Pest Analysis

http://www.jimintriglia.com/docs/writings/GlobalDomesticMarketingPaper.pdf

Global and Domestic Marketing 1

External Environment Factors Affecting Global and Domestic Marketing

James C. Intriglia

MKT 424 Marketing

Hannah Worley, Ed.D.

August 24, 2005

Global and Domestic Marketing 2

Abstract

There are a number of external factors that influence both global and domestic marketing

decisions. Organizations that develop products and services to be marketed domestically and internationally must consider the impact of external environmental factors that are political, legal, social, ecological, cultural, technological, and ethical in nature. This paper will explore three external environmental factors that impact marketing decisions on a global and domestic level.

Global and Domestic Marketing 3

External Environmental Factors Affecting Global and Domestic Marketing

Organizations that develop products and services to be marketed domestically and internationally must consider the impact of external environmental factors that are political, legal, social, ecological, cultural, technological, and ethical in nature. Failure to do so can result in failed efforts to market successful domestic products in other countries where there is significant market potential. Culture is one example of an external environmental factor that must be considered when making marketing decisions for products to be promoted domestically and internationally. Companies eager to tap international markets without completing market research can encounter humorous disappointments. In 1960, Pepsi's marketers learned a lesson about language differences and how successful English-based product slogans can become horribly lost in translation. Taiwanese consumers were reported to be taken aback by the Pepsi slogan "Come alive with the Pepsi Generation", which translated into Taiwanese reads "Pepsi will bring back your ancestors from the dead" (Feingold, 2000). Luckily for Pepsi, truth in advertising law was still a glimmer in some international business attorney's eye. This marketing gaffe caused obvious embarrassment among Pepsi's top marketing brass, though history would later show they would have more company among marketers beating a hasty path to the international marketplace.

Organizations considering marketing products and services internationally as well as domestically can also be affected by legal external factors. China's recent embracement of capitalism and international trade has proved to be irresistible to multinational corporations seeking significant international markets as a remedy to bolster sagging domestic sales. In the

process of engaging Chinese government officials as well as executives of major Chinese

corporations, some companies and corporate executives have become legally entangled in the

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Federal government's Foreign Corrupt Practices Act's (FCPA) antibribery provisions (Goodman,

2005). FCPA forbids anyone from paying or offering to pay "anything of value" to a "foreign

official" with a "corrupt purpose" of gaining business. Through interviews, China-based

executives have admitted that firms routinely win sales by providing extravagant entertainment

or covering travel expenses for government officials and state-owned businesses. In a country

like China where state-owned companies' purchasing agents routine accept bribes and consider

such payments as part of their salary, some U.S. corporations are catering to such practices and

in the process, subjecting themselves to federal lawsuits and fines levied by the U.S. Department

of Justice and U.S. Security and Exchange Commission. The lesson being taught by legal

prosecution of companies found to be in violation of federal law is that those in the U.S.A. who

seek to market their products internationally are still governed by U.S. law. Ignorance of

domestic laws that apply to international trade, as well as the practice of using third-party agents

as a tactic to insulate companies from prosecution, do not protect companies from prosecution

when they run afoul of FCPA antibribery provisions.

Technological innovations can also influence domestic and global marketing decisions,

and even good marketing and public relations common sense, especially when technology opens

the door to the possibility of tapping a vast global marketplace. In 2002, BT Group PLC allowed

its' corporate attorneys to embarrass the company on a global scale, in an obvious attempt to try

to collect royalties worldwide on a technical innovation it never invented or owned the rights to.

BT's attorney's filed suit against Prodigy Communications in 2002, claiming the Internet Service

Provider (and anyone who had ever clicked on a web page hyperlink) owed the company back

royalties for intellectual property, the "hyperlink", which it discovered it had invented in 1976

(Kleiner, 2002). BT Group's attorneys claimed they discovered the old patent in a filing cabinet,

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and it proved that the company owned hyperlink technology dating back when the patent was

granted in 1976. The obvious problem with the patent pre-dated the invention of the World Wide

Web Tim Berners-Lee by 13 years (Berners-Lee, 2005). When research surfaced evidence of

"prior