PART 3: EVALUATE THE SPECIFIC MARKET

Trends and developments

There are three main types of trend: short, intermediate, and long term. Trend analysis is
necessary for ensuring that a business is aware of the changes taking place around it and can
capitalize on opportunities as they arise.
Business organisations need to know about technological trends, changes in supplier prices
and the sources of supplies, demographic and psychographic trends that relate to their customer
base (now and in the future), ecological and environmental trends, economic trends (at local,
regional, national and international levels), political and social trends. These things will affect
businesses at different levels.
Government activities in the different countries with which they operate will affect
business operations and outcomes. Legislation, interest rates, regulation/ deregulation, trade and/or
free trade agreements, currency exchange, general industry trends, competitor activities, customs
and other social and cultural factors which can be quite different in other countries, will interact to
affect target markets. It is important that regular environmental scans and research activities be
conducted to identify what is actually happening in the marketplace and how any particular trends
and developments will affect the business.
Analysis
Statistical analysis of market data requires the collection, collation and analysis of data to
make it useful and useable for identifying trends and developments in the market. Trend analysis
can make it possible to determine whether trends and developments will have positive or negative
impacts on a business.
Trend analysis supports understanding of market maturity (whether the market is in a
growth or decline stage). Organisations can then identify their position within the market and
gauge future market potential.
‘A market trend analysis is an analysis of past and current market behavior and dominant
patterns of the market and consumers. An important aspect of conducting a trend analysis for an
organization is to obtain insights on the market scenario, consumer preferences, and the
macroeconomic environment’.
(smstudy.com)
The research process
Statistical analysis of Australian and international market data implies following an
appropriate research process.

Identify the research purpose, problem or focus.

Design research to get the right data.
Use suitable research tools and gather data.
Collate data.
Apply suitable analysis procedures.
Report on findings.

An understanding of past and current market behavior will help identify expected future
market changes and innovations. Data authenticity and methods used for analysis will determine
the accuracy of the projections. This will impact on short and long-term business planning and the
ability of a business to be competitive because they understand the circumstances surrounding a
trend or development.
Analysis results can be used to develop predictions - suspected trends or developments—
things which might not have occurred yet – forecasts.

Data sources
Data for trend analysis will be industry specific and can come from numerous sources.
It might be collected as a result of surveys but it is wise to take advantage of published industry
research and trend reports and to regularly follow publications and influencers in the industry.
These, and links to them, can be found on the Internet and will apply to a range of industry sectors.

The use of research results

The purpose of identifying trends includes determining the effects of trends on company
image, brands, products/ services and on marketing techniques at home and overseas.
 Trend analysis addresses the external factors that affect the business. In a trend analysis
business data is compared over time to identify any consistent results or trends so a business
organization can respond to these trends in line with their business goals (business.qld.gov.au).
The Political, Economic, Social, Technological, Legal and Environmental (PESTLE)
implications of an organization’s market and relevant changes to the way in which consumers
interact with the company and its products or services—consumer trends—are examined in order
to develop future market projections.

These areas should be analyzed:

1. Current patterns and possible changes in customer needs and behaviors. By identifying
specific trends with regard to customer/ consumer needs and behaviors an organization can
adapt its offerings to cater for those needs.
2. Any identifiable shifts in consumer perceptions of value/ value for money. This involves
analysis of product or service positioning in the consumer’s mind. It also includes
analyzing the possible effect of competitor activities. An aspect of a product or service,
which would at one point in time have been readily marketable, could lose value if there is
no longer a need for it, if it is perceived as being of minor value or if a competition
replicates it. For example, if a particular store (or on-line supplier) is the only one providing
free home delivery for customer orders, it can hold a better perception of value in the
consumer’s mind. However, if competitors start providing the same service, the value
perception for the original store or outlet and its goods is likely to decrease.
3. Trends in industry cost drivers. Changes in the composition of cost drivers and innovations
that lead to lower cost alternatives should be examined. If it is possible to find alternatives
that are more economical or offer additional features, the company can gain a competitive
advantage and achieve higher objectives.
4. Changes in the industry. Companies must continuously identify and analyze product
innovations, the features of competitor products, and new operations procedures and new
methods of getting the product to the consumer. The business needs to understand how the
industry is changing and how it operates in a given country, as well as how consumer
expectations are changing (adapted from www.smstudy.com).
Trends could relate to:
 technology—penetration of new technologies
 changes in supplies, supplier quality and supplier prices
 customer and consumer demographics and psychographics
 ecological and environmental conditions, changes and legislation
 the economy (local, regional, national, international)
 government activities (e.g. interest rates, deregulation, changes to the legislation that
affects business operations)
 social and cultural factors at local, national and international levels
 The size and viability of the market; is it trending up or down—growing or shrinking?

