The last two decades, probably after World War II the economic growth have speeded up by multinational enterprise. In the 1990s foreign direct investment made by these firms grew as faster arte than both international trade and GDP (Cieslik & Ryan, 2011). The foreign direct investment already created lots of fortune for world economy; however, it is not luck to each international firm. Some of them also faced huge risk, even failure. Throughout history, it seems like it is not easy for companies to entry foreign markets. Some of firms were very successful in the their home countries; however, they were failed in foreign markets. Those corporations adopted the same marketing strategies that they used in their home countries because they thought using the same methods would bring much profit in the foreign countries. However, the results were not they expected before. Why? The main reason is that the foreign market environment is not the same with their home countries. There are many different conditions in foreign, and those differences would make international companies rearrange strategies for new markets. Such as, culture, geography, religion, politics, etc. Among those differences, the most important is culture difference.
Culture is a system of values and norms that are shared among a group of people and that when taken together constitute a design for living–where values are abstract ideas about what a group believes is good, right, and desirable, and norms are the social rules and guidelines that prescribe appropriate behavior in particular situations. Therefore, international firms cannot use the same marketing strategies that they used before to apply different foreign markets. In addition to strategy difference, in the past, standard products were popular by international enterprises since they can operate multinational supply chains by standard operations. However, recently, more firms design their product more localization, it is because international firms want to fit in deeply foreign markets. Sometime, the companies even need to adjust their products for foreign customers, like Starbucks and Coca-Cola adjusted their recipes for local markets.
Facing the different markets, the corporations should use different strategies to fit in the different markets, and customized product for local customers. International enterprises need to restart to think many details about their customers, product, service, supply chains, etc. In addition, there are different modes for foreign firms to entry the different countries, such as exporting, contractual agreements, strategic alliances, and direct foreign investment. Each mode has its risk, and international companies should find out the best mode to for itself.
Choice of entering foreign mode is always a good argument for literature. The primary option is foreign direct investment. It can bring lucrative benefit, but it has biggest risk. The direct selling and setting the branches are costly, and business organizations would face bigger risks by this directly foreign selling mode. Well know examples of such organization are using this mode to set up their value chain in foreign countries, such as Banyan Tree, UTC, and Volkswagen (Jonsson & Foss, 2011).
Other is separating ownership and control, likes contractual agreement. Although this mode could not bring the benefit directly, it is long-term investment and has low investment risk (Brown, Dev, & Zhou, 2003). Other is strategic international alliance, it is based on some specific conditions that are controlling cost and arranging schedule, to generate this mode, such as, the air industry (Brown, Dev, & Zhou, 2003).
Whichever mode do the companies decide, and they still need to review their strategies for foreign markets. It is because the company would face changing quickly environment, the shopping behavior, units of employee, and political issues. Companies can predict some considerations and take the reactions, but firms should take the risk for some of issues that they do not have reaction (Raff, Ryan, & Stahler).
In this paper we would learn form it internationalization experience and strategies, and multinational corporations’ organization. Also, we would see conversions from the standardly operation to localize management and production. Then, we would discuss about other modes to entry foreign market (Chen & Chang, 2010).
According to the survey of IMF, the foreign market entry has been a popular topic in international business research during the last couple of decades. Firms need new market to increase sales, to avoid competitor, and to cost down. Manufacturing industries become the initially parts of main interest in entry the foreign market studies because they want to acquire the advantage of resource efficiency, such as labor force, natural resources, policy of foreign investment, to make more profit. However, with the fast movement of technology and the growing of many potential markets like China, India, and Brazil, entering a foreign market becomes the critical issue for a company to reach more customers and earn more profit. To expanding the business to global market, the manufacture industries now have to put effort on both manufacturing and service. Today, there are more different ways for companies to enter foreign markets.
