Answer To: BA (Hons) Business Administration Page 1 of 6 MKT7004 International Marketing Formal Report Date for...
Soumi answered on Feb 20 2021
MKT7004
INTERNATIONAL MARKETING
Table of Contents
Task 1 3
South Africa 3
United States of America 4
Comparison of UK with USA and South Africa 4
Task 2 5
Exporting 5
Acquiring a similar unit in foreign country 6
Joint Venture 7
Task 3 9
E-business opportunities 9
Strategies for global citizenship 11
Strategies for ethical behaviour 12
References 14
Task 1
With the advent of globalisation, firms desire to operate globally to increase their revenue and brand value. Operation in foreign markets is different from operations in home country therefore; the management should take an informed decision while deciding which markets to enter. There are various differences between two markets such as cultural difference, economical difference, and technological difference and so on. The management needs to analyse the issues of all the markets from various perspectives. This helps in analysing the opportunities and threats existing in the market. The market chosen for the purpose of this assignment are United States of America and South Africa. United States of America is a developed economy whereas South Africa is an economy with a number of economic problems like unemployment and hence is not a developed country.
South Africa
According to Power et al. (2016), South Africa is a developing economy but there are a number of economic issues at present. The currency of South Africa is at its all-time low. Being a developing economy, South Africa has huge potential for new business. However, the weakening of the currency has led to ambiguity in the minds of the investors regarding the return on their investments. However, South Africa is a huge economy and has potential for providing healthy returns on new investments. The economy of South Africa is different from that of United Kingdom or other developed economies. There is abundance of labour, due to which the cost of operations is low in South Africa. Majority of the international trade of South Africa is with China. However, the Chinese economy is slowing down due to which, the Chinese investment in South Africa has decreased. Therefore, South Africa is trying to attract investment from foreign countries to keep up with the pace of development.
The purchasing power of the people of South Africa has decreased by 25% due to decrease in the value of its home currency. However, the culture of South Africa is such that people like to spend on food. The tastes and preferences of South Africans differs largely form that of American. As per the views of Charman et al. (2017), the daily food in South Africa revolves around simple fare of starches and meat. South Africa is an economy, which has livestock farming as a major component of GDP. People of South Africa gather at weekends and enjoy barbecues called braais. Most of the snacks items are outsourced from United Kingdom or some other countries. However, the tradition is changing among the youth. People enjoy snacks and demand a large variety of items. It is expected that the South African economy have huge growth potential. With this hope, investors are investing in the country to ensure that they get a significant return on their investments.
United States of America
According to Akaev et al. (2018), the United States of America is a developed economy with high purchasing power of people. It is one of the most preferred investment destination due to the huge size of its economy. The per capital income in America is one of the highest across the globe. The unemployment rate is one of the lowest across the globe. Manufacturing and services industry support the economy of Australia up to a great extent. The country has huge revenue from exports and has the largest economy.
Like every developed countries, USA also has a problem of ageing population. This has led to a shortage of labour and increasing tax rates in the future. The healthcare and education system of Australia is one of the best across the globe. There are many opportunities for investors from different parts of the globe. It also ranks at a decent position in the list of ease of doing business. Innovations and technology are at the crux of economic developments of United States of America. It faces strong competition from other developing and developed economies. People of America have a liberal mind-set and ready to accept things.
As per the opinion of Nishizawa and Gibson (2018), Americans like to spend on food as they have a high per capital income. The income level is high, which supports the expenditure on outside foods. However, there is a strong competition in American markets. The local players have huge market share, which affects the market share of foreign players. However, the Americans do not differentiate between local and foreign brands. The purchasing decision depends mainly on quality rather than on price. There are customers who are price sensitive, but the price is not a major criterion in America, unlike in other countries.
Comparison of UK with USA and South Africa
According to the views of Nishizawa and Gibson (2018), the economy of UK is different from United States of America and South Africa. With the recent exit of Britain from the European Union, the economic landscape of United Kingdom has changed. However, the GDP of the country is high in comparison to South Africa, but low in comparison to United States of America. The snacks market of United Kingdom and USA may have certain similarities, but there is less similarity in the snacks market of UK and South Africa. People prefer to spend heavily on snacks in countries like USA and UK.
