Constraints on International Marketing Praveen Raj

S4 MBA, A-Batch

International Marketing
International marketing (IM) or global marketing refers to marketing carried out by companies overseas or across national borderlines.

Constraints It is a limitation or restriction or barrier.... In marketing, constraints are the hindering forces which obstructs the smooth functioning of the marketing process.

Constraints to International Marketing 1) Tariff Barriers 2) Non-Tariff Barriers Tariff : A tariff is a tax that a government collect on goods coming into a country. Why impose? revenue collection, protection of domestic industry, political control

Tariff Barriers Tariff barriers are duties imposed on goods which effectively create an obstacle to trade. Tariff barriers are also sometimes known as import restraints, because they limit the amount of goods which can be imported into a country. It is imposed in the form of customs duty. Tariff barriers are classified into:-

a) Export Duties Export duties are generally levied for revenue. They are more popular in the countries exporting primary products than in those exporting manufactured products. Sometimes the duties are levied to charge higher prices from foreigners for the commodities which are in short supply.

b) Import Duties A tax collected on imports products by the customs authorities of a country. This tax is used to raise state revenue. It is based on the value of goods called ad valorem duty or the weight, dimensions, or other criteria of the item such as its size, etc.

c) Transit Duties A duty paid on goods that pass through a country. The burden of transit duties is borne either by the consumers in the importing country or by the procedures in the exporting country, depending upon the conditions of demand and supply in the two countries.

d) Anti-Dumping Duties Dumping is the practice of selling goods in abroad at a price below their normal price. The purpose of this may be to maintain a stable domestic market structure as a means of disrupting the domestic market of a foreign competitor. Anti-dumping duties normally take the form of additional import duties and charges.

e) Countervailing Duties A duty placed on imported goods that are being subsidized by the importing government. This helps to even the playing field between the domestic producers and the foreign producers receiving subsidies.

Non-Tariff barriers Non-tariff barriers are trade barriers that restrict imports but are not in the form of tariff. A non-tariff barrier is any measure other than a tariff that raises an obstacle to the free flow of goods in the overseas market. They are classified into:-

a) Prior Import Deposits

Some countries impose a condition that importers in their countries should deposit money unto 100 percent of the value of their import in advance with any specified authority normally their Central Bank. Such deposits are generally for a specific period; and whenever such a policy is introduced by any country its Govt. ensures that the required amount has been deposited before the issue of an import licence.

b) Quantitative Restrictions These are normally imposed in the form of quotas and import licenses or a combination of both. A quota is a limitation in value or in physical terms, imposed on import and export of certain goods for a certain period of time.

 Import quotaa limit on the amount of a particular good that may be imported during a given time Quantity Quota: a limit on the amount of a good that may be imported. Value Quota: a limit on the monetary value of a good that may be imported. Embargoa complete halt to trading with a particular nation or in a particular product

c) Foreign Exchange Regulations Exchange control methods have been widely used by a number of countries to regulate their imports and exports. Foreign exchange control restriction on amount of foreign currency that can be purchased or sold. It constitute the regulation of transactions of residents and nonresidents with currency and other currency values.

d) Consular Formalities
Certain documents or procedures required by some countries before their customs authorities will permit goods produced in other countries to enter their markets such as certified invoices, import certificates, etc The fees payable for such documentation are often quite high. Heavy penalties are levied by importing countries if there are any errors in documentation

e) Health and Safety Regulations Many countries impose strict health and safety regulations on the import or sale of products particularly food products. Regulations based on environmental considerations are becoming increasingly important. A failure to know about such regulations would exclude a supplier from the market.

f) Government Procurement Government procurement(public tendering or public procurement) is the procurement of goods & services on behalf of a public authority, such as a government agency. To prevent fraud, waste, corruption, the law of most countries regulates government procurement more or less closely.

Constraints in a glance