IMA7001: Evaluating US & China for Luxury Car International Marketing

This report provides an in-depth analysis of the US and China markets for a luxury car manufacturer, Subaru, aiming to launch its new Subaru WRX 2022 model internationally. It uses Porter's Five Forces to assess market dynamics, including the bargaining power of suppliers and buyers, industry rivalry, the threat of new entrants and substitutes. The report also employs PESTLE analysis to evaluate macro-environmental risk factors such as political, economic, social, technological, legal, and environmental elements in both countries. Challenges and issues related to implementing an effective marketing mix are identified, and justifications and recommendations are provided for the optimal market entry strategy, considering the unique characteristics of each market. The report concludes with a strategic recommendation on which country the company should select for its expansion, based on a comprehensive assessment of market potential and associated risks.

International business

Table of Contents
Introduction .....................................................................................................................................3
Main body........................................................................................................................................3
Analysis of markets of US and China for the expansion..........................................................3
Analyse the macro environmental risk factors of any industry ...............................................6
Challenges and issues faced by the company in implementing marketing mix.......................8
Justification and recommendation............................................................................................9
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

Introduction
The segment of Luxury cars are highly dynamic and it is important for the companies to
make sure that they are coping with their continuous changes accordingly. Their is a lot of
challenges on the luxury and classic cars segment and it is important for the companies to make
sure that they are keeping all the challenges in mind and working accordingly (Amaeshi and et.
al., 2018.). The recent pandemic of COVID19 has majorly and severely impacted the cars
segment and the companies have secured high losses in this time. The companies are now
coming back in the market with better and more innovative ideas which can definitely help the
companies in capturing the markets again. In context to Subaru, the company is going to launch a
new product in the market which is Subaru WRX 2022. the company was incorporated in the
year 1953 by Kenji Kita and Chikuhei Nakajima. The company is headquartered in Japan and is
an automobile manufacturing division of Japanese conglomeration Subaru corporation. The
company is the twenty first largest automakers in production worldwide by 2017. The company
is looking for the potential markets for the new product of the company. In this report, analysis
of the markets of China and USA are given which can help the company in determining the entry
barriers as well as about the competition in the market. In this report, the macro environmental
risk factors that can affect the management of the company are also given as well as the
problems or the issues that the company might face are also given.
Main body
Analysis of markets of US and China for the expansion.
In order to do expansion it is important for the companies to make sure that they have
analyzed all the market challenges and benefits. The expansion of the company requires lot of
attention to details and it is important for the companies to do so as expansion methods includes
high costs and risk (Kumar and et. al., 2020.). If the expansion plan of a company fails the
company the have to bear huge losses and the reputation of the company also get ruined. In order
to have the right expansion plan it is important for the company to plan its expansion clearly and
carefully so that their is no last minute problems. In context to the above mentioned company an
analysis with the help of Porter’s five forces model is given below:

Bargaining power of suppliers: In order to manufacture their product it is important for
the company to analyse the suppliers before entering into any new market. Supplier’s plays a
major role in providing raw material and other resources to the company. If the suppliers in the
market in which the company wants to enter is less in numbers then it is a disadvantage for the
company as there is going to be high prices and high competition (Kurzer, P., 2019.). Powerful
suppliers plays a major role as they squeeze majority of the profits from the market. In context to
the above mentioned company , it is important to analyse the power of the substitutes. The
substitutes have high switching costs which is why it is important for the company to analyse the
ability of substitutes .
Bargaining power of buyers: It refers to the ability Of the buyers the to pressurize the
firm as It is directly related to the price sensitivity in the market. The bargaining power of buyers
depends highly on the price off the product of company. The bargaining power off the buyers are
high if large number of substitutes all alternatives are present in the market and low if the
customer have few choices and low alternatives (Jackson, G. and Deeg, R., 2019.). In context to
the above mentioned company it is important for the company to make sure that they have a
good reputation in the market . Loyal customer base also plays a major role in this factor. The
switching cost also plays an important role as if the customers are having low switching cost then
they are likely to change their preference and jump onto another product or brand .
Industry Rivalry: It is an important factor which must be taken into consideration by the
company. In order to make sure that the company is having a competitive advantage in the
market it is important for the company to analyse the market segment of country first. The
factors that are needed to be taken into consideration by the company must be according to the
competitive rivalry that the company is having in the particular industry. In case of the above
mentioned company the factors that are needed to be taken into consideration by the company
are firstly, the number of diversity that the competitors have which means that the company must
analyse what are the products that the competitors are offering in the market segment (Efrat, K.
and Asseraf, Y., 2019.). Secondly it is important for the company to analyse the price band in
which the competitors re working as the markets are highly price sensitive. After the pandemic
of COVID19, it has become essential for the companies to make sure that the competitor Are not
having any competitors advantage in the market. In this segment the product quality which the
competitors are offering also plays a major role. As it is a major investment for most of the

