Analysis of Bentley Motors Limited - Report Example

Global Marketing Research Assignment Introduction The Bentley Motors Limited is a British luxury automaker. The company is a subsidiary of German Volkswagen. The primary task of the organization is designing, manufacturing, engineering and distributing the luxury automobiles which are under the Bentley marquee. The Company is based in Crewe, England. It was founded on 18th January 1919 by W.O. Bentley in Cricklewood in London and was later acquired in 1931 by Rolls-Royce (Brookes and Palmer, 2004). PESTLE analysis of England The PESTLE analysis of the England shows that it has the Largest GDP in the world of about $ 2522.26 billion. Research indicates that England has higher military expenditure as compared to other countries. It spends more than $ 651 billion per year, and 48% of it is on military spending. The current president has a recession to deal with. He is using a substantial amount of country revenues to stimulate the economy and also to try and stabilize the financial system of the country. In addition, he will pay more to work and assist the unfortunate mortgage holders to stick on their properties (Chee, and Harris, 1998). The unemployment level in the country is pushing 8.5%. Considering the wealth of the country, it indicates a national disgrace. Immigration is a social issue although the country cannot succeed without the immigrants. The higher education of England is one of the best in the world. Almost 99% of the entire population is. Majority of the people in England acquire training for a couple of years. In the world’s top ten universities, 7 of them are from England. Also in the 500 largest companies in the world, 153 are from England, and the Bentley Motors Limited being included in the list (Chee, and Harris, 1998). Unfortunately, the people in England do not live as long as people from other countries since they have to fight for their healthcare. Healthcare is an issue that consumes a lot of time and too many resources for both businesses and individuals. Violence in the England has minimized, but it is still a problem that requires remedy. England has improved the environment more than any other country. It has set up cap and trade on so as to curb acid rain and many more solutions to fight water and air pollution. The country needs to revise the land use and water policies, struggles that are not new to the country (Chee, and Harris, 1998). PESTLE analysis in Canada (Developed country) Canada has experienced change in government regimes through general elections. The governments of the day have been bestowed with the responsibility of formulating policies and regulations that control trading activities of international corporations that operate in the country and those which seek to enter and exploit the robust market. Despite the change of government, the policies have always remained unchanged for quite a while; hence, business has remained stable especially after the recent global financial crunch. A stable political environment in Canada will influence the prosperity of Roll Royce in the vibrant market that the nation has (Research and Market, 2014). The growth of Canadian economic sector is significantly supported by its service industry. It contributes more than 70% to the country’s financial sector. The automobile industry also offers a very lucrative market with major manufacturing companies such as Toyota having established its presence in the country. Economist project the country’s economy to increase to close to $ 3 trillion by the year 2018.The promising economic growth positions Rolls Royce to tap into the current existing opportunities in the automobile industry (Research and Market, 2014). SWOT analysis of Canada Strengths Canada is with many natural resources. The country is rich in oil reserves and is among the world’s leading exporters. Oil is an essential resource that drives the development of the automobile industry. Petroleum products are imperative because they produce fuel that is needed by motorists. Because Canada has plenty of the resource, Roll Royce is likely to succeed in the market since buyers will not have to worry about the fuel consumption of their cars. This is one of the aspects that are usually considered by car buyers (Research Market, 2014). Weakness Canada is in the most populous country in the world. The government of Canada charges exorbitant prices for startup businesses. In addition, taxation in the country skyrockets on a daily basis. The cost of capital for Rolls Royce in this case might be very high, and the company may be forced to operate extensively (IC, 2008). Opportunity The population of Canada offers Roll Royce an opportunity to meet the demand of diverse customers who have different need and expectation. Royce rolls are a unique car manufacturer that has managed to earn its reputation globally. The uniqueness of their products places the company in a better place (IC, 2008). Threats Roll Royce is likely to face stiff competition from companies that have already established themselves in the market. It may be difficult to convince customers who have their loyalty in cars manufactured by other competitors such as Toyota to change their taste and preferences (IC, 