Faculty Of Business & Management

SEMESTER JAN 2015

BBIM4103

INTERNATIONAL MARKETING

BBIM 4103

MATRICULATION NO

771205075862001

IDENTITY CARD NO.

771205-07-5862

TELEPHONE NO.

016-4400005

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E-MAIL

riffa@oum.edu.my

LEARNING CENTRE

RECSAM

TABLE OF CONTENTS
CONTENTS
Title Page
1.00 Introduction Company Background

2.00 Descriptions of the six(6)driving forces that affect an

organisations decision to enter international market
2.01 Market Needs and ,Wants
2.02 Global Economic Growth
2.03 Technological advance
2.04 Presure to cut cost (Pricing Considerations)
2.05 Improvements in Transportation and Communication
Technology Introduction
2.06 Pressure to Improve Quality

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3.00 Identification and Discussion of Driving Forces That Affect

the chosen organisations decision to enter international market
3.01 Cultural Differences and Communication Problems With
International Business .
3.02 Poor Market Acceptance
3.03 Operational Risk
3.04 Quality Assurance In Product
3.05 Macroeconomic Risk
3.06 Poor Communication

4.00 Recommendation for Effective management of driving forces

to selected organisation
4.01 Conduct Market Research
4.02 Legal and Regulatory Challenges
4.03 Country Management
4.04 Adaptation

5.00 Summary

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References

1.00 Introduction Company Background

The spices business of Faiza started on the 1968, when founder of Faiza Marketing (formerly
known as Syarikat Faiza), Mrs Hajjah Faiza Bawumi Sayed Ahmad, formulated its own
traditional heritage home-made blends recipes. During that time it was more than try and
error recipes, where as it was produced for limited quantity and only sold to relatives and
neighbors, in order to gain a feedback to the taste of the spice recipes.
Faiza Marketing Sdn Bhd is a wholly bumiputera own company based in Batu Pahat, Johor.
Its main business is food beverage and its main product is spices . FMSB aim to be the leader
of Bumiputera spices producer locally and internationally by providing excellent customer
service, emphasizing on quality and human resource development generated from technology
advancement

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FAIZA MARKETING SDN. BHD. (442060-U)

LOT 15-11 & 15-12, BLOK B, KOMPLEKS KILANG SME BANK
NO 15, JALAN WAWASAN UTAMA, KAW. INDUSTRI SRI GADING II
83000 BATU PAHAT, JOHOR, MALAYSIA
(COPYWRIGHT www.faizaspices.com)

Nowdays, with more than 20 types of products and proper promotion channel, FAIZA spices
has become one of the most trusted household brand name throughout the region, under the
tagline Hygiene & Quality, clearly indicates the prime importance of the products to acquire
high quality of selected ingredients. FMSB has established her own brand locally

(COPYWRIGHT www.faizaspices.com)

Faiza Marketing Sdn Bhd manufactures and distributes various types of spices and curry
powder . Now, the distribution of the product covers Peninsular Malaysia, Sabah and Sarawak
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and has already entered Hypermarkets such as Giant, Tesco and others. They dedicated to
providing the best food to people through their plan such :

To market Faiza products throughout all the country in the world.

To fulfill customer satisfaction by providing assortments of hygienically quality

product, services and product availability.

To enlarge the market to other country and make variety of product under the brand
name of Faiza

For the future, FMSB intends to expand into the international market

2.00 Descriptions of the six(6)driving forces that affect an organisations decision to

enter international market
With the aim of venturing a business into the international market, FMSB company must
decide what steps to undertake by the company to go abroad. The most important criteria
would be what type of entry mode strategy a company should be regarded by the potential
company when venturing into the foreign market.
2.01 Market Needs and ,Wants
Hence , FMSB must try to understand the target markets needs, wants and demands. Needs
are the basic human requirements. People need food, air, water, clothing and shelter to
survive. People also have strong needs for education, recreation and other services. These
needs are not created by society or by marketers. They exist in the very texture of human
biology and the human condition.
These needs become wants when they are directed to specific objects that might satisfy the
given need. A country (sri lanka, us) need food but wants a rice and curry or noodles
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,Although peoples need are few ,their wants are shaped and reshaped by social forces and
institutions including families, temples ,schools and business organizations.
2.02 Global Economic Growth
An increase in the capacity of an economy to produce goods and services, compared from one
period of time to another. Economic growth can be measured in nominal terms, which include
inflation, or in real terms, which are adjusted for inflation. For comparing one country's
economic growth to another, GDP or GNP per capita should be used as these take into account
population differences between countries.
Economic growth is usually associated with technological changes. An example is the large
growth in the U.S. economy during the introduction of the Internet and the technology that it
brought to U.S. industry as a whole. The growth of an economy is thought of not only as an
increase in productive capacity but also as an improvement in the quality of life to the people
of that economy.

