International Marketing Strategies

This assignment delves into the realm of international marketing strategies. It examines various theoretical frameworks such as market entry strategies, export decision making under uncertainty, and the influence of social marketing principles in shaping consumer behavior. The analysis draws upon real-world examples, particularly focusing on Volvo's approach to international marketing. Students are expected to demonstrate their understanding of these concepts and apply them to a practical case study.

Managing
International Business

TABLE OF CONTENTS
Introduction......................................................................................................................................3
1. Appropriate analytical framework, identifying and analyzing the critical
macro-environmental factors that can influence Volvo’s international marketing
activities and their likely implications on the firm.....................................................................3
2. Recommending and justifying the most appropriate market entry
method for Volvo’s proposed entry method in an emerging market..........................................6
3. Evaluating the 4 international human resource management approaches along with the
recommendation for the most appropriate approach...................................................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................11
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INTRODUCTION
International business can be defined as selling and purchasing of goods and services
within the countries. In international business, business transaction are conducted all over the
world. The business transaction includes exchange of goods and services, technology, capital and
knowledge from one country to another country (Dunning, 2012). It also includes promotion,
distribution and selling of product all over the world. The present report is based on the
assignment of vulnerable Volvo. As Volvo is relatively a small car manufacturer with having
less than 1% of the global market share (Volvo. About us, 2016). Furthermore, this report
identifies the critical macro environmental factors that will influence the mentioned company
international marketing activities along with their implications. It also explains the most
appropriate market entry methods for Volvo's proposed entry method in an emerging market. In
addition to this, the 4 international human resource management approaches are evaluated in this
report along with the justification of the most appropriate approach for entering into India.
1. Appropriate analytical framework, identifying and analyzing the critical
macro-environmental factors that can influence Volvo’s international marketing
activities and their likely implications on the firm
Macro environmental factors are the external and uncontrollable factors on the business.
These external factors have a great influence on the company's decision making along with this it
affects the performance and strategies of the company. This environment has a great impact on
the success of the company and also on the marketing campaigns. The factors covered in the
macro environmental factors are political, economical, social, technological, legal and
environmental factors (Wild, Wild and Han, 2014). To identifying, analyzing and scan the
company's external macro environment, Pestle analysis is used. Considering this factors will
improve the success of the company, reputation of the brand and their marketing campaigns. The
primary external influence have a great impact on the business of the Volvo. This factors vary
according to the different countries.
The purpose of the analysis of the Pestle is to identify and analyze the factors which have
influence on the Volvo's international marketing activities. The pestle analysis will help the
mentioned company by focusing on the areas like country environment, competitive conditions,
socio economic culture etc. As this will also help in identifying the future challenges.
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Political factors- This factors are related to the political situation of the country. This factor is
analysis to know the level of government intervenes in the economy (Forsgren and Johanson,
2014). The areas which include in the political factors are tax policy, trade restrictions, political
stability, etc. There are many laws and restrictions in UK, which the mentioned company has to
follow. Along with this, the political factors have a great influence on the international marketing
activities. There was many barriers in the country related to the law or the interference of the
government, but due to the emergence of the globalization and liberalization, many barriers were
removed. The growing environmental concern in the country, forcing the UK government to
introduce harsher regulation for the automatic industry. For example, from the government
policies, America saved the 'American big three' of the automobile manufacturers in 2009.
Along with this, to make international marketing by the Volvo, government make no
difficulty with the automobile merger (Verbeke, 2013). For the international marketing activities,
mentioned company have to follow the different laws and regulation of the different countries.
For the Volvo, government foreign policies are important for the Volvo. For the local automatic
industry protection, there are extreme tax policies which is adopted by the UK.
