The Global Marketplace Essay
The Global Marketplace
1. Does Buick have a truly global strategy or just a series of regional strategies? Explain We believe that Buick has a series of regional strategies we believe this because their main focus is the American and Chinese automobile industries for a decades GM international marketing strategy was largely characterized by exporting products made for the us market in GM thinking what worked in America would work globally this included selling left hand drive cars in right hand drive countries like Japan and Britain the strategy made sense at a time when the United States was far and away the biggest car market in the world and GM was selling far more cars in the United States than anywhere else but US automotive sales matured years ago at a time when growth in other markets took off china is now the world’s largest car market s and with over 1.3 billion people it has a way to go before the market is saturated fortunately for GM Buick had rubber on the road in china before that market started accelerating when the Chinese market took off GM put things into overdrive as a result GM sold 2.35 million cars in china in 2010 marking the first time ever that a US automaker sold more cars in another country than it did in the domestic market that also marked the sixth consecutive year for GM as China’s number one automaker.
This case outlines how a combination of heritage and understanding the customer has put Buick at the top. But the more important lessons to be learned from this case are derived from the influence that the Chinese consumers are having on the design of products for the domestic U.S. market As this is considered, it should be noted that most companies have had tremendous challenges trying to come up with a “world car”, one that works for all markets. Not only are there too many differences in taste, but size constraints, cost of fuel, and government regulations throughout the world have made it extremely difficult. That said, it appears that Buick is developing a more cohesive global strategy. In this case, it is not evident that Buick is merely having new cars designed in China, then sold in other countries.
The example given of the Buick LaCrosse was actually more of a collaborative effort than the case lets on. The PATAC team designed the interior while a U.S. team designed the exterior. It became a joint effort from different regions to produce a car that could be sold in multiple regions. That is indicative of a global strategy. However, it still apparent that the old ways are only slowly giving way to the new. Buick and other GM brands will likely see more of this kind of collaboration in the future. But for now, Buick China is still selling vehicles produced by various divisions in various regions under various GM labels. That old method is far from a solid global strategy
2. Do GM’s global manufacturing facilities, such as shanghai GM solidify a global strategy? Why or Why not? Just because they have manufacturing facilities in shanghai does not mean that GM has a good global strategy because it is official targeting one region GM has long had manufacturing facilities throughout the world. But that has resulted in lots of cars made for lots of markets under different brands. Then, that mix is further blended and twisted as these products are re-distributed throughout the world. That’s an international strategy, not necessarily a good global strategy. So while Shanghai GM has been an important factor in making GM and Buick more competitive by contributing to a global strategy, such manufacturing plants alone do not solidify such a strategy 3. What is Buick’s global strategy in terms of the five global product and communications strategies?
GM adopts a strategy that makes their product Buick accessible in a global marketplace, particularly in China. There are five product and communications strategies help to build a loyal customer base and make the product valued for consumers globally. First, straight product extension strategy which take the product as is and find customer for it abroad. This strategy save money since no changes, development or new promotion occurs to products, but it costly if that fail to satisfy the consumer. Second, product adoption strategy which the company change the product to meet local requirements or want or conditions. Third, product invention strategy which the company create something’s new to meet needs of consumers in a certain country. Fourth, communication dual strategy which the same product is sold but it is advertised in a different way to suite the particular country, and that because the differences in culture and competitive environment by other local companies. Fifth, communications adaptation strategy which adapt the product in the market but using a standardized commutations way (Armstrong & Kotler, 2011).
GM adopt two of these strategies during the years of their investment in China, Communication Dual and Product Invention. The first strategy appeared Early in 19th century when Buick was one of Chinese political leaders and presidents choices over other luxury cars such as Rolls-Royce and Mercedes-Bens. GM took this advantages and start advertising the cars in 1929, and one the ads is “Buick Owners are mostly the leading men in China”. GM sold the same product but advertised in a different way to suite this country culture. Hence, GM use the communication dual strategy that gave the product a high value for customers and raise the sales over china. The second strategy started when Shanghai-GM open in 1998 to build GM cars in China.
The branch built a new models of Buick such as Regal and LaCrosse. The designer of LaCrosse model Joe Qiu said “I looked at where people lived, where they hung out, and then I tried to create that same feeling inside the car”. LaCrosse and other models in not only selling in China but it exported to US and other countries and Shanghai-GM became the lead of Buick sales. Thus GM use product invention strategy and create something new of Buick models to meet customer need and want, and success to raise the sales not only in China but around the world (Armstrong & Kotler, 2011).
