IMA7001 Report: International Marketing of Luxury Cars in China & USA

This report assesses the international market potential for a luxury and classic car manufacturer, focusing on the USA and China. It begins with an introduction outlining the report's purpose, which is to guide the company's international market entry strategy. The report then applies PESTLE analysis to evaluate the political, economic, social, technological, legal, and environmental factors in both countries. The analysis identifies opportunities and threats related to market entry and the development of a successful marketing mix for luxury cars in each country. The report analyzes the macro environmental factors of the USA and China, providing insights on how they impact the automobile industry. Opportunities and threats for the luxury car manufacturer in both countries are presented, followed by a justification for the choice of country and a recommended market entry strategy. The report concludes by summarizing the findings and recommendations, providing a comprehensive overview of the international marketing considerations for the company. The report uses data from sources such as theglobaleconomy.com, and other academic sources to support its claims.

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International Marketing Management
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3/30/2020
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International Marketing Management 1
Contents
1. Introduction............................................................................................................................2
2. PESTLE analysis....................................................................................................................4
2.1 Macro environmental factors of USA..............................................................................5
2.2 Macro environmental factors of China............................................................................8
3. Marketing mix of luxury car manufacturer..........................................................................10
3.1 Opportunities and threat for china..................................................................................10
3.2 Opportunities and threat for USA..................................................................................12
4. Justified choice of country...................................................................................................14
4.1 Recommended market entry strategy.............................................................................16
5. Conclusion............................................................................................................................18
References................................................................................................................................19

International Marketing Management 2
1. Introduction
International marketing reflect various opportunities and challenges for an organisation as it
provide company an opportunity to enter into international market that is offering consumers
outside the domestic boundaries. However, this decision may not be as easy as it sounds
because there are various questions to be answered before entering into any international
boundaries. The purpose of the report is to consider wise selection for a company to enter
into international market. The option to consider for the company includes entering a Chinese
or USA market. The company is a manufacturer of classic and luxury cars, which reflect auto
mobile industry to be targeted by the company in USA or Chinese market. The report will
consider discussing various environmental factors that may impact the business decisions
pertaining to market entry. Therefore, the report will consider analysing critical
environmental factors for USA and China along with the identification of opportunities and
threats that the car manufacturer company would have while entering both the countries
(Adam & Kotler, 2014). Considering the analysis from various tools, justify his choice of
country will be considered and presented in the report below.
Other than this another major decision to be made by the company while entry into
international boundaries is mode of entry. The suitability of the entry mode is different for
every organisation; this would also be discussed further in the report. An automobile
manufacturer reflects designing, development, marketing, producing and sale of automobile
products. The investment in this industry is quite huge where as some of the major
competition is also identified in this industry like from Toyota, General Motors, Mercedes
Benz, Honda and many more car manufacturing companies that are leading in the industry.
Considering this high level of competition in the industry, the company needs to consider
appropriate marketing mix strategy pertaining to both the nations and various opportunities

International Marketing Management 3
and threats that the marketing mix strategies may face while entering into any of the two
nations (Baker & Bowen, 2015).

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2. PESTLE analysis
PESTLE analysis is one of the strategic planning to which reflect six major factors of the
macro environment which may help reducing threats for the business. Considering this tool to
analyse the entry mode for luxury car manufacturer it is considered that the micro
environment could easily be analysed using these six factors and help the organisation
towards the product launching, selecting the entry mode, and marketing mix strategies of the
company and factors to the success for the company. Some of the major benefits of using this
to include deeper understanding of business, identification of exploit opportunities and threats
alertness. The six factors include political, social, economic or, legal, environmental and
technological factors. Considering the six factors these are the key to better understanding
and analysis of environment of a nation. One of the major benefits is that it is cost effective to
which only reflect cost of time. These forces reflect monitoring macro environment till forces
which are impacting organisation performance. This will help the company to understand
which factors of alternator countries to enter are more beneficial or reflecting opportunity for
the company and the factors which may be threat to the company thus eventually help
organisation to select one country which is more beneficial or reflect more opportunity to
enter (Ho, 2014).
The political factor reflects the degree of government being intervene for a particular industry
this may reflect political stability, trade restrictions, tax policy and labour law which may
impact the business. They economic factors reflect the economy’s performance which made
reflect inflation rate, disposable income of consumers, interest-rate, exchange rates which are
directly impacting company’s financial condition. Social factors reflect the basic
demographic characteristics of the nation which reflect customs well, values, income
distribution, lifestyle and cultural barriers which are important to consider while preparing