On the other hand, spending on snacks is not much prevalent in South Africa. In South Africa, people prefer meat to other items. However, in United States of America and United Kingdom, people are ready to try out new cuisine and snacks. There is a great difference in the culture of all the three countries mentioned above. With the recent changes in the policies of the government of United States of America, Sentimental may face expansion issues in America. South Africa on the other hand attracts foreign investment and expanding in South Africa may not be an issue for the company. In South Africa, the rate of unemployment is high therefore; the labours are available at a cheap rate. On the other hand, the unemployment rate of America and UK is low, due to which the labour cost is high in such areas.
Task 2
As per the views of Watson et al. (2018), entering into a new market requires significant knowledge about the market. The primary requirement is the market research, which provides the data for taking decisions. There are different strategies for entering a new market such as exporting, licensing, franchising, joint venture and others. Each strategy has different merits and demerits. Three different strategies for entering the markets of South Africa and United States of America are as follows:
Exporting
It is one of the most preferred strategy to enter a market. Initially, organisations tend to export products to target country as a pilot project to observe the response of the target customers. It does not require much of an investment in foreign countries and hence, it can be undertaken without much of a financial risk. In the current scenario, Sentilental is not a large company as its revenue is limited to £1.2 million per annum. Therefore, it may opt for the option of exporting to try the response of the product in South Africa and United States of America. In case of exporting, there is no requirement of setting up a manufacturing facility in other country. The company can tie up with few major exporters and ensure the availability of the product in the target countries, which are United States of America and South Africa.
According to De et al. (2015), there are various advantages of exporting for an organisation. Such advantages includes manufacturing set-up is home based and thus there are lesser operational risks. It will also provide the opportunity to the marketing team of Sentilental to observe the market of foreign countries before investing in foreign the foreign country. The firm will be able to reduce the risk of operating overseas. However, the firm will also be having certain disadvantages, which include the business is left at the mercy of the agents. The agents operate solely on commission and therefore, they will prefer selling the products of companies that offer them the best commission scheme.
According to Balsmeier et al. (2016), the firm can opt for different types of export strategies such as aggressive exporting or passive exporting. If the firm follows passive exporting strategy, it will have to wait for the orders of the agents. On the other hand, adopting the aggressive exporting strategy will enable the firm to market its products and create demand for its products through a push strategy. This will require some advertisement and promotion cost but the same will increase the probability of the expansion plan in foreign markets. For adopting the aggressive strategy, the firms will have to set a price, which is highly competitive. In addition to that, the quality of the product should be tailored as per the local preference of each foreign market. On the other hand, the firm can also sell a standardised product across the globe, similar to the strategy adopted by “Starbucks”, the famous coffee chain. However, it will be beneficial if the quality of product is modified as per the local taste of the customer.
The company will have to dedicate sufficient resource if the aggressive marketing strategy is followed. The exporting marketing channel will comprise of various intermediaries, which includes intermediary, importer and wholesaler. The firm needs to ensure that the commission across all the level is higher than that offered by the competitor. Initially, the firm should focus on low margin and acquire market share. According to Shen et al. (2017), once the company has sufficient market share, it can increase the price or reduce the commission to increase the profit margin.
The firm should focus on high volume and low margin for the time being to capture the market. Opting the exporting option of expansion will enable the firm to check the demand for the product in the new market. In future, the firm can also change its product and align the snacks as per the local taste. This will act as a pilot project for the firm and will enable the firm to check the type of demand for snacks in the market. The firms will thus get some time to adjust itself in the market along with the testing the product in the market.
Acquiring a similar unit in foreign country
This is one of the most common export strategies used by foreign firm to enter a country. This enables the firm to get a ready market for the product and understand the market effectively. According to the views of Wan et al. (2018), in case of acquisition of a...