Economical factor- The factors includes the economic growth, interest rates, exchange rates and
the inflation rates (Atwong, 2015). These all factors affects the business operations and also
effect in making decision related to the international marketing. In 2008, the economic recession
in the UK, hit the automotive industry immensely. From this the sales of the company goes
down. In 2013, the sale of the Volvo were down by 18.3% and also were continuing to under
perform in 2014 from the given economic turmoil. This under perform leads to filing for
bankruptcy and also demise of several automotive brands (Fifield, 2012). Now with
rising petrol prices, Volvo’s SUV market is under threat. There were economic slowdown in
many countries, due to the crisis in 1970-80. To make international marketing activities, the
mentioned company have to be aware about the interest rate, exchange rate and inflation rate of
the other country. The sales dropped significantly and the company had to lay off some
employee to continue its business.
With the rise in the prices of the fuel, there were fall in the sale of the automotive
industry. With this rise, it affects the Volvo, and also affect the performance of the company. For
example, the international marketing activities will be affected, if there is rise in the petrol or
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diesel in the other country, where the mentioned company wants to expand their business. The
reason is with an increase in the prices of fuel, the demand of the car will decrease. To drive a
big car also become expansive for the people. For this, customers are now more focusing to buy
smaller car rather than big cars.
Social factor- Social factors includes the cultural aspects, population growth rate, age
distribution etc. Demand of the company product will be affected due to the high trend in the
social factors. The major problem faced by the Volvo company is changing of the customers
preferences (Raff, Ryan and Stähler, 2012). As, this results is consumers are
moving away from Volvo’s large engines, seeking more fuel-efficient options. There demand is
changes from the luxury cars to fuel efficient small compact car. The shifting of the consumer
behavioral is due to the rise in the price of the fuel. With an increasing population, the mentioned
company attract younger drivers to the car marquee, as its target audience of 15 years
ago is downsizing and migrating to smaller, more fuel-efficient cars. Attracting the next
generation of Volvo drivers is important to ensure its
long-term success. Along with this, the government is also providing subsidies and incentives to
those consumers who buy Eco friendly cars. The incentive is in a form of free parking and road
tolls.
Technological factors- The factors includes in this factor are R&D, automation, technology
incentives and the technological changes. These technological factors can determine the efficient
production level also influence the outsourcing decisions. Along with this, the technological also
have a great effect on the cost and productivity of the cars of the mentioned company. With
every minute the technology changes and to reduce the cost of production by the Volvo
company, they need to be take care of the changes in the technology (Impullitti, Irarrazabal and
Opromolla, 2013). Eco friendly car and electric vehicles are manufacture by the mentioned
company with new technologies at an increasing rate. With a rise in the price of the fuel more
and more customers prefer Eco friendly cars. The mentioned company is also focused on
improving energy efficiency and health related technologies. By the major corporations, self
driving vehicles are on the way. This new technologies are being developed by the company.
Legal factors- The laws covered in this factor are discrimination law, health and safety law,
consumer law, employment law etc. With a continuously increased in the pollution, the new law
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was passed by the legislation for the protection of the environment. The clean air Act, 1993 was
passes and also have affected the mentioned company. This act bought many changes in the
customers preferences (Handley, 2014). On the basis of this act, The mentioned company focus
on manufacturing Eco friendly and fuel efficient cars.. Volvo company also introduce Flexi fuel
cars.
Environmental factors- This factor covers whether, climate and climate change. As this factors
affect the industries and their operations (Dunning, 2012.). The big size cars in UK increase the
pollution by emitting of the carbon. To reduce the carbon, the Government of UK has taken
serious action. To reduce the pollution, they focused on manufacturing of the Eco friendly cars
like Toyota for the customers. Along with this, to increase the sale of this car, they start
providing incentives and subsidy to those customers who will purchase those cars. The UK
government start promoting hybrid vehicles. With continuously increased in the pollution,
currently more and more customers care about the environment. They purchase smaller cars, as
this produces less carbon dioxide emission, than the bigger cars. Thus, this factors have a great
influence on the Volvo's international marketing
activities.
