Strategic Management and International Marketing Strategy of Indesit Company - Assignment Example

Indesit Company Introduction to the Company Indesit Company, which was set up in 1975, is one of the European leading manufacturers and suppliers of home/domestic appliances. The company deals with the manufacture and supply of kitchen appliances within the United Kingdom. Other products include refrigerators, electric and gas stoves, washing machines amongst other home appliances. The company history reveals that Indesit was integrated discreetly during the time when it was involved in the production of a range of domestic appliances and at the same time owned overseas locations within Western European markets. In the last decade the company has progressively developed despite the challenges. However, within this period, the company has passed through different vicious contentions in the business, but it has still achieved growth enabling it to attain its current commanding status. The Company Concerns There has been much interest in the German market, however, the state of affairs in Germany can be referred to as ‘a black hole’ since the market seems impenetrable by foreign firms. The same could apply to the Scandinavian market owing to non-existence of Indesit in these regions. However, the market in Turkey could be described as undeterminable yet rapidly advancing. This has forced Indesit to have minimal investment in these countries (Doole & Lowe, 2008). Despite establishing its presence in Europe, there are still some regions, such as Germany and Turkey, where the company has not established its presence, including recording poor performance in the Scandinavian countries. The Managing Director of the company acknowledged the fact that the location of the business disfavours the overall idea of innovative administrative practices, alongside adoption of technological solutions. This forces the company to rely on external concepts for the purposes of advancing the company business. The expansion into the global market poses a major test to the firm and its assets. Such practice calls for the need to implement global marketing strategies such as adapting workable business models and theoretical constructs (Doole & Lowe, 2008). Theoretical Constructs or Best Practices Applicable Indesit Company requires some theoretical concepts and business models for the purposes of penetrating Germany, Turkey and Scandinavian markets. In such a case, the company should consider cultural theory of buying behavior. In this case consumers make purchases based on their cultural backgrounds. Culture refers to set of values and beliefs defining a particular community. In such regions as Scandinavia, purchases are based on various aspects such as income and nature of occupation. Generic theory also applies in this case since consumers in these regions are prone to investigate new home appliances within on the market, evaluating their features, benefits and pricing before ultimate decision to purchase. Consequently, consumer feelings concerning the product after the purchase also present some issues. The customer is more likely to purchase the brand if satisfied with its performance (Doole & Lowe, 2008). Additionally, different objectives of management as well as the nature of applicable market strategies determine the rate of penetration within such foreign markets. The gap model could be utilized to assist in the identification of gaps existing between the perceived quality of service and products given to customers and consumer expectations (Fareena & Merlin, 2000). Indesit Company will utilise the gap model part 4 (service delivery-external communications to consumers’ gap) that allows CEO as the leader of services provided within Indesit Company to preview and countercheck various designs and images used in advertising the company products before releasing the products to consumers within target markets (Fareena & Merlin, 2000). There is a necessity to understand the nature of attraction applicable for new customers and retention processes. Application of Theoretical Constructs to Conduct a Critical Analysis of the Chosen Situation The fact that the market share for Indesit in Germany is smaller provides an advantage to competitors carrying on business within the domestic market. In this case, some of the strongest competitors within the German market include Bosch Company, a company that has also dominated the European market for fairly long period of time. Germany market still held the most populous title in Western Europe. However, it was established that the biggest consumers of domestic appliances is United Kingdom. The major challenge in Germany is that the market is super aggressive with the presence of well established business entities that caters for clients with taste for German products (Rate of Small Business Failure in the U.S., 2011). Building Global Market Participation Indesit Company can build its global marketing participation through integration of supply chain processes and development of gap model 1 and 4 within specified market environments. Gap 1 provides effective management principles on consumer expectations leading to required means through which costs of operations are reduced while improving quality of products (Damien, 2005). The challenge faced in increasing scale and internalization was due to Indesit’s expansive operations within highly volatile global business environment. However, management’s application of standardized