International Marketing and Ethical Considerations

Introduction

International marketing is activity linked to the sales of services and goods of one nation in the other, but subjected to the principles and regulations framed by the nations concerned. In the current era of globalization, several organizations are compelled to or want to by the market expand their operations and businesses beyond their border nations according to Nath et al. (2010). Basically, it entails marketing functions and operations among the nations of the globe following varying economic and political frameworks. It can be depicted that global marketing and functions is marketing and functioning at a global scale, that is, beyond the political constraints of the mother nations, capable of bringing together countries closer due to economic necessities and fosters comprehension and cooperation among them. In this report, the focus is on Patagonia Inc. an apparel company based in California, USA that focuses on selling outdoor clothes as well as athletic equipment and well known for its well structure ethical principles but affected by the ethical standards of a partnering organization affecting its international market and operations in quite a competitive apparel global market.

Background Scenario

Patagonia Inc. Company, a Ventura, California, United States of America clothing organization that was established back in the year 1973 by Yvon Chouinard that markets and sells outdoor clothing as well as affiliated products like athletic equipment, sleeping bags, backpacks, as well as camping food. The company consider itself being an activist organization, therefore, it is recognized for its environmental policies, where since 1985, the company commits one per cent of its total sales to environmental groups, via ‘One Percent for the Planet’. In the year 2015, Patagonia Inc. launched a ‘Common Threads Partnership’ which is an online auction-kind platform meant to promote direct sales of used Patagonia clothes so as to reduce environmental degradation via disposal of clothes waste, promoting its ethical principles that foster sustainability and recycling of some of its products.

However, in relation to the report, Patagonia Inc. has been criticized for sourcing its materials such as wool and down feathers from unethical business partners whose practices have serious consequences that have the potential to alter the company’s money and time in efforts to seal off the business reputations as well as any legal matter that may arise depending on the severity of the circumstance. Such integrity breakdown can perilously cost the organization lump-some funds as well as prison time in some extremely grave cases. In fact, unethical reputations have the capacity to scare off potential investors, as well as global clients in a quite competitive clothe and fabric global industry and market.

International Marketing and Operations of Multinational Companies

There are a number of researches ha have provided insight in the multinational organization’s response to the international markets and in the modern world, there is no country in its own sovereign and independence an isolate its internal affairs from external influences, since there are internal limitations of their own resources not leaving out the benefits of opening up their borders to other markets as identified in a research by Doole and Lowe (2012). As a result, there has been enormous number of activities I the global marketplace, an economic boom which in the last two decades it has been the major drivers for productivity, efficacy, and open and deregulated markets that have swept the globe.

It has never happened before in the world’s chronicles of events have businesses and organizations ben so acutely taken part in and influenced by global growths. Powerful political, economic, demographic, technological, industrial and economic forces are coinciding to create the foundation of a contemporary world economic order on which the framework of the global economy and market structure will be developed as reviewed in global market by Gomes et al. (2020).

The capacity or the intentions of Patagonia Inc. is or wants to take part directly in the global business, then according to Majaro (2013), assert that any MNC including Patagonia Inc. must be aware that it cannot evade the consequences of the ever-increasing number of domestic companies and business exporting, importing or/and manufacturing in other nations. The aggregate of foreign-based organizations in nearly all markets; the expansion of regional trade areas; the accelerated advancement of world markets, as well as the increase in the number of competitors for the global market.

However, according to Kotabe e al. (2011), fundamentally global marketing and operations have similarity with domestic marketing and operations, yet some vital distinction can be perceived following an in-depth insight. Companies that possess the experience of domestic marketing and business planning can possibly acquire an edge while diversifying into global markets and operations. Bearing this in mind, Michael E. Porter, a management theorist had identified that businesses aspiring to be successful international must try at being successful in the domestic market first. Leonidou et al. (2010) points out famous organizations such as Coca Cola and Proctor and Gamble operating at a lobal scale actually began by concurring their domestic markets first before entering the global market. As the magnitude of their operations developed, they identified it profitable to venture in other nations.

International marketing processes are majorly two viz, social and technical. According to Cuervo‐Cazurra and Genc (2011), the social process is in-charge of the human character, customs, values, attitudes and ethical aspects that is unique making it different from the domestic market. The technical process basically entails the non-human aspects like price, brand, product, cost and several others. The previous one; social process where cultural and sociological aspects predominate the decision making in reference o the market mix, and in this case previous operations either in the domestic market will be scrutinized to determine if the business will be able to thrive in the global market.

