International Marketing Management: A Case Study of Rolls-Royce
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This report assesses the global expansion of Rolls-Royce, a British car manufacturing company, using various frameworks and models. It includes a critical evaluation of models such as PESTLE analysis, Porter's Five Forces analysis, CAGE model, OLI framework, and Hofstede's model of international culture.
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International Marketing Management
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Table of Contents Executive Summary.........................................................................................................................3 INTRODUCTION...........................................................................................................................4 Overview of the organisation...........................................................................................................4 Critical Evaluation of Models..........................................................................................................4 PESTLE Analysis.......................................................................................................................4 Porter's Five Forces Analysis......................................................................................................6 CAGE Model..............................................................................................................................6 OLI Framework- Market entry...................................................................................................7 Hofstede's model of international culture...................................................................................9 Justification of models to be used.............................................................................................10 PESTLE Analysis of Rolls Royce in Australia..............................................................................10 PESTEL Analysis of Rolls-Royce in Canada................................................................................12 Hofstede's Cultural dimension- A comparison..............................................................................13 Cage model....................................................................................................................................15 Marketing mix analysis- Country comparisons.............................................................................16 Justification of choice of country...................................................................................................17 Mode of entry strategies.................................................................................................................18 CONCLUSION..............................................................................................................................18 REFERENCES..............................................................................................................................19
Executive Summary The mentioned report was aimed at global expansion of respective business organisation i.e., Rolls-Royce (A British Car manufacturing company). For instance, it was comprised of various frameworks and models in order to accomplish the standards and goals of completion of this particular report assessment. The entire assessment was basically aimed at international expansion of company in Canada and Australia.
INTRODUCTION InternationalMarketingManagementisdeterminedasprocessofcarryingout multinationalmarketingpracticesindifferenteconomicnations.For instance,it includes development of strategic plan and further execution of plan including strategies for promotion, pricing, and supplying products in order to fulfil consumer demands. There are various elements involves in essential process of international marketing management including research, product localisation, communication, inbound & outbound marketing, etc. Within this report, Rolls Royce is a UK-based organisation that is taken into consideration for demonstrating different aspects of this report(Akter and et.al., 2021).This report assessment will be comprised of significant and insightful information and knowledge regarding International marketing with context of Rolls Royce. Furthermore, it will further highlight risk factors as well as opportunities associated with respective organisation in carrying out international marketing practices for growth and expansion. Overview of the organisation Rolls Royce Motor Cars Limitedis UK based auto-mobile manufacturer engaged in manufacturing of luxury motor cars. Moreover, respective business organisation was established in the year 1904, and has been headquartered in Westhampnett, United Kingdom. The company operates worldwide by providing customers of richer section of society as motor cars offered by respective organisation are quite costly as compared to other competitors in the market. The respective organisation is functioning for the purpose of developing administrative as well as production facilities that are opened in the year 2003(Baack, Czarnecka and Baack, 2018). After this year, the company has expanded its product range in order to involve two-door coupe, extended wheelbase along with the convertible versions of Phantom Sedan and smaller ghost four-door sedan, Dawn Convertible, Wraith two-door coupe as well as Cullian SUV. Critical Evaluation of Models PESTLE Analysis It is a tool that is used to analyse the impact of macro-environmental factors that are influencing the functioning of an industry. This tool helps the managers of Rolls-Royce in taking strategic decisions and building remedies for the strategic management of the company. The Pestle Analysis of Rolls-Royce is given as under:
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ď‚·Political factors:UK Union has strong stability and has less trade restrictions because of this it provides opportunities for firm like Rolls Royce to trade freely at global level. It brings positive impact on company as the organisation can expand it business throughout the world. But impact of pandemic situation in the year 2019 has highly influenced the performance of company as government of country has made various guidelines such as social distancing, etc(Cantoni and et.al., 2019). This has resulted in declining the sales of company as thereby its profitability and efficiency too. ď‚·Economic factors:Economy of UK is globalised and market oriented which brings positive impact on company such as Rolls Royce. It helps in encouraging business worldwide which increasessales volume as well as profitabilityof the company. However, impact of pandemic situation of COVID-19 such as economic lockdown has greatly influenced the business operations due to which, the company has suffered loss and negatively impacted. ď‚·Social factors:Social market of UK is well developed along with fair as well as strong society. Rolls Royce is a status icon and a brand which is popular across the world by making positive impact on society. The company is producing the cars by knowing and understandingtheperceptionsofitsmarketshare.Itpositivelyimpactsbusiness operations of company as the sales of organisation will get increase through capturing a large number of customer-base. ď‚·Technological factors:UK has upgraded technological sector which impacts positively on ventures like Rolls Royce as the company is using latest technologies that facilitates it in saving the cost and time of the overall business. It brings favourable influence on organisation and enhance its productivity and profit margins within the business. ď‚·Legal factors:UK authority has legislations like Health and Safety at Work Act, 1974, Employment Rights Act 1996, Equality Act 2010(Cateora and et.al., 2020).Rolls Royce follows legislations to work ethically which ultimately brings good impact on it. ď‚·Environmental factors:UK environment is pleasant and has temperate climate and Rolls Royce introduced electric vehicles to reduce pollution level which positively impacts company's performance as it will attract a large number of customers within the market place.