technology within dynamic supply chain planning processes would assist in building quality supply chain operations, therefore, ensuring efficiency across the entire supply chain within target markets (Lovins et al., 1999). Designing of Global Products In order to counteract the issue on rivalry amongst firms, there is need to focus on the nature of designed products, which focuses on the process of naming and branding. The naming of products and services should focus on fulfillment of cultural uniqueness and market position of its products. The case on branding Indesit Company through globally recognised identities makes it easier for consumers to identify with company’s products and services. The other unique idea involves presentation of company branded products in an easily understandable language that consumers within global market can easily identify themselves with. Indesit Company can utilize the art of brand positioning for the purposes of sorting issues surrounding marketability within Germany. This is since every consumer segment usually demands unique product characteristics alongside delivery processes. Acquisition of locally based strong brand could be utilized as means of penetrating emerging markets. Unique branding of home appliances requires application of meaningful names that are structured from incorporation of such elements as color, symbol, and logotype (Larson and Lush, 1992). The company’s brand evolution aims at being attractive to various consumer categories as well as multiple cultures (Larson and Lush, 1992). Locating Major Elements in Global Activities According to Hopwood (2005), the structure of the home appliances industry which Indesit Company operates in provides a rich ground for innovative opportunities. However, the favourable structural attributes within Indesit’s areas of operation grant the firm a capability of capturing a significant market share. In this case, various structural attributes of the company within the market determine its performance (Hopwood, 2005). The foundation of the company’s resource base enables to locate potential global activities within the market, as the resource-based view of such a company considers the presence of many firms within the industry. This would shift Indesit’s focus towards dealing with diversified products, therefore, direct effect on differential performance of the company. In the global market, various firms operating on the basis of high standards of marketing strategies benefits from competitive advantages (Sharma & Vredenbrug, 1998). Global market is segmented depending on recognized market characteristics. In this case, the nature of entry as applicable by the company determines the extent to which Indesit penetrates the market. Indesit’s presence in these regions can be determined through consolidation of its assets and nature of performance of major domestic groups. Some major competitors such as Electrolux and Bosch enjoys larger market share within South American regions. However, market responses to global products vary across countries. Development of Global Marketing Strategies There is need for environmental munificence that refers to abundance or scarcity of critical resources that company’s such as Indesit requires prior to operations within designed markets. Such elements on understanding the availability of resources is considered tantamount to knowing the possibility of a firm’s growth and survival. This also includes the different odds of sustenance of the firm in case of new entrants (Sharma & Vredenbrug, 1998). Usually, there is always presence of high competition in cases of limited resources. Within such dimension, firms with sufficient resources tend to thrive in the midst of scarcity, therefore, presenting the firms with the opportunity of generating competitive advantage. In this case, Indesit would benefit owing to the opportunity on maximizing market power owing to existing market prices especially in the event of scarcity of supplies. Despite the mentioned challenges, business organizations are capable of achieving competitive advantage through inter-firm learning where knowledge about various market segments is freely shared. Making Global Competitive Moves Indesit Company has to implement some radical changes for the purposes of competing favourably within the global market. However, major causes of such competitive environment include application of modern technology as well as strain within global markets (Wilson, 2001). Such occurrences could push Indesit towards adjustment and modification of various aspects within their mode of operations for the purposes of satisfying consumer demand. The company should however, adjust their operational costs for the purposes of justifying final pricing of their commodities within the market. This is since different market segments have different expectations as previously discussed such as quality, affordable prices of commodities, nature of delivery, desire for customized services and flexibility. Such considerations would ensure adequate changes within business strategies for the company. Consequently, Indesit Company should undergo tremendous changes focusing on reinforcing its presence within the Scandinavian home appliance market. In the wider European market, existing economic trends have largely influenced business activities hence contributing towards formation of alliances and partnerships between companies. However, such alliances require provision of adequate products