Thanks for the Internet, it speeds up the globalization and connects the global information quicly. Not only business organizations can sell their product in different modes, but also they can gather more information than before. With the help of IT techonology, a corporation can track customers action and consuming habit. Although the Internet provides many variety ways for companies with diversity methods to sell a merchaindise, the risk of entering foreign markets are still very high. Before companies entering foreign market, they should do more research about new markets to avoid the risks that they can predict. There are some reasons that demostrate why research is so important. First, the capital is limited. Even though the big company as Walmart and eBay, they still cannot suffer huge amount of loss in a market. That is why they stayed back to the Asia market. In addition, doing local research can help companies know their customer better, so they can adjust their marketing strategies efficiently and effectively.
Furthermore, by researching the information of the competitors, the companies can decide which ways to enter foreign markets, to go with an agent or do with a joint venture, and what strategy can make the companies stand out in the market and segment with the competitor. Therefore, utilizing information is significant to knock out today’s multinational business. When it comes to brick-and-motor, targeting at developing countries with high disposable income seems to be easier to success (Polly Chan, 2009), because both of domestic demand and personal income are growing. Once a corporation focus on a high potential market, they should learn how to localization. Firms should not get locked into their glory in the original market and shoul make strategy flexible as they internationalize. They face different culture, government laws, consumer behavior, and business model of local partner, so the strategy should be localized.
Moreover, the corporation must be sure that the brand image and core concept deliver precisely to the customers, then educating them to find the value in the business merchandise and service; therefore, it can outshining in the blue sea as what Apple did. Innovation also plays an important role of success as well; especially when innovation combined with brand value tightly, so do not be afraid of being different. Last, using resourse wisely and keeping good relationship with other corporation might be a competitive advantage in the future.
However, cost down is not the only mesure to increase profit or secure a business. To pursue futher development, firm must avoid stocking with a particular mode due to they feel comfortable with it. In conclusion, gathering enough and critical information, the right and in-time decisions from management, market choosing, evaluating the local economy and culture are significant factors to success in foreign market entry, rather than the firm size or how many financial asset it has. To support our finding and theory, we are providing the case of three international businesses, UTC in technology industry, Banyan Tree in tourism industry, and Volkswagen in manufacture industry.
Banyan Tree Introduction
The first Banyan Tree resort opened in 1994, transforming an ecological wasteland into an environmentally sensitive resort – Banyan Tree Phuket (Banyan Tree, 2012). Banyan Tree’s philosophy is based on providing a place for renew of the body, mind and soul. Each Banyan Tree property is designed to fit into natural surroundings, using indigenous materials and reflecting the landscape and architecture of the destination. Banyan Tree group currently consists of 30 hotels and resorts, over 60 spas 80 retail galleries, and aggressive expansion plans for the future (Banyan Tree, 2012). Banyan Tree Hotels & Resorts has grown into one of Asia’s most successful hospitality brands with numerous international awards and accolades from publications like the prestigious Conde Nast Traveler and others. Even during the SARS outbreak in Asia in 2003, the company still emerged profitable by achieving average occupancy rates of 65-67% (Roll, 2006). In 2011, the revenue is 270 million US dollars (Exhibit 1).
Banyan SWOT Analysis
Eco-friendly Accommodation. Accommodation of Banyan Tree group emphasizes rejuvenation, eco-friendly, romance, and luxury. The corporation reminds customers that while you are enjoying the vacation, you can still do something for environmental protection. Therefore giving the customers an important message that Banyan Tree is not only a profit-oriented company, it still cares about of the global environment and commit itself in sustainable management. Fast Business Expansion. Banyan Tree expands the business global in a rapid speed. Both Banyan Tree and Angsana resorts are taking an ambitious movement in entering new traveling location, such as China, Greek, and India. With two brands on the way, the expansion rate is much faster than other competitors; hence, Banyan Tree group can acquire market share more rapidly in the new holiday paradise and enjoy the first mover advantage in those areas.
