CHAPTER ONE

AN OVERVIEW TO INTERNATIONAL MARKETING

Definition international marketing
 International Marketing' is defined as the exchange of goods and services across national borders to
meet the requirements of the customers. It includes customer analysis in foreign countries and identifying
the target market.
 International marketing may be defined as an activity related to the sale of goods and services of one
country in the other, subject to the rules and regulations framed by the countries concerned.
 In simple words, it refers to marketing activities and operations among the countries of the world
following different political and economic systems.
 International marketing is marketing abroad i.e., beyond the political boundaries of the country.
International marketing brings countries closer due to economic needs and facilitates understanding and
co-operation among them.
 International marketing can, therefore, be defined as, marketing carried on across national boundaries.
 International Marketing is the multinational process of planning and executing the conception, pricing,
promotion and distribution of ideas, goods, and services to create an exchange that satisfy individual and
organizational objectives.
Distinction between Domestic Vs International Markets
i) Domestic market
 One language, one nation, one culture
 Market is much more homogeneous
 Single currency
 No problems of exchange controls, tariffs
 Relatively stable business
 Minimum government interference in business decision
 Data in marketing research available, easily collected, and accurate etc.
ii) International Markets
 Many languages, many nations, many cultures
 Markets are diverse and fragmented
 Multiple currencies
 Exchange controls and tariffs normal obstacles

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  Multiple and unstable business environments
 Due to national economic plans government influence usual in business decisions
 Marketing research very difficult, costly and cannot give desired accuracy, etc.
BENEFITS OF INTERNATIONAL MARKETING
1. To meet imports of industrial needs
The developing countries need imports of capital equipment’s, raw materials of critical nature,
technical knowhow for building the industrial base in the country with a view to rapid
industrialization and developing the necessary infrastructure.
2. Debt servicing

All most all underdeveloped countries have been receiving external aid over the years for their
industrial development. Hence it is necessary to aim at sufficient export earnings to cover both
imports and debt servicing.
3. Rapid economic growth
An expanding export trade can be a dynamic factor in a country’s development process. The country
should have to utilize domestic resources and to provide technological improvement and improved
production at lower costs.
The benefits include: -
 The foreign exchange earnings can be used for the import of agricultural implements and
fertilizers to raise the production of agricultural produce and that can provide a base for many
agriculture-based industries.
 Mitigate unemployment in labor – intensive industries
 Full utilization of idle resources

4. Profitable use of natural resources

Earning from exports can be utilized in establishing industrial unit based on different
natural resources available in the country by making the necessary imports of plant and
machinery for the purpose.
5. Facing competition successfully
Better quality and lower prices improve the image of the producer as well as of the
country in minds of foreign customers.
6. Increase in employment opportunities

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In an effort to increase the export, many export oriented industrial units are established. In
underdeveloped countries, the problem of the employment and underemployment is very serious that
can be solved to some extent by increasing the level of export.
7. Role of exports in national income
Exports play an important role in the national income of the country and it can be increased to a
sizeable extent through organized export marketing.
8. Increase in the standard of living
Export marketing improves the standard of living of the countrymen in the following ways: -
 The imports of necessary item for consumption can be made which may help improve
standard of living. Exports increase the employment opportunities, which in turn, increase
the purchasing power of the people.
 Exports are responsible for the rapid industrialization of the country. New items are
produced for consumption in domestic market, which increases the level of standard of
living.
 In order to face the competition in the international market, the producer improves the
quality of the product by applying the latest technology. In this way, people get better
quality products at cheaper rates. It helps improve the standard of living of the people.
9. International collaboration
Export marketing results in international collaboration. Developed country fixes their import quotas
for different countries and for different commodities.
10. Closer cultural relations
International trade brings various countries closer. Better trade relations are established among
the countries.
11. Help in political peace
The economic relations between two countries help improve their political relations.
BARRIERS TO INTERNATIONAL MARKETING
The major legal, political and economic forces affecting international marketers are barriers created
by governments to restrict trade and protect domestic industries. Examples include the following: -
1. Tariff: - a tax imposed on a product entering a country. Tariffs are used to protect domestic
producers and / or to raise revenue. E.g. Japan has a high tariff on imported rice.
2. Import quota: - a limit on the amount of a particular product that can be brought into a

