International Marketing - Assignment Example

International marketing Ethnocentric and Culture: The selection process of human resource varies from one country to another country. While entering into international market; the MNC has to consider ethnocentric, geocentric and polycentric approaches while dealing with human capital of the company. Ethnocentric approach means employing host country nationals. Country nationals are citizens from nations other than the host country. Ethnocentricity is seeking global advantages through international integration. Lack of local response may arise in ethnocentricity. Host country national consists of local employees that can be hired by the MNC. Geocentric means employing third country national and Poly centric staffing means employing home country nationals. Home country nationals are those from the MNC’s home country. Ethnocentrism is a part of Chinese culture and it often creates barriers from one another and causes to from wrong opinions about each other. It often causes racial discrimination, hallo effect and wrong actions. “Ethnocentrism may be defined as the tendency to view the values and behavior of other peoples as invariably inferior and less "natural" or logical than those of ones own social group and to judge the values and behaviors of other peoples by the standards of ones own social group.” (You are a Fluke of the Universe). Ethnocentric beliefs make people of the same race and class acted in the same manner, as well as believing that their race is superior. Culture is the set of values, moral beliefs, and way of doing things in a specific community or group of people. Culture is a challenge to the MNC’s in the international market. In order to succeed in the global market, it is essential to understand the local culture and can make appropriate changes in business activities. Now a days MNC’s are adopting various changes in their approach due to the new global market opportunities. They identify that the cultural aspects as important part in their strategy. BRIC economy is continuously increasing and MNC’s had realised the importance of understanding culture and norms of emerging economic powers. BRIC is the new emerging market and includes Brazil, Russia, India and China. “Although BRICS economies are growing, this growth would not adequately reflect on prosperity and per capita income. In this scenario, BRICS as an alliance could ensure that the benefits of this projected success story reach the people in these countries, and are not siphoned off by unfavorable trade agreements or hot money invested from other parts of the world.” (Bhattacharya). On this competitive world, China has become a well-recognized political and economic power that plays a vital role in international affairs .China has trade relations with more than 220 countries and regions. “According to the World Bank, China is the world’s largest economic power. The People’s Republic of China (PRC) already ranks among the “elite group of the world’s ten largest exporters and the development of a true international market, with hundreds of millions of customers, may well revolutionize the economy of the entire planet.” (Schenk). Global marketing requires understanding cultural aspects for foreign entry and local marketing as well as for global management. International marketing is essential as it opens wider opportunities with emergence of WTO and other supportive foreign trade practices. The main objective of the international marketing is to exploit market potential and growth. It is helpful in diversifying market and for gaining economies of scale. Global entry is required to meet several challenges such as entering into foreign market, local marketing and global management of issues. It is essential for market analysis and research for understanding local behavior of buyers. Global marketing decisions involve global segmentation, target positioning, and global marketing strategy. Cross cultural market analysis and research is essential for meeting challenges in the global market. Difficulties in globalization are that political factors, war situations, and general factor such as accruing of capital, experienced labors etc. It is also difficult to market the product which is culturally sensitive. Impact of global market is that “Key emerging economies are driving global markets, not only via burgeoning exports and in the scramble for scarce raw materials, but also in their growing financial muscle, which promises to alter the balance of international financial power.” (Trade and Finance Nexus). Metro Cash and carry is the global market leader in the self service wholesale outlets. They have two brand names that are Metro and Makro. Their success is the results of their global competitive marketing strategy based on cultural aspects.” Metro’s arrival has filled up the commercial vacancy and contributed a lot to China, such as strict adherence to the countrys laws, payment of high taxes to the local government and more employment and professional training to improve the local economy. Metro attracts many other investments and improves the districts economy.” (METRO China). The success of the Metro is related to their efficiency in meeting local and international customer’s needs and preferences. Government plays a crucial role in development of global market. Favorable trade policies such as export promotion, foreign investments, ISO Standards and Free trade agreements etc are the factors which influence the global market. “Metro, the worlds third largest retailer by sales and the worlds largest cash & carry system business, has speeded up to seize the retailing market in Southern China.” (Metro Edges into Southern China’s Retailing Market). 