Brand Extension. Angsana is a more affordable resort brand that helps Banyan Tree to attract lower level of customers. This differentiation not only helps Banyan Tree to gain more business but also creates a more vivid atmosphere to give customers a brand-new experience. Despite Angsana’s price is cheaper, it does not mean the service or the landscape are less impressive. Angsana still offers a high quality value as Banyan Tree does. SPA Specialty. Spa training school, which set in Phucket, might cost amount of fee; however, both the quality and service are be guaranteed. Moreover, the therapist has to go practical training as well. This is also why Banyan Tree and Angsana Spa won amount of awards in travel industry. Community Development. Banyan Tree group also delicates in community development, a part of profits is used to build school and childcare center, and help the local artist to develop their career. This is the kind of social responsibility that everyone eagers to see. The more profit one company earned, the more it should feedback to the resident and society.
Politic Issue. Government law is different from one country to another; thus before entering a new market, Banyan Tree should exam the law carefully and has to think what the worse situation could happen. In some countries, Banyan Tree should go with joint venture, while in others countries they might welcome direct investment. Tax also plays a critical role in the profit. The instable political situation can greatly affect the business and profitability in a period. Taken Thailand as the example, in 2009, the protesters of red-shirt caused fears and panic in tourists, in the end, causing the slum in the whole hospitality industry. No matter what method, the company must prepare for the rainy days. Human Resource. Human force is another weakness of Banyan Tree business.
As the expansion of the resorts, Banyan Tree must find more labor force that can communicate in English fluently. But, in nowadays, English might not be enough because of the rising of Chinese market. Furthermore, not every customer speaks neither in English nor Chinese, so looking for multi-language employees would be an urgent issue. Natural Disaster. Many Banyan Tree Resorts locate in the tropical area around by beautiful sea. Natural hazards, such as typhoon and earthquake, influence the rate of occupancy tremendously. For example, in 2004, the tsunami damaged the travel industry in Phuket and Maldives. The only thing Banyan Tree could do is to repair the resorts and to wait for tourism back.
Chinese Market. As Chinese economy continues growing, the amounts of wealthy Chinese people pay more attention to vacation and family activities, thus booming the international and national tourism market. Moreover, more and more people show interest in going to Asia and experiencing the culture of Asia. Because Banyan Tree started in Asia and is very active in establishing business in China, Banyan Tree and Angsana resorts would have a great advantage in the segment of luxury hotel. Besides China, there are still many new hot spot that Banyan Tree could enter, such as Europe, Mediterranean, and Caribbean.
Member of Luxury Hotel Group. The Banyan Tree Resorts and Angsana Resorts are the members of The Leading Hotels Of The World (LHTW) (The Leading Hotels of the World, 2012) and Okura Hotels and Resorts (OHR) (Banyan Tree, 2012). Marketing alliance with LHTW and OHR also ensure the quality of the Banyan Tree. To be the member of LHTW, five stars is the basic requirement. A hotel must have additional conditions, such as delicate design, high-class service, amazing food, and breath-taking landscape. The marketing alliance is a magnificent method to increase Banyan Tree’s exposure and to enhance its business.
Cooperate with Agent. Cooperate with agencies is another great opportunity to let people notice the brand and attract more customers. Many wealthy people do not do researches or plan a vacation by themselves; instead, they prefer to book a package tour or flight plus ticket plan when they plan a vacation. This type of people will recommend the hotels and the agency if they are satisfied with the trip. After all, by word-of-mouth marketing strategy is very powerful tool to increase the fame.
Luxury Hotel Competitors. Maintaining a niche position as market matured was an ongoing issue for the company. New luxury hotels are building, such as Aman Resort in the vacation paradise and Marriot in the city. In order to be sustainable in the global market place, Banyan Tree can no longer just rely on competing with costs from manufacturing efficiencies or low cost production. Banyan Tree needs to reinforce on unique culture experience and convey the brand value to customers. Economic Recession. Many 5 stars hotels, maybe not as luxury as Banyan Tree, have begun the price war in recent years when the global economy went down. In economy recession, customer chose a cheaper hotel to stay and deducted the entertainment fee. From aviation industry to hotel industry, they all faced the decrease in revenues. This factor might cause Banyan Tree’s revenue dropped dramatically in 2009.
