International Maketing

Topics: Developing country, Developed country, Emerging markets Pages: 3 (779 words) Published: September 21, 2010
1.How important are PLESTE factors in terms of international marketing The PLESTE (Political, Legal, Economic, Social/Cultural, Technological and Environmental) factors determine the success or failure of any company when moving into international market either through Joint venture, acquisition, partnership or any other. It also determines how well the company can easily localise its products and services and gain market or cost leadership position. Political factors refer to government policy and the stability of the political system in the host country. Investor will obviously be scared of investing in a country such as Somalia because of the prevalence of war. Economic environment has a major impact on the strategic decisions to be taken to operate in any country as the profitability of the business depends highly on the interest rates, taxation rates, inflation and the exchange rates. Before the investment is done, it is crucial to observe these economical factors. For instance the lower interest rates encourage an investment which helps the company to increase the D/E rate by borrowing from the host company for low prices. On the other hand a strong currency which goes hand in hand with the low interest rates may have negative effects on exporting because of the high prices in terms of foreign currency. Legal environment in which companies operate affects behaviour of the firm. The legislation like competition, health and safety and employment law influence the new systems and procedures to be developed for operating in the host market. Social/Cultural factor play a deciding role in the companies’ product ranges sold in a particular country. The social environment including the cultural norms, the demography and population which helps to determine its product ranges. Product differentiation and localization becomes crucial if the host country and the companies’ original country are culturally far away from each other. Cultural distance includes...
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