Quantitative and qualitative data will contribute to planning for commercial success in
international markets and a wide range of analytics/ analytical tools are available to help with
analysis and evaluation.
Quantitative research is structured and relies on numbers: how much, how many, how often.
Quantifiable information allows numerical analysis of the strength of a trend and provides a
common vehicle for communication and a sound and reasonable exploration of issues, problems,
improvements or feasibility projections. Where decision making is the intention, quantified data
can be used to measure the potential of alternative marketing strategies and determine relationships
between situations or events, based on comparisons of sets of figures.
Qualitative research focuses on how people feel, their ideas and opinions: what they think and
why they make choices. Generally it consists of descriptive statements about events that have
happened or subjective descriptions of beliefs, values, needs, expectations and concepts such as
value and quality. It includes opinions or comments by customers/ consumers on a product or
service provided, future plans or even visions of what an organization might become. Although
these things are not easily measurable, the data is valid and combines with quantitative information
to give a full picture of a situation.
Information derived from qualitative data on its own is not all that useful for trend analysis,
but when combined with the results of quantitative data the analysis can be very informative. It
helps analysts understand the emotional reactions of people to products, brands, specific
companies, services etc.
 Both forms of research should be conducted when analyzing trends. Statistical analysis -
evidence based on numerical calculation, plus evidence related to ideas and opinions - can offer a
snapshot of the existing market and identify the trends and developments that will assist in
planning for business development and growth.
Survey questions based on multiple choice, rank in order and measurements such as frequency
can be used to collect data, so too can observations (of quantity, frequency etc.), number based
focus group results, product test results and retail audits (to determine brand share).
Data can be collected via desk research, from government organisations, media companies,
industry bodies, other research organisations or from university databases. The Internet and tools
such as Google analytics can contribute to the collection of data in Australia and from overseas
sources. The Internet can be used to identify competitors, competitor offerings and competitor
success. Information collected from reputable sources can help determine where the market is and
how it can be accessed. Secondary data sources, for example interviews with key trade buyers
(here and overseas) and surveys of consumers or end users of products and services can contribute
to trend analysis.

Taking advantage of trends

Moving with trends, and not against them, can lead to organizational profits. Pre-empting
trends and introducing innovative products, service styles and marketing techniques can make an
organization a market leader. Missing or not pursuing a trend can lead to loss of market position.
Changes in the market are the source of both new opportunities and new threats. They have
the potential to dramatically affect market size, marketing mix, price sensitivity, demand for
variety, distribution channels and level of emphasis on service and support.
Markets mature and decline. Some leading indicators of a market’s decline include market
saturation, the emergence of substitute products, and/or the absence of growth drivers.
Identification of downward trends is just as important as identification of new opportunities.
Studying market trends and sales growth (or downturns) in complementary products can
provide information that enables forecasts of market growth rate and turning points—extrapolation
of historical data into the future.
 Business organisations that are prepared can exploit any positive impacts and minimize the
damage of negative impacts, or even change the focus of the business if necessary. It might, for
instance be possible to determine that the size of the demographic group corresponding to a target
market is steadily growing as a percentage of the total population. Armed with this information an
organization could take steps to expand into this demographic.
Information about rising competitor brands and aggressive competition with an emphasis
on price cutting and discounting, on time delivery and increased marketing costs can all contribute
to an organization’s ability to make a place for itself in local, national or global markets.
Although predictive analytics or forecasting, to anticipate future trends, is an inexact art it
can provide a valuable indicator of potential opportunities or of problems and issues.
International business activity

International business activity

Trends directly affecting international trade include:
 online purchasing/ e-commerce (within Australia and external to Australia)
 Internet, SMS, search engine optimization, email and social collaborative or media
advertising
 the use of smartphones, wearables, and other smart connected devices that enable data
about consumers to be collected so that they can be specifically targeted with a marketing
message

Other situations that will impact on international business activity can include:
 changes or advances in technology
 demographic trends, including population growth or even decline in some areas
 ecological/ environmental trends
 economic trends (local, regional, national, international)
 Political conditions and government activities including changes to interest rates,
deregulation, policy changes etc.
 Industrial trends
  other political events such as wars, internal conflicts, forthcoming elections, changes of
government
 social and cultural factors- changes in attitudes, opinions, expectations

As brands develop and become known overseas, instantaneous communication between

countries continues to become easier and more mobile, and distances shrink, reputation
management becomes more and more important.

