Environmental Factors Paper –
Select an organization with which you are familiar that conducts both domestic and global marketing. (Writer, please use McDonald’s Corporation)
Write a 1,100- to 1,300-word paper in which you identify the environmental factors that affect global and domestic marketing decisions. Address the following as they relate to the organization’s marketing decisions:
•Analyze the influence of global economic interdependence and the effect of trade practices and agreements.
•Examine the importance of demographics and physical infrastructure.
•Analyze the influence of cultural differences.
•Examine the importance of social responsibility and ethics versus legal obligations.
•Analyze the effect of political systems and the influence of international relations.
•Analyze the influence of the Foreign Corrupt Practices Act of 1977, and the influence of local, national, and international legislation.
•Explain the effect of technology.
Format your paper consistent with APA guidelines.
Environmental Factors in Marketing
The prevailing factor for most companies today regarding environmental factors in global and domestic marketing decision is to “do the right thing”. No company can expect to survive today without taking responsibility for the environment not only for green house gas reductions and pollution control, but also for their own sustainment in a world of tighter supplies of fossil fuels and higher prices (Esty, 2009). Demands from government regulators, environmental groups, and stakeholders (including lenders, stockholders, customers, suppliers, and employees), are forcing companies to manage these environmental challenges as well.
The Ford Motor Company has a strategy for sustainability in the era of green. They continue to develop product plans in all regions with a goal of climate stabilization (Ford Motor Company, 2011). They are producing and developing electric and alternative fuel vehicles, as well as gas powered vehicles that achieve greater fuel mileage while reducing green house gases and emissions. Ford is also revamping production methods, facilities, and factories so that less water is used as well as producing less waste and pollution.
Global Economic Interdependence
Today it is difficult to distinguish what an American car really is. Does an American car simply mean one that is made within the U.S. borders or does it mean one that is made by a company with headquarters in the U.S.? As an example, in 2006 auto manufacturers headquartered in foreign countries manufactured vehicles and parts in the U.S and employed over 400,000 Americans who earned an average wage of over $63,000 (Ikenson, 2009). While Chrysler, Ford, and GM were struggling, insourcing was taking place with companies like Toyota, Honda and Mercedes expanding their operations in the U.S. Toyota manufactured over 1.6 million vehicles in 2008 in seven states and conducted research and development in three other states (Ikenson, 2009). Global interdependence is evident in the automotive industry and for both the manufacture and sales of automobiles. The important thing is that jobs are being created all over the world and marketing managers must be prepared for the required changes as they evolve.
Demographics and Physical Infrastructure
In order to provide a basis for market research, firms must examine the demographics and physical infrastructure of the country or region they are trying to penetrate. The size of the potential market (or demographics) tells the market researcher about the reality of any profitable opportunities (Perraault, Cannon, & McCarthy, 2009). The potential target market size might vary from one city, country, or region to the next. The physical infrastructure is a key factor when determining market penetration as well, especially when dealing with technology. Advancements in technology may lead one to believe that it might be easy to expand into other markets but if a new country or region has little or no experience with the technology and no infrastructure to support the new technology, it will go nowhere fast.
Influence of Cultural Differences
Culture has several important characteristics in that it is comprehensive, learned, and is a set of established boundaries in which acceptable behavior is found within. Culture being comprehensive means that all parts must fit together in some logical fashion (Perner, 2011). Bowing is a form of respect in some countries as an example and not in others. Culture is something we learn rather than being born with it. It is a set of boundaries established as acceptable behavior within a society. Market researchers must be careful not to over generalize or stereotype a society. They must also learn acceptable manners, behaviors, and dress if they wish to show respect to a potential business client in a foreign country. There are also the language barriers that must be researched and understood so as not to mistake meaning thus damaging communication lines.
Social Responsibility and Ethics
Ford in one of the largest automobile manufacturers in the United States and they have tremendous amount of social responsibility as a result. Compliance and reporting in accordance with the Sarbanes-Oxley Act to ensure that there are no insider trading issues is an example. The outline of sustainable leadership so that leadership at the director and executive levels are not involved in any conflict of interest issues. Ford Motor Company also has social and ethical responsibility to its stakeholders, communities, environment, and employees. Most businesses including Ford are expected to perform to their shareholders expectations pertaining to profitability and efficiency. That means producing vehicles and other products that customers want and that they can afford. Furthermore, Ford is expected to govern themselves in such a way that the company is in compliance with laws and regulation set forth by society and the U.S. government designed to enhance fair competition. Most every part of the operations at Ford are governed by law including environmental laws, safety laws, employment laws, and consumer and product laws. The ethical responsibilities go further than that however in that Ford is expected to conduct business fairly and that they are proactive in their efforts to meet the norms of society even if those norms are not governed by law.
