International Management of Herborist - Essay Example

International Management Contents International Management Contents 2 Introduction 3 Discussion 3 a. Entry Mode 3 b. Marketing and Growth Strategies 4 c. Sales Network 7 Conclusion 8 International Human Resources 9 References 10 Appendix 11 Introduction Herborist is considered as a high quality Chinese brand focusing in personal care products. The brand Herborist is built up by the company Jahwa which is considered as a leading personal care organization in China. The brand has steadily increased its market share since the year 2008 in the global markets. It has also created a unique brand image through successful integration of principals and ingredients from traditional medicines of China into its products. The products of the brand Herborist are considered to be infused with Chinese herbs which are extensively researched by the company’s research and development team. The brand was launched by the company Jahwa in the year 1998 and since then Herborist has experienced significant growth. Herborist has achieved $ 8.2 million of revenues in the year 2004 which led to a huge amount of profitability for the brand. The brand already has its existence in numerous European countries including Poland, Spain, and Italy with 80% growth in sales annually. Discussion a. Entry Mode The entry modes for organizations into foreign markets are considered to be of two types such as non equity and equity modes. Non equity modes of entry comprise contractual agreements and export. The equity modes of entry are considered to include wholly owned subsidiaries and joint venture. The best way for the brand Herborist to get access to foreign markets such as Thailand is to enter into joint ventures with other reputed organizations that focus on personal care products in the market of Thailand. This will provide the brand Herborist with immediate access to the market of Thailand. Since the brand is already recognized on a global platform to provide quality personal care products, it will be easy for the brand Herborist to form a joint venture with another reputed personal care company operating in the country of Thailand. It could consider forming a joint venture with Sephora group in this regard. The brand will enjoy numerous benefits by entering into a joint venture with the Sephora group such as gaining access directly to local markets, reduction of political and marketing risk, overcoming the restrictions of host government in an efficient manner, and sharing the risk of failure. As the brand has already established a partnership with Sephora group in France, it will play an important role in their working efficiently in a combined manner in Thailand. There are also certain disadvantages in this regard such as problem of transfer pricing, problem of adjusting to different cultures may lead to different modes of management, and loss of flexibility, etc. The company can also focus on contractual agreements with Thai SPA (Future) to get an immediate entry into the market of Thailand. There are also numerous advantages for the brand Herborist in this regard such as low market entry risk, cost advantages, stable income from such contract, and control over sales and marketing services and also R&D activities. The disadvantages in this regard may include possible limitations of supply and problems with regard to finding a manufacturer who is considered as reliable. b. Marketing and Growth Strategies Marketing strategies of an organization are considered to be a part of marketing plan which is designed to achieve the marketing objectives of an organization. It includes the following steps: I) Effective planning of marketing strategies for a specific target audience, II) Creation of value for consumers through effective marketing mix, III) Extensive use of sponsorship as a means to improve brand awareness, IV) Creation of a marketing mix which can be considered as winning, and V) The development of new products as a means to grow a brand. The marketing mix comprising of 4Ps has been widely used with respect to marketing of products by organizations. It consists of place, product, promotion, and pricing as factors that tend to significantly influence the purchase decisions of consumers. The brand Herborist should try to design its marketing mix in such a way as to promote the products that are manufactured by the company (Avlonitis, 2001, p. 51). It should promote its product’s unique selling points such that they are considered as unique with regard to products that are manufactured by its competitors. It should try to perfect its product further and seek to distinguish itself by its healthy and environmental style including the concept and packaging. Herborist should also try to get international quality certification with regard to its products and adhere to the product regulations and policies that are there in Thailand. The company should place a high degree of emphasis on its positioning of products which are considered to be produced from traditional Chinese medicine (Kolb, 2008, p. 98). The pricing strategy of the brand Herborist with regard to its products must focus on keeping the prices low such that they are not considered as unaffordable by consumers. In this regard, it can be said that Herborist did not choose Japan as the target market because it is considered to be rather advanced in the industry of personal care products. Herborist will find considerable difficulty in gaining competitive advantage in Japan because the country is considered as very developed in personal care products. The country is also considered to have a high expenditure with regard to personal care products and as such its people can afford better brands such as the Luxury. People of Japan may choose products of Chanel as compared to that of Herborist. The existence of local brands such as Natura Purifv is also an important hindrance for the brand Herborist with regards to gaining entry in the target market of Japan. Therefore it is highly suggested that Herborist chose the country of Thailand as the target market. It should focus on competitive pricing with regard to other high end brands and keep the prices of its products at a reasonable level. The company must seek retail agencies and try to sell products through counters at departmental stores. The brand Herborist must also keep on setting up SPAs in Thailand combined with its products (Bowhill, 2008, p. 67). It should continually build up self supporting flagship stores in an attempt to make those not only product selling stores but also a place where consumers can experience one to one consulting. The brand Herborist should also employ numerous promotional strategies such as advertising, internet marketing, and sponsorships, etc. The use of online platform by the company can prove to be of immense help