Though the principles and procedure in operating domestic markets and international markets are the same, but then also the marketers face following difficulties in operating international markets because of international environment.
1. Risks and Uncertainties: Long distances, dangers of sea transport, changing exchange rates etc, create a number of risks and uncertainties leading to heavy losses or damages. When compared with home trade, international trade is definitely risky and cumbersome. Hence, export, import trade requires specialists.
2. Payment of Dues: In foreign trade, due to variety of currencies and different rates of exchange, we have a number of difficulties in the settlement of accounts. Home trade involves no such obstacles.
3. Foreign Trade Quotations: In foreign trade we have a number of typical quotations such as C.L.F. & C & F, F.O.B. etc. Foreign invoices are very comprehensive and give a lot of additional information.
4. Multiple Chain of Middlemen: The wider the market, the larger is the chain of intermediaries. In foreign trade, we have in- numerable intermediaries between the primary producer or seller and the ultimate consumer or buyer. All these middlemen specialize in their own branches and sell their specialized services at very reasonable rates.
5. Difficulty of Distances: Many a time, international trade involves very long distances covering thousands of kilometers.
6. Diverse Languages, Customers, Traditions and National Laws: These are special problems in foreign trade. They are due to differences in civilization. The traders of two countries have to face all these problems.
7. High Cost of Transport: Long distances create another difficulty of proper and quick transport and communication both of which involve considerable delay as well as cost. The cost of transport is an important factor in foreign trade.
8. Currencies, Weights and Measures, Marketing Methods: Every nation has its own currency, weights and measures and may also follow its own marketing methods. These further create difficulties in the settlement of accounts or dues in international trade.
9. Custom, Formalities, Exchange Control Etc: Every country has its own custom duties and also rules and regulations relating to demand and supply of foreign exchange. Exporters and importers have to fulfill all the customs formalities as well as rules controlling exports and imports. Such controls are absent in home trade, we have usually much greater freedom in the movement of goods and in the settlement of dues.
10. Shipping and insurance: Shipping and insurance formalities in foreign trade clearly distinguish it from home trade activities. Marine insurance is essential in sea transport.
Know more about the difficulties involved in Global/ International marketing only at the University Canada West.
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