United Technologies Corporation (UTC) is the ranked number 150 on the Fortune 500 of 2011, and it is the ranked number 48 of the United States companies. Its revenue is 58,190.0 million and profit is 4,979.0 million in 2012 (Fortune Magazine, 2011). UTC is a diversified company that provides a broad range of high-technology products, services to the global aerospace and building systems industries. The diversified manufacturer which owns Carrier air conditioning and heating company, Otis elevator company, and Sikorsky, a builder of commercial and military helicopters. In addition, UTC has a strategically balanced product portfolio that enables the company to tap diverse set off (United Technologies Corporation, 2012). In 2011, UTC announced a reorganization of our commercial and aerospace businesses. UTC commercial businesses are Otis elevators and escalators and the new UTC climate, controls & security, which includes Carrier and UTC Fire & security. UTC’s aerospace businesses are Sikorsky aircraft and the new UTC propulsion & aerospace systems, which includes Pratt & Whitney aircraft engines and Hamilton Sundstrand aerospace and industrial products (United Technologies Corporation, 2012).
UTC SWOT Analysis
Strategically Balanced portfolio of Products and Revenue streams. UTC has diversified product. The company operates thought business segments to military area. Also, the company has a diversified revenue streams. Revenues from company’s subsidiaries were well balanced. The balanced products and revenue streams allow UTC to address a wide base that reduces the business ricks and enables the company catch opportunities in new existing markets (Datamonitor, 2011).
Strong emphasis on Research and Development. UTC has a strong emphasis in research and development. The company conducts its research and development activities by United Technologies Research Center (United Technologies Corporation, 2012). The center is focused on developing new technologies and upgrading existing technics in UTC’s product areas. In addition to United States, UTC operates research in many countries, China, Cork, and Ireland. Besides, UTC invests lot of budget in the technology development and research. For example, during FY2011, UTC’s research and development expenditure was $2.1 billion or 3.5% of total sales (Marketline , 2012). Such focus on research and development helps UTC incorporating newer features to its existing range of products and also in bring out latest technologies in the varied areas. Thus, the company strong emphasis on research and development allows it to uphold the technological leadership in most of its product segments (Marketline , 2012).
Industry Recognition. UTC has a strong recognition in the industry. Otis, is one of the world’s largest elevator and escalator systems, and Carrier, is the world’s largest manufacturer of heating, ventilating air conditioning and refrigeration systems (United Technologies Corporation, 2012). In addition to UTC, Pratt & Whitney is also one of the world’s leading suppliers of aircraft engines for commercial and military. Moreover, Hamilton Sundstrand is one of the leading suppliers of technologically advanced aerospace and indusial product and aftermarket services for diversified industries worldwide. Also, Sikorsky, is a strong suppliers of helicopter (United Technologies Corporation, 2012). Strong recognition across varied categories ensures its status as one of the strongest players in industry, which further enhance the brand image of the company and gives it a competitive advantage (Marketline , 2012).
Legal Proceedings. UTC has several pending lawsuits. For example, the company was sued by the Department of Justice(DOJ) in 1999 in the US District Court for the Southern District of Ohio, claiming that Pratt & Whitney violated the civil False Claims Act and common law. In relation to this lawsuit, the trial court judge fund that Pratt & Whitney violate the False Claims Act and is liable for a fine of up of $624 million. Moreover, there are others lawsuit and the fines are not cheap (Datamonitor, 2010). Although UTC maintains reserves to cover the costs for claims and lawsuits, those litigations would impact the company’s brand image and reputation.