Trend analysis might incorporate consideration of:

 product introduction
 market size and growth
 key market trends
 range of market conditions
 technology
 value-added services
 market projections
 factors affecting market growth
 industry outlook
 differences between the Australian market and overseas markets
 trends in Australia that can impact on international business activity

Businesses should be constantly scanning the market and collecting data that will enable
identification of conditions that offer opportunities and contribute to business performance
reviews. They must systematically investigate the growth and the composition of their
international markets to determine what things will influence (trends and developments) the
purchasing behaviors of the markets.
To fully investigate a market, and develop trend analyses, surveys can be conducted.
Consumers can be divided into groups. It is both a physical and cost impossibility to survey the
whole market, therefore market segmentation is necessary.
Segments divide the market into distinct groups of buyers on the basis of needs,
characteristics or behavior—commonly shared characteristics—to determine what types of
consumers will be most receptive to a particular product or marketing message. When conducting
research with an international focus the particular needs, characteristics and behaviors of the
market segment in terms of cultural differences, demographics and psychographics that are
specific to the culture of the market segment need to be explored.
Segmentation groups together potential customers with like preferences and needs.

Market segmentation takes into consideration a range of consumer features:

 demographics—characteristics of a group of people like age, income, gender, or ethnicity
 technographics—characteristics based on ownership, use patterns, and attitudes toward
information, communication and entertainment technologies
 psychographics—characteristics based on how people act, such as spending patterns and
hobbies
 socioeconomic features—related to household income, level of educational attainment,
occupation, neighborhood of residence, and membership in various associations

Analysis
Once data has been collected and collated (made into meaningful sets) it can be analyzed
in terms of similarities and variations—identification of relationships and meaning.
Both quantitative and qualitative analysis procedures might be followed.

Statistical analysis of quantitative research data is a mathematics-based discipline, which

includes:
 sampling
 measures of central tendency
 measures of dispersion and
 nature and degree of relationship between variables
 time series analysis
 normal distribution probability curves
 Trend analysis sometimes relies on time series analysis to interpret the data that has been
collected.
When a series of measurements are treated as a time series, trend estimation can be used to
make and justify statements about tendencies in the data, by relating the measurements to the times
at which they occurred.
Time series analysis is the study of a phenomenon that occurs over time; for example changes
in interest rates, employment, product sales and company profits. It is useful to identify general
trends or observe differences in specific time periods. For example, a soup manufacturer might
experience its highest sales figures during winter months. Unemployment rates often are higher at
the end of the year when school leavers and tertiary graduates enter the job market. It can also be
used to identify newcomers in the local or international market and to monitor their success over
specific periods of time.
A time series is a sequence of data points, consisting of successive measurements made over
a nominated time interval. Examples of time series are things like ocean tides or the daily closing
value of the Dow Jones Industrial Average. Time series are frequently plotted on line charts to
enable pattern recognition and trajectory forecasting.
Trend estimation helps determine whether measurements exhibit an increasing or decreasing
trend (a formal regression analysis). It is a process for estimating the relationships among or
between variables which are statistically distinguished from random behavior and which are often
measured over meaningful time intervals.

Other methods of analyzing international markets

From Food and Agriculture Organization of the United Nations:

‘Besides the usual descriptive data analysis methods, there are a number of other techniques
which can be used in analyzing market potential. "Usual" methods include univariate methods
(mean, median, mode, standard deviation), bivariate methods (regression, correlation, cross
tabulations), and multi variate methods (including multiple regression, cluster analysis, multiple
factor indices and multidimensional scaling).
 Industrial growth patterns: may give an insight into market demand. Statistics can be
obtained from in country sources.
 Income elasticity measurements: Describe the relationship between demand for goods and
changes in income. This could, for example, show what could happen to the demand for
basic agricultural products, if income rises. In theory, it should decline.
 Regional lead-lag analysis predicts what could happen to the pattern of demand in a
considered country based on the pattern of demand in a leading country. If Zimbabwe, for
example, introduces a new form of tobacco drying, it is likely the other tobacco producing
countries around it will do the same.
 When it is difficult to obtain data, resourceful ways are needed to estimate demand. One
of these methods is analogy. There are two ways of using this technique, one is by cross
sectional comparison, the other by time series analysis. Cross sectional analysis assumes
that a factor which correlates with demand in country A could be translated to country B.
Time analysis is a similar technique but adds the time dimension, very similar to the
estimate of the stage in the international life cycle. One USA chemical company found that
soup consumption was the only reliable index forecasting sales in Asia. There are
limitations to the analysis. These include whether the two countries can really be compared,
whether technical or social developments have led to a leapfrogging of the product under
consideration, and whether the difference between potential and actual demand (which
could depend on other factors like price, adaptability etc.) may subsume analogy.
 Comparative analysis: Comparative analysis, say between countries on intracompany,
intercompany, national - subnational markets can be useful for estimating potential
demand. It is not unreasonable, say, to compare Zambia and Tanzania.
 Cluster analysis: Computer packages exist to cluster similarities and differences between
countries which may show factors which could be common and therefore potential markets.
Such packages include multidimensional or clustering techniques.
 Multiple Factor Indices: MFIs indirectly measure potential demand, using variables that
either intuition or statistical analysis suggest can be closely correlated with the potential
demand for the product under review. Variables should be restricted to those which relate
to product demand and these may be GNP, net national income or total population. In
assessing the demand for coffee appliances, for example, an index which includes coffee
drinkers and type of coffee consumed would be useful.
  Regression analysis: A very useful and powerful tool. The procedure selects the
independent variable that accounts for the most variance in the dependent variable, then
the variable that accounts for the remaining variance etc. Often multiple regression is
needed as a single variable will not do. Predictions are often made on market demand for
products based on what would happen if GNP were increased. As seen earlier, an increase
in GNP could be good for luxury or durable goods but not basic commodities. However,
high GNP per capita, may be a good predictor of, say, exotic high value horticultural
produce, out of season produce or technological advanced agricultural machinery’.

