International marketing Sample Assignment
As it’s an era of globalization, international marketing has been a buzz word in business world where almost all the companies that were previously involved in local marketing are now entering into global marketing considering all the opportunities that it provides to stakeholders. I have been assigned as an market assistant of BMW under the marketing manager to complete these report on the analysis of BMW (UK) limited’s international marketing strategies, how it has entered into this market, the threats that it face, and an critical evaluation of the behind the rationale for which companies become motivated to market internationally.
Company overview of BMW (UK): It is a private limited company and had been incorporated on 11july, in 1978 for conducting business of importing and selling cars in United Kingdom. But mainly it was installed in Germany for producing and selling cars, motorcycles, and also aircraft engines. It is a subsidiary of BMW (UK) holdings limited where the parent organization is Bayerische Motoren Werke AG and in short named as BMW. It is located in Farnborough, Hampshire and Besides marketing, advertising cars of BMW through dealer network, it sells BMW Group’s other brands like MINI brands and Rolls-royce cars.
Definition of international marketing: It is defined as the principles of marketing being followed internationally (Bradley, 2009). The concepts of marketing are applied in a global perspective for pricing, promoting and distributing products and services across national borders while keeping mind of all the needs, preferences, culture and standards of law and regulations among the countries being reached.
Scope and key concepts of international marketing: international marketing has huge scope in terms of its importance and also in terms of running different types of businesses globally. First of all, the importance can be explained as-
- It leads the companies to go beyond any market criteria by giving opportunity to exploit newer markets every moment.
- It gives the benefit of reducing risk of running only locally like local market can crash and company can fall in direct stress. But in case of international marketing there is very low chance that market demand might contract (Haugen and Mach, 2010).
- With the expanded use of internet, communication technologies, and use of smart phones, international marketing is also making its place in customer minds
- The free trade systems and contracts of going beyond of national boundaries by reducing limitations, sea mutual contracts shipping etc. are paving the way of global market far more easily.
- With the increased development of WTO and other trade unions among countries, foreign direct investment is rising and also countries are learning to find the most potential business arena for next coming years, and also the scope of international marketing is reaching further.
Various routes to international marketing that an organisation can adopt: There major types of international businesses where IM has boundless scope ahead and for taking the route of internationalization BMW needs to focus on four areas-
- Diagnosis of the company’s capabilities, political, environmental favours etc are considered here
- Setting objectives and priorities of the company is made then in terms of company’s goals, project priorities etc.
- Strategic lines are found here in light of fund collection, the proposal is communicated and visibility of the project is monitored with available supports (Haugen and Mach, 2010). .
- Action plans are taken here to implement and establish the project practically in foreign land.
Diagram: Routes to international marketing
Source: (Bradley, 2009).
Rationale for an organisation to want to market internationally: the major reasons that encourage companies to want to market internationally are given below-
- As the international market has no boundary, the profits and sales pattern are as beyond imagination. With increased market higher sales and higher profit encourage companies to market internationally.
- Demand fluctuates from one country to the other. Companies with diversified marketplace can easily adjust one country’s recession by the other country’s upstream.
- With higher production levels, the cost of production reduces and companies can benefit from economies of scale largely (Czinkota, Ronkainen and Sutton-Brady, 2018).
- Innovation and technological advantages of the developed countries can be reached to less-developed ones by international marketing and that add advantages to business units of the world
- The flexible government policies and regulations encourage businesses to go public
- Competitive advantages is another driving factor that lead companies to be multinational and exploit more market demand than local ones
Evaluate the opportunities and challenges faced by organisation (s) in going global: Globalisation is highly beneficial as it contributes to the portfolio of businesses largely by diversifying business risk, by reducing cost factors, taking advantage of environmental and social factors etc. (Lemert, 2016) . but the challenges are:
- Compliance with foreign country’s rules and regulations
- Different accounting policies, business systems and management boards
- Communication, culture, religion, ethnicity and different social practices
- Particular distribution, payment and shipment methods of that country
- Foreign currency exchange rate
- Different HRM issues of labour cost, hiring and compensating
Key criteria and selection process to use when considering which international market to enter: BMW can consider the following selections criteria for choosing the right international market-
- Countries with higher GDP growth should be focused for selection process
- Lower political risky countries with good, stable governance should be looked upon
- If market appeal is good with higher demand of company’s products, it should be prioritized.
- Country’s company laws, starting procedure, tax benefits, operational difficulties, administrative costs, labour costing etc.
- Competitors’ position in the market, their strength, weakness, markets’ SWOT and PESTEL analysis, forecasting of sales, pricing pattern should be focused (Haugen and Mach, 2010).
- Distribution channels should be analysed considering agents’ positioning, internet, transportation flexibility, charges on shipping etc.
Evaluating different marketing entry strategies with advantages and disadvantages: While taking the business and marketing of BMW internationally, it can choice from the following entry strategies with highest advantages and lowest disadvantages.