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 country. Like tariffs, quotas are intended to protect local industry.
3. Unstable governments: - high indebt-ness(55.67 billion$), high inflation (34.7 to 36.6%), and
high unemployment(21.30%) in several countries have resulted in high unstable governments
that exposed foreign firms in business risks and profit repatriation.
4. Foreign exchange problems: - high indebtedness and economic and political instability
decrease the value of a country’s currency. Profit repatriation for foreign firms is not
available in many markets.
5. Foreign government entry requirements and bureaucracy . Government places many regulations
on foreign firms. For example: - they might require joint ventures with the majority share
going to the domestic partner, a high number of nationals to be hired, limits on profit
repatriation etc.
6. Corruption: - officials in several countries require bribes to cooperate (87rank from world).
They award business to the highest briber rather than the lowest bidder. Etc.
7. Technological pirating (plagiarized): - a company locates its plant abroad worries about foreign
managers learning how to make its product and breaking away to compete openly. I.e.
machinery, electronics, chemicals, pharmaceuticals area.
Characteristics of International Marketing
1. Broader market is available
 A wide platform is available for marketing and advertising products and services.
 The market is not limited to some precise local market or for people residing in a particular
place, region or country but is free for all.
 People from different nations sharing different cultures and traditions can actively participate
in it.
2. Involves at least two set of uncontrollable variables
 By uncontrollable variables, we mean the geographical factors, political factors prevailing in
different countries. At the global level, all the companies have to face uncontrollable variables
from different countries. While establishing business globally, a company has to learn to deal
with these variables.

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3. Requires broader competence
 International market requires more expertise and special management skills and wider
competence to deal with various circumstances and handle different situations like changes in the
strategies of the government, the mindset of the people and many other such factors.
4. Competition is strong
 Competition is very tough in international market, as the organizations at the global level have to
compete with both competitors in their home countries and also in the foreign lands. Competition
is high because the clash is between developed & developing countries and both have different
standards and are unequal partners.
5. Involves high risk and challenges
 International marketing with its own advantages is also prone to different and tangible risks and
challenges. These challenges come in the form of political factors, regional and cultural
differences, changing fashion trends, and sudden war situation, revision in government rules and
regulations and communication barriers
6. Large-scale operation
 Large-scale operations involve relative amount of labor and capital to cater to the needs such as
transportation, and warehousing.
7. Domination of multinationals and developed countries
 International marketing is highly dominated by multinational corporations due to their
worldwide reach.
 These organizations apply efficient and effective business practices to all their business
operations.
 They have a stable position and with their global approach find themselves fitting into the arena
of international marketing.
8. International restrictions
 The international market needs to abide by different tariff and non-tariff constraints. These
constraints are regulated because different countries follow different regulations. All nations tend
to rationally abide by tariff barriers. All the imports and exports between the nations participating
in international marketing follow some restrictions in foreign exchange.

