Page 10 - DMGT547_INTERNATIONAL_MARKETING

Unit 1: Basics of International Marketing

national interest impose several restrictions. The traders in international marketing have Notes
to observe such restrictions. These restrictions may fall in any of the following categories:
(i) Tariffs and customs duties on import and export of goods and services in order to
make them costly in the importing country and not to ban their entry into the
country completely. In the post war period, the efforts of General Agreement on
Tariffs and Trade (GATT) there has been a significant reduction in tariff globally and
on regional basis due to the emergence of regional economic groupings.

(ii) Quantitative restrictions are also imposed with an intention to restrict trade in some
specific commodities. The major objective behind the restriction is the protection of
home industries from the competition of the foreign commodities.
(iii) Exchange control is another restriction imposed by almost every sovereign state.
The Government, in some cases, does not ban the entry of goods in the country but
the importer is not allowed the necessary foreign exchange to make the payment for
the goods imported. But, in some cases, exchange control and quantitative controls
are put together along with the grant of import licence.
(iv) Imposition of more local taxes on imported goods with an object to make the imported
goods costly is one of the restrictions in international marketing.
2. Different Legal Systems: Different countries operate different legal systems and they all
differ from each other. Most of the countries follow English Common Law as modified
from time to time. Japan and Latin American countries are important exceptions to this
rule. The existence of different legal systems makes the task of businessmen more difficult
as they are not sure about the particular system will apply to their transactions. This
difficulty does not arise in the domestic trade, as the laws are same for the whole country.

3. Different Monetary Systems: Each country has its own monetary system and the exchange
rates for each country’s currency are fixed under the rules framed by the International
Monetary Fund and, therefore, they are more or less fixed. However, in recent years the
exchange rates are fluctuating and are being determined by demand and supply forces.
Some countries operate multiple rates; i.e. different rates are applicable to different
transactions.
4. Lower Mobility Factors of Production: Mobility of different factors of production is less
as between nations than in the country, itself. However, with the advent of air transport,
the mobility of labour has increased manifold. Similarly, the development of international
banking has increased the mobility of capital and labour. In spite of these developments,
the mobility of labour and capital is not as much as it is within the country itself.

5. Differences in Market Characteristics: Market characteristics in each segment are different,
i.e. demand pattern, channels of distribution, methods of promotion, etc. are quite different
from market to market. If we take each country a separate market, we can assume different
market characteristics there. These differences are accentuated due to the existence of
government controls and regulations. However, this is a difference of degree only. Even
in one single country.

Example: India and America these differences in market patterns may be found from
state to state.
6. Differences in Procedure and Documentation: The centuries old laws and customs of trade
in each country demand different procedures and documentary requirements for the import
and export of the goods and services. The traders residing in the territory have to comply
with these regulations and customs if they want import and export of goods and services.

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