consumers it is likely going to compare the products cost and based on the quality they prefer as
well as the prices that they prefer they are going to make investment.
Threats of new entrants: It is important for the companies to make sure that they have
analyzed this factors of expansion as the new entrants of the industry have the desire to capture
the market segment of the industry and they capture some of the market segment whether the
company fails or succeed. It is important for the new companies that are looking for expansion to
make sure that their is adequate amount of entry barriers but not so much that they could not
fulfill (Hurtado-Torres and et. al., 2018.). In context to the above mentioned company, it is
important for the brand to take some of the factors under consideration before entering into any
new market which is first, time and cost that the company have to invest in order to launch a new
product in the market. It refers to the initial investment that the company have to make and
which does not have a guarantee of return. The second factors that the company must take into
consideration is technology and knowledge. It is important for the company to analyse the
prevailing technology in the market or the technology that the competitors posses so that they
can have competitors advantage in the market.
Threats of substitutes: This factors helps the company in determining the substitutes
that are available in the market and the performance of the substitutes. Before entering into any
new market it is important for the company to make sure that the market does not posses a large
amount of substitutes already as it can affect the market segment of the company. The substitute
sometimes can cause a major harm to the market segment of the company as they possess the
same or alike features that the product of the company have. In case of the above mentioned
company, it is important for the company to first analyse the price band in which the substitutes
of the product of company are dealing (Wentrup and et. al., 2019.). If the substitute projects are
at much lower cost then it is not good for the company to enter the market as the market are
highly price sensitive and people prefer to buy low quality goods in comparison with quality
goods. Another factor that the company must take into consideration is that the performance of
the substitute in the market. If the performance is below average then it could be an advantage
for the company as people will be looking for goods that can provide them value for their money.

Analyse the macro environmental risk factors of any industry
The pestle analysis framework help company in analysing the external environmental
factors that can affect the workings of the company.It is essential for the company to analyse the
external environmental factors of the industry all the country in which the company is going to
enter . There are six factors that can affect the workings of the company . In context to the
company the six factors are given below:
Political factors: These are the factors that help the company in determining the degree
up to which the government can intervene in to the free market of the industry in which the
company is going to enter (Lundan, S.M. and Li, J., 2019.). It includes political stability,
government policies, foreign trade, government instability in the overseas market, tax policies,
etc. It is important for the company to make sure that they are entering in to the market which is
stable so that the workings of the company does not get interrupted. In case of USA, the
government and the political factors of the country are quite stable but in case of China, it can
cause some stress to the company as China support domestic companies more.
Economic factors: These are the factors that determines the economic performance of a
country. It is important for the companies to make sure that the economic performance of the
countries are good so that the company do not have to face economical issues. It includes
economic growth of the country, interest rates, exchange rates, disposable income of businesses
as well as consumers, inflation, etc. In context to the company, both the markets of USA and
China are quite good in their economic performance and are providing good opportunities to the
companies as well.
Social factors: These are the factors that are related to the society in which the company
is operating. It is important for the company to make sure that they are working according to the
rules and norms of the country or society in which they are operating. It includes age, income
distribution, wealth distribution, geographical demographics, etc ( Vahlne and Johanson., 2020.).
In case of the company, it is important for the company to make sure that they are working
according to the taste and preferences of the country in which they are operating. According to
the society of USA, the people prefer to buy cars according to the comfort and the quality that
the cars are offering where as people in China buy cars in order to show off or as a status symbol
so they prefer the design and style of the cars rather than comfort.