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9. Sensitive character
 International marketing is highly sensitive and flexible. The demand for a product in a market is
highly influenced by political and economic factors. These factors can create as well as decrease
the demand for a product.
10. Importance of Advanced Technology
 International market is dominated by developed countries like the USA, Japan, and Germany as
they use highly advanced technology in production, marketing, advertising and establishing a
brand name.
11. Need for specialized institutions
 Marketing at global level is highly prone to risks & is very complex and knotty. It undergoes
lengthy and time taking procedures & formalities. Competent expertise is required for
handling various sections of international marketing.
12. Need for long term planning
International marketing calls for long term planning. Marketing practices differ from nation to nation
influenced by social, economic & political factors.
13. Lengthy & Time Consuming
 The activities in international marketing are very time-consuming and knotty or complex.
 The main cause of these difficulties are the local laws and policies enforced on different
nations, issues in payment as different countries use different currencies, distance between the
participating nations and time taking formalities involved therein.
FORMS OF ENTRY TO INTERNATIONAL MARKETS
Once a company decides to target a particular country, it has to determine the best mode of entry. Its
broad choices are indirect exporting, direct exporting, licensing, joint ventures and direct investments.
Each succeeding strategy involved more commitment, risk, control and profit potential.
1. Indirect Export

Companies typically starts with indirect exporting that is they work through independent
intermediacies to export their products. There are four types of intermediaries.
A. Domestic – based export merchant: Buys the manufacturer’s products and then sells them abroad.
B. Domestic based export agent: Seeks and negotiate foreign purchases and is paid a commission.
C. Cooperative organization: Carries on exporting activities on behalf of several producers and is partly
under their administrative control. Often used by producers of primary product – fruits, nuts and so

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 on.
D. Export – Management Company: Agrees to manage a company’s export activities for a fee.

Indirect export has two advantages: -

 It involves less investment and
 It involves less risk
2. Direct Export

 Companies eventually may decide to handle their own exports. The investment and risk are
somewhat greater. The company can carry on direct exporting in several ways;
A. Domestic based export department or division
 An export sales manager carries on the actual selling and draws market assistance as needed.
The department might evolve into a self – contained export department performing all the
activities involved in export and operating as a profit center.
B. Overseas sales branch or subsidiary
 An overseas sales branch allows the manufacturer to achieve greater presence and programs
control in the foreign market. The sales branch handles sales and distribution and might
handle warehousing and promotion as well. It often servers as a display center and customer
– service center also.
C. Traveling export sales representation
 The company sends home – based sales representatives abroad to find business.
D. Foreign – based distributors or agents
 The company can hire foreign based distributors or agents to sell the company’s goods.
These distributors and agents might be given exclusive rights to represent the manufacturer
in that country or only limited rights. Whether companies decide to enter foreign markets
through or indirect exporting, one of the best ways to initiate or extend export activities is by
exhibiting at an overseas trade show.
3. Licensing

 Licensing is a simple way for a manufacturer to become involved in international marketing.

 The licensor license a foreign company to use a manufacturing process, trademark, patent,
or other item of value for a fee or royalty.
 The licensor thus gains entry into the foreign market at a little risk.

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  The license gains production expertise or a well-known product or name without having to
start from scratch.
There are several forms of licensing arrangements:
a) Management contract

i) The company can sell a management contract to the owners of a foreign hotel, airport,
hospital or other organization to manage these businesses for a fee.
ii) Management contracting is a low risk method of getting into a foreign market, and it yields
income from a beginning. Management contracting prevents the company from competing
with its clients.
b) Contract manufacturing

 The firm engages local manufacturers to produce the product.

 Contract manufacturing has the drawback of giving the company less control over the
manufacturing process and the loss of potential profits on manufacturing. However, it offers
the company a chance to start faster, with less risk and with the opportunity to form a
partnership or to buy out of the local manufacturer later.

c) Franchising

 A company can enter a foreign market through franchising, which is a more complete form of
licensing. Here the franchiser offers a franchisee a complete brand concept and operating
system. In return, the franchisee invests in and pays certain fees to the franchiser.
d) Joint Venture
 Foreign investors may join with local investors to create a joint venture in which they share
ownership and control.
 Forming a joint venture might be necessary or desirable for economic or political reasons. The
foreign firm might lack the financial, physical or managerial resources to undertake the venture
alone. Or the foreign government might require joint ownership as a condition for entry.
 Joint ownership has certain drawbacks. The partners might disagree over investment, marketing
or other policies. I.e. one partner might want to reinvest earnings for growth, and the other
partner might want to withdraw these earnings.
4. Foreign Direct Investment

