International Marketing Strategies of BAE Systems in Italy

Desklib provides solved assignments and past papers to help students succeed.

INTERNATIONAL
MARKETING
1

INTRODUCTION
International Marketing refers to that process where the need and wants of customers residing
across the national borders are satisfied through application of various marketing principles
(Kotler et al, 2017). In other words, it can be said that international marketing refers to
targeting the market and customers outside the geographical boundaries of domestic country
and selling the goods to such nations which have demand for them (Gomes et al, 2017).
According to Cateora and Graham, International marketing is a process or performance where
the objective of earning profit is achieved though the performance of business activities
designed to plan, price, promote and direct the flow of company’s goods and services to
consumers in more than one nation (Cateora et al, 2015).
This report is going to emphasize on the various strategic marketing activities which are
undertaken by various multinational companies in order to respond to the changes in the
customer behavior. The idea of international marketing not only provides a business to expand
and grow its business, but it also provides recognition to the company across the geographical
boundaries of the domestic country (Morschett et al, 2015). This report is going to evaluate the
possibilities of BAE systems into new market – Italy. This report uses various marketing
strategies and analytical tools such as PESTLE analysis, SWOT analysis, and Porter’s five forces
to evaluate and examine the International Marketing strategies of BAE systems outside the
geographical boundaries of UK.
BACKGROUND OF MULTINATIONAL ORGANIZATIONS
Some of the multinational organizations which are taken into consideration for the purpose of
this assignment are given below:
1. BAE Systems Plc.: BAE systems Plc. is a defence, security and aerospace company
situated in London, UK. It is one of the largest defence contractors in Europe. When two
aerospace companies namely, British Aerospace and Marconi Electronic Systems were
merged in 1999, ‘BAE systems Plc.’ was formed by this £7.7 billion merger. The major
2

markets for operations of BAE systems are the UK and the USA, while some other
markets include India, Australia and Saudi Arabia (Moir, 2019). The company plays a
significant role in the production of the military equipment, especially military aircraft
and is the leading supplier of cyber intelligence and security capabilities.
2. Rolls-Royce: It is a British Multinational company founded in 2011, which provides
engines for military aircrafts and has £8.9 billion market capital. It has 16000 military
engines in service along with 160 customers in 103 countries. The company aims at
providing a vital advantage to the customers and helping them to fulfill their missions
and reach home (Rolls Royce, 2019). In a recent report, it has been found that the
company employees around 21,000 people in the company (Rolls Royce, 2019).
3. QinetiQ: QinetiQ is a British Multinational company, which provides bomb-disposable
robots, intelligence technology and parts for warships, fighter planes and vehicles. It is
headquartered in Farnborough, Hampshire. The market capital of the company is £1.1
billion and it has more than 14,000 people employed in the company in UK (QinetiQ,
2019). It is dedicated to defend the sovereign capability, protecting lives and interests of
its customers.
L1
In order to expand and grow business beyond the geographical limits of the home country, it is
very essential for a company to analyze and research the market and macro-environment of the
country in which it has decided to expand business in. After analyzing and evaluating the
market conditions of the market and about the macro-environment of the country, the
company is needed to frame its plans and strategies accordingly. The macro-environment of a
country can be analyzed using PESTLE Analysis.
PESTLE ANALYSIS
The PESTLE analysis helps to analyze those political, social, economic, environmental, legal and
technological factors which may affect the marketing plans and strategies of a company in
order to achieve its goals and objectives.
3