Gather and analyze comparative international market information as a

basis for reviewing business performance
Organisations of many sizes and from many backgrounds, especially in the industrialized
countries, exhibit willingness to respond to attractive opportunities in international markets. Many
will extend their marketing activities to more than one international market.
They will use statistical analysis to generate comparative international market information
and to review business performance. Comparative analysis can point to both similarities and
differences and to trending activities or processes. It might take the form of an item-by-item
comparison of two or more comparable alternatives, processes, products, qualifications, sets of
data, systems etc.
Comparative market analysis often refers to markets like the real estate market. It refers,
in real estate, to the process of examining the prices at which similar properties in the same market
have been selling, in order to determine property listing prices.

Comparative information could include that relating to:

 benchmarking against performance in Australian markets which is used as benchmark
 world’s best practice information which is also used as a benchmark
 inter-firm comparison data
 international benchmarking
Information gathered from these sources and compared with the organization’s actual,
international performance can be used to assess performance and identify new opportunities.

Other things the business must consider will include:

 market projections
 acceptance of and involvement in global marketing initiatives
 product line extensions
 market equilibrium
 specialization/ niches
 import/ export regulations and compliance expectations
 economic factors/ climates that affect international markets
 competitive pricing/ incentives/ predatory pricing
 rising tide of internal and external competitor brands
 aggressive competition with an emphasis on price cutting and discounting
 increased/ decreased marketing costs
 population/ population intensity

There can be pronounced differences in international consumer perceptions, and organisations

working in the international sphere need to identify differences and take them into consideration
when developing their marketing strategies and deciding on an appropriate marketing mix.

Opportunities identified as a result of analyzing comparative international market information can

relate to:
 trademarks, patents and standards accreditation
 cooperative ventures
 extending, expanding or otherwise changing an existing business
 franchising
 joint ventures
 new products or services for existing markets
 new products or services for new international settings or within other regions of existing
international settings
  potential for greater penetration of existing markets with existing products or services
 strategic alliances
 mergers, acquisitions, takeovers, buyouts and diversification

Research into markets and a review of business performance must take

into consideration:
 market size (current and future)
 trends
 market growth rate
 market profitability
 industry cost structure
 distribution channels
 the key success factors and criteria against which successes will be measured
 comparative strategic management perspectives
 comparative marketing management results
 comparative frameworks in emerging market economies
 human resource and general management strategies and performance
 developing economies
 cross-disciplinary/country/industry implications for comparative management

When reviewing business performance –pricing, positioning, distribution, market share and
market percentage plus sales/ profitability – cultural, legal and ethical constraints should be taken
into consideration.
These include both the Australian and the country specific legal and ethical expectations with
regard to the behaviors and activities of business organisations:
 cultural expectations and influences
 ethical business principles
 legislation and regulations relating to import/ export activities and to the operation of
businesses in specific countries or under specific governments
 fair trade
  protection of vulnerable people, including children
 non-exploitation of vulnerable people
 social responsibilities
 responsibility with regard to environmental issues
 societal expectations
Taking all of these things into consideration the question to be answered is: How well is the
organization performing in its international markets, in relation to the variables identified?

Analyze competitive performance to identify opportunities or threats

within the market
Before even starting to export or before setting up a business overseas it is important to know
who the business will be up against—what competitors offer, how they present their offerings,
how they interact with customers and with suppliers and how they collect and manage customer
information.

Competitors might be:

1. Direct—businesses that offer identical or similar products or services to the same
customers via the same market channels.
2. Indirect—businesses that offer products or services that are close substitutes. The
competitors usually target the same market with the same or similar value propositions but
deliver a different product.
3. Future competitors—existing businesses that are not in the marketplace yet and have not
firmed their offering, but could enter into competition at any time.