 The ultimate form of foreign involvement is direct ownership of foreign-based assembly or

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 manufacturing facilities.
The foreign company can buy part or full interest in a local company or build its own facilities. As a
company gains experience in export, and if the foreign market appears large enough, foreign
production facilities offer distinct advantages, as enumerated below.
1. The firm could secure cost economies in the form of cheaper labor or raw materials,
foreign government incentives, freight savings and so on.
2. The firm will gain a better image in the host country because it creates jobs.
3. The firm develops a deeper relationship with government, customers, local suppliers, and
distributors, enabling it to adapt its products better to the local marketing environment.
Etc.
The main disadvantages of direct investment are that
 A firm exposes its large investment to risks such as blocked or devalued currencies,
worsening markets, or expropriation.
 The firm will find it expensive to reduce or close down its operations, since the best country
might require substantial severance pay to the employees.
CHARACTERISTICS OF MULTINATIONAL CORPORATION
 Several firms have passed beyond the international division – stage and have become truly global
organizations.
 They have stopped thinking of themselves as national marketers who have ventured abroad and
now think of themselves as global marketers. Their top corporate management and staff plan
worldwide manufacturing facilities, marketing policies, financial flows, and logistical systems.
 The global operating units report directly to the chief executives or executive committee, not to
the head of an international division. Executives are trained in worldwide operations; not just
domestic or international ones. Management is recruited from many countries; components and
supplies are purchased where they can be obtained at the least cost; and investment is made
where the anticipated returns are greatest.
What is a Global industry?
“A global industry is an industry in which the strategic positions of competitors in major
geographic or national markets are fundamentally affected by their overall global positions.”
What is a Global firm?
“A global firm is a firm that operates in more than one country and captures R&D, production,

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logistical, marketing, and financial advantages in its costs and reputation that are not available to
purely domestic competitors. “
The mention of MNCS usually elicits mixed reactions. On the one hand, MNCS are associated with
exploitation and ruthlessness. They are often criticized for moving resources in and out of a country,
as they strive for profit, without much regard for the country’s social welfare.
On the other hand, MNCS have power and prestige. Additionally they create social benefits by
facilitating economic balance. As explained by Miller, “with resources, capital food, and technology
unevenly distributed around the planet, and all in short supply, an efficient instrument of quick and
effective production and distribution of a complex of goods and services is a first essential.
According to Aharoni, an MNC has at least three significant dimensions: structural, performance
and behavior.
1. Structural
Structural requirements for definition as a MNC include the number of countries in which the firm
does business and the citizenship of corporate owners and top managers.
2. Performance
Definition by performance depends as such characteristics, as earnings, sales and assets. These
performance characteristics indicate the extent of the commitment of corporate resources to foreign
operations and the amount of rewards from the commitment.
3. Behavior
Behavior is somewhat less reliable as a measure of multinationals than either structure or
performance, though it is no less important. Thus a company becomes more multinational as its
management thinks more internationally. Such thinking, known as Geocentricity, must be
distinguished from the two other attitudes or orientations, known as ethnocentricity and
Polycentricity.
1. Ethnocentricity: - is a strong orientation toward the home country. Markets and consumers
abroad are viewed as unfamiliar and even inferior in taste, sophistication and opportunity.
Centralization of decision-making is thus a necessity. The usual practice is to use the home base
for the production of standardized products (i.e. without significant modification) for export in
order to gain some marginal business.
2. Polycentricity: - is the opposite of ethnocentricity, is or strong orientation to the host country.
The attitude places emphasize on differences between markets that are caused by variation with

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 in, such as income, culture, laws and politics. The assumption is that each market is a unique and
consequently difficult for outsiders to understand. Thus, managers from the host country should
be employed and allowed to have a great deal of discretion in market decision. A significant
degree of decentralization is thus common across the overseas divisions.
3. Geocentricity: - is a compromise between the two extremes of ethnocentricity and
polycentricity. Geocentricity is an orientation that considers the whole world rather than any
particular country as the target market. A geocentric company might be thought of as a
denationalized or supranational. As such, “international” or foreign departments or markets do
not exist because the company does not designate anything international or foreign about a
market.