2008). Bentley entry strategies to Canada The success of Bentley will depend on the entry strategies that the company will employee. Strategies that may include, exporting, licensing, franchising, contract manufacturing, having joint ventures, or forming strategic alliances (FAO, 2014). The British luxury car manufacturer strategy will involve exporting ready-made vehicles to dealers. The dealers will buy the cars directly from the company then later sell them at a specified profit range. They will be expected to a broad variety of products that will suit customers’ needs. The dealers will be in Ottawa that is a populous city (Bentley, 2014). SWOT Analysis of England Strengths The country is the centre of large regional market. It has a proximity to a military base and markets for private companies like the Bentley Motors Limited. It has access to decision and policy makers. The country also has a highly educated workforce. The country has a very high score on the national standards and rankings for highly educated workforce (Czinkota, Donath, and Ronkainen, 2003). The country also boasts of having most of its citizens being trained. Its citizen obtains their education for about a couple of years. In the world’s top ten universities, 7 of them are from England. Also in the 500 largest companies in the world, 153 are from England, and the Bentley Motors Limited being included in the list. The country also has highly developed infrastructure that provides easy access to transit, commerce, and freight movement. It has good railway systems. Also, the country has good sewer systems, ample water, and reclaimed water sources. It has easy access to alternative and affordable energy sources (Czinkota, Donath, and Ronkainen, 2003). The country is known worldwide for having an advanced infrastructural facilities including but not limited to a well-maintained environment. The country also has access to the local salt water. The country also has many business support organizations (Czinkota, Donath, and Ronkainen, I.2003). Weaknesses Healthcare is an issue in England that consumes a lot of time and too many resources for both businesses and individuals. A large number of manufacturing firms in the country have experienced a lack of access to high-speed telecommunications within industrial areas as being a hindrance to their expansion and retention (Douglas, and Craig, 1995). The country also faces the problem of funding for transportation; there is a decrease in the sources of revenue that fund the public transport infrastructure. The country also experiences lack of economic development incentives. The state also requires vocational training in high schools and colleges (DouglasandCraig, 1995). Opportunities The country is a stabilizing employer for the region. The country also has emerging technologies that can be a source of market entrepreneurs. Investors can take advantage of the available telecommunication networks and infrastructures to make positive returns as well as create employment opportunities for the local people. The country also has access to port facilities that facilitate international trade. In addition, the country has higher education institutions that are a cause for transfer of technology and the catalyst for development of entrepreneurship (Gerbe, 2007). The country also has a number of financial institutions where local lenders may be motivated to capitalize local ventures. The financial institutions in this country act as an imperative source for financing new ventures and existing business at considerably low interest rates. The state also retains highly skilled workers with technical degrees (Gerbe, 2007). Threats The government in the United Kingdom is the predominant employer. The country also lacks public support for private employees. Another threat is the ability of local organizations to adapt quickly to the changing market trends. Another threat is the increasing cost of infrastructure and utilities (Gillespie, and Hennessey, 2011). Bentley Motors Limited an internationally recognized automobile company has strategies for promoting growth of its brand to a greater extent. Franchised worldwide dealers sell majority of the Bentley vehicles. Most of the vehicles are at the plant of the Company in Crewe, with a minimal number of Continental Flying Spurs joined at the Transparent Factory in Dresden, Germany. The Bentley cars in Germany are highly hand-built. The bodies of the Automobile for the Continental model are in Zwickau. The current production of the Bentley Motors is the Continental Flying Spur, Mulsanne, and Continental GT. The company’s former production models were Bentley Image, Bentley Turbo R, Bentley Speed Six and the Bentley 4 and a quarter. Liter Also in the company’s corporate website there is a number of affiliated models that have been listed by the corporation (Gillespie and Hennessey, 2011). The presence of Bentley Motors Limited internationally is phenomenal, and its colours, advertising, and logo are among the most recognized in the world. There are various market entry strategies that a company can use to make penetration into the foreign markets. Those strategies include joint ventures, mergers to mention just but a few Gillespie, and Hennessey, 2011). If Bentley Motors Limited wishes to go international it will face three major issues: 1. marketing: It has to decide which country to enter, which segments, how to implement the marketing effort and manage it. In addition, it determines on how to enter the market – will it come directly or use intermediaries, with what information are it entering the market with (Hassan, and Blackwell, 1994). 