Significant Debt. UTC has outstanding debt and other financial obligations and significant unused borrowing capacity. In FY2011, the company had total significant debt of $10,260 million (United Technologies Corporation, 2012). The debt could force the company to allocate a considerable portion of cash flows from operations to debt service payments; limit the company’s ability to obtain additional financing; and lose advantage against its competitors who may have less debt. In other words, much debt would impact significantly companies’ performance (Marketline , 2012).
Surge in defense spending in China and India. UTC provides a wide range of technology products and services to global defense industry, including the fastest growing markets, China and India. The increasing global defense spending would provide the topline growth for the company in the short to medium term (United Technologies Corporation, 2012).
Strategic acquisitions. UTC made significant acquisition in 2010 and 2011 from the company’s Fire & Security segment. This acquisition will allow the company to expand its offerings of high quality gas and flame detection products (United Technologies Corporation, 2012). UTC uses to take the acquisition from other segment to develop other segments that UTC planned. Such strategic acquisitions would provide the company an opportunity to increase its global presence and revenue base (Datamonitor, 2011).
Positive outlook for HVAC equipment market. The global HVAC equipment market has witnessed a strong growth since last few years. The global HVAC equipment market is forecasted to grow at a rate of approximately 6% annually, which is expected to drive the market to $93.2 billion by the end of 2014 (Marketline , 2012). UTC through its Carrier business segment provides products including residential, commercial and industrial heating, ventilating, air conditioning (HVAC) and refrigeration systems and equipment. The company is well positioned to capitalize on the growing HVAC equipment market (Datamonitor, 2011).
Intense Competition in Aerospace Business. The aerospace, global defense, space and aerospace industries businesses are subject to substantial competition from domestic manufacturers, foreign manufacturers and companies that obtain regulatory agency approval to manufacture spare parts. Customer selections of engines and components can also have a significant impact on later sales of parts and services. In addition, the US government’s and other government’s polices of purchasing part from suppliers other than the original equipment manufacturer affect military spare parts sales (Marketline , 2012).
Government Contracting Risks. The US government contracts are subjected to termination by the government, either for the convenience of the government or for default as a result of UTC’s failure to perform under the applicable contract. Those U.S government contracts are not easy to make profit, but UTC has many kinds of this contracts with the U.S governments (Datamonitor, 2011).
Foreign Currency Fluctuations. UTC conducts its business on a global basis. The company derived approximately 60% of its total FY2010 segment sales from international operations. Therefore, the currency risk is an extremely important factor for UTC’s earnings. Any changes in demand and refinancing conditions, fluctuations, in exchange rates have a significant impact on the company’s earnings (Marketline , 2012).
Volkswagen has been the largest carmaker in Europe since the 1970s. It also has the largest assembly plant (Wolfsburg) and best-selling car (Golf) in Europe. Being a German company, Volkswagen group positions its brands at the premium part of the market – Audi is mass premium, Volkswagen is semi-premium while Bentley, Lamborghini and Bugatti are prestige marques. Only the Spanish SEAT and Czech Skoda target at the lower end of the market, but they still share the high quality and engineering standard of the group because of extensive platform and component sharing.As the world’s leading car manufacturers, Volkswagen group is the typical transnational business template, Volkswagen historical analysis, it is clear to get a development model targeted analysis.
Volkswagen SWOT Analysis
Until the early 21st century, the world’s leading international automobile manufacturers have found that this “fertile land” which have not been fully reclaimed. However, in more than a decade of dominance, Volkswagen brand cannot shake the brand influence. Until today, VW brand identity is the identification of the most well-known automobile.
Brand Awareness. From Volkswagen’s own point of view, the most important point is that the layout of the product. Since Volkswagen was into China early, and thus its product line pulled very long, the vast Chinese market is a large hierarchy of needs and different techniques have competitive products on the price level, to ensure that the public give full play to their own advantages. Volkswagen’s popular products always have been durable, reliable performance and good reputation. Products Targeted. Finally, there is the introduction of the new Skoda, Volkswagen’s product family has been more fully into the Chinese from Audi, the high-end flagship Volkswagen in different market segments, each with good results and competitiveness.
