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The Impacts of Political and Economic Factors on Marketing in Emerging Markets Essay


Introduction

Various new markets have emerged in the 21st century. In fact, powerful forces have transformed the emerging market economies. Literature shows that the way firms and corporations conducted their businesses have changed due to the movement of organizations, individuals and goods across the borders. In the past, foreign debts, hyperinflation, and military coup dominated the news of emerging nations.

For instance, India and China became the renowned tigers and dragons that represented the image of the emerging markets. On the other hand, Brazil was known as a country that represented the future generation. Irrespective of such appealing features, these markets presented numerous challenges to global marketers.

The last decade generated immense shifts and outstanding changes in the political and economic power balance. These have transformed the manner in which organizations perform their business operations. Most scholars assert that the term emerging economies is no longer suitable.

These nations have emerged and only pursue key adjustment strategies. In the global economy, emerging markets are now seen to be integral market players. These economies have remarkable features that can spearhead the growth of corporations (Fletcher and Crawford, 2011).

This paper investigates the economic and political impacts that are encountered by marketers in the emerging economies. The paper reports the impacts of economic and political factors on marketing the McDonald products in China and India. It offers practical recommendations that should be implemented by the corporation that want to expand their business operations to the emerging markets.

Business in the emerging markets

Emerging markets attracts various corporations in terms of few domestic competitors, the increasing number of middle class, and expanding populations. However, there is a guarantee neither for growth nor success in these emerging markets. Often, the emerging markets are associated with tough business environments (Bettis and Hitt, 1995).

The risks and challenges that are common to the emerging markets can only be experienced after a corporation has entered into the new markets. There are different levels of bureaucratic interferences and varying business practices.

Reports indicate that BRICS nations have conducted their business operations with corporations found in the developed countries. According to a World Bank report, out of the top 183 nations, China is ranked number 87, India 139, Russia 124, and Brazil 120 (Khanna and Palepu, 2000).

The most prevalent challenge that corporations face when doing businesses in the emerging markets is the control over the economic interest rates. Therefore, before doing business in the emerging markets, it is advisable that corporations should carry out market research. This assists in understanding the markets where a company wants to relocate its business operations.

Given that emerging nations provide markets that offer business growth prospects, it is difficult for marketers to conduct research on consumers. Besides, the growth rates of markets in Europe and the United States have slowed down.

Thus, businesses that export their products and services to such markets must understand the challenges and opportunities present in the emerging markets (Zou and Fu, 2011). These will help them to execute effectual business development plans.

The influence of economic factors

Developed countries such as Europe, Japan, and the US have reported cases of delays and slow growth periods. Markets in these nations have experienced imbalances that are expected to prolong into the future. The consumption levels have dropped, most consumers are now retirees, and access to credits is restricted. Therefore, it is not easy for companies to get consumers.

Whereas developed economies continue to deteriorate, the emerging markets are reporting remarkable performances.

The key emerging markets such as Brazil, India and China are reporting overwhelming economic growths compared to the developed world (Cavusgil, Ghauri and Agarwal, 2002). In fact, the up-and-coming marketplaces are export motivated. They have entrenched financial bodies as well as well-established business ventures and asset inflows.

In China and Russia, corporations have constructed high-priced real estates. Businesses find it relevant trading in these emerging market economies. The economic environments are very stable and offer adequate mobility. Besides, abject poverty in the emerging nations such as Brazil and India has considerably declined in the past years (Czinkota and Ronkainen, 2007).

The inflation rate that has often lessened the purchasing power parity of the deprived individuals over the past years has dropped in the emerging market economies. Most citizens in these markets become a part of the reliable consumers.

Nevertheless, another wave of market clientele has cropped up. The banking systems in the emerging markets have integrated these classes of affluent groups. Thus, it is anticipated that economic growth will be increased further by expanding the available credit facilities (Douglas and Craig, 1986).

The emerging market economies have also changed their exchange rate systems. They now have stable domestic currencies, which help marketers, foreign-based corporations, and investors to have confidence in these economies (Shama and Merrell, 1997).

However, the exchange rate reforms have increased the number of domestic investors and reduced capital flight. Foreign corporations that want to introduce their products and services in the emerging market economies might find it rather difficult to achieve their objectives. They will be competing against the domestic and entrenched corporations.

