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International Business Marketing - Essay Example

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International Business Marketing

(Tai, et al 2005).
Population growth rate and FDI are considered the main factors for country selection. Examining the statistical results, it is evident that China is on the top of the list having the highest population in the world (Table 1). The average rate of population growth is a lower than in India and Indonesia, nevertheless, it is expected that in 2025 the population in China will be about 1,476.0 ml, in contrast to India which will has only 1,363.0 ml (2004 World Population Data Sheet, 2005). According to the survey, "China was the largest FDI destination in the world in 2003, overtaking the US" (FDI Confidence Index, 2004). It has stable political situation, and high rates of economic growth. In case of China, FDI is a very important feature of the economies of the developing countries. For many big Western companies, expansion of their sphere of operations through the establishment of branches in other countries is regarded as a key aspect of strategy, often more important than immediate returns on capital. Many firms are seeing their investments as lower than they would have to be in the future and as providing them with a first-mover advantage as those economies begin to grow significantly. In 2003, FDI inflows were $53.5 billion. The economic health of countries is also assessed to determine whether the macroeconomic conditions are conducive to stable economic conditions. The economic prognosis says that 40% of world's investors "expected a more positive outlook on China's economy" (FDI Confidences Index, 2004). China expects liberalization of market, and that is why all those risks will be minimized. Demographic factors, taken into account together with measures such as disposable income per head, shows that China and India are two potential markets for this product. For instance, GDP per capita growth rate is the highest in China (8.8%) in contrast to other countries included in the list (GDP per capita, 2001).
The penetration strategy will be based on specific product line which has not been developed yet. The strategy will be aimed to promote luxury skin care line for pregnancy and early motherhood. Estee Lauder has not promoted this product line, but its skincare product meet high quality standards making them safe for pregnant women. Cosmetics for pregnancy is based on all natural cosmetic line (Begoun, 2006) as those proposed by Estee Lauder. This strategy is important because there are limited number of companies promote this line in China (Dowling, 2006).
International expansion strategy will consist of several steps.
1.The first step (during the first year) - co-operation strategy and selection of sales agents in big cities. (This step is aimed to evaluate market potential and growth rate, as well as competition tension. Estee Lauder will sale its products through drug stores and specialized stores for pregnant women in big cities around the country).
6 month - identification of potential agencies and sellers; contracting and licensing
6 month - advertising and promotion campaign, opening a Web page
After the first year of performance - evaluation and analysis of the market potential
2.The second step (during the second year) - employing sales representatives and agents in order to promote products around the country (the aim is to sell products in middle-size cities through agents, drug stores and specialized stores for women; competitive rivalry on both a price and a non-price basis.

3.The third year - to ...Show more

Summary

Estee Lauder is a US-based company and the forth world leader in cosmetics industry. It operates on the global market competing with such firms as L'Oreal, Lancme and Shiseido. Its products include: cosmetics, toiletries, and skincare products for men and women…
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International Business Marketing essay example
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