Once established a business must have one eye on the competition at all times, and constantly
assess their own performance against that of competitors. They must know where they stand in the
marketplace and know the market positioning of competitors.
Market positioning strategies are intended to make the product/ service on offer attractive and
wanted—the preferred product/ service that offers perceived value for money and a range of
identifiable consumer benefits. To ensure suitable positioning and on-going sales it is necessary to
know what competitors are doing, what customers are buying, what customers want to buy; and to
improve the organization’s products/ services and support performance at a higher level than that
of competitors.
Monitoring the performance of existing and potential competitors in the home or the
international market can include watching corporate share prices, reading annual reports, assessing
market share, and collecting data about the number and type of customers serviced by a competitor.
Where possible, monitoring the profitability and sales in units or dollars of competitors will be
valuable. The business must understand where it and its competitors are positioned in the market
in order to determine how much of a threat competitors are.

Threats or opportunities
Organisations operating on the international stage must gather competitive intelligence that
will give them the opportunity to strategically position what they have to offer. Some of this
information can be gathered online, from news articles, industry journals, analyst reports, the
company’s website, marketing collateral, and company reports. Alternatively it might be necessary
to commission professional, industry-based research. Visiting a proposed or a current export
destination in person and attending networking events and trade shows can also provide data
collection opportunities.

Things to be taken into consideration include:

1. Customer satisfaction/ brand loyalty. Can the organization match its competitors in
attracting customers and building loyalty?
2. Product/ service quality. Does the product/ service deliver better value to the customer and
is it performing as intended?
3. Brand/ company associations. What do customers associate with the business in terms of
perceived quality, innovation, class, expertise, customer orientation, ethics and
environmental soundness?
4. Relative cost. Are there any cost advantages or disadvantages—with respect to materials,
assembly, product design, or wages—that differentiate the organization from its
competitors?
 5. New product activity. Is there a stream of new products or product improvements that have
made an impact or are the competitors always ahead with regard to innovation?
6. Innovation, creativity. Do customers perceive the organization and its product/ services as
innovative or are competitors more creative in their product/ service design and in their
marketing activities?
7. In comparison to competitors, is the organization flexible enough to meet and pre-empt
changing needs and customer expectations?
8. Entrepreneurship. Are past and current marketing activities exciting? Do they draw
customers to the company or do competitors draw more attention due to entrepreneurial
ideas and marketing procedures?

Businesses can consider, in comparison with current or emerging / potential competitors:

 business location  years in business
 product price  financial viability
 product quality  personnel
 product/ service bundles  sales figures
 market share  profitability
 customer bases  marketing strategy
 product lines  brand
 production capacity  image
 distribution  reputation
 pricing  acceptance
 quality
To measure an organization’s performance against that of its competitors ask:
1. Who are the key competitors?
2. What are their strengths?
3. What are their weaknesses?
4. What are their key success factors?
5. What can be learned from them?
6. How can data that will answer these questions be collected?
7. What are competitors in related fields doing?
It is possible to use a two-dimensional matrix to hold the data;
competitors along the top and key success factors down the side.
Rank the key success factors for the industry by giving each one a weighting. The sum of
all the weightings must add up to one. Rate each competitor on each of the key success factors.

Multiply each cell in the matrix by the factor weighting.

Key Industry Competitor Competitor Competitor Competitor
Weighting
Success Factors #1 rating #1 weighted #2 rating #2 weighted
1 - Extensive
.4 6 2.4 3 1.2
distribution
2 - Customer
.3 4 1.2 5 1.5
focus
3 - Economies of
.2 3 .6 3 .6
scale
4 - Product
.1 7 .7 4 .4
innovation

Totals 1.0 20 4.9 15 3.7

(Wikipedia)
In this example competitor #1 is rated higher than competitor #2 on product innovation
ability (7 out of 10, compared with 4 out of 10) and distribution networks (6 out of 10), but
competitor #2 is rated higher on customer focus (5 out of 10). Overall, competitor #1 is rated
slightly higher than competitor #2 (20 out of 40 compared with 15 out of 40). When the success
factors are weighted according to their importance, competitor #1 gets a far better rating (4.9
compared with 3.7).
Two more columns can be added. In one the organization can rate itself on each of the key
success factors. In another column benchmarks can be listed. This will show the organization’s
relative position in the marketplace, demonstrate its strengths and weaknesses and indicate how
much of threat different competitors are. It might also indicate strategic weaknesses applicable to
competitors.
Advance warning of new products, services, technology or new markets
Innovation is essential for on-going business success. It involves doing things that are new
or different.
It might involve developing processes and procedure that save time and money, and give
the company a competitive advantage that enables it to grow and adapt.
Innovative companies identify and tap sources of intelligence for advance warning of new
products, services, technology or new markets to ensure that they are able to take advantage of
opportunities and counter threats. They use information and innovation to achieve a market
advantage.