Within the marketing ecosystem, the surrounding as well as the operational variables in the international business assume a varying framework. The factors involved like political, cultural, economic, legal, competition and geographical are by extension dynamic and can be unmanaged when venturing in the foreign markets in comparison to indigenous markets. Various nations have contrasting currencies, legislations, inflations, accounting practices, interest rates and several other. Therefore, the controllable aspects of an organization (market mix) would require rearrangement in accordance to the needs of the ventured country(ies) as asserted by Gilligan and Hird (2012). Note that the very intricacy of exchange business dealings across countries makes it significantly distinct from local marketing and operations.

Approaches Patagonia Inc. Use to International Marketing and Operations

There exist differing international orientation and frameworks that firms apply to penetrate and thrive into the international scope. These forms may include ethnically close markets, Poly-centric or Regio-centric concepts.

Domestic Marketing and Operations Extension (Ethno-centric) Concept

In this concept, Patagonia has invested a lot, whereby the organization is guided by casual players in other foreign countries. In this case, the overseas markets only serve as conduits for directing surplus production, where these global markets act as buffer for checking how demands of its products line that entails apparels of other sports like surfing, athletic equipment ad other merchandise how they fluctuate in the domestic market according to a study by Carpenter et al. (2013). However, the main focus of Patagonia remains domestic market since a lot of its activities beyond business such as activism, politics as well environmental preservation is all geared towards its mother country; the United States of America. While this concept is normally common among small organizations and firms, even Multinational Companies like Patagonia Inc. are venturing it and prefers its operations seemingly be domestically adopted but source more revenue even at global scale as identified in a Journal on World Business by Verbeke and Kano (2016). However, the global operations of Patagonia Inc. are restricted to exports in certain niches due to high competitiveness of the apparel industry thus known as the ethno-centric in the Ethnocentric, Polycentric, Regio-centric and Geocentric schema.

Regio-centric Global Market and Operations Concept

In this approach, Verbeke and Kanol (2016) identify that firms venture into global market by acquiring a global perspective in their operations. These kinds of organizations identify lucrative businesses and investment opportunities in global basis. Thence they source their collaboration by sourcing their resources from any foreign country that offers friendly market environment, promoting the inputs to the business in the most cost-effective way possible. Patagonia Inc. has done this by sourcing resources such as wool from Australia before shifting the operations to South America. This was before the company was criticized by the People for the Ethical Treatment of Animals (PETA) over the practice of ‘mulesing’, forcing the company to shift its sourcing of wool to another continent. For such an organization applying this concept does not regard the Strategic Business Units (SBUs) in these foreign countries as independent entities, but as the SBUs which are adding towards the development and expansion of the organization as a whole. Therefore, you find that certain degree of policy issues and controls from the head offices are extended to all the SBUs, though concessions may be created to accommodate regional diversities.

Ethics and Integrity in the International Marketing and Operations

In a study, Kline (2010) argue that organizations or companies that operate at a global scale discover that the comprehension as well as acquiescing with variant rules and principles, administering staff from a far headquarter, serving clients and relating with the suppliers not leaving out the stakeholders in several areas of authorities can yield a number of significant remonstrances to creatin shared corporate values and meeting the actual international culture.

Most of the MNCs are faced with three major issues, according to Tadajewski and Jones (2012), and they are; how to promote a culture of ethical conduct in all the ventured nations of marketing and operations, how to engage an international workforce in comprehending as well as affiliating its corporate values, and how to meet the network of conglomerated decreed and concession commitments that may exist in all its ventured markets.

Edwards (2011) emphasizes that it is vital for MNCs to be aware that global ethics and principles exist in different designs and realities, and these ethics entail; basic human interaction, respect for dissimilarities, and trust that the partnered country or business will work together in an honest aspect, where candidness is the communication with counterparts in the business venture, and anticipation that each side of the partners mutually respect the agreements forged and sustain tenability.

The reason of global ethics and professional exemplars is based on the MNCs’ personal comprehension, fortitude of controversies, appreciation for the exceptional and inquisitiveness of the unascertained. Without the individual quest for learning contemporary frontiers, and steering with other competent who have their individual perceptions of the other party and compare with those of theirs, then the professional lives would be humdrum as studied by Olaru and Gurgu (2009).