The impacts of the political factors

Marketing in the emerging market economies is somehow tricky. The citizens are always protected by the state from external interference and from opening up to the global economy. This implies that the emerging market consumers are accustomed to protection from the external corporations.

Such an occurrence is usually detrimental to foreign marketers and investors. In fact, emerging markets like China and India have their national pride issues. They may be compelled to disregard any foreigner marketer who wishes to promote products and services (White, 2000).

Opening up these countries’ economies to the external world would imply subjecting the nation to new cultures as well as different standards and ethics. For instance, introducing fast food in the domestic markets could be seen as a foreign investment.

To the generations, the societal structure and fabrication could be altered by introducing new fast food products. In case the Chinese and Indians do not trust the product change, they may be compelled to refute and discontinue the introduction of products in the markets (Fawzy and Dworski, 2010).

The impacts of political and economic factors on marketing

China has currently the second largest economy in Asia. The country has drawn the attention of most product exporters. This country conducts most of its joint trade with Canada. It has stylish purchasers’ experience, superior disposable earnings, and huge inhabitants (Jain, 1989). These make China one of the major emerging markets for McDonald Company products.

Conducting businesses in China needs the corporation marketers to invest ample resources and time in its business ventures given that China appears to be a multifaceted market. For instance, McDonald Corporation vendors must set up bureaus.

Further economic resources will be necessary for transformation, endorsement, ads, lawful services, and housing. Any corporation that wants to set its presence in China must register its trademarks, patents, and copyright with approved agencies in China (Luo, Tan and Shenkar, 1998).

In India, the population growth rate emerges to be high. It is now predicted to be amongst the top five most populated nations. India offers a potential niche for the telecommunication and infrastructural corporations.

The economic performance of China is remarkable and foreign investors always find it easy to start up their businesses in this nation. The foreign policies adopted by both China and India prevent their currencies from inflating (Doole and Lowe, 2008).

The first region to return to its normalcy after the global financial crisis was Asia. Most businesses reported the least slowdown in the undertaken economic activities. China surpassed Japan in this region with respect to nominal GDP and is currently the largest Asian economy. Both China and India have massive populations. The population of China alone is reported to be 1.30 billion.

The economic growth rate for China is striking and is anticipated to outdo that of the United States by the financial year 2017 (Peng and Luo, 2000). India has achieved outstanding growth impetus in the previous years. It has a strong market growth indication.

For example, India is an open market with educated workers, high saving rates, and high incomes. Both India and China offer viable marketing opportunities for companies such as McDonald. This company looks forward to expanding its business operations in such favorable political and economic environments.

Like most Latin American economies, India and China enjoy political stabilities. There are booms in the incoming foreign investments. The state governments have implemented measures to ensure that these emerging economies are strong. With vast resources and improved economic prospects, these emerging markets are good for marketing McDonald products.

Although cultural factors might pose barriers to these globally recognized corporation, India and China have continued to attract additional foreign investors. These have alleviated problems encountered in conducting business. In fact, they have increased the level of transparency, boosted the economic stability, and improved the level of infrastructural development (Khanna and Palepu, 1997).

Marketing McDonald products and services in India and China

The emerging economies are buoyant and create vast potentials for corporations like McDonald. The potentials created in the Chinese and Indian markets are sources of great enthusiasm amongst competing businesses. These countries have created numerous business opportunities for this company to explore and utilize.

However, marketers need to implement winning business strategies to acquire dominant market shares. This will help to avoid marketing challenges in these emerging market economies (Ayhan and Eswar, 2011). While China has a pool of economic resources, the per capita income is below one sixth compared to that of an average United States employee.

The poor domestic infrastructural facilities in both China and India have limited the uniform growth distribution. The countries direct further development and investments to the big cities. These challenges are not only faced by India and China, but Brazil, Russia, Chile, and South Africa also encounter identical growth and development barriers.

In these markets bribery, private security, and frail foundations have made the commerce atmosphere challenging. As a result, investors in these markets have been discouraged.

As nations constantly engage in global business operations, the legal protections and the transparency levels will gradually improve (Jansson, 2007). This will take time. Businesses and international corporations are cautioned to perform research on the unique marketing challenges reported in every emerging market economy.

Recommendations

To be dominant market players, marketers should identify the emerging market economy that best suits the services and products offered by McDonald. Factors that should be considered by the marketers include the clients’ dynamics, competition, and local demands. The promotion strategies include the trading activities, ads necessities and rules as well as marketplace segmentation.