Political Systems and International Relations
International marketers must consider the legal and political environments of foreign countries that they are attempting to penetrate. Companies such as Ford that operate overseas must comply with laws established by the home country as well as those of the host country. The interpretation and content of various laws can be quite different as well as the legal systems from one country to another. Marketing strategies can be affected especially when dealing with specific product restrictions or specifications. The politics of any country under consideration must be considered by the marketing management as well. There are often numerous risks involved when entering into business relations with companies or businesses in regions with unstable political situations. Companies must be ready to make modifications or changes to their marketing strategies in response to sudden changes in regulation in order to benefit from potential new opportunities. The new Ford Focus is the first global product under Ford’s “One Ford” vision. The company hopes to achieve more consistency and higher quality communications around the world and through initiating a globally integrated market launch they hope to save millions dollars in marketing costs. The goal is to connect Ford products with new customers and build on their strength as one of the world’s most recognizable, and admired companies and brand name.
Foreign Corrupt Practices Act and Local, National, and International Legislation
The Foreign Corrupt Practices Act (FCPA) was signed into law in 1977. 21 years later, the FCPA was amended by the International Anti-Bribery Act of 1998. The anti bribery provisions of the act make it unlawful for companies such as Ford to make payments directly or indirectly, to any foreign official or third party for the purpose of gaining an unfair advantage or to assist in obtaining or retaining business within the country (U.S. Dept of Justice, 2011). Ford must comply with these provisions as well as maintaining records of any and all accounting transactions. Laws such as these are implemented to establish fair business practices and are designed such that no single company can have an unfair advantage over another.
Impact of Technology
Technology has changed the marketing strategy for most firms including Ford. Consumers are more informed and product lifecycles are shorter. Everyone wants the latest and greatest product and companies like Ford are always trying to stay at the forefront of new technologies and produce the freshest, most desirable product possible. Communication technologies allow the word to spread like wild fire and marketing managers must be able to react to changes in consumer wants and needs quickly. Time to market is more important than ever if Ford wants to remain on the cutting edge and maintain their image as technology innovators.
There are many facets to the marketing strategy and all companies including Ford must “do the right thing” when it comes to environmental protection and climate stabilization. Global interdependence is evident in many industries including the automotive industry and marketing managers must be prepared for the required changes as they evolve. The target market may vary in size from one city, country, or region to the next and the physical infrastructure is a key factor when determining market penetration as well. Culture must be considered and market researchers must be careful not to over generalize or stereotype a society. Furthermore, businesses like the Ford Motor Company also have social and ethical responsibilities to their stakeholders, communities, environment, and employees. Most businesses including Ford are expected to perform to their shareholders expectations pertaining to profitability and efficiency. Additionally, the interpretation and content of various laws can be quite different as well as the legal systems from one country to another. Marketing strategies can be affected especially when dealing with specific product restrictions or specifications. Laws such as the FCPA are implemented to establish fair business practices and are designed such that no single company can have an unfair advantage over another. And finally it is evident that most people want the latest and greatest products, and companies like Ford must strive to stay at the forefront of new technologies and produce the freshest, most desirable products possible and get them to market quickly in order to remain competitive.
Esty, Dan (2007). Ford Motor Company and the green wave. Retrieved from: http://blog.turningtheship.com/?p=10
Ford Motor Company (2011). Our strategy: Blueprint for sustainability. Retrieved from: http://corporate.ford.com/microsites/sustainability-report-2010-11/issues-climate-strategy
Ikenson, Daniel (2009). Made on Earth. How Global Economic Integration Renders Trade Policy Obsolete. Retrieved from: http://www.cato.org/pubs/tpa/tpa-042.pdf
Perner, Dr. Lars (2011). The Global Market Place. Retrieved from: http://www.consumerpsychologist.com/international_marketing.html
Perreault, W.D., Cannon, J.P., & McCarthy, E.J. Jr. (2009). Basic marketing: A marketing strategy planning approach (17th ed.). New York, NY: McGraw Hill.
U.S. Dept of Justice (2011). Foreign Corrupt Practices Act. Retrieved from: http://www.justice.gov/criminal/fraud/fcpa/