Room to grow. Volkswagen is now one-step ahead of the introduction of the latest addition to the vehicle platforms, engines and other key technology production, in order to ensure that they can have enough growth space. In addition, the development of new products based on the specific situation of the Chinese market in support of SAIC and FAW, Volkswagen began to actively exploring. Localization makes Volkswagen to be strengthened competitiveness in the Chinese automobile market, the future Volkswagen will become important weapon to compete in China’s automobile market.
Inappropriate Choice of Market Strategy. Volkswagen seems to have deviated from the direction of the public, and fully intends to make a difference in the luxury segment.
Decline in market share. The data show that the Chinese auto market hotspots Global the major Automotive Group competition, the Volkswagen Group’s market share in China hold the first place, but the share declined. To keep the advantage, Volkswagen has announced an additional investment of 1.6 billion euros for the construction of two new factories and other projects in China.
Models look rich enough, a single product line. Conservative single shape is Volkswagen’s standard. Now everyone pursuit of individuality society shape is a good way to Volkswagen, however, how you can easily imagine the serious and cautious changes of German company’s philosophy.
Growth of the private car market in China. With the rapid development of China’s social productive forces, the sound and rapid development of economic construction has made each grade highway construction great achievements, people travel more convenient than before. The private car market gradually matured. The purchasing power for the entire auto market is improved.
Development of new energy technologies. Volkswagen is now for electric vehicles to develop a clear product release schedule. Electric drive car with internal combustion engine-driven vehicles will coexist. Technologies in this field will be further strengthening. In order to reduce the fuel consumption and emissions significantly, these measures will allow Volkswagen to a leading position in the zero-emission car market.
Improve public relations effect. In modern society, manufacturers and distributors, the service is an important means of marketing. Consumer satisfaction is their survival of the lifeline. By having a closer look on the sales figures, Volkswagen is very successful in selling their cars in China. It is also an effective way to explore and establish a good relationship with government, so that Volkswagen will once again return to the core area of the Chinese people and market.
Japanese car competition. Strong competition from competitors, especially the Japanese auto strong competition for the Volkswagen from Germany is a big impact. As the oil belongs to the non-renewable resources, along with the gradual expansion of the use of inevitably less and less, plus the world’s largest oil-producing region of the Middle East political instability, oil prices fluctuated, the overall trend is gradually Shanghai Volkswagen’s fuel economy is relatively certain deficiencies. Shanghai Volkswagen has brought certain threat. Return risk. Volkswagen is committed to clean energy and energy-saving vehicles developed new energy is also the world in the development of R & D, the threat is that the public’s investment in can be rewarded. Developed a higher energy consumption of resources, and that Volkswagen will go to recover the huge investment.
In addition, the Japanese small car in the energy and environmental protection more highlight the advantages of a smaller investment in environmental protection in transition. The public why the assurance that their input is “value for money” a significant threat to public investment cannot maintain a leading level will be for their own development. Service Competition. In order to progress automotive competition, Shanghai Volkswagen had make in the current situation. Must be able to advance with the times, and the development and use of its own suited to the development of the marketing strategy, market demand, and solve problems for customers, and strive to make customer satisfaction. Improve the pre. Sale, service, and strive to improve the scientific and technological content of products and services. Volkswagen is currently lagging behind in this regard in the Japanese and Korean car manufacturers.
Doing business in home country is quite different in other country. In the class, we already know some essential conditions for multination corporations. Moreover, we will discuss that these multination enterprises have some similar characters to success in today’s environment. Also, we can understand what foreign challenges they are facing when they are entering global markets.