Technological factors: it refers to the factor that tells the company about the upgraded
version of the technology that is prevailing in the market. It is important for the company to
make sure that they have more upgraded version or innovative technology so that they can get
competitors advantage in the market. Technological factors plays a major role in capturing the
market as on the basis of this factor the company can capture the market. In case of the company,
as the company is dealing in cars, it is important for the company to make sure that they are
providing latest technology to the market as luxury cars are high priced cars and if the company
is not delivering something valuable or new to the customers, they are not returning the value
that the customer wants or for which they are paying such high prices. In case of the market, both
the markets are containing high level of upgraded technology and the company needs to invest
huge cost if they want to have competitors advantage in the market.
Environmental factors: These are the factors that tells the company about the
responsibility that they have towards environment. It is important for the companies to make sure
that they are not providing any harm to the environment. Nowadays governments are also
providing measures and policies that the companies have to follow in order to work. These are
the policies that helps the companies in becoming eco-friendly and also allow them to work
without providing any harm to the environment (Arregle and et. al., 2019.). In case of the
company, it is important for the company to make sure that they are taking appropriate measures
as the people of USA are highly concerned about the environment and China is one of the most
populated country in the world which is the reason why the company must make sure that they
are not providing any harm to the environment and are fulfilling their part of responsibility.
Legal factors: These are the factors that determines the different rules and regulations
that are prevailing in a country. It is important for the company to make sure that the company is
following all the rules and regulations of the country in which they are operating as these rules
and regulations are imposed by the government and if the company does not comply to these
rules and regulations then they have to pay high penalties or may have to submit their licence of
trading to the government back. In case of the company, it is important for the company to make
sure that they are following all the rules and regulations of both the countries as they are very
particular about their legislation and have strict rules and regulations as well.

Challenges and issues faced by the company in implementing marketing mix
There are some issues that are needed to be faced by the company while implementing
marketing mix. It is important for the company to make sure that they are effectively and
efficiently coping with these issues so that the company and its workings does not have to suffer
and the company can implement its marketing mix according to the plan or the strategy. Some of
challenges that are faced by the company are given below:
Dynamic effect: The micro and macro environment of the market in which the company
is operating is dynamic. It is important for the company to make sure that they are taking all the
possible happenings in to consideration before planning or making a strategy for their marketing
mix as it can severely affect the impact and implementation of the marking mix in the
management of a product or a brand (Treviño and Doh., 2020.). Their are continuous changes in
the market and it is important for the company to make sure that the marketing mix that the
company is planning is not affected by these changes or the company already have taken
precautions about these changes.
Lack of transparency: The marketing mix nowadays are prepared by the external
agencies or consulting firms on behalf of there corporate clients which affects the accuracy of the
plans as the corporate clients may not able to make identify the mistakes in the strategy or may
not be able to validate or confirm the plans as they themselves are not very well aware. This
makes the transparency of the marketing mix low and will also hinders the growth of the
company as well as the effectiveness of the marketing mix.
Instability of market: The instability in the market in which the company is operating
may decrease the effectiveness of the marketing mix that is made by the company by keeping in
mind a certain market situation (Sarabi and et. al., 2020. ). This is the reason why the company
have to take in to consideration all the possible circumstances that can take place in the economy
or the market. The instability of the markets cannot be controlled by the company and the
company have to make sure that they are just going with the market and are implementing the
marketing mix accordingly.
No standard of measurement: Their is no set standard form in which the company can
make their marketing mix. All the factors have to be chosen on the basis of the possibilities that
can happen. It creates a situation of confusion and uncertainty which is the reason why the
companies need to analyse properly the closest possibility so that their is no problem in the

marketing mix afterwards. This is one of the factors that can crate issues in the implementation
of the marketing mix.
Resistance to change: As the company implements marketing mix in the workings of
the company it is a possibility that the company might have to face resistance to change (Zalan.,
2018.). In order to avoid the situation the company can implement change model but it is
important for the company to recognize the problem first. If the employees or management of the
company is resisting this change then it is important for the company to talk to them first so that
they do not create problem in the implementation of the marketing mix.
Organizational Myopia: This refers to the faulty perspective of the executives that are
responsible for the creation of marketing mix (Parente and et. al., 2019.). It is important for the
company to make sure that the marketing executives who are involved in the formation of
marketing mix are having correct information and facts which can help them in making sure that
the information on the basis of which they are planning and making strategy is correct and their
will be no issues in the implementation of the marketing mix.
State of data: It refers to the factor that in order to have a perfect fit of marketing mix for
the products of the company it is important for the marketing managers to have knowledge about
the internal as well as external factors that can affect the marketing strategy of the company
(Polonsky and Waller., 2018.). In most of the cases the marketing managers are not able
evaluate each and every aspect of internal as well as external data which is why the strategy of
the company is not implemented properly. The internal and external factors may differ a slightly
but that slight difference can make big difference in the marketing strategy when the company
implements the marketing strategy in the workings of the company.
Justification and recommendation
From the above information it is justified that USA is better option which can be opted by
Subaru company for expanding their business as compared to China. There are many reasons
behind choosing USA over China and they are explained below-
 Subaru Company is dealing in expensive cars manufacturer and selling it to interested
customers (Backus, Kehoe and Kydtand, 2021). USA population has better living of
standards as compared to China population. Secondly, USA people has more interest in

