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Top 9 Problems Faced by International Marketing

International marketing is not as easy as domestic marketing.


International marketing environment poses a number of uncertainties
and problems. As against, national markets, international markets are
more dynamics, uncertain, and challenging. Especially, cultural
diversities and political realities in several nations create a plenty
of barriers that need special attention. In the same way, geographical
constraints cannot be totally undermined. Widespread terrorism has
created a new threat to international trade. Though the world is
advancing in terms of information technology, innovative and superior
methods of organizing marketing efforts (like horizontal organisation,
network organisation, virtual organisation), global efforts for smooth
international trades, and so forth, yet international marketing is not
that much easy to pursue, it has become a challenge to accept.
1. Tariff Barriers: Tariff barriers indicate taxes and duties imposed
on imports. Marketers of guest countries find it difficult to earn
adequate profits while selling products in the host countries.
Sometimes, to prevent foreign products and/or promote domestic
products, strategically tariff policies are formulated that restricts
international marketing activities. Frequent change in tariff rates
and variable tariff rates for various categories of products create
uncertainty for traders to trade internationally. Antidumping duties
levied on imports and defensive strategies create difficulty for
exporters.
2. Administrative Policies: Bureaucratic rules or administrative
procedures – both in guest countries and host countries – make
international (export and/or import) marketing harder. Some countries
have too lengthy formalities that exporters and importers have to
clear. Unjust dealings to get the formalities/ matters cleared create
many problems to some international players. International marketers
have to accustom with legal formalities of several courtiers where
they wants to operate.
3. Considerable Diversities: Different countries have their own unique
civilization and culture. They pose special problems for international
marketers. Global customers exhibit considerable cultural and social
diversities in term of needs, preferences, habits, languages,
expectations, buying capacities, buying and consumption patterns, and
so forth. Social and personal characteristics of customers of
different nationalities are real challenges to understand and
incorporate. Compared to local anddomestic markets, it is more
difficult to understand behaviour of customers of other countries. In
the same way, as against domestic markets, to design and modify
marketing mix over time for international markets seem more difficult.
Market segmentation, product design, pricing, and distribution need
more information and efforts. Promoting products in international
markets is a formidable task. Message preparation and execution in
suitable media in international markets is not easy game to play.
Language and religious diversities are the real challenge for
international business players. There are 6000 languages in the world.
China (20%) is the largest in term of native speakers, followed by
English (6%), and followed by Hindi (5%). Yet English is recognized as
global business language. English speaking countries can contribute
the largest share (40%) in global business. Religious diversities seem
difficult to cope with as they determine needs and wants of people. At
present Christianity is the largest in the world (1.7 billion),
followed by Islam (1.0 billion), followed by Hinduism (750 millions),
and followed by Buddhism (350 millions).
4. Political Instability or Environment: Different political systems
(democracy or dictatorship), different economics systems (market
economy, command economy, and mixed economy), and political
instability are some of real challenges that international markers
have to face. Political atmosphere in different courtiers offer
opportunities or pose challenges to international marketers
Governments in different nations have their priorities, philosophies,
and approaches to the international trades. They may adopt restrictive
(protectionist) or liberal approach to international business
operations. Especially, political approaches of dominant nations have
more influence in international marketing activities. Long-term trend
of global political environment is unpredictable and uncertain.
Economic policies of different nations (industrial policies, fiscal
policies, agricultural policies, export-import policies, etc.,) do
have direct impact on international trade. Drastic change in these
policies creates endless difficulties to international traders. While
dealing with international markets, international political and legal
environment needs a special attention.

A holding company is a legal entity which has control over another


company’s board of directors. Another company will not control the holding
company. More often than not, a holding company will do no more than hold
assets through its incorporated subsidiaries companies. A holding company is
defined in sections 9 and 46 of the Corporations Act 2001 (Cth). This article
sets out the advantages of having a company with a holding function.
The Advantages of a Holding Company
There are several advantages in setting up a holding company.
Has control over its subsidiary companies
 A holding company by its very definition has control over its subsidiary
company’s board of directors. What this means, practically, is that the holding
company has a say in the management of its subsidiary and, subject to law,
has the authority to hire and fire managers and directors, if necessary.

Can hold property and use it

 A holding company can hold its own tangible and intangible assets. These
may include land, building, intellectual property and trading stock. Further, it is
not limited to holding these.
 A holding company can hold, borrow and lend property and make investment
decisions. It can use this property to its advantage and the benefit of its
creditors of subsidiary companies.

Can minimise risk

 Holding companies, especially large multinational corporations usually have


many valuable assets. Accordingly, it is advantageous that a holding
company can protect its assets.
 The holding company may be structured in a way that protects or minimises
risk, in that it can disperse assets throughout its subsidiaries. The advantages
of this become very real in light of a bankruptcy or insolvency.

For example, let’s say a subsidiary of a holding company’s goes into


bankruptcy or liquidation. Creditors of the bankrupt subsidiary are generally
limited to receiving remuneration from that subsidiary. A creditor will not be
able to go after the holding company for the reason that it is its own entity at
law. This structure, therefore, has the ability to isolate or minimise damage to
the overall holding company. However this is not always the case, a holding
company may be liable when its directors are aware that its subsidiary is
trading insolvent or unable to repay its debts.
Can hold property and protect it

 Placing your business’ intellectual property or other assets into a holding


company may be very beneficial to your business’s longevity. This is
especially true in light of a liquidation.

Flexibility to engage in risky investment opportunity to the advantage of its


shareholders

 A holding company that engages in risky investments can protect the


shareholders of a subsidiary. It might do this by investing in its holding
company, however, the subsidiaries will be largely unaffected. Accordingly,
this offers flexibility for growth and development of the company overall
company.

Directors of each company must act in the best interests of their corporation

 The holding company and its subsidiary companies are each separate legal
entities with their own Board of Directors. The Board of Director has a
responsibility, under the law, to act in the best interest of their company. The
Board of Directors cannot act in the best interests of a third party company.

Tax planning

 The holding company may be set up in another country that offers a lower
corporate tax rate.
 The holding company may be an advantageous structure, in that it usually has
lower tax rates than a trust would usually have.

Succession planning

 A holding company may ensure the continuity of business, even on the loss of
key people.