Brand awareness. It is very critical for a company to keep leadership or earn profit in an industry. How to let customer embrace the idea of company is a significant issue for marketing strategy. Volkswagen is a wild-known Germany car brand with high quality and brand recognition. “Volkswagen – Das Auto”, the slogan of Volkswagen Passenger Cars brand combines the three core values: “innovative”, “providing enduring value” and “responsible” (Volkswagen, 2008). It launched many successful car models such as Volkswagen Golf and Beetle. Next, Banyan Tree Hotel & Resort, the Asia based luxury hotels group, also has a strong brand awareness.
A Sanctuary for the Senses is the philosophy behind the hotels, resorts, residences, spas, retail galleries and destination club is based on rejuvenation of the body, mind and soul (Banyan Tree, 2012), thus giving the customers the greatest experience and building its name. Otis, the brand belongs to UTC, is one of the world’s largest elevator and escalator systems, and Carrier, and is also the world’s largest manufacturer of heating, ventilating air conditioning and refrigeration systems (United Technologies Corporation, 2012). From this three brand, we saw that they are dedicating in creating brand awareness, because it is the key to expend to the future business.
Expending market in China. China is the biggest market in the world. With high economic growth rate, in China more and more people have disposable income to enjoy the material life, and more and more enterprises are thriving, too; therefore, a huge amount of commodities are needed. From the manufacture industry (Volkswagen and UTC) to tourism industry (Banyan Tree), they are heading and accelerating their business in China. Not only the national market that enterprises focus, but also target at the international customers that come to do the business or travel in China. In the next three years, the Banyan Tree group, including Angsana, plans to open 20 resorts in China (Banyan Tree Hotels & Resorts, 2012). UTC will try to have business relationship with Chinese government on the global defense spending in the short to medium term.
Face on fierce competition. Even though each brand, Volkswagen, UTC, and Banyan Tree, is one of brand leader in its own industry; however, they still face tremendous competition. In the luxury high-end car model, Volkswagen faces the competition of Ferrari, Mercedes, and BMW. In the cheaper models, it has to compete with Japanese car such as Nissan and Toyota. In hotel industry, Banyan Tree group has encountered many luxury hotel groups in their business location, such as Four Season hotels in Macau and Bali, One and Only resorts in Maldives, and Aman resorts in Phuket. UTC also struggle with the competition in global defense, space, and aerospace industries businesses. Because these fields are subject to substantial competition from domestic manufacturers, foreign manufacturers and companies that obtain regulatory agency approval to manufacture spare parts.
In addition, the US government’s and other government’s polices of purchasing part from suppliers other than the original equipment manufacturer affect military spare parts sales (Marketline , 2012). To stand out in the blue sea, these three companies have to build a strong marketing strategy to convey and create the value for their customers. Politic restriction. It is not the unusual issue for the foreign and global company. Every country has its own regulation. That is to say, the marketing strategy must to adjust country by country. Moreover, the politic is not so stable in some area, hence increasing the risk of investment, decreasing in sales and profits, or both. Doing deeper researches becomes more critical for a company before planning and implementing its market strategy in a country.
Product position. Since having different product positions in marketing, it makes them also have different marketing relationships, marketing strategies, and management systems. For example, Banyan Tree and serve and product are targeted at traveling and tourism, and it was classified into business to customer (B2C), as well as Volkswagen. Therefore, people are easy to see their advertisements. Moreover, Banyan Tree not only includes hotel industry but also traveling services. Thus, it is critical for Banyan to guarantee its services quality since it would has deep relationship with their traveling industry (Banyan Tree, 2012). In addition, Volkswagen focuses its product most.
Every year, Volkswagen need to investigate new markets and focus different levels of customers before it publishes new car (Volkswagen, 2008). Although the serve is also important to Volkswagen, the new cars’ attraction is vital for Volkswagen expanding markets. UTC’s marketing relationship is business to business (B2B), it is different from other two cases. It would focus on its product technique and quality (United Technologies Corporation, 2012). Since UTC’s products are various, it includes many of business requirements, it is benefit fro UTC to maintain long-term relationship with their customers.