capable of attaining competitive standards and demands from the market (Driscoll, 2009). Such trend calls for the company to restructure various strategies and activities comprising supply concepts and practices capable of addressing complex market demands. In the process, integration across supply chains presents the main challenge facing general operations of the company within specified markets. SWOT analysis Strength The company operates under strong brands namely; Hotpoint, Indesit and Scholtès. Additionally, there is heavy investment in electronic commerce through development of new home appliances with cultural taste within various regions; the strategy has enabled creation of new distribution channels for consumer satisfaction. Weaknesses One of the company’s weaknesses lies in finding a common communication language that is easily understood by majority of the population. The language is crucial in naming of products to be supplied within target markets. In most cases, companies use local language in naming products for purposes of penetrating local markets. Opportunity Incorporation of additional brand names into the product portfolio Stinol and Cannon provides consumers with wide range of taste, therefore, enabling the company to satisfy every segment of the market. Marketing all brands under the Indesit umbrella provides an opportunity for the company to establish its identity across the targeted regional markets. For instance, Italian market recognizes Ariston brand as opposed to the United Kingdom market that is dominated by the Hotpoint brand. Threats In the new market, Indesit Company faces the risk of being circumvented alongside segregation due to the use of new technologies already applied by existing companies. Consequently, the German market is considered a super aggressive market due to the presence of well established business entities offering products with local taste. Application of Porter’s five forces The Porter’s five forces of competition model provides good basis on the description of the nature of Home appliances industry within target markets. Porter’s Five forces incorporates such elements as threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products, and rivalry amongst firms within home appliance industry. Home appliances industry in German market has high degree on threat of new entrants since the industry is in continuous growth. Different companies have shown interest in expanding their operations within target markets such as Wall-mart and Bosch Company. Currently, there is no dominant home appliance company within the market despite Bosch Company being highly recognized within European region. According to customer value business model, analysis of the target group plays an important role in the establishment of such businesses within European region. Bargaining power of suppliers is relatively high in European region since the industry requires range of supplies for the purpose of normal operations. However, one of the distinguishing factors amongst suppliers lies in the nature and quality of materials used, nature of technology applied, and level of convenience obtained from products. In such instances where competition is based on distinguishing factors there is always increased costs that allows opportunity for suppliers influence. Bargaining power of buyers within European market is relatively high due to high population. One of the notable challenges to businesses within the region concerns customer retention. This is since the degree of switching costs is low due to availability of many branded home appliance products. Additionally, consumers in this region are willing to pay additional costs depending on quality of products. Consequently, the power of influence on prices remains with consumers. Moreover, Indesit Company faces low competition from substitute products due to their non-existence within the industry. This is since the Company’s operations ensure design of European home appliances while maintaining focus on establishing a modern, progressive enterprise through massive investment in modern technology. Indesit is considered as one of the first occupant of the German markets, therefore, making the company to benefit from an outstanding market share. However, an efficient strategy within the market required that the business practices should enable different roles by different factions, with one of the faction focusing on the channel combat amongst established contenders in Western Europe. Additionally, the other faction focuses on meeting desires of Russian and former Soviet Union Markets. Findings and Recommendations for Strategic Moves Necessary for Improving the Situation The case provides a significant difference between mature and emerging markets on the basis of relative strength of the company’s distribution channels. At the same time, it is crucial for Indesit to consider various factors influencing sales of their appliances within the domestic market before venturing into the global market. Since the level of market positioning is crucial in determining the potentiality of earning higher margins, Indesit should invest entirely on product brands. The company should take the advantage on the fact developing markets presents opportunities for development of strong brands. European region presents one of the largest markets for industrial goods hence accounts for over thirty percent of total global market share. The second largest market for industrial goods as identified