Porter's Five Forces Analysis ThemodelofPorter'sFiveForceswillhelpcompanyinanalysingthelevelof competition within the industry through examining surplus potentiality of industry and therefore its attractiveness. There are five forces within this model and all these forces are discussed as below: ď‚·Competition in existing market:This force helps the company in determining the level of competition within the industry of automobiles. Therefore, there is ahighthreat for the organisation as market share can switch to another competitors who is offering the same products at lower cost in comparison to first company. ď‚·Threats of new entrant:The political system of UK has made certain barriers and regulations within automobile industry for new entrants. There is a requirement of license in order to enter into the markets of respective industry. Hence, there is alowthreat of new entrants for company because a large amount is required to enter into the industry. ď‚·Bargaining power of suppliers: There are a large number of suppliers in automobile industry so if a supplier charge high prices then the respective company has an option of switching to the another supplier who offers same raw material at lower cost than others. So there is alowthreat of bargaining power of suppliers for company. ď‚·Bargaining power of buyers:Buyers are large in number who are demanding modified and innovative cars having unique features at low rates. Though, the company has maintained customer loyalty but its market share can switch to other competitors who are offering identical products at less cost than respective company(Czinkota and et.al., 2021).Hence, there is amoderatethreat of bargaining power of buyers for company. ď‚·Threats of substitutes:When the price of substitute car products is more than the company, then the customers will not switch to other company as the organisation will offer products at less cost with same benefits. Thus, there is a low threat of substitutes for business. CAGE Model This is a model that helps an organisation in making comparison of a possible target market to the home market of a company on the basis of certain dimensions such as culture, administration, geography and economy(Farrell, 2020). Rolls-Royce use this model because it gives insights to company in key differences between target and home markets and permit the
organisation in assessing desirability of that market. The Cage Model of Rolls-Royce is given as under: Cultural distanceAdministrative distance Geographic distanceEconomic distance Different languagesAbsence of colonial tiesPhysical remotenessDifferenceinincome of consumers. Different ethnicitiesAbsenceofshared politicalormonetary association Lackofacommon border Differences in cost and qualityofnatural resources,financial resources,human resources, information technology and many more.Adiverse workforce will capture asimilarcrowdinto RollsRoycehence processofrecruiting newpeoplewhile managingdiversity ratiowillbemuch easy. Different religionsPolitical hostilityLackofseaorriver access Differentsocial norms Governmentpolicies will help Rolls Royce in enhancingitsbusiness intointernational markets. Size of country
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OLI Framework- Market entry OLI stands for Ownership, Location as well as Internationalisation and as per the OLI framework,Rolls-Royceisrequiredallthethreeadvantagesofownership,locationand internationalisation in order to get successfully engaged in the Foreign Direct Investment (FDI). The respective organisation should develop a different strategy of the market entry in case id one or more these advantages are lacked(HĂĽttner, 2018). It is a three-tier evaluation model that can be used by the managers of Rolls-Royce at the time of attempting to ascertain whether it is beneficial to pursue FDI or not. The OLI framework of Rolls-Royce is given as below:
part in activities and adopt relevant cultures within the international country that are advantageous for organisation and workers. ď‚·Uncertainty avoidance index:It shows uncertaintyor ambiguity and is used by organisation for operating its business in international markets.In context of Rolls- Royce, there is low index level of the employees that shows intense tolerance as well as acceptance of uncertainty. ď‚·Masculinity versus femininity:Such kind of culture is concerned with femininity as well as masculinity and is used by Rolls-Royce for developing its performance(Lu, Scholz and Nguyen, 2018). Within the company, masculinity is followed by managers of the organisation that can help in enhancing the business performance and concentrates on wealth-building and material achievements. ď‚·Pragmatics versus normative:Within Rolls-Royce, pragmatic approach is preferred by the management of the company in order to concentrate on future and includes delaying success of short-term for meeting success of long-term.This puts focus on perseverance, persistence as well as growth for lomg-term. ď‚·Restraint versus indulgence:In context to Rolls-Royce, the culture of indulgenceis followed by the administrators of the company in which it indicates that the society permits comparatively free satisfaction in relation to enjoy life as well as have fun. Justification of models to be used From above explanation of the different models, it is justified that the managers of Rolls- Royce are required to develop and frame effective