Marketing impact. Nowadays, each company’s market is not always stable. The factors from marketing impact are also various. Some factors come from external, such as environment, economic recession, etc.; and some are belonged to corporation internal. For example, first, the frequent marketing impacts to Banyan Tree are natural disaster, such as typhoon and earthquake (Banyan Tree, 2012).
The only thing Banyan Tree could do is to repair the resorts and to wait for tourism back. Second, UTC has significant debt, and it would limit the UTC’s ability to obtain additional financing; and lose advantage against its competitors who may have less debt. In other words, much debt would impact significantly UTC’s marketing performance (Datamonitor, 2010). Last, the decline in Volkswagen’s marketing share is a serious problem, especially in China market. Since more and more competitors share car marketing, Volkswagen has to find another way to increase its marketing share (Volkswagen, 2008).
Marketing Strategy. Corporations should have new strategies for increasing market share since more and more competitors are also in unstable-fast markets. According to case reports, these three corporations also have new marketing strategy to attract new customer and maintain its original customers. For example, Banyan adopts marketing alliance, and it is a magnificent method to increase Banyan Tree’s exposure and to enhance its business. It would ensure the quality of Banyan Tree, such as delicate design, high-class service, amazing food, and breath-taking landscape (Banyan Tree, 2012). Second, UTC re-organized its company for utilizing its resource efficiently and creating new markets.
UTC uses to take the acquisition from other segment to develop other segments that UTC planned. Such strategic acquisitions would provide the company an opportunity to increase its global presence and revenue base (Marketline , 2012). Also, Volkswagen tries to attract it new customers by developing new energy technique. Volkswagen believes this technique, that reduces the fuel consumption and emissions significantly, will allow Volkswagen to a leading position in the zero-emission car market (Volkswagen, 2008).
Risk considerations. Having business in abroad should not only consider the market, but also economic risk and government risk. For example, Banyan would have a serious impact in economy recession since customer chose a cheaper hotel to stay and deducted the entertainment fee. From aviation industry to hotel industry, they all faced the decrease in revenues, such as in 2009 (Banyan Tree, 2012). UTC’s would have a significant impact on the company’s earnings, if there are any fluctuation in exchange rates. It is because UTC derived approximately 60% of its total FY2010 segment in abroad (United Technologies Corporation, 2012). However, according to Volkswagen case, the major risk of Volkswagen is competitors. Volkswagen should find other way to distinguish its competitors (Volkswagen, 2008).
These three cases all have good reputations in global industry, and their product and services are also predominant in their area. Banyan Tree provides good quality service and hotel in tourism industry, UTC has high technique in aero industry, transport area, and weather control system, and Volkswagen has large market share in car industry. In addition, they are not new multinational companies, and they have long history in their home markets and global markets.
According to the report, we know that international business share some strength factors and also face same challenges. Although their product and service are different, they still have some similar conditions, such as owning brand recognition, having politic issue, jointing Chinese markets, and facing global competitors. In addition, we believe that those enterprises are capable to deal with different global challenges, including marketing their product into different countries, predicting any risk from external, and creating new marketing.
Under turbulently changing environments, enterprises survive through dynamic reactions. Those reactions should not only depend on experience but also create new marketing strategies. Also, having sensitive recognition to global market and creating marketing method are vital to nowadays environment. It is not difficult to identify that Banyan Tree, UTC, and Volkswagen already own these characters. Because of their experience and creating marketing thinking, they can have outstanding performance distinguish from their competitors.
Through this report, we understand that being multinational corporations would have similar successful characters to overcome foreign challenges. In this quick-changing era, it does not matter what product or service is, fixable and executable international marketing strategies are vital to global companies to conquer the global market.
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University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 1 November 2016
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