CHAPTER TWO
POLITICAL ENVIRONMENT
 Environmental forces influence organization marketing. Some of these forces are external to the
firm, while others come from within. There isn't much that management can do about controlling
the external forces, but it generally can control the internal ones.
 These uncontrollable external forces that influence an organization's marketing activities
includes: Political and legal forces, Social and cultural forces, Economic condition,
Demography, Competition, and Technology
 The political environment that a firm operating in international market face is a complex one
because they must cope with the politics of more than one nation. The complexity forces to
consider that environment as composed of three different types of political environment: foreign,
domestic and international.
TYPES OF POLITICS

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1. Foreign politics
 Foreign politics are the politics of host country. This part of international business
environment can range from being favorable and friendly to being hostile and dangerous.
The host country’s political and economic circumstances determine the kind of political
climate a company faces.
2. Domestic politics
 Domestic politics that exists in the company’s home country, also known as the parent or
source county, At first glance, it would seem that domestic politics should pose no threat and
that a company should have minimal problems at home. This is often not the case. Although a
company’s major political problems usually derive form political developments at home.
3. International politics
 International politics are the interaction of the overall environmental factors of two or more
countries. The complexity of the political environment increases significantly when the
interest of the company, the host country, and the home country do not coincide.
Government Types
a) Political System
 One way to classify governments is to consider them as either parliamentary (open) or
absolutist (closed). Parliamentary governments consult with citizens from time to time for the
purpose of learning about opinions and preferences. Government policies are thus intended to
reflect the desire of the majority of the society. Most industrialized nations and all democratic
nations can be classified as parliamentary.
 In an absolutist, system, the ruling regime dictates government policy without considering
citizens’ needs or opinions. Frequently, absolutist’s countries are newly formed nations or
those undergoing some kind of political transition. Many countries political systems do not
fall neatly into one of these two categories. Some monarchies and dictatorship (E.g. Saudi
Arabia and South Korea) have parliamentary elections.
b) Number of Parties
 Another way to classify governments is by number of political parties. This classification
results in four types to governments: two – party, multi-party, single party, and dominant
one party.
i) Two party

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 In a two party system, there are typically two strong parties that take turns controlling the
government, although other parties are allowed. The USA & UK are prime examples. The two
parties generally have different philosophies, resulting in a change in government policy when
one party succeeds the other. I.e. in USA, the Republican Party is often viewed as
representing business interests, whereas the Democratic Party is often viewed as representing
labor interests, as well as the poor and disaffected.
ii) Multiparty
 In a multiparty system there are several political parties, none of which is strong enough to
gain control of the government. Even though some parties may be large, their elected
representatives fall short of a majority. A government must then be formed through coalitions
between the various parties, each of which wants to protect its own interests.
 Countries operating with this system include Germany, France and Israel.
iii) Single party
 In a single party system, there may be several parties, but one party is so dominant that there
is little opportunity for others to elect representatives to govern the country.
 Egypt has operated under single – party rule for more than three decades. Countries often use
this form of government in the early stages of the development of a line parliamentary system.
iv) Dominated one – party
 In a dominated one party system, the dominant party does not allow any opposition, resulting
in no alternative for the people. In contrast, a single party system does allow some opposition
party.
 The former Soviet Union, Cuba, and Libya are good examples of dominated one party
system. Such a system may easily transform itself into a dictatorship. The party, to maintain
its power, is prepared to use force or any necessary means to eliminate the introduction and
growth of other parties.
c) Economic Systems
 Economic systems provide another basis for classification of governments. These systems
serve to explain whether businesses are privately owned or government owned, or whether
there is a combination of private and government ownership. Basically these systems can be
identified: Communism, Socialism and Capitalism.
i) Communism

