Problems faced in marketing of foreign goods by multinational companies

Globally the product line of Nestlé is very large but in Bangladesh currently there are only 11
products and the famous “Procter & Gamble” acquired a number of other companies that
diversified its product line and significantly increased profits in Bangladesh. In case of marketing
of foreign goods, the stated both multinational companies face various problems regarding to
marketing their foreign products in Bangladesh. The multinational companies usually distribute
their products through various intermediaries which create several complicated issues. They are
briefly stated below-

1. Sourcing

Ideally, every importer or any multinational company would hire personnel to oversee the
sourcing of products from an international supplier, but that’s not always a viable option. Still,
it’s important to have someone acting on your behalf because, unfortunately, not all overseas
manufacturers are what they seem.

.2. Pricing

Negotiating with an international seller takes more than picking up the phone or exchanging
emails. Cultural differences and language barriers can make otherwise manageable tasks—
reaching out to a customer representative, communicating design elements, negotiating prices—
far more difficult.

3. Quality control

Since the multinational companies will not be there to oversee the production of their goods, they
may find that the quality is not up to par with specs.

4. Transport

Getting the product from there to here can be challenging and expensive.
5. Risk and Uncertainty:
Foreign trade is subject to greater risk and uncertainties as compared to home trade. As the goods
have to be transported to long distance they are exposed to many risks. Goods in transit overseas
are susceptible to the perils of the sea. These risks may be covered through marine insurance but
this involves extra cost in foreign trade transactions.

6. Lack of information about foreign traders:

In foreign trade since there is no direct and close relationship between the buyers and the sellers,
the seller has to take special steps to verify the credit worthiness of the buyer. It is difficult to
obtain information regarding credit worthiness, business standing and financial position of
persons living in foreign countries.

7. Difficulties in Payments:
Foreign trade involves the exchange of currencies because the currency of one country is not the
legal tender in the other country. Exchange rates are determined for different currencies for this
purpose. But exchange rates go on fluctuating. Moreover there is a wide gap between the time
when the goods are dispatched and the time when the goods are received and paid for. Thus,
there is a greater risk of bad debt also in foreign trade. Remittances of moneys for payments in
foreign trade are time consuming and expensive. Hence payments in foreign trade create
complications.

8. Various Documents to be used:

Foreign trade involves the preparation of a large number of documents both by the importer as
well as exporter. These documents may be required either under law or under customs of trade of
the two countries.

9. Study of Foreign Markets:

Every foreign market has it own characteristics. It has its own requirements customs, traditions,
weights, and measures, marketing methods etc. An extensive study of foreign markets is required
to be successful in foreign trade, which may not be possessed by an ordinary trader.
10. Tariff Barriers:
Tariff barriers indicate taxes and duties imposed on imports. Marketers of guest countries find it
difficult to earn adequate profits while selling products in the host countries. Sometimes, to
prevent foreign products and/or promote domestic products, strategically tariff policies are
formulated that restricts international marketing activities. Frequent change in tariff rates and
variable tariff rates for various categories of products create uncertainty for traders to trade
internationally. Antidumping duties levied on imports and defensive strategies create difficulty
for exporters

11. Administrative Policies:

Bureaucratic rules or administrative procedures – both in guest countries and host countries –
make international (export and/or import) marketing harder. Some countries have too lengthy
formalities that exporters and importers have to clear. Unjust dealings to get the formalities/
matters cleared create many problems to some international players. International marketers have
to accustom with legal formalities of several courtiers where they wants to operate.

12. Considerable Diversities:

Different countries have their own unique civilization and culture. They pose special problems
for international marketers. Global customers exhibit considerable cultural and social diversities
in term of needs, preferences, habits, languages, expectations, buying capacities, buying and
consumption patterns, and so forth. Social and personal characteristics of customers of different
nationalities are real challenges to understand and incorporate. Compared to local and domestic
markets, it is more difficult to understand behavior of customers of other countries.

In the same way, as against domestic markets, to design and modify marketing mix over time for
international markets seem more difficult. Market segmentation, product design, pricing, and
distribution need more information and efforts. Promoting products in international markets is a
formidable task. Message preparation and execution in suitable media in international markets is
not easy game to play.
13. Political Instability or Environment:
Different political systems (democracy or dictatorship), different economics systems (market
economy, command economy, and mixed economy), and political instability are some of real
challenges that international markers have to face. Political atmosphere in different courtiers
offer opportunities or pose challenges to international marketers.

