Environmental Analysis
One of the main challenges of marketing on a global scale is the multidimensionality and complexity of the many foreign country markets the company may operate in. Marketing managers of global companies need to be aware of these complexities and understand the implications of each.
The following is an Environmental Analysis model, using the SLEPT approach, that can be used to examine the various aspects and trends in the international marketing environment through the social/cultural, legal, economic, political and technological dimensions (Doole & Lowe, 2008).
The following is an Environmental Analysis model, using the SLEPT approach, that can be used to examine the various aspects and trends in the international marketing environment through the social/cultural, legal, economic, political and technological dimensions (Doole & Lowe, 2008).
It is very important that a company considers environmental factors before starting the marketing process. In fact, environmental analysis should be continuous and part of all aspects of the planning.
Social and cultural influences of a business vary from country to country. Before entering a market, organizations should know things such as:
1. What is the dominant region?
2. How is the acceptance of imported products or services?
3. Does the language have any impact on the spread of products on the market?
4. How much time consumers have available for leisure?
5. What are the roles of men and women in the society?
6. What is the life expectancy of the population?
7. What is the society's opinion in relation to environmental factors?
Social and cultural influences of a business vary from country to country. Before entering a market, organizations should know things such as:
1. What is the dominant region?
2. How is the acceptance of imported products or services?
3. Does the language have any impact on the spread of products on the market?
4. How much time consumers have available for leisure?
5. What are the roles of men and women in the society?
6. What is the life expectancy of the population?
7. What is the society's opinion in relation to environmental factors?
Social/cultural
Social/cultural factors are related to different behaviors, tastes, and life styles. This is directly associated with changes in consumer behavior resulted from temporary fads or styles. These factors also include the cultural aspects and concerns about health, population growth rate, age distribution, languages, professional trends and emphasis on safety. They affect not only the demand for products or services, but also how the company operates.
Economic
Economic factors include economic growth, interest rates, exchange rates and inflation rate, which have strong impacts on how businesses operate and make decisions. Interest rates, for example, affect the cost of capital of a company and therefore the extent to which it grows and expands. Exchange rates affect the costs of exporting goods, as well as the demand and price of imported goods in an economy. And marketers need to consider the state of a economy in the short and long term.
Legal
The Legal factors include consumer protection, regulation of competition, food security, unemployment, anti-discrimination law, and laws related to consumer rights, competition, labor, health and safety. Every business should be aware of the local, international, and domestic laws of all the current and potential markets. These factors may affect how a company operates, its costs and the demand for their products.
Technology
Technology is vital to achieve an edge over the competition, and is a major factor of globalization.
The technological factors correspond to the changes in technology that may have particular impact on the activity of any company. Those include innovation, improvement of tools, devices, or any forms of manufacturing, as well as technological factors related to the services necessary to support the activity. These can determine barriers to entry the market, the minimum level for an efficient production, and can influence outsourcing decisions.
The technological factors correspond to the changes in technology that may have particular impact on the activity of any company. Those include innovation, improvement of tools, devices, or any forms of manufacturing, as well as technological factors related to the services necessary to support the activity. These can determine barriers to entry the market, the minimum level for an efficient production, and can influence outsourcing decisions.
Political
Political factors are intrinsically linked to the influence that governments can have in the economic activities of the company, either by creating interventional policies or regulations that may control this activity. Specifically, political factors include areas such as tax policy, labor law, environmental law, trade restrictions, currency and political stability. Political factors may also include goods and services that the government intends to provide or receive, as well as those that they don't.