scale.
software concepts. Give your team the final prototype and Businesses need to learn to adapt their products and
MVP iterations to produce the product to the correct marketing to suit people's needs in various parts of the
specifications. world. A product that can successfully do this is considered
b. Ecommerce implementation: Once the product has been a global product. There are several factors to consider
developed and you’re ready to launch, your development when developing a global product. These include the target
team will transition your ecommerce materials to a live country's culture and norms, current demand in various
state. This may require additional testing to ensure your parts of the world, and the regulations and laws guiding
live product is functioning as it was intended during the the production and sale of the product in question.
previous front-end testing phase.

Global Product Development Importance

Who is part of the product development team? Companies invest in global product development to
1. Product management: A product manager oversees all increase their market share for many good reasons. The
areas of the product life cycle and works to bridge world is increasingly interconnected, and it is no longer
communication gaps between various internal and necessary for companies to restrict their operations to a
external teams. The product manager works to initiate single country or region. Instead, it is possible to create
new product launches and initiates product ideation and products that people all over the world can enjoy.
Creating global products is a great way to improve
business performance, put a company on the map, and gain
a competitive advantage over less globalized companies.
Global product development is becoming increasingly
crucial for businesses that want to be successful on the
international stage in the long term.

Global Product Entry Process

Creating and marketing a global product is a challenging
process with many steps. Understanding the process from
start to finish is a good way for companies to avoid
problems in their design and marketing process and
ensure that the product successfully meets international
demand.
Global product development requires businesses to have
strong skills in many areas, including cultural competence,
flexibility, and a clear understanding of the potential uses
of their products.