Entrepreneurs all over the world are constantly seeking ways of introducing their products to global markets through international marketing. However, activities in the international business environment make it highly competitive for many who want to venture into the international arena with their products due to the dynamic nature of the environment.
As a result, you find that the international marketing environment poses both equal opportunities and threats to foreign entrants. There are many ways, however, of breaking into new untested markets – which include exporting, foreign direct investment, joint venture, and international partnerships – all these options seem to tie their feasibility around what is obtainable in the market to break into. However, the cultural, political, and technological environments act as determinant factors in entrepreneurial success in global markets.
It has become easier for small and new ventures to find information about foreign markets and clients abroad, to communicate with foreign partners, and to coordinate various activities across borders.
Challenges Facing Entrepreneurs In Developing Economies
Research trends show that cross-border activities, such as exports, are very important means through which small and new ventures are able to create value, generate growth, and access new knowledge and technologies.
In modern times, the internationalization of new ventures and small and medium enterprises (SMEs) are both expanding and accelerating – this further contributes to a greater number of economic actors pursuing foreign markets. The expansion and acceleration of cross-border entrepreneurship can be considered in the light of substantial changes that took place in the past decades and that resulted in a reduction of transaction costs for undertaking international businesses.
However, several challenges are facing potential entrepreneurs in developing economies. On top of the list are the determinants of the conditions of entry into the new markets. This is the power of the established sellers in the industry to persistently raise prices above the competitive level without thereby deterring new firms to enter.
The second, perhaps the most important major obstacle to indigenous enterprise in manufacturing, is ignorance on the part of potential investors.
It has been observed that theories of underdevelopment related to a lack of entrepreneurial spirit are inapplicable to most developing economies. Most practitioners in developing economies appear to be actively seeking material rewards, and entrepreneurship as such is socially honored.
The third major pre-investment obstacle is the difficulty of access to productive resources such as capital, managerial and skilled manpower, and an adequate flow of raw materials.
Although not barred from international factor markets, the indigenous investors, unlike their foreign counterparts, lack the knowledge and experience, which are the intangible assets of expatriate investors, to operate in such markets. These indigenous entrepreneurs have no locus standing; even in the domestic money market and where some of their raw materials are imported, they may find it more difficult to meander through the network of administrative controls.
International Environmental Forces
Various international environmental forces mitigate entrepreneurs seeking internationalization to their business – which include but not limited to political and legal factors, demographic factors, natural environmental factors, and physical and technological factors.
The international environment is very important for certain categories of businesses. It is particularly important for industries directly depending on imports or exports and import-competing industries.
For instance, a recession in foreign markets, or the adoption of protectionist policies by foreign nations, may create difficulties for industries depending on exports. On the other hand, a boom in the export market or a relaxation of the protectionist policies may help the export-oriented industries.
Liberalization of imports may help some industries which use imported items but may adversely affect import-competing industries. It has been observed that major international developments have spread effects on domestic businesses.
Domestic Markets and International Competitiveness
Companies are operating in an economy that is becoming increasingly global hence the critical need of international marketing. The worldwide reduction of trade and investment barriers through the World Trade Organization and the establishment of regional economic cooperation agreements have diminished barriers for SMEs and new ventures to become internationally active.
Also, technological advancements (including the widespread use of the Internet and e-mail) and falling transportation costs have resulted in enhanced information flows between countries that facilitate small and new venture internationalization.
It has, for instance, become easier for small and new ventures to find information about foreign markets and clients abroad, to communicate with foreign partners, and to coordinate various activities across borders.
Related: Marketing Kenyan SMEs Globally
The importance of the international marketing environment in today’s global world cannot be over-emphasized. International entrepreneurs all over the world go as far as possible to transact businesses out of their local regions to earn revenue and boost profitability cum acceptability of their products in the global markets.
Venturing into international marketing, therefore, unlike domestic marketing, requires operating simultaneously in more than one kind of environment, coordinating one’s business operations, and using the experience gained in one country for making decisions in another country.
While there are so many hurdles to contend within the international arena by entrepreneurs, potential opportunities exist and can be effectively harnessed. Detailed awareness of cultural environments can enhance the business dealings of entrepreneurs in a foreign country.
Entrepreneurs must also consider government regulations that are prevalent in the country of operations to understand their limits for any dealings they want to engage in. Finally, the ability of an entrepreneur to make a substantial profit from international dealings is dependent on the potential to align the business with all the above listed.