4. Can Competitors easily replicate Buick’s strategy in China? It’s difficult to replicate Buick’s strategy in China due to the good repetition created for the company. However, the completion is still on the scene when other big company such as Ford and Toyota use the same strategy to satisfy consumers need. As GM created Baojun the inexpensive model in China, Ford developed economical low price model called Figo in India, and that will increase the competition if Figo enters China market (Armstrong & Kotler, 2011). Indeed, GM sold more cars than Ford in china because Buick has a good repetition in the past and has an excellent experience in last decade lead to save the car from other brands like Pontiac. Furthermore, the design of some Buick models like LaCross has been driven by the tastes of Chinese buyers. So GM considered the culture impact and reflect that to their product (MEINERS, 2010). There are several factors save company position in the market against competitors: reduce the cost, diversity of product, quality, innovation, flexibility of production etc.
Most of these factors reflect into Buick’s strategy when adopt the innovation and make new models, attained the flexibility of production by design the product suit China culture such as LaCross, reducing the cost and the variety of models produced to cover all society classes such as Baojun. Moreover, the investment in advertisement plays an important role in market position, which GM recorded a highest investment in advertisement as part of their communication strategy in China (Chen & Yao, 2006). Although these advantages of Buick’s strategy are form a obstacle for competitors, big companies tried to floats on the surface with the same strategy. The quality and price advantages are used in Toyota strategy to compete in the market. For instance, reduce a quality car like Camry for a period then raise the price after being popular among citizens, consider the effective way to compete in the market. “Toyota is getting more local, too, and thus a little more like GM. It’s building a new research center as well as another production plant, so they are trying hard to make up ground” (Brush, 2011).
5. Based on Buick’s goals as discussed in the case, what do you predict for Buick in the coming years in China? In the United States? Through the first half of this year, GM has sold 1.2 million vehicles in China which was more than its sales in the U.S. by 120 thousand vehicles. GM expects to sell more than three million cars there annually within the next five years. It has been so clear to say that Buick’s success in China helped to save the brand from the fates of Pontiac, Oldsmobile, and Saturn. In 2009, China accounted for 450,000 Buick sales; in the U.S. last year, Buick sales barely broke 100,000. While it doesn’t try to compete with the premium German carmakers, Buick is clearly superior to the typical Chinese mass-market brands. The average Buick customer in China is in his mid-30s, which is about half the age of his U.S. market counterpart. In China, Buick became considered as the brand of choice for young, successful entrepreneurs and enjoys a cachet born of the big car’s popularity among the wealthy in 1930s China.
Buick is just one of several large automakers enjoying huge sales booms in the Chinese market, as greater proportions of the population move into the middle classes and has the disposable income to buy new cars. During 2012, China’s Buick again made the real gains though, with a 15.7 % of increase On the other side, Buick’s sales in the U.S. showed actually increase from those in 2012 and by a significant margin. However, the 2013 total sales fail by 13.9%. The Encore was among Buick’s most successful models with nearly 100,000 global sales, but the eight-passenger Enclave was one of the fastest-growing models, with a 6.5 percent rise in sales. The increase in sales in the U.S. is good news, but it’s those Chinese numbers that’ll keep Buick on the roads for many years to come. In conclusion, unless, GM utilized the opportunity of growing business generated in China by developing suitable cars for its customers in The U.S., they will never be able to keep up with the race against other brands of Japanese, Korean and even European cars.
Armstrong, G. M. & Kotler, P., 2011. Marketing: An Introduction. s.l.:Pearson Education. Brush, M., 2011. Sorry, Toyota: GM is winning China. [Online] Available at: http://money.msn.com/how-to-invest/sorry-toyota-gm-is-winning-china-brush.aspx?page=2 [Accessed 23 4 2014].
Chen, J. & Yao, S., 2006. Globalization, Competition and Growth in China. s.l.:Routledge. MEINERS, J., 2010. Ford and GM Battle for Sales in China. [Online] Available at: http://www.caranddriver.com/features/ford-and-gm-battle-for-sales-in-china-feature [Accessed 23 4 2014].