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 A movement toward communism is accompanied by an increase in government interference
and more control of factors of production. A movement toward capitalism is accompanied
by an increase in private ownership.
 Communist theory holds that all resources should be owned and shared by all the people (I.
e. not by profit seeking enterprises) for the benefit of the society. In practice, it is the
government that controls all productive resources and industries, and as a result the
government determines jobs, production, price, education, and just about anything else.
 E.g. China, Soviet Union, Eastern Europe, Vietnam, North / Korea:
ii) Socialism
 The degree of government control that occurs under Socialism is somewhat less than under
communism.
 A socialist government owns and operates the basic, major industries but leaves small
business to private ownership. Socialism is a matter of degree, and not all socialist countries
are the same.
 I.e. a socialist country such as Poland leans toward communism, as evidenced by its rigid
control over prices and distribution. France’s socialist system, in comparison, is much closer
to capitalism than it is to communism.
iii) Capitalism
 At the opposite end of the continuum from communism is Capitalism.
 The philosophy of capitalism provides for a free – market system that allows business
competition and freedom of choice for both consumers and companies.
 It is a market – oriented system in which individuals, motivated by private gain, are allowed
to produce goods or services for public consumption. Under competitive conditions. Product
price is determined by demand and supply. This system serves the needs of society by
encouraging decentralized decision- making, risk taking, and innovation. The results include
product variety, product quality, efficiency, and relatively lower price.
 Successful economic reform requires several critical policy principles, including establishing
private property rights and privatization of public enterprises, promoting domestic
competition, and reducing and reforming the role of government.
Political Risks
 According to Charles De Gaulle, there are a number of political risks with which marketers

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 must contend. Hazards based on a host government’s action include confiscation,
expropriation, nationalization and domestication.
a. Confiscation: Is a process of a government taking ownership of a property without
compensation. An example of confiscation is the Chinese government’s seizure of
American property after the Chinese communists took power in 1949. The US congress
did not approve the normalization of economic relations with China until a satisfactory
claim settlement had been negotiated.
b. Expropriation: Differs somewhat from confiscation in that there is some compensation,
though not necessarily just compensation. More often than not, a company whose
property is being expropriated agrees to sell its operations – not by choice but rather
because of some explicit or implied coercion.
c. Nationalization: After property has been confiscated or expropriated it can be either
nationalized or domesticated. Nationalization involves government ownership, and it is
the government that operates the business being taken over. Burma’s foreign trade, for
example, is completely nationalized. Generally, this action affects a whole industry rather
than just a single company.
d. Domestication: In the case of domestication, foreign companies renounce control and
ownership, either completely or partially to the nationals. The result is that private
entities are allowed to operate the confiscated or expropriated property
Another classification system of political risk is the one used by Root: based on this classification,
four sets of political risk can be identified: general instability risk, ownership / control risk, operation
risk and transfer risk.
a. General instability risk: Is related to the uncertainty about the future feasibility of a host
country’s political system. The Iranian revolution that overthrew the shah is an example of
the kind of risk.
b. Ownership / control risk: Is related to the possibility that a host government might take
actions (e.g. expropriation) to restrict an investor’s ownership and control of a subsidiary
in that host country.
c. Operation risk: Proceeds from the uncertainty that a host government might constrain the
investor’s business operations in all areas, including production, marketing and finance.
d. Transfer risk: Applies to any future acts by a host government that might constrain the