Patagonia Inc. as a MNC has the potential to venture into global markets and foster effective and on return good operations if it does the following;

Foster a Global Corporate Culture

Any MNC can develop a unified culture that adheres to a high level of business manner of conduct of itself in all global marketing and operations by respecting its local workforce s as well as its customs and traditions according to Eccles et al. (2012). Several of the successful MNCs have managed to promote a global culture by venturing into approaches that implements global standards that are based on values corporate that allow for local policies based on cultural traditions. If Patagonia had embraced this approach when venturing into Australian bred sheep for wool, then it could have the ability to reinforce the values the organization seeks to foster in its corporate culture to instill universal principles of business conducts. In addition, local policies applied in Australia on practice of ‘mulesing’ would be respected with respect to cultural distinction among its global workforce.

Establishing a Corporate-wide code of conduct

Before entry into a foreign market, the most apparent way is to set up a uniform standard of values and codes of behavior. Such a written communication spells out for all stakeholders the fundamental standards that advises daily reciprocal action as well as resolutions arrived. It is important for MNCs to note that values are astronomically pertinent, evident to recall and far more inspiring that a set of guidelines according to a journal in ‘Politics and Governance on Global Ethics and Integrity in MNCs’ by Kadian (2013). To heighten the applicability of the code, then these corporate-wide codes of behaviors can be constructed and translated into the local language through culturally accurate, admissible interpretation. Those MNCs that have ventured into foreign markets and shifted also operations such as Coca Cola, they reinforced the global character by publishing their code of conduct as a single booklet with sections for every dialect of their stakeholders, something that Patagonia Inc. could embrace in future.

Including Local Bureaus in Local Codes of business Conduct

For an effective entry into a foreign market and set up operations, MNCs must demonstrate sensitivity to local traditions. It is attainable through allowing their international business units to augment the organization-wide code of behavior with local stratagems as necessary. To create these, the local business unit administrators as well as individuals from different practical localities, such as audit, finance, human resource, and legal might become drawn in studies by Olaru and Gurgu (2009) affirm. Enlisting the approval of these local functions is vital in molding copacetic policies as well as dismissing beliefs that individuals at the home office edict principles of manner of conducting oneself without regarding artistic distinctions.

Engaging Global Stakeholders in Ethics and Compliance

Favotto e al. (2016) research that organization’s standards and policies dissemination as well as attaining buy-in can take place if only the organization has the potential or the method in which stakeholders can be inspired to believe that they are part of as well as guardians of the company’s culture and values. This task would require an organization such as Patagonia Inc. to develop local leadership in the ventured countries like Australia and South America capable of engaging the stakeholders in those foreign markets via education, communication not leaving out provision of equipment that armor them with the ethics and values that the organization stand for not leaving out the compliance awareness and skills required for the rearing of sheep, harvesting, and processing of wool that are in accordance with the principles that PETA has forged to be adhered to in performing of the underlined operations. Therefore, it is recommended that Patagonia Inc. to actively engage global business units and local stakeholders to entail setting up local presence, create local ethics and compliance leadership, enlighten all stakeholders, as well as foster culturally responsive report framework.

Setting up a Local Presence by forming a Corporate-wide Ethics and Compliance Committee

Lastly, Neef (2012) suggests that as much as possible, Patagonia Inc. needs to take a local approach in the foreign market, a times when it is conveying the significance of morals and compliance. It is best attained by setting up a presence in every location that the company invest its marketing and operation, by either setting up satellite morals and compliance offices, or even providing roles to the local managers to be in charge of the ethics and compliance initiatives in the locations the MNC establishes its business in a Journal on Marketing Management by Schuster and Holtbrügge (2012) analyzes. It is an effective initiative where other MNCs such as Unilever Inc. that has formed a corporate-wide morals and compliance committee whose staff are the managers of the global business units set up in the foreign markets, and every manager is provided a responsibility to oversee the compliance of ethics in their stations.