business strategies for improving the performance of the organisation. The company should consider political, economic, social, technological, legal as well as environmental factors at the time of operating its business for understanding wider market in which it is operating. In relation to Porter's Five Forces model, it is justified that the company can gain competitive advantages through analysing the level of competition within the industry and making strategic decisions. From the CAGE model, it can be justified that the managers of Rolls-Royce are required to analyse cultural, administrative, geographical as well as economic factors for comparing its own market functions with the marketing functions of foreign organisations(Mansour, 2021). In context to Hofstede's cultural dimensions, it is also justified that the company can easily understand the differences in the culture of different nations and their impact on the business performance. Overall, it can be
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justified that the company can effectively operate its business in international markets through developing effective business strategies and working in an ethical environment. PESTLE Analysis of Rolls Royce in Australia ď‚·Political Factors:The essential factor of political stability plays a crucial role in influencing or affecting operations and activities carried out by business organisations. For instance, Parliamentary democracy regulated in Australia facilitates in providing respective economic nation with Political stability(Nes, 2018). In addition to that, business organisations always look out for economic nations with political stability as it facilitatesinstablebusinessenvironmentaswellaseliminatinguncertaintyin environment. ď‚·Economic Factors:The respective economic nation has been facing a downfall in economic growth by 7% in the quarter of June 2020(Reserve Bank of Australia, 2022). For instance, arise of these situations have been resulted in a barrier to crossings of international border. The recent rise of this conflict could contribute negative values towards economy with degradation of existing scenario. Therefore, this factor or aspect could lead to negative impact upon operations and activities carried out by respective business organisation. ď‚·Social Factors:As the luxury motor cars offered by respective organisation are very expensive, target customer base of Rolls-Royce is richer and wealthy section of people in society. For instance, preferences and behaviour of customers in society is inclining towards fulfilment of social status with purchase of luxurious and expensive products and services. Moreover, this factor of increasing preferences of people towards purchase of expensive products will result beneficial for respective business organisation in attracting their target customer base. ď‚·TechnologicalFactors:ThetechnologicalenvironmentwithinAustraliaishighly upgraded and developed which will help the managers of Rolls-Royce in performing its businessoperationswithinthecountry.Asthecompanyisalreadyusinglatest technologies and machines in order to conduct business transactions, it will bring positive impact on the organisation. ď‚·Legal Factors:Within Australia, the legislative system of the country has framed The Competitionand Consumer Act 2010 which is a nationallawthat facilitatesthe
businesses in regulating fair trading process within the country(Oyewole, 2018).Rolls- Royce must have to consider and adhere this law in order to operate its business functions in an ethical way. This will enhance the brand image of the company within the country and will also increase its productivity and efficiency. ď‚·Environmental Factors:The major environmental law that is framed by the government of Australia is The Environment Protection and Biodiversity Conservation Act 1999. When Rolls-Royce will operate its business in Australia then it has to follow this environment law as it will help the company in protecting the environment of the country through developing the electrical vehicles that emit less pollution to the environment. PESTEL Analysis of Rolls-Royce in Canada ď‚·Political Factors:The respective economic nation has been considered among least corrupted economic nations in the world(Ozturkcan, 2019). For instance, according to a survey of World population Canada has been ranked 12 for least corrupt countries which is quite a higher rank among total of 180 countries. This positive aspect of respective economic nation will facilitate respective organisation in carrying out their business operations without any unethical practices due to corruption.Furthermore, with low corruption rate in respective country, Rolls-Royce will be able to attain efficiency as well as minimising cost incurred in carrying out operations and activities (Least Corrupt Countries 2022, 2022). ď‚·Economic Factors:In order to expand business units in another economic nation, it incurs huge cost which is needed to be raised from that particular economic nation. For instance, financial markets in Canada are highly efficient which results in a positive aspect for respective organisation to look out for further expansion of business unit. In addition to that, Financial market of respective country is determined one of the largest contributor towards GDP of Canada(Sangra, 2020). Furthermore, efficient financial market in respective country will facilitate Rolls-Royce in upright accumulation as well as allocation of funds. ď‚·Social Factors:The level of education among people in an economic nation is an important factor of macro environment which impact upon operations and activities of a business organisation. Referring to OECD, Canada is among most educated economic nations with maximum educated population. In addition to that, this aspect will result in