 P (Political Factors)- Before commencing a business in any foreign country, it is very
essential to analyze the political conditions of that country. Every country has its own
policies and regulations within which every individual or a company is obliged to work.
Changes in taxation policies and fluctuations in the political status of a country also
affect the plans and strategies of a company, planning to expand its business
internationally. Italy is a democratic socialist republic, governed by a presidential form
of government (Motyčková and Richter, 2017). For example, BAE Systems can plan to
expand its business to a country like Italy, where the government provides several
business opportunities to the companies of UK like: Development of sustainable and
renewable energy; developing digital economy and also improving cyber security and
technology in government. Also, QinetiQ can also expand its business to such countries
which are prone to wars so as to provide them security and protection of their lives and
interests.
 E (Economic Factors)- Economic factors of a country affects the representation of the
product and how a customer gets attracted to it. Factors like inflation, employment rate,
GDP of the country, Demand for the products etc. are some factors that affect the
overall plans and strategies of the business (Moir, 2019). For example, BAE systems can
expand its business to countries where trade policy of the country is liberal and much
more convenient for imports and exports. On the other hand, companies like Rolls
Royce had to plan its business strategies according to the fluctuations in the foreign
exchange rates.
 S (Social Factors)- Social factors refers to factors like customer demand, their cultural
and religious beliefs, Gender roles, education levels and changes in the behavior of the
customer. For example, BAE systems need to understand and consider the demand of
the customers of Italy to provide them with its products and services. Furthermore,
QinetiQ can also provide its products to countries like Italy in order to provide it with
security and interests of the people.
 T (Technological factors)- Technological factors include innovative ideas and use of
technology to keep the customers and other stakeholders of the company educated.
4

This would help the companies like BAE systems with the latest innovations and
knowledge of the policies of competitors in the market. Also, Rolls Royce uses
innovative technology in manufacturing nuclear and hybrid technology (Barba et al,
2016).
 L (Legal Factors)- Legal factors means those factors to which a company needs to
comply with. These are the regulatory framework which regulates and control the
operation of business within the territorial boundaries of the country. For example, if
Rolls Royce, BAE systems and QinetiQ expand their business to USA or India, they have
to follow the legal framework and laws relating to import and exports or other relevant
laws to operate in the country and avoid any fines and penalties which will affect the
business adversely.
 E (Environmental Factors)- Along with the production of goods and services and
satisfying the needs and wants of the customers, it is the duty of these companies to
protect the environment and abide by their corporate social responsibility towards the
environment and other living creatures in its surroundings (Sridhar et al, 2016). No harm
to the environment shall be caused in order to produce the goods and services of these
companies.
PORTER’S FIVE FORCES
 Existing Competition: It refers to the existing rivalry among the competitors in the
market, which directly or indirectly affects the plans and strategies of a business.
Companies like BAE systems, QinetiQ and Rolls Royce have huge competitors in the
market and thus, the existing competition is a stronger force for the business strategies
and plans of these companies (Kampen et al, 2016).
 Threat of new entrants: BAE systems, Rolls Royce and QinetiQ do not usually have
threat of new entrants in the market. As the cost and amount of capital which is
required to be invested to establish a business in the market is very high, thus it makes
this factor a weaker one to affects the plans and strategies of the business.
 Power of buyers: The operations of BAE systems, QinetiQ and Rolls Royce are wide and
if these companies plan to expand their businesses internationally, the buyers would
5

have fewer options to choose from the other firms available. Thus, the power of buyers
to bring down the prices becomes a weaker force to affects the international marketing
plans and strategies of these companies.
 Power of suppliers: As the number of buyers that these companies have is
comparatively high, this makes the bargaining power of the suppliers a weaker force
and it would not affect the international marketing plans and strategies of these
companies to a great extent (Moir, 2019).
 Threat of substitutes: As there are only few substitutes which are available in the
market for the products produced by the companies like BAE systems, Rolls Royce and
QinetiQ, this forces becomes weaker and would not affect the international marketing
plans and strategies of the business as a whole.
MARKETING MIX
Marketing mix refers to those strategies and plans where a company focuses on the main key
points including product, price and promotion to attract the customers from various sources.
4 P’s
The 4 P of marketing refers to the following:
 Product: A company shall provide such products to its customers that satisfy their needs
and wants to a great extent. For example, BAE systems provide products for defence
and aerospace supports along with its cyber security services. Rolls Royce provides
luxurious cars while QinetiQ provides bomb-disposable robots and other auto parts of
warships and vehicles (Stead and Hastings, 2018).
 Pricing: Pricing refers to deciding and determining prices according to the market
situation and the willingness of the customers to spend their money. As BAE systems
and QinetiQ are expertise in producing defence and aerospace support and services, the
government would purchase them on the affordable prices and also Rolls Royce
provides luxurious cars to its clients of variety of range accessible to all customers
(Baker and Saren, 2016).
6