Conclusion

The greatest achievement of man is developing global markets and operations that have resulted to macro-economic effects for every economy in the world. It is attainable due to the Multi-national Companies such as Patagonia Inc. The exports and imports have resulted to national income as well as technology generating direct and indirect benefits. Such MNCs begin by concurring their domestic markets by capturing their economic and market niches then proceed to foreign markets. It has been identified that Patagonia’s success as a MNC involves taking advantage of two major approaches and these are ethno-centric and Regio-centric concepts. These approaches entail partnering with other businesses or individuals in the foreign markets to source their resources in this case it was Australia first then shifted to South America. This is by sourcing their resources from any foreign country that offers friendly market environment, promoting the inputs to the business in the most cost-effective way possible. However, their legal issues on matters of ethics and compliance at the global market and operations arises from inability of the company to foster a global corporate culture, establishing a corporate-wide code of conduct, inducing local administrations in local codes of business conducts, engaging global company’s stakeholders in ethics and compliance and finally setting up local presence by creating a corporate-wide ethics and compliance committee that would monitor and update foreign market and operations of the MNC.

Reference

Carpenter, J.M., Moore, M., Alexander, N. and Doherty, A.M., 2013. Consumer demographics, ethnocentrism, cultural values, and acculturation to the global consumer culture: A retail perspective. Journal of Marketing Management, 29(3-4), pp.271-291.

Cleveland, M., Papadopoulos, N. and Laroche, M., 2011. Identity, demographics, and consumer behaviors: International market segmentation across product categories. International Marketing Review.

Cuervo‐Cazurra, A. and Genc, M.E., 2011. Obligating, pressuring, and supporting dimensions of the environment and the non‐market advantages of developing‐country multinational companies. Journal of management studies, 48(2), pp.441-455.

Doole, I. and Lowe, R., 2012. International marketing strategy. Cengage Learning.

Eccles, R.G., Ioannou, I. and Serafeim, G., 2012. The impact of a corporate culture of sustainability on corporate behavior and performance (No. W17950). Cambridge, MA: National Bureau of Economic Research.

Edwards, T., 2011. The nature of international integration and human resource policies in multinational companies. Cambridge Journal of Economics, 35(3), pp.483-498.

Favotto, A., Kollman, K. and Bernhagen, P., 2016. Engaging firms: The global organisational field for corporate social responsibility and national varieties of capitalism. Policy and Society, 35(1), pp.13-27.

Gilligan, C. and Hird, M., 2012. International marketing: strategy and management (Vol. 17). Routledge.

Gomes, E., Sousa, C.M. and Vendrell-Herrero, F., 2020. International marketing agility: conceptualization and research agenda. International Marketing Review.

Kadian, A., 2013. Global Ethics and Integrity in MNCs: A Reality Check in Indian Context. Journal of Politics and Governance, 2(3and4), pp.215-220.

Kline, J., 2010. Ethics for International Business: Decision-making in a global political economy. Routledge.

Kotabe, M., Jiang, C.X. and Murray, J.Y., 2011. Managerial ties, knowledge acquisition, realized absorptive capacity and new product market performance of emerging multinational companies: A case of China. Journal of World Business, 46(2), pp.166-176.

Leonidou, L.C., Barnes, B.R., Spyropoulou, S. and Katsikeas, C.S., 2010. Assessing the contribution of leading mainstream marketing journals to the international marketing discipline. International Marketing Review.

Majaro, S., 2013. International Marketing (RLE International Business): A Strategic Approach to World Markets. Routledge

Nath, P., Nachiappan, S. and Ramanathan, R., 2010. The impact of marketing capability, operations capability and diversification strategy on performance: A resource-based view. Industrial Marketing Management, 39(2), pp.317-329.

Neef, D., 2012. Managing corporate reputation and risk. Routledge.

Olaru, S.D. and Gurgu, E., 2009. Ethics and integrity in multinational companies. The Review of International Comparative Management, The Bucharest Academy of Economic Studies, The Elitist Society of Management from Romania, Excellence Romanian Center for Comparative Management Studies, 50, p.10.

Petagonia, n.d. Our Company History - Patagonia. [online] Patagonia.com. Available at: [Accessed 23 April 2021].

Schuster, T. and Holtbrügge, D., 2012. Market entry of multinational companies in markets at the bottom of the pyramid: A learning perspective. International Business Review, 21(5), pp.817-830.

Tadajewski, M. and Jones, D.B., 2012. Scientific marketing management and the emergence of the ethical marketing concept. Journal of Marketing Management, 28(1-2), pp.37-61.

Verbeke, A. and Kano, L., 2016. An internalization theory perspective on the global and regional strategies of multinational enterprises. Journal of World Business, 51(1), pp.83-92.

Continue your exploration of International Economics and Innovation with our related content.