In order to increases the global market share by the Volvo, mentioned company have to
focus and be aware about the changes of the customers' demand and preferences. Rather than the
style of the car, they have to focus on the functionality of the car (Volvo. About us, 2016). If the
Volvo wants to be a successful firm, they have to adopt the customers need, which is
continuously changes. To be a successful firm, they develop small cars due to different factors:
Due to increasing in the price of the fuel, it becomes expansive for the customers to drive
big car. With this, they more focus on smaller car, as this small cars have more fuel efficient
engines. The buying power of the customers decrease, due to the economic crises in the last
5years (Raff, Ryan and Stähler, 2012). Customers spend less money on the big cars, as the
resources are limited with the customers. The people of UK spend money on the smaller car, as
they are less expensive. The another factor is due to increase in the environmental issues,
Government is implementing policies by penalizing the use of the big cars. From these factors,
the mentioned company manufacturing smaller cars and Eco friendly cars for the customers.
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2. Recommending and justifying the most appropriate market entry
method for Volvo’s proposed entry method in an emerging market
When Volvo has made decision to expand their business in the emerging market that is
India. At that time they have variety of options to enter in the other country. The variety of
option contain cost, risk and degree of control, which have to be exercised by the mentioned
company. Entering or delivering of goods and services into the other country is a planned
method (Market entry, 2015). Company have to manage and establish contract with the foreign
country for the importing and exporting of the services. While establishing in the international
market, the mentioned company have to face 3 major problems, that is marketing, sourcing and
investment control. There are different methods of market entry like exporting, licensing,
franchising, joint venturing, merger and acquisitions, counter trade and many more.
Exporting- For operating in the foreign market India, exporting is the traditional and well
established strategy. Marketing of the product and services in one country into the other country
is exporting. In short, it can be defined as selling of goods and services in the other country
market is exporting. For the exporting method, investment is required by the Volvo, to expand
their business in India and no direct manufacturing is required in India. The benefit is, by
exporting method, the mentioned company can manufacture their products in the home country
that is UK, and deliver the products to the other country. Manufacturing in the home country is
less risky than oversea based (Market entry strategies, 2016). Before investing in the other
market, this method helps the company and also gives an opportunity to learn the other market.
The another advantage is it reduces the risk of operating overseas. Along with the benefits, this
method also carry demerits. The demerit is the company faces conflicts with the distributors and
the other is logistical complexities.
Licensing- Licensing is when a firm leases the right to use its intellectual property, work
methods, patent, copy right or trademark to the another firm. In general words, it is a method in
which a firm in UK, agree to permit the another country to use the manufacturing, processing
etc. the one country who permit the another country is licensor and the another country is
licensee. Expenses and involvement involves in the licensing method. The benefit is it maintains
a low risk manufacturing relationships with the foreign countries (Folsom and et.al., 2012). The
another benefit is, it covers low cost to assess the potential market. To enter in the international
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market by this method, licensee provide knowledge about the local market to the licensor, this is
the main advantage of using this method. This method also carry demerits, use of the method
provide limited market opportunities as well as profits. To get the knowledge about the local
market, the licensor have to fully depend on the licensee, which create conflicts with them.
Franchising- Franchising is the another method, in which one country operates the business
under the name of the other company (Kubacki and et.al., 2015). The independent company who
operates the business of the other country is the Franchisee and the other company is franchisor.
To operate the business, franchisee pay money to the franchisor. This method is same as
licensing, but in this franchisor have more control over the franchisee company. The independent
company helps the another company in establishing the manufacturing facilities (Cavusgil and
et.al., 2014). The advantages of using this method is it reduces the risk of failure, as it covers low
financial risks. Franchisee provide full knowledge and information of the local market to the
franchisor. Fully depended on the franchisee creates conflicts between them, which is a negative
aspect. This method also result in limited market opportunities and profits.
Recommending Exporting method on the basis of Paliwood's international marketing
model.