International Marketing Management 5
marketing strategies in a particular nation. Similarly technological environmental and legal
factors will reflect companies opportunity to innovate, use of raw materials from the nation
and environmental offsets so as to better decide which country to enter considering the nature
of industry (Calboli, 2015).
2.1 Macro environmental factors of USA
Political factors
Considering the political factors of USA pertaining to the automobile industry it can be said
that law and regulations of the nation have been affecting this industry that is manufacturers
of automobile since outburst. The major laws and regulations are pertaining to environmental
issues as car manufacturer needs to consider air pollution caused by the fuel and mechanism
of the machine. Considering the political stability of the nation it has been identified that it is
second largest democracy across the globe where the elections are very transparent and fair.
This reflects politically strong nation which enjoy stable political climate which can be an
opportunity for the company to sustainably conduct business in the nation. However, one of
the drawbacks considering political factors are USA being faced international criticism the
reason being interventionist policies, which could act as a threat for the company
(theglobaleconomy, 2019).
Economic factors
USA being largest economy of the globe reflects a well-developed and systematic economic
system, which could act as an opportunity for the company to grow in this nation. The GDP
of the company is considered to be growing every year and the tremendous increase in GDP
reflects the increase in purchasing power for the consumers which reflect increased
expenditure in luxury by the consumers. This has been strained for manufacturing and
services industries. However, one of the drawback considering economic factors is the labour

International Marketing Management 6
rate that is the labour in this nation is not cheap and may increase the cost to the company
while conducting business in this nation, specifically when compare to China. This is being
one of the reasons that many organisations have been outsourcing their business activities
across the globe (theglobaleconomy, 2019).
Figure 1: (Source: (theglobaleconomy, 2019)
Social factors
USA is third populous nation across the globe with around 327.2 million populations as of
2018. Other than this it has been identified that the list of ageing population has increasing in
this nation which could be one of the major problem for supply of labour. However, the car
manufacturing company could gain advantage by offering classic cars that are more
comfortable and luxurious for the Increased ageing population. Other than this the social
factors reflect racial tension across the nation which could be one of the drawback
considering social factors of USA. Other than this people are very health-conscious which
reflect an opportunity for the company to include features like providing purified air. This
nation is much diversified which reflect various cultures integrating in one nation. Thus the

International Marketing Management 7
company need to consider all the cultural norms and ethics which could be one of the threats
for the company while conducting business in this nation (Craig & Douglas, 2015).
Technological factors
Considering the technological factors this can’t be the most exploited opportunity for the
company as technology and science is factors in which USA is being a global leader. The
company technological needs can easily be fulfilled across this nation which reflects
opportunity for the manufacturing car company to keep the product cost lower when it comes
to technological innovation and advances.
Legal factors
Considering the automobile sector legal factors are very strict and the legal environment of
USA is quite tough. One of the threats considering legal factor is increasing terrorism in the
nation which may act as worsening souring foreign relations for the nation. Some of the key
government regulations that may apt directly to the automobile sector include safety features
to be included while manufacturing, analysis of overall performance. Automobile regulations
are designed in a way to keep the environment protected, modern safety requirements,
designed to benefit consumers and may face Various strict penalties and fines if not abide By
the company. Therefore, legal factor could be a threat to the company if not abided strictly
(Greg, 2014).
Environmental factors
Environment is one of the major factors when it comes to automobile sector as this sector is
largely responsible for fuel emission, use of natural and nation resources. Other than this the
nation has faced some of the major tough weather conditions across the globe. For example in
2017 the loss has been suffered in the nation due to climate disaster which could be a threat