luxury items as compared to China population. Therefore, launching Subaru WRX 2022
is beneficial in USA.
 Political and governmental factors of USA is considered as more suitable then China.
Their corruption level is higher then USA. US's interest rate is 1.50% and China's interest
rate is 3.85% which indicates that USA is better place for taking loans for business
purpose and repay it on low interest rate which will help the company to attain more
earning with them self.
 In context of corporate tax rates then China is having 4% more interest rate then USA this
will help company to attain more earnings in case starting business in USA (Lundan,
2018).
 In context of social factor, then customers at USA are more habitual to spend more on
purchasing products as compared to China. USA people will see their comfort zone for
purchasing products. China is the place is having more environmental issues like
earthquakes, air pollutions, water pollution and many more due to their increasing
population. On the other hand USA is little less free from such issues as compared to
China. Hence, having business and launching new luxury car in USA market is more
appropriate.
 Both country USA and China is having high technology for production process but the
rate of adopting new technology as soon as possible is also essential competitive world of
business. In this context USA is gaining more advantage than China, USA innovate new
technology more rapidly and start using it after testing the capability as soon as possible.
Secondly, qualitative resources which will help to manufacture more luxury cars are
better found in USA (Bahoo, Alon and Paltrinieri, 2020).
 China is having more threat of substitute goods as compared to USA. There are many
companies which will make the same product of actual company with low quality and
sell in on lower prices. This misleads the customers and creates a negative brand image of
the company which is harmful for them to survive in this competitive world. Whereas
USA is more focused to intellectual property law and they opt for trademark and patent
law which will help to restrict the chances of copying the products. Secondly, the
government of USA is more focused and strict toward avoidance of intellectual property
laws as compared to Chinese government.

 USA is covered with ocean hence, transportation through water channel is easy for the
company. They can transport their product through ocean route to any country. Whereas
China has no part which is covered or attached with sea and ocean. Hence, the product
will delivered thorough land and air transportation which is more expensive then
delivering through water (Hannibal and Knight, 2018). Therefore, USA has more benefits
in context of transportation basis. Secondly, USA has less trade restrictions as compared
to China which will help the company to trade their resources and products easily from
one place to another especially from USA to Japan ( home country).
It is recommended that the company must adopt diversification strategy for entering the
market of USA. Diversification strategy is one of the most famous marketing entry strategy
where companies launch new product in new market for further growth after analysing their
market and customers behaviour appropriately. As the Subaru Company is launching their new
luxury car in new market hence is is diversification strategy. It is also recommended for the
company to further focus and invest more on research and development department of their
company to analyse marketing conditions of USA appropriately because diversification is
considered as one of the most risky strategy among all entry strategies. Here, company takes the
risk of introducing their new product on which they invested more as compared to all previous
projects (Tien and Ngoc, 2019). Therefore, analysing marketing condition, recent marketing
trends, targeted customer's behaviour, their income spending habit and many more will help to
decide that whether the product has good scope in selected country or not. On the other hand, it
is more effective for the company to have diversification strategy by coming together with
another popular company in USA which is called partnership. Having partnership with other
established company in USA will further help to gain more better knowledge about marketing
conditions. Having better skilled employees and more resources from partner firm is good for the
company.

Conclusion
From the above information it is concluded that analysing marketing conditions and
international forces impacted upon business is essential for expanding the business at
international level. Having internal analysis will help the company to analyse their present
condition within the business like are they having appropriate skilled workforce or not, their
present tools and machines are producing products according to their expectation or not and
many others. PESTEL analysis helps to analyse about external factors like technological factor,
political factor, social factor and many more. It helps to analyse the impacts of all these factors
on the company and how they can be mitigated. It is essential for the company to mitigate their
threats as soon as possible for rapid growth at international level. The following file covers
comparison of USA and China for launching new luxury car by Japanese company. It is found
that USA is a better option for the company to start their business rather than China because of
many reasons like political factor of USA is more stable than China, transportation facilities
through water Chanel is effective for USA only and many others. It is also found that USA
population is more habitual to spend their income to develop their standard of living as compared
to China. At the end the report cover that the company will gain more profit in case they adopt
diversification strategy for their business to enter the USA market.

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