International Marketing Management

Globalization: Advantage and Disadvantage

Globalization is defined as a worldwide movement towards economic, financial, commerce and communication integration. It is the process by which organizations and other businesses develop international influences or start business operations at international level (Henseler, Ringle and Sinkovics, 2009). Industrial revolution at the end of 18th century was the beginning of the globalization. Governments of many countries are in favor of globalization because it can help in growing the economy of the country. However, there are so many advantages and disadvantages of globalization. Some of them are discussed below:

Advantages of Globalization:

• Untapped market: PRADA's can expand its business in countries like India as it can be very beneficial in increasing sales and profitability. PRADA can offer its products which are unavailable in certain parts of the world but which are demanded by the customers (Katsikeas, Samiee and Theodosiou, 2006). By expanding the business in these markets, the firm can establish a new base of customers without any immediate threat of competition.
• Favorable business climate: A new country can offer PRADA more favorable economic conditions. The country in which PRADA is planning to expand can provide them more business friendly environment and also it can provide them the advantage of lower tax rates etc. (Craig and Douglas, 2005).
• Greater exposure: Moreover, Expansion increases the exposure of business. It helps to create good brand image between other countries people and the firm can gain good brand recognition throughout the world. This strategy can even facilitate expansion in future (Johnson and Selnes, 2004).
• Business Rejuvenation: One more advantage of expanding business globally is that it helps in reviving the business which is struggling to capture the market. Business operated in concentrated market or experiencing the decreased market share can find new outlets for products in another country.
• Product quality: The operation of international trade has given growth to intense competition in the market. A particular trade can bring many options with different prices (Papadopoulos and Heslop, 2014). The main advantage of globalization is that, customer gets improved quality products which further helps in retaining the user.
• Cheaper prices: Further, globalization has brought in fast and furious competition in the market. Since there are so many products to select, the producer can only sustain by offering competitive price to the customer.

Moreover, there are many advantages of globalization such as free movement of capital, increase communication, transportation, international trade, GDP increase etc.

Disadvantages of Globalization:

Globalization of business has some advantages as well as disadvantage also. These are as follows:

• Loss of culture: Unconventionally, people of a specific country follow its culture and traditions from old time (Hultman, Katsikeas and Robson, 2011). Due to globalization, people shift to various countries. This tends them to follow foreign culture and traditions. Initially they forget their own culture. Thus, globalization can create cultural conflicts for PRADA.
• Financial risk: While expanding into new country, PRADA have to consider financial risk factor. For instance, exchange rate of currencies can lead to unfavorable return on investment (Jüttner, Christopher and Baker, 2007). It can be tough time for accessing supplies and products in other countries, because some countries charge tariffs and fixed costs to ship the products. It can make business less profitable.

 Environmental Analysis

Environmental analysis is a strategic tool which helps in identifying all the external and internal elements that affects organizational performance. Businesses are generally influenced by environment of the location (Papadopoulos and Heslop, 2014). There are many strategic tools that an organization can use for analyzing the environment for expanding business internationally. For expanding business internationally, PRADA have to analyze following environmental factors of the business by PESTEL analysis.

• Political factors: The political factors affects country's current political situation. As per this, PRADA have to analyze political conditions that affect the country and business. These political factors are government policies, taxes laws and tariff, stability of government and entry mode regulation of the country etc.
• Economic factors: Economic factors are crucial part of the economy of any country. While expanding business internationally, PRADA should analyze all economic factors of the country such as, the inflation rate, interest rate, disposable income of buyers, credit accessibility, unemployment rate, foreign exchange rate and other monetary policies (Olson, Slater and Hult, 2005).
• Social factors: Further, The social factors of the country impact the sales of products and services. Thereby, PRADA have to consider all social factors of the country in which the firm is interested to expand its business. These social factors are cultural implications, social lifestyle, domestic structure, educational levels, distribution of wealth etc.
• Technological factors: While expanding business, another factor which needs to be analyzed is technological development of the country because these factors will help PRADA updated and also it will help in knowing various customers trends (Krasnikov and Jayachandran, 2008).
• Legal factors: Moreover, PRADA should analyze all the legislative changes of the country in which it is going to expand its business. The regulatory body develops rules and regulation for the business which affects the economy. Thereby, it is important for PRADA to be aware of product regulations, employment regulations, and health and safety regulation of the country.
• Environmental Factors: The location of the business affects the operation of the business. Frequent changes in climate can affect business of PRADA. While expanding business internationally, PRADA should analyze geographical location, climate and weather of the country, energy consumption law and attitude of people towards the environment (Bowman and Narayandas, 2004).

