Explicit and Implicit Barriers

Topics: International trade, Free trade, International economics Pages: 5 (1285 words) Published: October 1, 2012
Explicit and Implicit Barriers: how they impact MNCs
Benjamin Osiel

International marketing is a concrete field and established on the principle that transactions can be carried out through International marketing much more effectively because of many necessities that are still unsatisfied throughout the world. Hence, this particular field could improve the quality of life of each individual (Cayla and Arnould, 2008). It is identified that organisations would experience difficulties by exporting because of trade barriers, even though they do not matter to all companies in the same fashioned (Kneller and Pisu, 2011). Barriers may appear through many different aspects, such as political risk or economic instability; we can define as trade protection set by government policies in order to protect their own domestic producers against world competition (Cipollina and Salvatici, 2007). International trade barriers are also distinguished as trade costs which are a significant factor, cross-cultural barriers and corporate social responsibility that management and marketing activities would face as a result of trade policies deferring between countries.

May be the most common barriers are trade protections such as “Tariffs, non-Tariff-Barriers (NTBs) and Import Quotas”. Tariff may well threat international trade and could have severe direct and indirect impact on the economy of a nation as MNCs (Multi-National Companies) exporting worldwide (Cipollina and Salvatici, 2008). In the paper “Measuring protection: mission impossible? (Cipollina and Salvatici, 2008) the effects are seen over an economy, are the decrease of consumers’ surplus (buying power drops), prices rise and create inflationary or a “snowballing effect” which force exporter to lower their exportations and decrease their marginal revenue. Import Quotas have similar impact as reducing the “real income” of consumers and also, creating inflation. However, it brings up a new scenario for organisations that enter a new market, as host government imposes control over a quantity imported (Kneller and Pisu, 2011). According to the Kneller and Pisu, (2011) exporters won’t be able to overcome an import quota by cutting price because they will not be allowed to export and sell more than the quantity fixed.

Non-tariff Barriers are well known by firms, mostly U.S corporations exporting to E.U as seen by Cipollina and Salvatici, (2007) paper. International marketing activities face large difficulties to overcome restrictions. For instance, Chinese cars manufacturers willing to enter the E.U market but restricted due to the Safety and Emission Requirements because according to the European Government, China has a much lower safety and emission standard than Europe.

Agawam, Ruth and Bolton (2010) define “national culture as the values, beliefs, norms, and behavioural patterns of a national group”. Thus, organisations that target an overseas market would have to know to adapt to a new local market. Even though, it has been argued that national cultures and values are converging across nations and moving toward a global culture, it is likely that some barriers remain and jeopardise business marketing strategies and the organisation itself (Agarwal, Ruth and Bolton, 2010). For instance, Majka, Francourt and Lewis (2012) explain thoroughly how “Burger King” entered the French market around 1981 and had to close down all its stores in 1997. The failure was cause by its strategy of exporting the American restaurants, without local adaption.

Nationalism appears to be a significant threat to MNCs, culture and language serve as a challenging barrier, making it very complicated for foreign organisations to embed themselves in a culturally different country than their owns (Cavusgil and Cavusgil 2011). Additionally, population may be extremely collectivist and with high uncertainty avoidance which increases the difficulty for foreigners to build relationship along with a Bias or...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Implicit and Explicit Personality: Essay
  • implicit and explicit Essay
  • A Comparison of Implicit and Explicit Weight Bias Essay
  • Explicit Costs And Implicit Costs Concepts Essay
  • Implicit and Explicit Learning: Two Different Systems? Essay
  • Trade Barrier Essay
  • Barriers Essay
  • trade barriers Essay

Become a StudyMode Member

Sign Up - It's Free