Economic growth is usually associated with technological changes. An example is the large
growth in the U.S. economy during the introduction of the Internet and the technology that it
brought to U.S. industry as a whole.
2.03 Technological advance
One of the most striking manifestations of globalization is the use of new technologies by
entrepreneurial and internationally oriented firms to exploit new business opportunities.
Internet and e-commerce procedures hold particular potential for SMEs seeking to broaden
their involvement into new international markets.
Technology is also one of the main tools of competition and the quality of goods and services.
On the other hand it necessitates quite a lot of cost for the company. The company has to use
the latest technology for increasing their sales and product qua.
2.04 Presure to cut cost (Pricing Considerations)
Global product and promotion strategies must take into consideration the economic conditions
of the country where products are introduced. For example, a price that might be discounted in
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the United States would be considered too high for poorer countries or perhaps not high
enough in rich countries. To combat prices being too high in less affluent countries, a
company could make a smaller or less complex version at a lower price.
2.05 Improvements in Transportation and Communication Technology Introduction
Advances in technology are one of the main reasons that globalisation has escalated in the
past decade. In information and communication technology, innovations have become smaller
in size, more efficient and often more affordable. In transport technology, vehicles have
tended to become larger and faster, as well as becoming more environmentally friendly and
cheaper to run. Whether for personal use or for business, technology has made the world seem
a smaller place and assisted in the rise of globalisation.

2.05 (i)Communication Technology

The last decade has seen dramatic developments in telecommunication technology.
Communication has moved on since the days of 'snail mail' where it would take several weeks
for mail to arrive from overseas.The internet has had an important role in connecting people.
It allows people in countries around the world to instantly contact each another through email,
chat programs and video calls. This instant communication has revolutionised business and
social lives.
Transport has also changed the way do business. Super tankers have increased the scale of
trade between countries, as these massive container ships are able to carry larger quantities of
goods,

including

oil

and

grain.

As

result,

trade

has

become

increasingly

international.Innovations in transport often involve the use of information and communication

technology. Larger aircraft and container ships use satellite navigation systems, GPS and
computers to function.
2.06 Pressure to Improve Quality
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In developing products and services, quality assurance is any systematic process of checking
to see whether a product or service being developed is meeting specified requirements. Many
companies have a separate department devoted to quality assurance. A quality assurance is
said to increase customer confidence and a company's credibility, to improve work processes
and efficiency, and to enable a company to better compete with others. Today's quality
assurance systems emphasize catching defects before they get into the final product. Hence ,
providing consumers with products of the highest quality is assured through strictest standards
of requirements set on the processes and the quality of the material used.
Quality control is assured with a laboratory equipped with the latest equipment and
microbiological count analysis that complies with the International Food Act and ASTA
specifications.

3.00 Identification and Discussion of Driving Forces That Affect the chosen
organisations decision to enter international market
Part of global business failure involves a lack of planning. One motive for companies to go
beyond local boundaries is access to new capital and customers. Trying to keep up with
competitors, some companies jump into foreign markets without a solid plan of action. They
don't research the markets, don't assess differences in local versus global strategies and don't
ponder the variance in costs in doing business globally. Companies sometimes have pulled out
of global markets because they went in without a plan. By taking steps to mitigate potential
risks, business owners can avert legal and financial trouble before it starts. "Forces that affect
new technologies, creating new product and market opportunities."- Kotler et al.
Internationalization is a process taken by company to make their product or service available
in the foreign country (Bloodgood,1996).

3.01 Cultural Differences and Communication Problems With International Business .

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Different countries and different cultures may have different preferences, however; what sells
well in one place may never sell in another place.