1. What aspects of culture are important for metro to consider in India? India is basically an agrarian economy, more than 70 percent of the populations are depending on agricultural and the other related activities for their livelihood. So even if Metro is trying to entering into the Indian market, the major thing they have to consider is the agrarian culture of the economy and they have to concentrate more on such products. Many of the Indian population reside in rural areas. This is one of the major disadvantages faced by Metro since they cannot penetrate into the rural market of India since it would be highly costly and may not be profitable also. Indian market is still dominated by the government owned mandis, which was started to protect the farmers and to provide them with reasonable price. But it did not happen to be successful any farmer suicides are prevalent in the Indian market. India is also characterized by a highly fragmented whole sale market and because of this reason the international companies cannot step into the Indian market. About 98 percent of such market is wet market in the sense they are served in the traditional style itself. They Indian consumers are more depending on vegetable and other fresh foods rather than going for bulk and stored food items. Because of this reason the infrastructure facilities like cold storage are also low in India. But due to change in the life style and westernization has in turn increased the standard of living of India now days. This has increased their consumer spending to 34 percent. Since the standard of living of the people is increasing more development is forced in the country through some infrastructure modernization program. This is attracting foreign investments to India, which might result in the transformation of Indian culture and might prove advantage to the Metro to enter into Indian market. Economic reforms have been initiated in India in the 1990s and are encouraging the private participants to enter into the Indian market. 2. How should Metro change its methods of dealing with political risk in India? India follows a democratic parliamentary set up. The government change very quickly since there exists multiple political parties. Its political structure is characterized by central and state governments, which has got separate powers. It is the central government that exerts pressure on the state government. If the political parties of the state government are different from the party in power at the center, there is a possibility of an election at the state level since the ruling party at the centre has more power. Only if the political parties of the central and the state governments are co-existing, there will be a stable and powerful government. Because of this reason the rules and regulations imposed by one government may sometimes change by another government. So before entering into the Indian market, the political situation of the country should be clearly studied, especially whether the existing government is in favor of new international entrants into the Indian market. For stating a business which seeks national presence, it is important to investigate the policies of the government regarding it. It is the state government that is controlling many affairs of the country including agricultural marketing. Central government has control only on the foreign direct investment and other aspects. Since Metro C&C is characterized by high quality goods targeted at business customers and SMEs like hotel, restaurants, bars etc, it should choose locations in metro cities like Delhi, Mumbai and the west region where the land prices are reasonable and the climate is favorable. The metros cities in the south like Chennai and Bangalore has more or less unstable political situation. Also since India is agrarian economy, more importance should be given to the farmers as per the guidelines of the Indian government like farmer operated grading, sorting and packing. All these should be operated so as to maintain the quality and also the shelf life of the produce. In metros, the transportation is also made easy in cooled vans from the collection centers to the destination centers. This will improve the export potential for the fresh products. Based on the Information in the case, how might the self-reference criterion and psychological distance affect the management of Metro’s operation in India. India is country which adopts the changes very slowly. Its economy is characterized by predominated by so many retail and wholesale operators. They basically will not allow any huge international players to enter into the market since they will loose the business. So when the Metro entered into the Indian market there were huge agitations initiated by various political parties. The agitation was mainly against privatization and liberalization and also they accused metro that it charging exorbitant prices which will lead a monopsonic situation. They also accused Metro as another East India Company that will exploit the resources of India for their benefit. All the wholesalers also turned and acted against the coming up of Metro. Later the news came in all newspapers and the situation became difficult to manage. All these arguments against Metro suffered much psychological pain so as to secure its status in the Indian court. But some of the press opined that the entry of Metro bought radical changes in the outdated trade and distribution structure and also reduced the high margins that were prevailing in the business operations. 