Information, intelligence and advance warning can come from a variety of sources that include:
 the World Trade Organization (WTO)
 government publications
 government agencies– home or overseas
 the Internet
 face book and other social media
 Internet advertising sites
 organizational R&D
 research papers – national/ international research
 market intelligence– research conducted by the company or by commercial services
 television, movies, radio, other media
 networking contacts
 social contacts
 forecasts
 universities
 magazines and promotional materials
Other sources can include:
 competitor advertisements
 web pages
 analysis of current consumer behavior - with a view to predicting future behaviors
 use of:
 o media tracking technologies
o beacons, or iBeacons - small tracking devices
o Near Field Communication (NFC)
o click through counts
‘The World Trade Organization (WTO) serves as the regulatory foundation for
international trade. As the preeminent world trade negotiating forum, the WTO also is the number
one “clearinghouse” for companies wanting global trade information and trade agreement
management. It also functions as the prime arbiter for international business disputes’.
(www.business.com)
It is, therefore a prime source of information about what companies need to do when
operating internationally.

Companies might:
 analyze past and current trends in the market environment in order to predict new
developments
 Collaborate with customers/ consumers to identify emerging needs.
 consult with customers and employees for ideas on improving processes, products and
services both internally and externally
 seek advice from business advisors
 collaborate with local and international researchers
 develop strategic plans that promote innovation as a key business process
 identify new products and services introduced by competitors and innovate to improve
them or to out compete
 consider changes to company infrastructure that will allow it to take advantage of new
ideas, in order to:
o develop and market new products, services
o use technology to identify new markets
 focus on innovation because innovative companies are more competitive and more able to
capture increased market share
Legal, ethical and environmental constraints
Consideration must be given to legislation. Australian laws will have an impact on the ways
in which Australian-based companies do business. The legislation and protocols relevant to the
international setting in which organisations conduct business and structure their marketing will
also, necessarily, have specific impacts.
Before undertaking international business ventures the organization must understand their
obligations under International Commercial Law, as well as their obligations under the legislation
relevant to the countries in which they do, or in which they intend to, operate.
They will need advice from government agencies, trade organisations/peak industry bodies
and from their own legal representatives.

Australian legislation
In Australia national, state and territory legislation exists to protect:
 customers/consumers
 the community
 suppliers
 the environment
 intellectual property (IP)
These laws are intended, at national, state and territory levels, to promote fair trading (for
businesses and consumers) and to encourage competition. They also outline the rights of
businesses and business owners when conflicts arise. The Australian Competition and Consumer
Commission (ACCC) oversees fair trading practices.

Taxation here and abroad

‘Generally, Australian tax residents and foreign entities controlled by Australian tax
residents are taxed on their worldwide income, regardless of whether it is earned in Australia or
overseas. Just because a business is in a foreign country and only trades overseas does not mean
that it escapes the Australian tax net. However, if a business is liable to taxation both in the foreign
country in which it is based and Australia then it is likely that there will be a double tax treaty
between Australia and the foreign country that sets out the tax position in each country.
 It is always wise to seek tax advice both in Australia and in the relevant country overseas
when establishing a business overseas and when undertaking transactions overseas that may have
tax consequences in Australia, particularly if they involve changes in ownership or transactions
with related parties’. (legalvision.com.au)

Import/ export
Australian legislation, regulation and standards place specific requirements on import/
export activities.
Import businesses must be aware of laws and of government regulations. They must know
what imports are acceptable and which might be seized by the Australian Department of
Immigration and Border Protection.

They need to know about:

 conditions that apply to buying and importing goods from overseas
 banned and restricted imports
 trade measurement regulations
 duty taxes
 customs restrictions
 permits
 quarantine and treatments
 the powers and jurisdiction of the Australian Border Force
(business.gov.au)

Exporters need to know the risks associated with exporting - foreign exchange, political,
shipping, quarantine. They will need industry specific information for different international
markets. This will include information about the legislating relevant to sending, marketing and
selling goods overseas. Austrade, state and territory governments and Australian Border Security
can provide information on import/ export requirements or provide contact details for expert
advice.
International legislation
Organisations setting up their businesses in international markets must comply with
International Commercial Law - the legislation, regulations, rules, conventions, treaties, and
commercial customs or usages that govern international commercial or business transactions.
Legislation in other countries will determine what can be marketed, how it can be marketed
and how businesses are allowed to operate in their jurisdiction.

