Introduction to International Business; Global Marketing
Introduction:
In this assignment, expansion of Wal-Mart will be analyzed from different marketing tools and models that enable the company to decide and compose certain effective marketing strategies that lend a hand to successfully commence their operations in the market of China.
Pestle Analysis:
Pestle analysis the core instrument for any marketing department to take into consideration for the expansion of any business. The term Pestle generally stands for political, Economical (E), Social (S), Technological (T), Legal (L) and Environmental (E). It is quite beneficial and effective tool in performing marketing practice and especially supportive enough in this domain.
Political factor of China:
China is considered as the most vibrant economy of the world and therefore, the political stability comes under the perfect mode. The political conditions have a greater prevalence over the companies as most of the ventures are progressively drawing their attention towards this factor. The republic of china has one of the stable political systems across the globe and the country is governed and run by democratic government . The country is committed to strengthen the political structure so that the investors and new businesses come and expand their businesses in politically viable environment. Therefore, due to feasible political stance, the companies that are coming to initiate their business will contain definite advantage over competition stance because the political stability means a lot for them.
Economic factors of China:
China is recognized as its robust and incredible growth of the economy and financial possessions. The company would rejoice extra lead by entering into the most fascinating economy throughout the globe. The republic of China is a developed country in terms of both macro economies by having an enormous Gross Domestic Product (GDP) value which is CN￥56,884,521 in the year 2013 and experienced a growth of 7.7% from the last year 2012 . The Per capita income is also incredible in the China while, the foreign direct investment stance is also making a boost to a greater extent. Therefore, the companies wish to enter into this particular region will certainly get an edge relative to different region as they rejoice the opportunities of economic propensity and high income from numerous dimensions that would be obliging for the company.
Social factors of China:
The social aspect is also quite significant for the company that neither be skipped nor ignored. It is of great importance from the organization’s view point so that the companies would always attentive to consider this factor while expanding the business into another country. However, there are loads of components associated with is very aspect and among them, the religious factor is the most prominent social factor. There are lines of religion that exists in the China and the same is categorized below the following chart.
The aforementioned chart divulges that the Buddhism lead the proportion by hitting 35.1% of the population that relates to Buddhism religion. However, the Taoism and Christianity are the next practiced religion with having a proportion of 33% and 18.7% respectively. The companies should consider this religious aspect into consideration for expanding the business in China.
Technological factors of China:
The republic of China is a high tech country that is growing with their innovative approach in the world. Their technological expression can be identified from their cutting edge technology employed in different industries or product manufacturing stance. There are high tech system and process applied in the retailing industry therefore; the company that is likely to enter into this market can easily catches their desire motives successfully . The constant expansion in technically sounds Country will certainly give an edge to the wall mart.
Legal factors of China:
However, the legislation has a great influence over the economy of the country and a company wishes to come in must have to adhere the given regulations that are formulated by the legislative authorities. Therefore, this compliance will certainly hurt the company in terms of their profitability. The company has to strengthen their compliance department to adhere the regulations of the country in a strict manner. This is s risk factor for the company because the company is unable or even dares to perform any activity that is contrary or a violation of the legal aspects.
Environmental Factor of China:
In regard to an environmental stance of China, the country is a healthy and one of the pro hygienic states listed under ambit of top hygienic countries in the world. This expression comes into the favor of the company to expand their business in a healthy state.
Porter five forces:
It is equally important marketing component for the company to bring into play and helps the company to compose fruitful strategies in the process of expansion.
Competition within the Industry (High)
As it is mentioned earlier that China has opened the doors for foreign investors to come and expand their business under the premises of the Country. Therefore, taking this factor into consideration, the environment is becoming competitive more and more that reflects high competition in this specific geography . As a result, Wal-Mart needs to identify unique and key success element within the Chinese market in order to get leading edge and meet their targets.
Bargaining Power of Customers (High)
As it is quite obvious that Wal-Mart is a well reputed retail store that has its own recognition across the world. However, go into flashback, China didn’t allow or permitted any international brand to come and expand their operations but the table have been turned around and investors are showing interest in making an investment in this particular region and due to this fact, the customers have a range of options in the market to get facilitated . Therefore, it would be tough for the company to go with high prices. The consumers will expect for bargaining element on all of the products due to unfamiliarity with the product’s quality but over time, the company will validate the same with low risk.
Bargaining Power of suppliers (High)
As we discussed that China is a growing market in terms of different businesses therefore, the availability of suppliers are also high where we would have lower rates that helps the company to maintain quality within the competitive rates.
Bargaining Power of Substitute Products (High)
This threat is always present in China as the bargaining power of substitute products is immeasurably higher. In that case, the company must be pro-active by keeping a hawk eye over their competitors in terms of introducing a substitute product that will derail the position of the company
Threats of New Entrants (High)
Marketing Mix:
Marketing mix is yet another aspect through market strategies is formulated for those companies tends to enter into new region. This marketing model is mainly comprised of 4ps that referred to people, place, pricing and promotion.
People: The segment people are synonymously known as target market of the company. Therefore, with the intention to attain an edge over peer entities, Wal-Mart should bring their attention towards most dominating stimuli that will certainly ensure the existence of the company towards its target market . At this time, the company has to focus on a target market that based on middle and upper class income groups.
Pricing:
In order to win a market share a market share, the company has to implement low pricing strategy in the initial stages to win the trust of the people. The standard retail store has the capacity to enhance their product range in front of end-users. Therefore, Wal-Mart has to be committed to apply pure play technique to set appropriate prices for the right product at the right time.
Pricing Strategy Model:
Place:
All is required by the company to search out most appropriate destination through which they can easily approach their target market in an efficient manner . Hence, the same is done by acquiring a number of franchises and multiply their selling networks with several cities and different areas of China.
Promotion:
The promotion is the core element for any business to keep their customers familiar with their products or services and for that, the company has to exploit diverse promotion mediums. However, there are some other ways through which the company can augment their recognition in front of their customers. Those promotional practices may encompass with coupons, discount deals, brands with strategy like buy 1 and get another free offer.
Conclusion
The whole assignment is entirely based on the market expansion of Wal-Mart in the Chinese market. From the aforementioned analysis, it has been clearly revealed that it would be quite supportive and beneficial for the company to step forwards into the market of china as all of the aspects are favorable in the account of the company. This will also help the company to boost their brand recognition, enhancement and net income not only in China but also the other territories of Asia.
References
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Sudarshan, D. &. (2010). International Marketing Management. Olympia: Discovery Publishing House.
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