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 ability of a subsidiary to transfer payments, capital or profit out of the host country back
to the parent firm.
Indicators of Political Risks
Potential source of political complications include social unrest, the attitudes of nationals, and the
policies of the host government.
a. Social unrest
 Social disorder is caused by such underlying conditions as economic hardship, internal
dissension and insurgency and ideological, religious, racial and cultural differences. Lebanon
has experienced conflict among the Christians, Muslims and other religious groups.
 A company may not be directly involved in local disputes, but its business can still be severely
disrupted by such conflicts.
b. Attitudes of nationals
 The national’s attitude toward foreign enterprises and citizens can be quite unfriendly.
Nationals are often concerned with foreigners’ intentions in regard to exploitation and
colonialism, and these concerns are often linked to concerns over foreign governments’
actions that may be seen as improper.
 Such attitudes may arise out of local socialist or nationalist philosophies which may be in
conflict with the policy of the company’s home country government.
c. Policies of the host government
 Government policy formulation can affect business operations either internally or externally.
The effect is internal when the policy regulates the firm’s operations with in the home
country. The effect is external when the policy regulates the firm’s activity in another country.
a company in one country may be prohibited from doing business with other countries that are
viewed as hostile.
Measures to Curb Political Risks
 Political risk though impossible to eliminate, can at the very least be minimized. There are
several measures that MNCs can implement in order to discourage a host country from taking
control of MNCs assets. Some strategies used by MNCs:
a) Stimulation of the local economy
 One defensive investment strategy calls for a company to link its business activities with the
host country’s national economic interest. A local economy can be stimulated in a number of

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 different ways. One strategy may involve the company’s purchasing local products and raw
materials for its production and operations. By assisting local firms, it can develop local allies
who can provide variable political contacts. A modification of this strategy would be to use
subcontractors.
 Sometimes local sourcing is compulsory. Governments may require products to contain
locally manufactured components because local content improves the economy in two ways:
o It stimulates demand for domestic components and

o It saves the necessities of foreign exchange transaction. Further investment in local

production facilities by the company will please the government that much more.
b) Employment of nationals
 Frequently foreigners make the simple but costly mistake of assuming that citizens of least
developing countries are poor by choice. It serves no useful purpose for a company to assume
the local people are lazy, unintelligent, unmotivated or uneducated. Such an attitude may
become a self – fulfilling prophecy. Thus the hiring of local workers should go beyond the
filling of labor positions. I.e. united Brand’s policy is to hire only locals as managers
c) Sharing ownership
 Instead of keeping complete ownership for itself, a company should try to share ownership
with others, especially with local companies. One method is to convert from a private company
to a public one or form a foreign company to local one (Joint venture).
 In some overseas business ventures, it is not always necessary to have local firms as partners.
Sometimes having co owners’ form other nations can work almost as well. Having multiple
nationalities for international business projects not only reduces exposures, it also makes it
difficult for the host government to take over the business venture without attending a number
of nations all at once.
 A wise strategy may be for the company to retain the marketing or technical side of the
business while allowing heavy local ownership in the physical assets and capital investment
portion of the investment.
d) Being civic minded
 To shed the undesirable perception, multinationals should combine investment projects with
civic projects. Corporations rarely undertake civic projects out of total generosity, but such

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 projects make economic sense in the long run. It is highly desirable to provide basic
assistance because many civic entities exist in areas with slight or non-existent municipal
infrastructures that would normally provide these facilities
e) Political neutrality
 For the best long – term interest of the company, it is not wise to become involved in political
disputes among local groups or between countries. A company should clearly but discreetly
state that it is not in the political business and that its primary concerns are economic in nature.
f) Behind the scene lobby
 Companies may not only have to lobby in their own country, but they also may have to lobby
in the host country. Companies may want to do the lobbying themselves, or they may let their
government do it on their behalf. This government can be requested to apply pressure against
foreign government.
g) Observation of political mood and reduction of exposure
 Marketers should be sensitive to changes in political mood. A contingency plan should be in
readiness when the political climate turns hostile, when measures are necessary to reduce
exposure.

Prepared By Mr. Thomas Tadesse (MA)