In China, the subject of artistic variation is rather insightful. McDonald marketers must build mutual trust to carry out business operations in this area. They should build suitable meeting channels to create enduring business affiliations. It is important to show respect when marketing products in the Chinese markets.

Marketing products in India requires that McDonald should refine its market entry plan. India offers a big market for McDonald products and marketers must consider each market separately. Open credits should be avoided, and marketers need to use information from the decision makers.

Conclusion

All emerging market economies offer viable market and marketing opportunities for McDonald products and services. In fact, in the emerging markets there are excellent business opportunities for building product or service brands. These nations offer the largest markets and display the best economic growth rates and political stability.

However, there are numerous political and economic challenges that may hinder the marketing of McDonald Corporation products. It is important for marketers to understand the overall growth potentials and the business environment before starting business operations. Products must be differentiated to suit all consumers’ needs and market demands.

References

Ayhan, M., & Eswar, S. (2011). Emerging markets: Resilience and growth amid global turmoil. New York, NY: Brookings Institution Press.

Bettis, R. & Hitt, M. A. (1995). The new competitive landscape. Strategic Management Journal, 16(2), 7-19.

Cavusgil, S., Ghauri, P., & Agarwal, M. (2002). Doing business in emerging markets: Entry and negotiation strategies. Thousand Oaks, California: Sage Publishers.

Czinkota, M., & Ronkainen, I. (2007). International marketing. Andover, Hampshire: Cengage Learning.

Doole, I., & Lowe, R. (2008). International marketing strategy: Analysis, development, and implementation. Andover, Hampshire: Cengage Learning EMEA.

Douglas, S., & Craig, S. (1986). Global marketing myopia. Journal of Marketing Management, 2(1), 1- 4.

Fawzy, L., & Dworski, L. (2010). Emerging business online: Global markets and the power of b2b internet marketing. Upper Saddle River, New Jersey: FT Press.

Fletcher, R., & Crawford, H. (2011). International marketing: An Asia-Pacific perspective. Upper Saddle River, New Jersey: Pearson Education.

Jain, S. (1989). Standardization of international marketing strategies: Some hypotheses. Journal of Marketing, 6(1), 70-79.

Jansson, H. (2007). International business marketing in emerging country markets: The third wave of internationalization of firms. Cheltenham, United Kingdom: Edward Elgar Publishing.

Khanna, T., & Palepu, K. (1997). Why focused strategies may be wrong for emerging markets. Harvard Business Review, 75(4), 3-10.

Khanna, T., & Palepu, K. (2000). The future of business groups in emerging economies: long-run evidence from Chile. Academy of Management Journal, 43(3), 268-285.

Luo, Y., Tan, J., & Shenkar, O. (1998). The strategic responses to competitive pressures: The case of township and village enterprise in China. Asia Pacific Journal of Management, 5(2), 33-50.

Peng, M., & Luo, Y. (2000). Managerial ties and firm performance in a transition economy: The nature of a micro-macro link. Academy of Management Journal, 43(3), 486-501.

Shama, A., & Merrell, M. (1997). Russia’s true business performance: Inviting to international business? Journal of World Business, 32(1), 320-332.

White, S. (2000). Competition, capabilities, and the make, buy, or ally decisions of Chinese state-owned firms. Academy of Management Journal, 43(3), 324-341.

Zou, S., & Fu, S. (2011). International marketing: Emerging markets. Bingley, West Yorkshire: Emerald Group Publishing.

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IvyPanda. (2020, January 22). The Impacts of Political and Economic Factors on Marketing in Emerging Markets. Retrieved from https://ivypanda.com/essays/the-impacts-of-political-and-economic-factors-on-marketing-in-emerging-markets/

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IvyPanda. "The Impacts of Political and Economic Factors on Marketing in Emerging Markets." January 22, 2020. https://ivypanda.com/essays/the-impacts-of-political-and-economic-factors-on-marketing-in-emerging-markets/.

References

IvyPanda. 2020. "The Impacts of Political and Economic Factors on Marketing in Emerging Markets." January 22, 2020. https://ivypanda.com/essays/the-impacts-of-political-and-economic-factors-on-marketing-in-emerging-markets/.

References

IvyPanda. (2020) 'The Impacts of Political and Economic Factors on Marketing in Emerging Markets'. 22 January.

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