by (a) Huge foreign indebtness (May lead to unstability of political environment and may lead to nationalisation or limits on profit)
(b) Unstable Government
(c) Foreign exchange problems
(d) Foreign Government entry requirements and bureaucracy
(e) Tariffs and other trade barriers
(f) Corruption
(g) Technological pirating
(h) High cost of production and communication adaptation
- 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.
- 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.
- 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 and domestic 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).
- 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.
- Place Constraints (Diverse Geography):
Trade in foreign countries of far distance itself practically difficult. In case of perishable products, it is a real challenge. Exporting and importing products via sea route and making arrangements for effective selling involves more time as well risks. Segmenting and selecting international markets require the marketers to be more careful.
- Variations in Exchange Rates:
Every nation has its currency that is to be exchanged with currencies of other nations. Currencies are traded every day and rates are subject to change. Indian Rupee, European Dollar, US Dollar, Japanese Yen, etc., are appreciated or discounted at national and international markets against other currencies. In case of extraordinary and unexpected moves (ups and downs) in currency/exchange rates between two courtiers create serious settlement problems.
- Norms and Ethics Challenges:
Ethics refers to moral principles, standards, and norms of conduct governing individual and firm’s behaviour. They are deeply reflected in formal laws and regulations. In different parts of the world, different codes of conduct are specified that every international business player has to observe. However, globalization process has emphasized some common ethics worldwide. Corruption is another issue relating to business ethics.
- Terrorism and Racism:
Terrorism is a global issue, a worldwide problem. People of the world are living under constant fear of terrorists attracts anywhere in the world. To trade internationally is not economically risky, but there is the threat to life. Racism also restricts international trade activities.