Competitive advantage in fashion industry's international competition

Competitive advantage is unique which are possessed by few organizations. These advantages give benefit to the firm to differentiate and quote prices as compared to competitors. Competitive advantage allows businesses to beat the competition regularly (Johnson and Selnes, 2004). The fashion industry runs with various activities by creating services and products that are related to fashion as every country has different categories to identify their fashion trends. Before industrialization fashion was exclusively commodity of the rich people.
The PRADA is an Italian luxury fashion retail which mainly caters for the markets of international fashion trends since PRADA is expanding its business internationally. It has the competitive advantage of low price and quality product range. The firm uses its skilled workforce and inexpensive raw material and efficient operation to create maximum value of products to its customers (Rust and et. al. 2004). PRADA uses cost advantage strategy by providing a very large and quality product range to its customers. Costs of the products can be kept lowest by various ways. Organizations which have experience of many years’ work in a very cost effective manner. However, other organization uses offshore manufacturing to keep the costs low for their products. For instance, the firm can slower down the costs in promotional activities as it is already very popular among fashion industry. It would allow the firm to lower down the costs of products and attract more customers (Terpstra, Foley and Sarathy, 2012). Furthermore, many organizations use reengineering to cut down the costs by redesigning products and create improvements in their products. The firm which finds the way to make its technology better and more affordable is the successful organization. For instance, PRADA can also create new delivery or packaging methods of products to cut down prices for getting competitive advantage in the international markets.
Moreover, PRADA is a huge luxury fashion brand, the range and quality of fashion products is unique and different from other brands. The firm produces its products with differentiation strategy. PRADA's products are valuable and they offer unique products to customers which create loyalty between customers. However, cost competitive advantage can easily disappear by introducing new competitor with even lower prices. But the product differentiation advantage cannot be easily copied by anyone (Håkansson and Persson, 2004). If the quality and range of product is unique from other brands and the firm has good brand image then it will allow the firm to sale even on high prices without affecting the customer segment. The PRADA has positive brand image on customers mind because of its latest, reliable and designer fashion trends on their products which help them to retain their customers and also assist in attracting the new customers. For instance, fast fashion retailers establish their manufacturing location close to the market so that they can instantly response to the customers need. It is essential to develop a rapid and accurate information communication process to transfer and share database within the organization (Luo and Bhattacharya, 2006). Thus, technology also plays huge role in providing product based or fashion based competitive advantage to the firm.
Furthermore, another thing which provides competitive advantage to PRADA is good brand image on customers mind. Being an international brand, the firm is more successful in attracting more customers than competitors. The promotional activities cost of the products, latest, trendy and quality products make huge impact on customers which also helps them to retain with the specific brand. These qualities would help a lot in expanding business internationally with a competitive advantage in fashion industry (Vargo and Lusch, 2004). However, these are the competitive advantages of PRADA which help in growing businesses in the international markets.

Conclusion

International marketing is the process of using marketing principles in more than one country or across the nation. International marketing is based on expansion of firm's local marketing strategy by paying special attention to target market internally and locally. Rapid technological changes mean that geographical and cultural communication obstacles are disappearing. Even small businesses without strong physical presence in other countries can make efforts to sell their products internationally. However, it means that the organizations want to expand their business by entering in the international markets. International marketing mainly depends on the popularity of brand and potential customer segment. This report has given three insights of international marketing which can help PRADA's managers to analyze advantages and disadvantages of expanding business globally.
This report has helped in understanding the advantages and disadvantages of globalization and expansion of business internationally. Expansion of business internationally would help the organization to increase the sales and profitability as it provides the opportunity to enter in untouched market without any competition. The firm can offer their product range in few parts of the world where PRADA's products are in demand. This would provide opportunity to expand the business. Further, some more benefits of globalizing business are that it provides favorable business situations and great exposure to the company. Expanding business internationally creates good exposure for the company and creates positive brand image internally. There are few more benefits of expanding the business globally that it rejuvenate the business and improvise the quality of product. However, there are some disadvantages of international expansion of business. It can create situations of financial risks and loss of culture for the organization. Due to globalization, the firms start adopting cultures of the countries in which they are expanding business which creates cultural conflicts.

Moreover, this report also helped in understanding the factors of environmental analysis while establishing a business in the international markets. Environmental analysis is strategic tool to identify internal and external factors which affects organization’s performance. According to this, the managers of PRADA should analyze all the political, economic, social, technological, legal and environmental factors of the country in which they are going to expand their business. However, to be successful in operating business internationally it is also important to consider competitive advantages of business such as, cost, product quality and technological advantages. These are all the important elements which will help PRADA managers to analyze benefits of expanding business internationally.

References

• Bowman, D. and Narayandas, D., 2004. Linking customer management effort to customer profitability in business markets. Journal of Marketing Research.
• Cateora, P. R., 2008. International Marketing 13E (Sie). Tata McGraw-Hill Education.
• Craig, C. S. and Douglas, S. P., 2005. International marketing research. Chichester: John Wiley & Sons.
• Czinkota, M. and Ronkainen, I., 2012. International marketing. Cengage Learning.
• Håkansson, H. and Persson, G., 2004. Supply chain management: the logic of supply chains and networks. The international journal of logistics management.

• TESCO Marketing Principles To Enhance The Business
• Clerkenwell Research Project- Part 2

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