being a positive aspect for Rolls-Royce to expand in an economic nation with high education level (Most Educated Countries 2022, 2022). ď‚·Technological Factors:There is a huge significance of technology in an economic nation. For instance, Technology has been considered as one of the fastest growing sectors in Canada especially in the field of education, occupation and profession, leisure, etc(Sapouna and et.al., 2018). In addition to that, occupation and professions engaged in technology sector are facilitate with higher paid job opportunities. Business organisations all around the world look out for Canada as most suitable economy in order to boost their businesses. Therefore, this sector will result in being beneficial towards respective organisation. ď‚·Environmental Factors:Within Canada, the environmental policies have been set in such a way that there is a reduction target in the carbon emission of 30% by the year 2030. Therefore, when Rolls-Royce will operate its business in the markets of Canada, then it has to follow the environmental policies of the country which can enhance its business performance. ď‚·Legal Factors:The legislative system within Canada has framed various laws and legislations such as Canadian Human Rights Act, Constitution Act 1867, employment laws and many more. The managers of Rolls-Royce must adhere these laws within the country while performing its business operations and work in an ethical environment that will bring positive impact on the company(Shemyatikhina, Shipitsyna and Usheva, 2020). Hofstede's Cultural dimension- A comparison
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Cultural dimensionsAustraliaCanada Power distance indexThe power distance index within Australia is relatively low with an index of 36 compared to the world average of 55. It shows higher equality between levels of society such as government, organisations and many more. The power distance index of Canada is 39 which is higher than the power distance index ofAustraliaandshowsthat there is high level of inequality between the levels of society incomparisontothepower distance index of Australia. Individualism vs collectivismAustralia with a score of 90 on such type of cultural dimension showhighlyindividualism which converts into a loosely- knitsocietyinwhichthe expectationisthatthepeople look after themselves. On the basis of this cultural dimension,Canadais generally following the culture ofindividualismyetitalso concentratesandvaluethe contributionofeveryoneto their community. Masculinity vs femininityAustraliaisfollowingthe culture of masculinity as men are expected to be competitive, assertive as well as concentrated on success of material. As per thisculturaldimension, Australia has scored 61 on such dimension . Canadaisfollowingthe cultureoffeminismasit believes that women as well as girls are having the ability in order to meet the real change inrespectofpeaceand sustainable development.
Uncertainty avoidance indexThe country has scored 27 on thescaleofUncertainty Avoidance and implies that the people of Australia do not like the concept of uncertainty and want stability for members. Thecountryhasscored48 which is high in comparison to Australia and implies that the people of Canada are receptive oftheinnovativeandnew ideas. Restraints vs IndulgenceWith an score of 71 on the basis of this dimension, the culture of Australia is indulgence in which there is relatively weak control. With an score of 68 on the basisofthisdimesion,the cultureofCanadaisalso classified as indulgence. Short-termorientationvs Long-term orientation The culture of Australia as per this dimension is at 30% which is just below half the level at 44% as compared to rest of the world which depicts that long- term orientation is at low level withinthecountryandleans moretowardstheshort-term orientationinwhich concentration is on near future includingachievingshort-term successandputsastronger focus on present than future and on quick outcomes as well as respect for tradition. The culture of Canada as per this dimension is at 23% which is less than Australia and is followinglong-term orientationwhichshows society's belief in the process of achieving its objectives as wellastendstoreflectan appreciation for the traditions of the culture. Cage model Components and country CulturalAdministrativeGeographicalEconomic AustraliaPrimarilyaTheAustraliaisEconomy of country