When operating in international markets:

 do not assume that a foreign country’s legal system will work like it does in the home
country
 be aware that foreign legal systems are not necessarily impartial or immune to political
pressure - in particular when trying to resolve business or commercial disputes
 conduct stringent risk assessments that include assessments of legal responsibilities, in
order to develop risk minimization strategies
 retain a registered agent in the country(s) in which the organization will operate even if it
does not have a physical location; a registered agent can be an official contact point for
acceptance of legal documentation
 be familiar with World Trade Organization (WTO) functions and regulations
 understand any treaties and regulations relevant to the international market
 thoroughly investigate changes or trends that could result in loosening or tightening of
legislative controls
 be familiar with and comply with any legislation relating to environmental interactions,
protections, restrictions and conservation
 take taxation legislation into consideration
 be aware of the laws in the countries in which the business operates and the ways in which
they relate to import/export, licenses, customs and taxation
 obtain any licenses or registrations necessary for operating in a foreign country
 enter into contracts, applicable to the international marketing context, with customers,
suppliers and distributors, that set out the rights, obligations and responsibilities of the
different parties and describe methods of dealing with disputes
  identify and comply with any industrial relations legislation, in particular that which
applies to payment of correct wages and monitoring employee safety
 comply with any and all legal obligations that relate to marketing and marketing processes
 investigate and comply with Free Trade Agreements - Australia has free trade agreements
in force with other countries and these are legally binding commitments
 determine whether tariffs, tariff quotas and export subsidies will impact on the organization
and its business
 investigate the differences between legal systems here and abroad
 understand the rules of competition and product liability requirements

Understanding legal issues is vital to protecting a business that is operating in an international

market and, while the following things do not relate directly to legislation it is advisable to:
 develop a good understanding of and familiarity with local foreign customs, cuisine and
culture in order to avoid making mistakes or innocent faux pas that can affect business
relationships
 ensure that management and employees who interact with the business in its international
context understand customs and cultural issues that can affect long-term business success
(Adapted from business.com and legalvision.com.au)

Organisations participating in export activities must be aware that Australia maintains

United Nations Security Council sanctions and bilateral sanctions in respect of a number of
countries and the sanctions must be complied with.

Ethics
Customers in the international market will look for both product and company suitability.
This relates to ethics and to the values and norms held by the society within which the business is
marketing.
Marketing that is linked to social causes can lead to an opportunity for growth and
differentiation. Businesses can promote the link between causes and products to develop a point
of difference that matters to people.
 While it is incumbent on businesses to operate within the ethical constraints of the country
in which they are working it is also important that they do not take advantage in countries where
ethical standards are low and exploitation and/or corruption are allowed.
‘Some of the most common ethical issues in international business include outsourcing,
working standards and conditions, workplace diversity and equal opportunity, child labor, trust
and integrity, supervisory oversight, human rights, religion, the political arena, the environment,
bribery and corruption. Businesses trading internationally are expected to fully comply with
federal and state safety regulations, environmental laws, fiscal and monetary reporting statutes and
civil rights laws.
Cultural considerations can … make or break a company conducting business globally.
Every culture and nation has its own history, customs, traditions and code of ethics. Cultural
barriers include language, which often means a company must rely on translators when speaking
to business contacts and customers. Gender can be an issue in countries where women do not have
the same rights as men. Religious holidays and other cultural events can prohibit trade at certain
times. Acting in accordance with ethical and cultural values is crucial for a multinational company
to win clients’ support and business and to achieve a competitive advantage in a particular market’.
(online.uttyler.edu)

Work conditions
Businesses operating in international markets can face the dilemma of complying with the
work standards of their home country versus the lack of such rights for employees in the host
countries. They need to make a determination on how they will operate and determine what human
rights policies they can apply. Policies brought by companies from, in particular, Westernized
countries will not always be well received.
Outsourcing production jobs to overseas, usually third world, operations with substantially
lower labor costs can be beneficial in terms of competitiveness. The company can provide lower-
priced products to customers. This creates social and ethical issues, including the issues
surrounding child labor that must be faced. Some companies, importing from those operators will
simply turn a blind eye to what is happening. Those who create their own operations base overseas
need to consider whether they can justify complying with poor safety regulations and the
expectation that people will work long hours for little return. Some companies will see the need to
spend less money on safety and on wages as an opportunity, however this can have negative
impacts on the company image and brand. Compromise might be necessary.

Human rights
In an attempt to establish global standards for human rights related to business activities,
the United Nations created a set of Guiding Principles on Business and Human Rights.

These relate to:

 work standards, wages and conditions
 performance and quality standards
 workplace diversity and equal opportunity
 religion and its impact on business practices and social customs
 complying with the host country’s rules and regulations

The environment
Impact on the environment is another ethical issue faced by western businesses in the
international arena. Most countries are concerned about the environment but legislation and
expectations will differ in each country. Western countries might try to implement the standards
they have dealt with in their home country, but in a country where environmental regulations are
less strict they might choose to take advantage of more lax environmental requirements. This could
mean that they need to spend less money and be less caring about the environment. This is an
ethical dilemma that could be faced by any company setting up overseas.

Bribery and corruption

These are issues that might be faced by companies in the international marketplace because
in some countries bribery and kickbacks are normal and are actually expected when doing
business. Many, but not all developed countries have legislation that prevents their citizens from
paying bribes to foreign government officials to gain business favors and advantages.
 If some developed countries are able to pay bribes it puts others at a disadvantage Germany,
for example, recognizes bribes paid to foreign government officials and allows these payments as
tax deductions.
Countries that are unable to make such payments have an ethical dilemma and might feel
it is necessary to resort to other means, possibly unethical, to garner appropriate advantages. As
companies are under pressure to produce profits ethical codes can be strained.

