In this article we are giving the subject as per the title beginning with the principles of international trade existing some two decades ago. Now with globalization business has become globally competitive and countries, which are not willing to minimize/abolish the custom duties and taxes for imported goods are not able to or allowed exports to other countries by WTO (World Trade Organization). INCO terms are accepted by all WTO countries for the purpose of smooth business transactions.
There are three basic points of similarities between Domestic Marketing and International Marketing:
1. Both in domestic marketing as well as in international marketing, success depends upon satisfying the basic requirement of the consumers. This necessarily involves finding out what the buyers wants and meeting their needs accordingly.
2. It is necessary to build good will both in the domestic market as well as in the international market. If a firm has been able to develop goodwill of the consumers, its task will be much simpler than the one which has not been able to do so. The days of caveat emptor have gone and basic principle is caveat,. In fact, to win over customers, liberal guarantees have to be given have and facilities of after of after sales service may have to be provided on an extensive scale.
3. Research and development for product for product and adaptation is necessary both for international marketing and domestic marketing
However there are some salient features between the international marketing and domestic marketing.
Sovereign political entities:
Each country is a sovereign political entity when services have to move across national boundaries. As a result they may have to face a number of restrictions. These may fall in any of the following categories:
1) Tariff or custom duties: These only make the goods expensive and are not intended to ban entry of foreign goods completely. In the post war period there has been a significant reduction in tariff both globally and due to the effort of General Agreement (GATT) on a regional basis due to the emergence of regional economic grouping.
2) Quantity restrictions: There are quantity restrictions on certain products including commodities to be imported from other countries to protect domestic trade.
3) Exchange control regulations: In some cases though the entry of goods is not banned, importers may not be allowed the importers may not be allowed necessary foreign exchange for payment of the goods due to existence of exchange controls. But in many cases quantitative controls has been coupled with exchange controls and grant of import license automatically involves grant of foreign exchange.
4) Local taxes: They are imposed on imported goods to make them on par or costlier than local goods.
Different legal systems:
Each country has its own legal system and legal system of one country is different from other. However a number of countries follow English common law while several other European countries follow Civil law. The east European countries have developed their own system. The existence of different legal systems makes the task more difficult for businessmen as they are not sure which legal system applies to their transactions. Therefore to bring in uniformity in international trade INCO terms and Uniform Customs and Trade practice on documentary credits was developed by the international chamber of commerce.
Different Monetary systems:
Each country has its own monetary system. And exchange value of each countryâ€™s currency is different from that of the other. Exchange rates are fluctuating and are being determined by forces of supply and demand.