Governments in different nations have their priorities, philosophies, and approaches to the
international trades. They may adopt restrictive (protectionist) or liberal approach to international
business operations. Especially, political approaches of dominant nations have more influence in
international marketing activities.

Long-term trend of global political environment is unpredictable and uncertain. Economic

policies of different nations (industrial policies, fiscal policies, agricultural policies, export-
import policies, etc.,) do have direct impact on international trade. Drastic change in these
policies creates endless difficulties to international traders. While dealing with international
markets, international political and legal environment needs a special attention

14. Variations in Exchange Rates:

Every nation has its currency that is to be exchanged with currencies of other nations. Currencies
are traded every day and rates are subject to change. Indian Rupee, European Dollar, US Dollar,
Japanese Yen, etc., are appreciated or discounted at national and international markets against
other currencies. In case of extraordinary and unexpected moves (ups and downs) in
currency/exchange rates between two courtiers create serious settlement problems.

15. Terrorism and Racism:

Terrorism is a global issue, a worldwide problem. People of the world are living under constant
fear of terrorists attracts anywhere in the world. To trade internationally is not economically
risky, but there is the threat to life. Racism also restricts international trade activities. For
example-In our country, terror attack on Holey Artisan in 2016 restaurant that killed 20 people
has cast adverse impact on the transaction of the service sector as people are now really scared of
going to the shops or to the restaurants. The transactions as well as the turnout of consumers
 have declined as both the buyers and sellers are now afraid of movement over the prevailing
sense of insecurity

16. Execution of money transfers

The challenges caused by foreign exchange don’t stop there. The execution itself of money
transfers can be slow, costly, and can break down.
- The multinational companies need to set up a collections system. This is especially
relevant when it comes to import finance. If the recipient does not pay on time, they
could be left flailing.
- Repatriation of capital is limited strictly by regulatory authorities in all countries. This is
so capital is not drained from the country in a small space of time.
- Paying suppliers sets up challenges. If they’re using a system that is costly or inefficient,
the international traders need to negotiate who pays the fees. Overseas payments for
imports can get tricky, both financially and organizationally.

f. Natural forces
Natural forces, such as climates and natural disasters can break down system temporarily.
 Solutions to the problems

- Ensuring the proper source. Enlisting the help of an international trade manager who will
ensure that- the importers or the traders will not be sending money to a company that
doesn’t even have a legitimate factory

- Set proper pricing strategy

- Ensure proper quality control regarding to pre-production process—factory inspection,

prototype evaluations—to make sure that the product meets the expectations.

- Facilitate well transport system which is useful as well as inexpensive

- Payment processing itself sets the traders up for a lot of trouble and need to process
payments in accordance with the laws of more than one country. The traders need to use
efficient systems that are suited to overseas payments

- Use alternative non-bank loan providers

- Foreign exchange options for currency hedging

The challenge of currency fluctuations has been around for a very long time, even if it’s a
bit more significant right now. Foreign exchange companies have been developing
solutions for almost as long. Some of the options include:
 call/put options: these allow you to buy or sell currency at a specified price within
a specified time.
 limit or stop orders: these allow you to set up orders to buy or sell your currency
when the exchange rate reaches an upper or lower limit

- Outsource the dirty work

There are many resources available online about invoicing and documentation, from
different governmental departments as well as private companies. However, reading up
on the information is not quite the same as following through with it. Documentation can
be quite a nightmare. It’s always better left to someone else. Money transfer companies
 are again highly useful here, as they know how to use the right formats and provide the
right information. They do it on a daily basis, quickly and without the stress and hard

International trade is going nowhere, and thus there’ll always be a massive need for import &
export companies. It’s a great industry to get into but, like all businesses, there are major
challenges. Unlike most other businesses, there are exponentially more bureaucratic processes to
deal with, and a lot of reliance on currency rates staying stable. Loan providers cater specifically
to the import & export industry. Foreign exchange companies provide options to deal with
currency fluctuations. They can help with execution and documentation.

The import & export industry will always be necessary, and has existed since the early days of
traveling merchants. It’s only growing, due to globalization and easier means of transportation.
Millions of individuals and businesses have found ways to face the challenges, and come through
stronger.