Legal
Since there is no actual body of law known as international law, there are various legal systems around the globe. Examples are common law and Islamic law. These legal systems concern the pricing of products, import/ export limitations, types of advertising and product safety. For an example, some electrical products such as laser torch are banned from certain countries due to some health issues. Belco should be aware of what kind of electrical they use.
Economic
In his book, “International Marketing”, Paliwoda suggests that “Macro-environment is created when trade and transactions take place across, rather than within, national frontiers; but it is important to note that there may well be greater economic environmental differences between different parts of the same country than between countries belonging to the same geographical region.” This means a single country may have different economic level. For an example, in some rural part of China is suffering from poverty, whereas in some parts of China, such as Hong Kong, is to be considered as one of the richest cities in East Asia.
Other factors to be aware of are, currencies used, where some countries may have weak currencies due to inflation or recession, also the kind if payment, some countries such as Columbia may pay by coffee beans. Secondly, the general economy, which can be determine by the average income of the public.
Political
Politics is a very important factor, it can either bring trading partners together or tear them apart. Government policies and attitudes towards imports are different around the globe. Some may set up trade barriers such as high tariffs, high import tax, in order to protect their own brands/ economy, or due to some tensions between countries. On the other hand, some may lower the import restrictions by setting up trade agreements between countries to minimise trade tariffs in bilateral trade exchanges, or to create job opportunities for their public. Marketers should also be aware of the stability of the host country’s regimes, also the level of government control of company assets.
Technological
This factor concerns the technological level of a country, such as the existing facilities and infrastructure, some countries may be more “high tech” than the others. Also the labour skills and training, some countries may have highly skilled labours, some may not. There may be a huge cost of new technology, also some government policies such as green issues may limit the use of some technologies.
Competitors
Since Belco is not the only company around the globe that supply television sets, there are various alternatives for consumers to choose from. Competitors such as Sony and Panasonic may have taken at least 90% of the consumers in some countries. Marketers should consider whether it is worthwhile to enter such countries.
In marketing audit, SWOT analysis suggests that companies should minimise their weaknesses/ threats, and turn them into companies’ strengths/ opportunities. When entering new country markets, there are weaknesses/ threats exist within and outside the company. These are the lacking of time, lacking of internal/ external knowledge and risks of competitors. By using methods of entry such as acquisition or merger can often minimise the weaknesses/ threats and turn them into possible strengths/ opportunities within and outside the company.
There are advantages of using such method. Firstly, acquisition allows quick entry to new country markets. If time and speed are the main concern of entering a new country market, then this is a perfect solution. Secondly, acquisition provides knowledge and resources of the chosen country market internally as well as externally. An example would be doing business in China, it would be useful to have “Kwan-Zi” with other companies, by taken over a company in China, it could be an easy way to create “Kwan-Zi”, as well as gaining loyal/ long-term customers in China. Thirdly, technological innovation can sometimes boost up the level of fixed costs. An example can be the case of Black & Decker’s merger with McCullough in the 1960s, where
On the other hand, there are disadvantages of using acquisition. Firstly, it is not an optimal option/ strategy. There are risks such as the reactions of the public and the existing companies in the chosen country markets. Secondly, this method of entry can be expensive. When the chosen company is in debts or other financial problems, taking over it may also means taking over its financial situation. Also desirable companies may only be bought at a high premium price. Thirdly, the chosen company may have to live with the acquirer’s financial and cultural frame after the take over. It may be renamed/ repackage its product in order to match the acquirer’s desire/ concepts, for an example, “Jif”, a domestic cleaners company, changed its name to “Cif”, since some languages do not have such pronunciations.
There are other effects that acquisition may bring to the company which can be a positive point, as well as a negative point. Although some may suggest that acquisition increases the company’s capital, since two companies become one, this may depend on the chosen company’s financial situation. As mentioned before, buying a company means taking the responsibilities of paying its debts. This may decrease the acquirer’s expected profits. An example can be the BMW and Rover’s case in the late 1990s, where BMW had to sell Rover since it was in huge debts. Secondly, how people react to new products, foreign companies can be varied around the globe. Acquirers usually rename the products/ companies’ names of the chosen companies. This brings both advantages and disadvantages. If the public’s attitudes toward new/ foreign goods in the chosen country are positive, then the strategy would create more customers as well as boost up the sales/ profit figures. On the other hand, if this factor is negative, then this may lead to losing customers, losing sales/ profit figures, this may also upset the existing employee, and results in resignation or even strike.
