Environmental Factors of Marketing

Environmental Factors of Marketing

T.I

University of Phoenix

MKT 421

Harry Caldwell

06/24/2006

Environmental Factors

For a company to gain or maintain a sustainable competitive advantage, the organization must be ever vigilant, watching for changes in the business environment. The organization must also be agile enough to alter its strategies and plans when the need arises (Wikipedia, 2006). In today’s business world, organizations must look at international markets for new opportunities. For a business to grow, the organization must be aware of the challenge that awaits the marketing team. What might be proper in the United States might not be acceptable in a foreign country.

Toys R Us

Toys R Us is the nation’s largest retailer in a specialized field. The company operates over 500 domestic stores and 400 international stores. In the past two years, Toys R Us has opened more international units than domestic ones, a trend that it is likely to continue in the foreseeable future. The chain now operates in nearly 20 foreign countries, the most recent additions being Denmark, Sweden and Luxembourg. The nameplate also appears in Israel via a franchise agreement (Findarticles, 2006). With the organization operating in so many different markets, the importance of proper marketing takes center stage. What might be appropriate in England might not be appropriate in Japan. The difference in cultures must be observed and Toys R Us has proved that they are up to the challenge.

Any U.S. company looking abroad must start by understanding the international trade system. When selling to another country, the U.S. firm faces various trade restrictions. The most common is the tariff, which is a tax levied by a foreign government against certain imported products. The tariff may be designed either to raise revenue or to protect domestic firms. The exporter also may face a quota, which sets limits on the amount of goods the importing country will accept in certain product categories. The purpose of the quota is to conserve on foreign exchange and to protect local industry and employment. An embargo, or boycott, which totally bans some kinds of imports, is the strongest form of quota (Armstrong, kotler, 2005). Toys R Us established an international division that operates independently. The international division is still a vital part of the Toys R Us organization and within the past few years, have successfully established itself as a vital part of the organization.

Toys R Us also deals with domestic environmental factors in both domestic and global marketing. Consideration has to be given to the ever present STEEP factors: sociological, technological, environmental, economical, and political. In foreign markets these factors could become a serious issue if not observed. The U.S. marketing division has to work with all these factors as well. For example, over the past few years Toys R Us has been scrutinized over fair business practices. The company was found guilty for pressuring different manufactures in giving the company exclusives. If the organizations failed to work with Toys R Us, the company threatened to pull particular toy lines from the shelves. This issue cost the company not only a black mark to their reputation, this also cost the company millions of dollars. This particular event would fall under the economical factor. Toys R Us has increased the company effort in ensuring the public this action would not happen again. This has impacted the marketing within the company.

Technology Impact

Technology has impacted how marketing is done in the Toys R Us organization. When a company fails to recognize the importance of technology, the company runs a risk of being overtaken by competition. Toys R Us faced this factor five years ago. Companies such as Wal-Mart and Target have successfully recognized the importance of technology and both companies have implemented new technology in their organizations. Toys R Us was considered a