westernculture whichis originally derivedfrom Britain but also influencedby cultural input of Aboriginal, TorresStraight Islander as well as other people ofAustralia. Thereisno official languageof Australiabut thesocietyof Australia values theEnglish language. administrationor the government of Australiaisrun bytheHeadof Stateaswellas Governor- General.Itisa constitutional monarchywith TheQueenas Soverign. consideredasa comparablyflat continentalong withlowelevation highlandsthat involvestheGreat DividingRange alongitsEastern Coast. The intrinsic outbackhas deficiencyin precipitationand has a large number of deserts. is dominated by its service sector. It is a wealthynationand hasmarket-based economyhaving relatively high GDP as well as per capita income. CanadaMixtureof British,French andAmerican influenceswith twoofficial languages Englishand French(Canada CulturalLife, 2022). Thegovernment of Canada is run byTheRight Honourable Prime Minister.The countryisa constitutional monarchyand involves executive, legislative, quasi- Canadahasthe longestcoastline withintheworld anditsfeatures includealarge numberofrivers, clack-bluelacks, majesticwestern mountains, forested eastern valleys and rollingcentral Theeconomyof Canadaconsistsof mining, eal estate as wellas manufacturing.The country's economy is consideredasa home to some of the largestmining organisationswithin theuniverse.The
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judicial as well as judicialfunctions at all three levels ofthe administrationof Canada. plains.greatportionofits GDPcomesfrom internationaltrade along with its largest trading partners such asChina,U.Kand U.S(GlobalTrade Guide Guide, 2022). Marketing mix analysis- Country comparisons Marketing mix is a set of tactics or activities that are carried out by a company in order to promote its brand or product and service within the market place. The marketing mix analysis of Rolls-Royce is given as below comparing two countries: Marketing mix elementAustraliaCanada ProductWithin Australia, Rolls-Royce is selling car products such as Silver Ghost,SilverSeraph,Corniche, Cullinan,Phantom,SilverSpur, Ghost, Wraith and many more. Within Canada, the company is selling car products such as CullinanSUV,Lamborghini Urus SUV and many others. PriceThe company should consider the pricingfactorssuchascosts, customers, competitors and profit. Thehigh-premiumpricing strategyisalsofollowedby Rolls-Royce in Canada too but itislessexpensiveinthis countryascomparisonto Australia. PlaceSydney is number one with 4000 andMelbourneissecondwith 3000(AustraliaTopChoicefor Wealthy 2022). Within Canada, the company is employing over 1000 people throughout the six provinces. PromotionThecompanyisusingawideThe company is using word-
number of promotional strategies suchassocialmedia,websites, onlineandofflineadvertising, digital marketing, etc. in order to promote its products to capture a large number of customers. of-mouth promotional sgrategy asaprimarystrategyfor promoting its car products to thepeopleofthecountry through describing its special and unique features as well as advantages to the public. Justification of choice of country From above discussion, it can be justified that Rolls-Royce can choose Canada as a country in order to take entry into international markets so that it can enhance its business operations. Canada as a country is selected because it is has highly upgraded technological environment in comparison to Australia in which the company can enhance its profitability and productivity level through saving the cost as well as time of the business(Zeneli, Czinkota and Knight, 2018). Another main reason behind choosing this country is that it is considered as one of the largest Automotive manufacturing within the industrial sector and is contributing 10% of manufacturing GDP along with 23% of manufacturing trade(Australia's automotive industry, 2022). Canada is presently the thirteenth largest auto-producing nation within the world as well as seventh largest auto exporter by value and is producing 1.4million vehicles and exports $32billion worth of vehicles in the year 2020(Canadian automotive industry, 2022). The automobile industry is a vital to the economy of Canada and this industrial sector is a key driver for the economy of Canada that is contributing crucially high values. Therefore, Canada is chosen as a country to take entry into international markets. Mode of entry strategies ď‚·Exporting:It is marketing as well as direct sale of domestically produced products and services within another country. It does not require that goods to be produced in target country and no investment in foreign production facility is needed. ď‚·Licensing:It is the fast way to enter into international markets through taking only restricted legal and financial risks that might consider agreements of licensing with
international companies. It allows an international company for selling its products of licensor or to use its intellectual property in exchange for royalty fees. ď‚·Foreign Direct Investment:It involves direct ownership of facilities in the target country and hence transfer of resourcesconsist of technology,capitalaswellas personnel.EntrythroughFDIcaneithertakeformofacquisitionsofexisting organisations or through establishing a new plant. CONCLUSION From above explanation of report, it has been concluded that primary and major importance of International marketing lies in expansion of target market, boosting brand reputation, building up connection with global business environment. In this report, pestle analysis of UK, Australia and Canada has been conducted to analyse impact of macro- environmental factors influencing business performance. Other models such as Porter's five forces, Cage model, OLI model, etc. have also been performed.Foreign direct investment has been considered as an effective entry mode that will help the company in enhancing its business and its performance.
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