Recommending the most appropriate method for market entry
by the Volvo’s in the India is Exporting. According to the Paliwood model, Exporting is the
appropriate method for entering in the India (International Marketing, 2016). This is because,
through Exporting, Volvo can easily enter in the India, as licensing and franchising takes time to
enter into the market. The cost and financial exposure for entering into the market will be low
through exporting (Volvo. About us. 2016). Whereas, in other two methods, it covers cost to enter
in the India, they have to pay fees to the other country to operate the business. Exporting method
is flexible, it means if the mentioned company found no profit in India, they can easily exit the
country market, but in other methods, they are fixed for some period in a particular country, it
means they can't easily exit the market.
The 4th factor is risk factor, through entering in the market through Exporting covers less
risk factors compared to the other methods. The pay back period, is the other factor which is to
be determine while entering into the international business. The profitable return in the Exporting
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is quick and high, as in other 2 methods, the mentioned company have to firstly operate in the
India's local market, which take much time, also covers expenses. Hence, the profitable return in
this 2 methods is slow (Cavusgil and et.al., 2014.). The Volvo can achieve the long term
objective through the Exporting method. As, this method will help the mentioned company to
establish their strategies, as it is cost effective and also helps the company in earning more profit
(Kumar, 2015). Hence, the Exporting method is the appropriate for Volvo while entering in the
emerging market of India.
3. Evaluating the 4 international human resource management approaches along with the
recommendation for the most appropriate approach
To manage the human resources in different countries effectively, the mentioned
company must evaluate the 4 approaches of international human resource management. The four
approaches are Ethnocentric, Polycentric, Regiocentric and Geocentric approach.
Ethnocentric approach- In this approach, operations of the home country and foreign country
are held by the headquartered personnel. For example, if Volvo in UK, expand their business
India. Then all the key management positions are to by held by the country nationals.
Polycentric approach- This approach is differed from the Ethnocentric approach. In this all the
key management positions are held by the home country (Khanna and Palepu, 2013). For
example, if mentioned company entering into the India, then the company will require nationals
form the India. As, the subsidiary are normally managed by the local nationals.
Regiocentric approach- This approach is for regionally orientated organization. On the basis of
the geographical regions, the division the operations are made in the multinational company. As
this allows the interaction between the executives transferred to regional areas (Wright, 2016).
Geocentric Approach- By using of the global approach, it makes a unique contribution with its
unique competence. As, this approach help the company to develop core competency by taking
the best talents (Sharp and Hartnett, 2016).
Recommending the most appropriate approach
The most appropriate approach which the mentioned company have to adopt in India is
Polycentric approach. The reason is, local people know, what is best for their country. To
manage the subsidiary, they hired host country nationals. To get the operation started they hand
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over the work to the host country that is India (Volvo. About us, 2016). This approach is
appropriate because this eliminates the language problems also avoids the adjustment problem
between the staff and their families. The need of training program related to the cultural
awareness also removes. If the mentioned company hire the staff from the India, then is cost
effective. As the employment of the host country nationals (Indian people) is less expensive
compared to the UK people. The another reason for recommending the Polycentric managing of
the local politics and administration will be easier for the mentioned company. Hence, the
Polycentric approach is appropriate to enter and manage the foreign market in India.
CONCLUSION
The aforementioned report is based on the Volvo company and this expainined the
different factors. It concludes that external factors have a great influence on the company's
decision making. Is also affects the performance and strategies of the company. This macro
environment has a great impact on the success of the company and on the marketing campaigns.
Furthermore, the analysis of the Pestle is done to identify and analyze the factors which have
influence on the Volvo's international marketing activities. In addition to this, this report
concludes that there are different methods of market entry but the most appropriate method for
market entry
by the Volvo’s in the India is Exporting method. Moreover, to manage the human resources in
different countries effectively, the mentioned company must evaluated the 4 approaches of
IHRM. The most appropriate approach which the mentioned company have to adopt in India is
Polycentric approach.
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international Economics. 94(1). pp.50-66.
Impullitti, G., Irarrazabal, A. A. and Opromolla, L. D., 2013. A theory of entry into and exit
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Kubacki, K. and et.al., 2015. A systematic review assessing the extent of social marketing
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