International Marketing Management 8
for the company. The company while entering into this nation must consider corporate social
responsibility that acknowledge this environmental safe products and reducing carbon
emission in the nation (Mühlbacher et al., 2016).
2.2 Macro environmental factors of China
Political factors
Considering the political framework for China it has been identified that dual leadership
system has been exercising along with the central people’s government. The aspects related
to political factors which can act as an opportunity for the company is association or
participation of nation in world trade organisation which reflect Inter county stability and
encourage the foreign country to invest in the nation. This may act as an opportune company
to enter into the market with ease and conduct business here. However, the company have
been considering various instability or issues pertaining to political environment like some
territorial dispute previously. Other than this Taiwan is one of the illustrated issues that the
company has faced which reflect people desire of Taiwan to create a link with mainland
China through direct transportation system in order to increase or extend Taiwanese
business. This may reflect risk for the business to be conducted in this region. Other than this
lack of openness in the political system is also an aspect which reflects area for concern that
is lack of political freedom which may act as a risk for car manufacturing company to enter
into the nation (theglobaleconomy, 2019).
Economic of factors
The statistics reflect that it is the second largest economy across the globe considering GDP.
The company has been investing in infrastructure and purchasing power is being increased in
the nation every year. The nation is able to maintain appropriate relation with various
powerful agreements like world trade and politics. Other than this the major challenges have

International Marketing Management 9
been faced by the company while considering economic development. This reflects a rapid
urbanisation, high inequality, environmental damages which are the major risk factors for a
Moto mobile company to enter into this nation as this may reflect in maintaining economic
sustainability. However, one of the opportunities reflected through economic factor of the
nation is cheap labour which is one of the major competitive advantages for the company
manufacturing is this nation (theglobaleconomy, 2019).
Figure 2: (Source: (theglobaleconomy, 2019)
Social factors
Population of China is maximum across the globe which reflects use of massive consumer
goods. It has been identified that the citizen of China are considering status symbol which
reflect purchase of latest smartphones, luxury cars and designer apparel. This reflects
opportunity for the company of auto mobile manufacturer to enter into this market. However,
there are some major social risks like ageing population (Balmer & Abratt, 2016).
Technological factors
The company have some of the biggest technological giants like Alibaba which has reflected
powerful technological advancement, innovation and entrepreneurship massiveness across

International Marketing Management 10
the nation. Other than this the company is aiming to become innovative driven nation
reflecting opportunity for the companies in technological sectors; this act as an opportunity
for car manufacturer, to enter into the nation.
Environmental factors
Considering the economic development of the nation, the natural environment is evenly been
harmed. Some of the major issues identified a climate change, deforestation, air pollution,
water pollution, biodiversity loss and industrial waste. Considering these challenges faced by
the nation today, this can be risk to the company to maintain environmental protection and
responsible for the level of fuel consumption and carbon emission.
Legal factors
Legal factors that could impact business of car manufacturers include labour standards,
employee benefits, labour disputes which are generally regulated by PRC labour contract law
2007 and other regulations. Moreover the foreign direct investment have been categorised in
the nation based on permitted, prohibited, encourage and restricted, where the company is
increasing agricultural machines manufacturers. It can be said that the legal factors or legal
regulation of China could be risk for the company as the company is implementing additional
taxes for foreign goods in order to keep it in control and regulation. There is some power of
organisations in order to protect consumers like consumer Association of China which could
also act as threat for the company while entering into the nation (Cabral & Mathiason, 2015).

International Marketing Management 11
3. Marketing mix of luxury car manufacturer
3.1 Opportunities and threat for china
From the analysis the key opportunities for entering into China include low labour cost, high
technological advancement, trading relations with other nations, and increasing GDP.
However, some of the threats that have been identified for China include political threat due
to disagreement or disparity with USA, environmental threat due to increasing air pollution in
and biodiversity loss. Other than this income inequality is one of the major cause which
reflect large population of labour and reflect threat for luxury car manufacturer (He, 2017).
Considering these opportunities and threats the marketing mix relevant for Chinese market by
car manufacturer includes
Product strategy, as per this strategy the company product features will be focusing towards
technological advancement. The reason being Chinese market is always looking for advanced
technology and latest technology as part of new product. Therefore, this aspect needs to be
considered while designing the car model for the Chinese market. Other than this the
company must consider manufacturing unit development in this nation due to low labour
income, which reflects lowering the cost of the product while manufacturing.
Pricing strategy, considering the threat of income inequality the company must consider price
differentiation strategy while targeting the upper middle and upper class. It has been
identified that the GDP of the nation has been increasing rapidly However, the in income
inequality and increase in labour class reflect that the company must consider the strategy of
pricing differentiation. This reflects offering different prices for different products. Therefore,
the company may consider offering Variants of a model which may initiate with lower price
towards the higher price for the increase in luxury elements in the car (Chu & Liu, 2017).