- Importing: it is the easiest approach of importing products from one country and selling it in the domestic markets where importers belong to. That is just what BMW(UK) holdings limited does of importing automobiles from parent country and selling it in other countries (Bradley, 2009).. IM has a great chance here too with advantages of low costing and disadvantages of dependency on import agents.
- Exporting: it is just the opposite of importing technique. Where parent companies make or produce their products in home country and make it available by selling to other countries’ markets. The function of BMW of Germany is just the same as it. It is also a low costing technique but export agent may not bargain in the best ways that the company itself could.
- Contractual agreements: two types are here one is franchising and the other is licensing where dealers in foreign countries are given right, technologies, experts, logistics, copy right and logo support of business formulas to do businesses. It expands the scope of IM as dealers do branding and marketing of main company. These kind of contractual agreements are also seen In BMW case and that is what the subsidiary BMW (UK) Holdings do in light of contractual agreements in United Kingdom. It is good in the sense that it requires the lowest cost for BMW but it runs the risk of reputation loss in case of not having any control (Czinkota, Ronkainen and Sutton-Brady, 2018).
- Joint venturing: here two countries’ business initiators come together and decide to establish a business of that kind by jointly giving capital, investment and efforts in foreign land. It needs huge cost but it is good as BMW will have full control over company operations.
- Fully owned manufacturing: here any company fully own a company in foreign country and does the manufacturing, distribution of products there by its own capacity. It also requires huge cost but company can claim the full ownership and controlling rights.
- Strategic alliance: here two countries’ business magnets do allied business in terms of giving and sharing one’s strategy to the other in lines of marketing, distributing, manufacturing, managing, pricing, promoting and everything they consider as part of alliance contract. BMW (UK) is strategic partner of many countries. It requires cost too but company may lose most valuable information and resources of itself for sharing with its competitors.
Difference between global and local marketing by presenting an overview of the key arguments in this debate:
From years there has been huge agreements about the issue of either local marketing is good or global marketing is good. In fact, both of the issues have their own merits and demerits with opportunities and threats.
Local marketing actually means that all the business functions of manufacturing, marketing and distribution of services be concentrated with any national country boarder whereas Global marketing implies no border limitations (Hitt, Ireland and Hoskisson, 2017) and products, services are produced considering its distribution all over the world.
The global marketing supporters claim that with the development of communication through technological enhancement, transportation and trading methods all over the countries, it is important and beneficiary to take advantages of this through going beyond by global marketing (Loth, 2006) . This approach is mainly prioritized because of cost savings issues in marketing, advertising and production costs with increased volume of sales. It is mainly capitalistic viewpoint and monetary issues are focused here.
For example, when companies like CocaCola, P&G, Samsug, BMW, Nokia etc. do their marketing internationally they can gain the objectives of large market share and other financial goals but at the same time runs the risk of losing country-own identities
In contrary, the supporters of local marketing emphasizes on several differences like language, cultural, religious, geographic patterns of climate, nationality issues and other macro issues. They think that foreign country’s culture, practices and languages can adversely affect the local country’s national sovereignty. For protecting the host country from foreign country’s complex issues they consider global marketing to be the best approach.
For example, countries like Greenergy, Brakes Group, Firstsource etc. are the private companies in United Kingdom that comply with local demands fully rather being so capitalism oriented but the disadvantage they go through is also vital as they cannot enjoy the benefits that global companies provide.
From the above conceptual argument of these two concepts, we can see that both are important and identical in their standings but none of them cannot be rigorously voided by replacing one by the other. BMW taking considerations o all the debates involved in here they have made their marketing in such a way that satisfies global and local benefits but does not include any of its negative impacts on the business, economy or to any of the country (Lemert, 2016). It is called Glocal Marketing that most of the international marketing companies approach.
How does the product, pricing, promotional and distribution approach differ when using a variety of international markets and how does organizations adopt them in different markets:
The four main components surrounding marketing strategies are product, price, place, and promotion. They largely differs from local market to international type in the following ways-
- Product: in international marketing product must satisfy several different categories that international companies must have like they need to introduce considering different country’s customers needs, their preferences of additional product facilities or supports required to operate the product. BMW has also focus on the technological aspects of their cars that UK customers prefer to have but for Germen customers they have to design the products differently (Mayrhofer, 2012). UK wants product be more luxurious, outlook to be gorgeous and value uniqueness. On the other hand Germen customers prefer products be more efficient and effective even if it lacks uniqueness or technically savvy features.
- Price: prices of products in one country are much more different than that of other countries. So, international marketing has to identify which countries’ customers assess the price of any product in which manner. Countries with higher GDP growth, increased per capita income can afford the highly priced product but the less developed countries in contrary cannot afford that so easily.