 Place: After deciding the product and its prices, the company needs to decide the place
in which it would operate. BAE systems, Rolls Royce and QinetiQ operate in a large area
and they may expand their business to other countries as well.
 Promotion: After deciding the place, the companies are required to promote their
products and services so that it could be recognized by the different customers in the
market.
STP STRTEGY
 Market Segmentation: Market segmentation refers to distributing different customers
into different segments to understand the needs and wants of the customers more
specifically. BAE systems has segmented its market to aerospace and defence security
products, while QinetiQ has segmented its market to bomb disposable robots and auto
parts of warships and other vehicles (Kozel et al, 2016).
 Market Targeting: Market Targeting refers to target a specific segment of the market to
provide more specific products and services to different segments of the company. The
target group of BAE systems and QinetiQ is the Government and their armies to provide
defense support to the governments. Rolls Royce target its elite client as well.
 Market Positioning: Finally, after segmentations and targeting, the final step is to
position the products orss services into the market. For example, BAE aims at providing
high quality defence services to its customers and helping them to fulfill their mission. It
also helps to provide cyber security to mission critical electronic systems. Rolls Royce
aims at providing luxurious cars while QinetiQ aims at providing capability generation
and assurance in challenging times.
CONCLUSION
To conclude, it can be said that to expand and grow a business outside the territorial limits of a
country, a business needs a proper strategy and plans to do international marketing. A
company has to do a deep research and analysis of political, social, legal, environmental and
economic factors to expand its business to other countries. A great research of market is
needed for segmentation, targeting and positioning of the products and services in the market.
7

After analyzing all these factors and using different analytical tools, it is thus clear that
international marketing involves proper research and analysis of market, in order to distribute
goods and services to other countries to expand and grow its business.
8

REFERENCES
1. Baker, M.J. and Saren, M. eds., 2016. Marketing theory: a student text. Sage.
2. Barba, F.C., Sanchez, G.M.D., Segui, B.S., Darabkhani, H.G. and Anthony, E.J., 2016. A
technical evaluation, performance analysis and risk assessment of multiple novel oxy-
turbine power cycles with complete CO2 capture. Journal of cleaner production, 133,
pp.971-985.
3. Cateora, P., c Gilly, M. and Graham, J.L., 2015. International Marketing. McGraw-Hill Higher
Education.
4. Gomes, E., Sousa, C., & Vendrell-Herrero, F. 2017. International marketing agility.
International Marketing Review.
5. Kotler, P. 2017. Philip Kotler: some of my adventures in marketing. Journal of Historical
Research in Marketing, 9(2), 203-208.
6. Kozel, R., Mikolas, M., Vilamova, S., Chuchrova, K. and Piecha, M., 2016. Porter’s Analysis as
a Standardized Process Applicable in Industrial Companies. Communications-Scientific
letters of the University of Zilina, 18(1), pp.79-84.
7. Moir, I., 2019. Military avionics systems. John Wiley & Sons.
8. Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international
management (pp. 978-3658078836). Springer.
9. Motyčková, M. and Richter, J., 2017, December. Research of Strategic Analysis Methods
Application in the Department of Defence. In European Conference on Management,
Leadership & Governance (pp. 602-604). Academic Conferences International Limited.
10. Rolls Royce, 2019. Online available at
https://www.rolls-roycemotorcars.com/en-GB/home.html last accessed on 16th April, 2019
11. Sridhar, R., Sachithanandam, V., Mageswaran, T., Purvaja, R., Ramesh, R., Senthil Vel, A. and
Thirunavukkarasu, E., 2016. A Political, Economic, Social, Technological, Legal and
Environmental (PESTLE) approach for assessment of coastal zone management practice in
India. International Review of Public Administration, 21(3), pp.216-232.
9

12. Stead, M. and Hastings, G., 2018. Advertising in the social marketing mix: getting the
balance right. In Social Marketing(pp. 29-43). Psychology Press.
13. van Kampen, T., van Fenema, P.C. and Faber, N., 2016. Strategic Defence Supply Chain
Security Management. In NL ARMS Netherlands Annual Review of Military Studies 2016(pp.
249-274). TMC Asser Press, The Hague.
10