3. How are the core benefits and conditions of use of what Metro offers the same or different in India? What does this imply about how they should manage their product offering and communications? The core products offered by Metro include both dry goods and fresh foods. They also provide non food items and many other commercial types of equipment to its customers for maintaining small business. Metro is using intensive computer merchandise management system and give high emphasis for customer service. In addition to the food retailing trade, it is offering many other services like convenience stores, caterers and other service operators. They are providing high quality goods mainly to the business customers and institutions which include hotels, restaurants, bars, cafe, to specialized food and non-food retailers, to government and other non-profit institutions. It also gives the customers valid business registration that will allow the buyers to buy from any of the Metro outlet. They are providing magnetic plastic card services to all the SME customers. The customers are identified after conducting a survey of the potential customers and their needs. They also make direct updated mails to the customers regarding the sales, special offers and prices. They also provide a wide selection of the international products. Its procurement facility helps to generate more business for the local manufacturers and farmers and also help to modernize cultivation, processing and distribution mainly in the emerging markets. The cold storage facilities provided by Metros increase the longevity of the fresh food and also reduce the waste in the emerging markets. Indian market has accepted the Metros and its products. It was seen that in India even in the absence of sales of the perishable goods, sales of food items amounted to more than 10 percent of the estimated budget and the total sales increased by 58 percent. Indian market had required innovation and two more centers could be opened in India. But the only thing to be taken into consideration while operating in India is that more importance should be given to the procurement and distribution of the agricultural commodities. They should be also provided with sufficient storage facilities to store their perishable products so that the farmers will be able to get adequate price for their products by reducing the margin between the middlemen. Computerized merchandise management system should be also practiced in India, so as to efficiently manage all the customers. 4. How is Metro exploiting their global marketing system in India? What aspects are they standardizing and adapting? Metros are providing a variety of international products to the customers. It is also adopting computer merchandise management system so as to manage their customers effectively and also provide the facilities at the door steps of the customers. They give priority to the quality of the service and their main customers include hotels, bars, restaurants, government and other non profit institutions. It operates among the customers through a valid business registration which allows the customers to accept the service from any metro outlets. It also gives the registered customers up to date information related to the price of the products, availability etc. It is also providing storage and procurement facility to the customers so as to allow the customers especially the farmers to modernize the cultivation practices and also processing and distribution channels. 5. Metro have entered India, China and Russia and they are trying to build operations there more or less simultaneously. What are the pros and cons of this decision? When comparing all the three countries in which Metro is trying to build its operations, China is the most thickly populated country compared to India and Russia. But in Russia even though the population is low, the land area available is large when compared to other two countries, so there is a potential for the starting of Metro in Russia. By comparing income wise, China is having more GDP growth rate and because of that the income availability is also more in the individual hands. In the spending patterns, retail sales of goods and services and in food service sales also China stands first. Viewing from this aspect, there is a huge potential in the Chinese market to start a Metro market. Looking from the opportunities of each country, China is protecting the local producers and manufacturers. But there is a huge need for centralized ware houses for storing of the processed foods and non-processed foods. It is also having an inefficient distribution system also. So with the entry of the Metro into the Chinese market, these opportunities can be exploited. China has given permission for wholly foreign owned business to operate in their country and this regulation will make the entry of the Metro much easy. In Russia also there is a wide opportunity for the Metro since there does not any supermarkets which are providing high quality produce and excellent services. In India, even though the government is not permitting such international super markets to their country, there is an opportunity for Metro to enter into Indian market due to the economic liberalization followed by the economy. Works Cited You are a Fluke of the Universe. Cultural Syllabus. 7 Dec. 2008. . Bhattacharya, Devjani. 9th International Conference on Brics Agenda for Corporation. INDIA edunews.NET. 20 Dec. 2007. 7 Dec. 2008. . Schenk, Thorben. Foreign Marketing Servicing Strategies the METRO Group in China. Grin Publishing for Free. 2004. 7 Dec. 2008. . Trade and Finance Nexus. Trusted Sources. 2008. 7 Dec. 2008. . METRO China. Metro Cash & Carry. 20 Oct. 2003. 7 Dec. 2008. . Metro Edges into Southern China’s Retailing Market. BNET. Mar. 2004. 7 Dec. 2008. . Read More