because it can reach diverse set of consumers through its effective utilization of internet marketing strategies (Cha, 2009, p. 69). In the world of today where technology has occupied an important place, retailers have resorted to social networking sites as a tool for marketing their products to a wide range of customers. The approaches and tools of organizations have changed a great deal with respect to interaction with consumers after the emergence of social media. In this regard it is of utmost importance that organizations learn to apply the uses of social media in a way that would be consistent with their plan of business (Smith, 2004, p. 39). Organizations trying to gain competitive advantage over its competitors must focus on the uses of social media marketing as a tool for competitive growth. Social media has made a huge progress from simply acting as a means to connect individuals with their friends and family. It has become a useful means through which consumers are able to learn new facts regarding their preferred companies and the services and/or products they sell. Retailers and marketers have started to use these sites to their benefit (Tuten, 2008, p. 93). They are utilizing these sites to reach new consumers and also provide them with an additional way of shopping. The long term growth strategies of Herborist could be broadening of consumer base, R&D activities, public relations strategy, management development, and finance development. The company should reach new consumers in an attempt to improve its performance in the country Thailand. The R&D activities of the company should focus on concentrated product development and also on launching of a second product line using a brand name which is differentiated. The public relations strategy should involve cross industry development and also increase the publicity power of the company in an attempt to broaden the influences of brands (Cole, 2003, p. 79). The management developmental activities of the brand should focus on changing the way its business functions and operates. It should also try to increase the market share of the brand Herborist. Finance developmental activities of the company should aim at maintaining steady cash flow for the brand Herborist. c. Sales Network Herborist should consider selling through counters at departmental stores because it leads to improved brand image for the company. The qualities of products that are sold through departmental stores are considered to be very high. It also guarantees a constant flow of consumers. The opening of online stores by the company can considerably reduce expenditures as it seeks to eliminate intermediaries in the process. It also provides the company with the option of employing fewer employees and purchasing less number of equipments. The company may consider opening of physical stores which may provide competitive advantage of low priced products (Ashford and Beamish, 2005, p. 49). The brand Herborist should find new ways of working while it seeks to enter into foreign countries. In this regard, the central role of management must be changed. The workers should be treated as belonging to a collective work force and should not be treated as individuals. Workers of the company should be encouraged to treat members of management as partners and not as opponents. The company is considered to have a Chinese culture and so it must effectively handle the culture of other countries when it seeks to diversify into other countries. Organizational culture is considered as very important because it refers to a system of shared meaning that is shared by members of an organization. It seeks to distinguish an organization from other organizations in the industry. Conclusion Herborist is considered as a high quality Chinese brand focusing in personal care products. It should try to create a unique brand image for the company in the target market of Thailand through successful integration of principals and ingredients from traditional medicines of China into its products. The company should focus on joint ventures with other reputed organizations that focus on personal care products in the market of Thailand. This will provide the company with an immediate access into the target market of Thailand. Since the brand is already recognized on a global platform to provide quality personal care products, it is not that difficult for the company to find a suitable partner in this regard. Herborist will enjoy numerous benefits in this regard such as overcoming the restrictions of host government in an efficient manner and sharing the risk of failure. The company can also consider the option of contractual agreements to get an immediate access into the target market of Thailand. It can tie up with Thai SPA (Future) in this regard. There are numerous benefits for the company with regard to contractual agreements such as lower entry risk and cost advantages. Herborist should not choose Japan as the target market because it is considered to be rather advanced in the industry of personal care products. The gaining of competitive advantage by the company in Japan will be very difficult as it is already considered as a highly developed market with regard to personal care products. International Human Resources In this case the company under consideration is planning to enter into the country of Thailand. So the company will have to follow the human resource policies prevalent in Thailand and accordingly replicate their policies. International polices like minimum wage law, working hours and gender discrimination and maintenance of organizational culture should be the focus of Herborist. These are the only external HRM aspects the company needs to follow. On the other hand the company needs to have internal focus on motivational strategies of employees, lucrative incentive schemes according to the industry average of Thailand. References Ashford, R. and Beamish, K., 2005. Marketing Planning 06/09. London: Routledge. Avlonitis, G., 2001. Strategic Industrial Marketing. London: Routledge. Bowhill, B., 2008. Business Planning and Control: Integrating Accounting, Strategy, and People. New Jersey: John Wiley & Sons. Cha, J., 2009. Shopping on Social Networking Websites: Attitudes towards real versus virtual items. Journal of Interactive Advertising. 10: 77-83. Cole,G. 2003. Strategic Management . London: Cengage Learning EMEA. Kolb, B., 2008. Marketing Research: A Practical Approach. London: Sage. Smith, G., 2004. Control and Security of E-Commerce. New Jersey: John Wiley & Sons. Tuten, T. L., 2008. Advertising 2.0: Social Media Marketing in a Web 2.0 World. Westport: Greenwood Publishing Group. Appendix 1. What does the customer want from the product/service? 2. What needs does it satisfy? 3. What is the value of the product or service to the buyer? 4. How is it branded? Read More