3.02 Poor Market Acceptance

Just because the company plan and have a good solution doesn't mean all foreign markets will
accept it. In some cases, people don't buy into certain brands or product concepts as
consumers in other parts of the world. Some companies have struggled to develop
promotional campaigns that hit on the benefits that appeal to the local culture, way of life and
people

3.03 Operational Risk

A global strategy includes an operational risk. If employment laws or corporation laws change
in the country where a company manufactures its global product, then that could ruin
everything. Likewise, if a war breaks out, employees go on strike or a natural disaster occurs
where a company manufactures its global product, then it may not be able to fulfill its
obligations.
3.04 Quality Assurance In Product
The factory is equipped with modern machinery such as comprehensive dryer, destoner,
miller, cryogenic-grinder, superheated steam sterilizer and packing machine in order to
produce the finest end-products to meet the stringent requirement of today's food industry.
Today, Faizas brand awareness stands at par with other famous international food product
brands sold in Malaysia..In March 2010, FMSB was awarded QMS ISO9001:2008 by KGS
Certificate. It helps that ISO and Halal certifications are in place. In recognition of this
commitment to quality, FMSB also has received numerous awards and accolades. Among
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other awards received are Mardi R&D adoption program , Health Certification (Free Sales) by
Ministry Of Health, Malaysia ,Best Product Awards 2008 (Meat Curry Powder) from Ministry
Of Agriculture (MOA) ,Certification of Sudandye Analysis (Free Additional Color) and CEPT
& GSP certificate.
FMSB continuous commitment in To ensure that the products are always accepted, the
method of product testing was conducted during the whole period. Some of the client
approaching method was performed by doing sampling in the supermarket; there are also
participation in the events that involved many people.Therefore, all Faiza products are
guaranteed 100% halal, hygienic, wholesome and healthy.

3.05 Macroeconomic Risk

The major downside to pursuing a global strategy is that a one-size-fits-all approach does not
work in all markets. Some markets have particular tastes or are more sensitive to pricing.
Moreover, a company's products invariably are more popular in one country than another
country; deciding in which country a product will be popular is a problem. If a company
estimates incorrectly, the mistake could cost it a fortune.
3.06 Poor Communication
Communication is a major challenge for businesses domestically, and the burden becomes
even greater when enter markets where the native language is different from your own. Global
companies must consider affects of communication in hiring local talent, creating global
workplaces and virtual teams and interacting with local customers. Human resources is a
major strategic concern as enter global markets. People who can speak the local language are
vital to success in doing business and serving customers. Companies that fail to plan for these
communication challenges rarely get a second chance.

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4.00 Recommendation for Effective management of driving forces to selected

organisation
Jain(1996)added that before a company decide to venture into the foreign market it is
important to consider the internal and external factors

extensively, when preparing for

international expansion . The internal factors refer to corporate objectives, technological

changes, and economic,political or social changes . The monitoring of external and internal
factors help in the decision of whether to adapt the pro-active or the reactive strategy when
going international

4.01 Conduct Market Research

A critical aspect of looking for new sales opportunities in foreign markets is conducting
market research. To be successful, Faiza company must pick the foreign market carefully.
Focus on countries that already show interest in the product or service. Start by researching
two or three international markets that offer the most potential for success.
Before a company decides to invest abroad, the company has to decide which foreign country
to venture into and what are the entry mode strategy options that are available to them.
According to Andersen and Strandskov (1998), choosing the right entry mode strategy is a
very important decision as it will determine the survival of the company in the foreign
country.
Domke Damonte (2000) also explained further that by choosing the right entry mode
strategy when venture internationally, it will be able to help the firm to identify and adjust its
resources in the long run, as it attempts to generate a sustainable competitive advantage in the
foreign market. Countries that are closer to each other will have less cultural distance between
host and home country. This is because countries that have similar cultures tend to behave the
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same way and it will ease the business processes as business counterparts will understand each
others way of doing business
Before a company decides to invest abroad, the company has to decide which foreign country
to venture into and what are the entry mode strategy options tat are availabale to them .
According to Andersen and Strandskov (1998), choosing the right entry mode strategy is a
very important decision as it will determine the survival of the company in the foreign
country.
Osland et al.(2001) stated that once a firm has decided to enter or expand into foreign market ,
it must determine the structural nature of its operations in that nation . The importance of
choosing method of entry into foreign markets can not be over emphasized, even thought , it
is one of the most critical decisions that a company must consider