In case of pricing of products, BMW has to consider the economic standards of different country, currency exchange rates, inflation and population’s income and spending pattern wisely. In UK highly priced products are considered to have higher value to them and they consider extravagant marketing, advertisement, special customer services be very important and all these increase the price of the products (Hitt, Ireland and Hoskisson, 2017). In Germeny, prices of products are not considered a value defining element of product and they don’t value luxurious customer service, special marketing be important to define the value of any product. They want the price be affordable sacrificing its other auxiliary issues.
- Place: place where product is being manufactured and where they are distributed with outlets is another marketing mix component that varies from local marketing strategy to international strategy largely. BMW has to design the places of establishing outlets in different countries particularly. In UK, outlets are placed in the most convenient way and it makes the distribution channels very much comfortable to customers as they can reach to any outlets any times requiring less transportation and less time as the number of outlets is higher here. But in Germeny the place of outlets are not considered much important rather they consider outlets be placed in remote areas so that cost issues can be minimized for the benefit of customers.
- Promotion: advertising in one country varies from advertising in foreign markets because cultural, religion, modeling setups are not same in every country. In religion-oriented countries using alcohol, women, or child attracting ads are considered violent for their society but in liberal countries these are not so highly focused (Loth, 2006) . BMW has to make lavish promoting strategies in UK but promotion urgency are not so extreme in Germeny.
Explaining the domestic and global marketing approaches the companies can adopt and implication thereof: There are mainly three types of international marketing approach and BMW can adopt any one of them. These are explained below-
- Multinational matrix: Here employees are given directions, command and orders from more than one singular department at the same time. For example, production department’s employees of BMW UK are structured from sales department too. Because according to the volume of sales made each day and its projection for future production department continues increases or stops their production level. So to maintain efficient collaboration between these linked business functions of different countries multinational matrix approach is very important (Miller, 2007). This marketing approach is very expensive but it increases efficiency level.
- Centralization: here all the decision making power is centralized to the domestic countries’ top level management and foreign countries mandatorily execute the orders given by headquarter office’s country. It is a rigorous approach lacking flexibility and employees’ motivation level.
- Decentralization: here decision making power and other authoritative executions are distributed among several country offices based on their importance, changes, events and outcomes.
Compare home and international orientation and ways to assess competitors, outlining the implications of each approach:
Home orientation is different from international orientation in the sense that in case of home, companies provide uniquely produced goods or services for each country whereas in terms of international orientation a standard process is followed for each country’s production (Czinkota, Ronkainen and Sutton-Brady, 2018). Home orientation is too expensive as maintain particular feature of each country is difficult but global orientation is much easier and less costly.
- Assessing competitors under home orientation: here 5 to 10 competitors should be selected from each of the domestic regions that the company does business. Next BMW will have to classify them as primary, secondary, territory competitors and find out the mission, vision goals, their distribution channels, market positioning, and other marketing strategies with their strength and weaknesses too (Lemert, 2016). Most importantly their market share, customers’ demand for their products, sales and profit amounts need to analysed and what has given them competitive advantage is needed to be finding out. then it will be easier for BMW to produce the best products for each country differently.
- Assessing competitors under global orientation: all the processes are just the same as above mentioned analysis of competitors but one thing is different here mostly that the competitors must be chosen form international perspective that means companies that business globally. Then their pricing, other marketing strategy, distribution methods, profit level, demand in the mind of customers, strength, weaknesses, business uncertainty, technology being used, reasons behind loyalty of customer c and ompetitive advantages factor etc. must be analysed effectively to design standardized products by BMW UK Limited (Haugen and Mach, 2010).
Recommendations for BMW UK Limited
Here as an marketing assistant and after analysing the international marketing concepts through BMW UK Limited I’m putting some recommendations for gaining opportunities of international structuring-
- Before going to any international marketing BMW must do the investigation and analysis task on that country, its governance with full efforts and responsibility to find the opportunities and challenges of that market share.
- There must also be clear plan with specified mission, vision short-term and long-term goals, business model etc. and these can be established based on the analysis made in above point.
- Next BMW needs to form an executive committee comprising with employees of existing and new foreign market’s employees together to achieve broad view of the two different markets.
- Finally BMW is required to structure its organisation in that country with strong compensation for bringing best employees for the company (Hitt, Ireland and Hoskisson, 2017) and competitive promotion packages of product to make the products looking valuable and attractive at the same time.
All the above mentioned recommendations are necessary for making the international marketing projects of BMW beneficiary both monetary and non-monetary senses combined.
International marketing is not free from disadvantages as it is the law of economics that globalization will bring some disparity initially but with time adjustments will be made, changes of growth will be distributed equally by lowering demerits of it. So, this report explains the various routes, entry modes, opportunity, and challenges, strategies through which international organizations like BMW can achieve most of the facilities from enhancements of technologies, transportation, communication and open trading methods.
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