by market research is Asia, followed with United States and other regional markets of the world also providing significant market share. However, market for home appliances as produced by Indesit is identified to be highly competitive in China despite the market being dominated by domestic brands. The best remedy towards rivalry in completion would be purchasing highly rated German brands. This could be used as leeway for Indesit in Germany, and a probable solution for the Scandinavian market too. Initially the market growth played to the advantage of a rapidly progressing Indesit however Arcelik carried the task successfully. This venture dictated the rate of deployment of crucial marketing activities and probably the purchase of a domestic competitor with a reputable brand (Doole & Lowe, 2008). Such marketing activities are influenced by the knowledge that companies ideally use competitive promotional techniques as opposed to that of their rivalry for the purposes of gaining competitive advantage in the global market. A typical example can be the case where Indesit Company attempts to create awareness of its large pool of products through sponsorship activities (Wagner et al., 2001). On the issue of bargaining power of buyers, there is demand for quality global products that ensures consumers obtain value for their money. For instance, in the case of firms such as Indesit, which are in the business of innovating technologies, there is the need to give consumers an assurance on the advancement of new features able to address prevailing individual necessities. There is a possibility of enticing customers with advantages as well as benefits not addressed by other related products within the same market. However, creating needs is an essential element to firms trying to make remarkable market segment for expansion of their presence. Such a strategy leads towards provision of more opportunities to customer’s choices on products depending on their specification, personal requirements as well as prevailing needs (Wilson, 2001). Indesit Company’s changes of price index could determine their progress within the global market. This is ensured through production and innovation of more products. However, such marketing processes depend heavily on development of strong brands. The company requires intensive advertising and promotion of the company’s brand known as Indesit. There is also the necessity of applying different promotional techniques for the purposes of influencing the market and gaining stability. Technically, the company uses promotion that refers to “the advancement of a product, idea, or point of view through publicity” (Driscoll, 2009). The main objective of such agenda is enhancing the demand for a product and increasing sales within a target market (Magretta, 2002). The company should also make attempts towards analyzing the impact of other companies in various target markets. This included preferred and applicable product promotion techniques, and the influence on market position of home appliance products. Conclusion In conclusion, Indesit Company’s consideration of a global strategy, management principles and supply chain integration is of prime importance, especially when venturing into foreign markets, as related products from other competitors usually present stiff competition. Such competition usually has direct impact on the companies’ profit margins. However, most of the senior managers are recorded as perpetually tackling supply chain issues based on operational matters rather than strategic principles. Pressure experienced on the sale of company products within foreign markets justifies the use of appropriate business models and concepts. This should be considered for the purposes of avoiding unnecessary costs incurred at the inception of such business ventures. Conclusively, integration of all elements within supply chain is identified as most critical since it enables sustainability as well as organic growth of the entire business. References Doole, I. & Lowe, R. (2008) International marketing strategy. Available online: http://estore.bized.co.uk/ Driscoll, M. (2009) Public Relations and advertising. Available online: http://aboutpublicrelations.net/ Fareena, S. & Merlin, S. (2000). Services marketing management. The Journal of Services Marketing, 3(14), 188. Hopwood, B. (2005) Sustainable development: mapping different approaches. Sustainable Development, (13), 38–52. Larson, P. D. & Lusch, R. F. (1992) Functional integration in marketing channels: a determinant of product quality and total cost. Journal of Marketing Channels, 2(1), 1–28. Lovins, A., Lovins, H. & Hawken, P. (1999) A road-map for natural capitalism. Harvard Business Review, 77(3), 145–158. Magretta, J. (2002) Why business models matter. Harvard Business Review, 22(80), 86–92. Rate of Small Business Failure in the U.S. (2011) Small and medium business trends. Available online: http://smb-trends.com/2011/02/smb-failure-rate-us/ Sharma, S. & Vredenbrug, H. (1998) Proactive corporate environmental strategy and the development of competitively valuable organizational capabilities. Strategic Management Journal, (19), 729–753. Wagner, M., Schaltegger, S. & Wehrmeyer, W. (2001) The relationship between the environmental and economic performance of firms. Greener Management International, (34), 95–108. Wilson, A. (2001) Creating a climate for change- the case for media neutral planning and how to get there. 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