4.02 Legal and Regulatory Challenges

Some countries prohibit the importation of certain items to protect domestic industries. Others
might require government approval to operate or require you work with local partners.
Trademark, copyright and patent protection laws might be nonexistent. Different
environmental regulations might have to be observed. Certain products might be banned for
political or religious reasons. Permits or licenses might be needed to perform basic activities.
You may not be able to overcome some of these challenges, so it is important to understand
them before you invest resources.
Host country governments may have a set of policy intiatives designed to attract specific types
of investment . As a consequence , a firms investment sequence in a host country,s will vary
with a countrys level of policy uncertainty.
4.03 Country Management
FMSB company should appoint country manager, he/she will be responsible for handling all
operations of the firm in the host country, and is directly responsible for the firms success or
failure. An ideal candidate will possess a background in management and will have an inBBIM 4103

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depth knowledge of the company. The perfect candidate will also be knowledgeable of the
political, legal and cultural landscapes in the host country.
4.04 Understanding Language and Cultural Differences
Language differences present a common stumbling block in international business
communication. Whenever one party is using a second language or a translator, the potential
for misunderstandings increases. The riskiness of the host country is believed to be a
significant determinant of the foreign entry mode strategy (Shan , 1991:Woodcock.Beamish &
Makino 1994)Firms must posses the necessary flexibility to shift to a different mode of
operation should original mode of entry rendered inefficient by the unpredictable changes in
th foreign environment (Erramili and Rao.1993).In high-risk countries integrated modes are
associated with high switching cost (Erramili and Rao .1993)

4.04 Adaptation
Production and promotion adaptation strategies are used in a global market for a product that
may be popular but needs to be adapted to meet local customs and demand. For example,
customers of less affluent countries may need a product of similar quality (spice) that has been
downscaled to be more affordable to purchase. Technology products must be altered to meet
the specific language of the country being marketed to.Along side with Jeannet and Hennesey
(1995)Agarwal and Ramaswami (1992)also suggested that when a firm seeks to enter into
foreign market the firm must make the important strategic decision of which is the most
appropriate choice of entry mode strategy to use for that particular identified potential market

5.00 Summary
Globalization leads to increased competition. This competition can be related to product and
service cost and price, target market, technological adaptation, quick response, quick
production by companies . Globalization also provides business some level of insulation from
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slumping performance in one country or region. In essence, global customer diversity spreads
business risks across a broader customer base. This means that if the economy, supply issues,
environment or government regulations in one country negatively affect they can still find
success in other countries. Domestic companies are often overwhelmed by economic shifts in
the local market. Hence, FMSB company must always be ready for price, product and service
and customer preferences because all of these are global market requirements.
Companies develop marketing strategies to build a loyal customer base, to build relationships
with those customers and to create value for the customer. Effective product and promotion
strategies are essential in making sure the product is readily accessible in the global
marketplace.

Conduct international market research to analyze a country's regional demographics, market

trends and economic conditions. Educate about the cultural differences that might encounter,
especially those relating to how foreign companies do business. Language and diplomacy are
other chief issues to consider.
Special considerations are necessary when marketing to global customers such as international
issues of technology, transportation and regulation. Government restrictions are law and
regulations that include equity limits, local content requirements and exchange controls that
have an impact on the operations of a foreign firm .
According to Czinkota and Ronkainen(2004),firms go international because of the increased
in global business activities that created increased opportunities for the fim. International
activities can also be crucial to a firms survival and growth. By expanding the international
business araound the globe , an International business around the globe, an international firm
can strengthen its competitive position . Going international with the companys product and
in its way of lengthening or renewing the product life cycle in other countries,can also avoid
early market saturation in the home country.
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Referencess
http : www.faizaspices.com
Pan.Y.&Tse.D.K.(2001).The Hierarchical Model of Market Entry Modes. Journal of
International Business Studies .31(4).pp.535
De

Burca,S.,Brown

,I.&Fletcher,

R.(2004)International

Marketing

:An

SME

Perpective,Pretice Hall:New Jersey

Andersen,P.&Strandskov.J (1998).International Market Selection :A Cognitive Mapping
Perspective. Journal of Global Markting.vol 11.pp 65-84

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