Business practices
Business practices that are illegal or frowned upon in one country can often be allowed,
tolerated or even expected in foreign countries. Before negotiating entrance into international
markets organisations must know what business practices are acceptable.
‘…. companies that enter global markets with an established code of ethics have a better
chance of achieving a positive international image that results in a stronger market share and higher
profits.
The list of social and ethical issues and marketing ethics in foreign trade that companies
face in the global stage is long and complex. Each country is different in culture, laws, politics,
workers' rights, child labor and diversity. A company considering a foreign operation must
carefully examine all of these issues before making a commitment’. (smallbusiness.chron.com)

Intellectual property
Not all countries have the same restrictions and the same ethical attitude towards
intellectual property. It can be tempting for organisations importing from or operating within the
international market to support copying, knockoffs or theft of intellectual property. Any company
doing this must be aware of the legislation and the ethical expectations with regard to such matters
in their home country.
Understanding cultural differences can make the difference between success and failure in
a global market. Each nation has its own distinct customs, history, traditions and code of ethics.
Religion
Business practices and social customs that would be common and accepted in a Christian-
dominated country might be considered offensive and totally unacceptable in other countries, for
example Islamic or Buddhist countries. Methods of negotiation and the types of products and
services that can be sold can be influenced by religion. In order to comply with their ethical
responsibilities businesses must understand the role and depth of a religion's influence on business
practices.

Political and Legal Issues

When operating globally, businesses must comply with the host nation's rule and
regulations. Google's attempt to enter the Chinese market is an example of this type of problem.
Quite simply, the Chinese government has restrictions on freedom of speech, and Google's
presence would open up free expression to the people of China. The government was not going to
allow that to happen. As a result, Google had to discontinue its version designed for mainland
China and divert Chinese users to its Hong Kong version.
International companies must identify and asses the type of government that a country has.
Is it communist, socialist, a dictatorship or an open democracy? Who's in charge, and who makes
the decisions?

Foreign Governments
Being on top of the political winds in a host country is necessary to be allowed to operate
or run the risk of having the company's assets, plant and equipment confiscated. What will happen
if a new party takes over?
‘[Western] companies have more freedom to operate and, ultimately, they have a legal
system to pursue for protection and recourse. However, some foreign governments can just decide
to seize a company's properties at a whim, and there is nothing the company can do about it’.
(smallbusiness.chron.com)
Additional Reading
Video Links
 Nestlé: 150 Years of Food Industry Dominance
https://www.youtube.com/watch?v=MYGZZKTA2qI
 The marketing insider's tips for 2019
https://www.youtube.com/watch?v=O3MC4JCu4vM
Web Links
 The Tremendous Impact of AI on Social Media Marketing
https://www.renderforest.com/blog/ai-for-social-media-marketing
 Market Research Techniques: Primary and Secondary Market Research
https://www.cleverism.com/market-research-techniques-primary-secondary/
Additional Reading
Video Links
 Nestlé: 150 Years of Food Industry Dominance
https://www.youtube.com/watch?v=MYGZZKTA2qI
 The marketing insider's tips for 2019
https://www.youtube.com/watch?v=O3MC4JCu4vM
Web Links
 The Tremendous Impact of AI on Social Media Marketing
https://www.renderforest.com/blog/ai-for-social-media-marketing
 Market Research Techniques: Primary and Secondary Market Research
https://www.cleverism.com/market-research-techniques-primary-secondary/
Check your knowledge
True or False statements. Answer True (T) or False (F).
True False
1. Business organisations operating here or overseas must be constantly
aware of threats and opportunities.
2. It is only political trends that must be constantly monitored.
3. It is only Australian legislation that must be complied with when
operating in international markets.
4. Organisations with a strong code of ethics do not need to comply with the
ethical requirements of a host country.
5. Trend analysis supports understanding of market maturity so can identify
their position within the market and gauge future market potential.
6. The internet can supply all the information that is needed to conduct a
competitor analysis.
7. In Australia bribery is an accepted aspect of doing business.
8. Differences relating to religion, culture, language and environmental
concerns will all affect organisations that operate overseas.
Multiple choice questions. Select the answer you think is correct.
1. For a business ethical dilemmas can relate to:
a. Child labour and work conditions.
b. Where people live.
c. How many children labourers have.
d. None of the above.
2. Innovative companies tap sources of intelligence for advance warning of new products/
services, technology or markets to:
a. Develop new loss evading products.
b. Show everyone how clever they are.
c. Stay ahead of competitors and achieve a market advantage.
d. Keep up with market trends.