2. Sourcing: It will involve deciding whether the company should organization make or buy the products (Hassan, and Blackwell, 1994). 3. Investment and control: The Company will have to come up with the idea of how it is going to invest in the foreign market. It will determine whether to use joint ventures, global partners or mergers and acquisitions (Hassan, and Blackwell, 1994). Decisions in the marketing field majorly focus on the value chain. The company’s entry alternative or strategy must ensure that the particular value chain activities are integrated and performed. One of the most important questions to look into when setting up an international development strategy is to choose the mode of entry into the target foreign country and the channels of distribution. Several alternative methods of entry strategies can be (Kaynak, 1993). Multinational enterprises (MNEs) are broadening their reach globally, carrying their brand and products to new and diverse markets of emerging economies. They have to create brand and product portfolios that are in line with their competencies with local needs, as they tailor their strategies to the local contest. A multi-tier strategy with global or local brands may issue the MNEs the widest reach extensive market coverage. In addition, it has to be given support by an appropriate combination of both local and global resources. Thus, foreign entrants have to set up operational capabilities in a particular context that requires unique resources that are typically controlled by the local companies. An example of such a firm is the Bentley Motors Limited (Lee, Carter, 2009). The Bentley Motors Limited has recently begun to invest heavily in the Kenyan market. Kenya was a small priority country for Bentley Motors Limited when there was a citing population growth rate and low sales disproportionality (Paley, 2006). PESTLE Analysis of Kenya Kenya is a developing country lying at the equator. The economy of the country is the largest by GDP in both the east and central Africa. Its capital city is Nairobi; that is the major commercial hub of the country. The tax system of the country is based on pay as you earn scheme. The VAT rates in the country are very high. The constitution of Kenya guarantees fundamental freedom and rights to all citizens (Paley, 2006). The economy of Kenya is by a liberated trade system and few state-owned enterprises. The country stands number 14 according to the UN Human development index. The economy highly depends on the agricultural sector while the industrial sector remains underdeveloped. The major economic problems faced by Kenya are; Inflation, high population growth rate, rampant corruption and inflation (Paley, 2006). The GDP of the country has lacked consistency since independence. Inflation rates are above 9% in 2009-it rose to 26.3% due to political unrest and instability. The key industry sectors of the country are; mining, oil, electricity, tourism and Information technology. Crime and drugs are the major social problems in the cities (Paley, 2006). SWOT Analysis for Kenya Strengths Kenya is strategically positioned in East and Central Africa. Its unique products distinguish it from competitors. It has a superior technology which helps it meet the needs of its citizens (Palvia, S., Palvia, and Zigli, 1992). Weaknesses Kenya has a weak supply chain of products which affects it economically. The supply chain network has not been well defined and hence affecting the flow of goods from within the economy. In addition, a large percentage of its citizens are illiterate thus affecting it negatively because most of them may not be in a position to make rational decision regarding their purchase and consumption (Patrick, 1993). Opportunities International markets expansion offers Kenya an opportunity to invest globally. The availability of new products will help Kenya expand its business internationally. In addition, the emergence of call centres and new technology in Kenya will help business people to take advantage of advertising and exporting product globally in a most efficient and effective manner (Pimpa, 2010). Threats The availability of substitute products will make the demand for the countries products to reduce. In addition, the presence of volatile revenue will make planning difficult in the country (Pimpa, 2010). Entry strategies into the Kenyan market Bentley Motors Limited will enter the Kenyan market using various modes of entry. The most common methods are franchising, exporting and licensing. The company exports the Bentley cars to the Kenyan distributors and firms. The company will also begin permitting assembling companies in the country and supplying the necessary spare parts required to assemble the cars (Samli, 1995). Strong licensing relationships with Kenyan collecting groups became the platform for the entire Bentley Motors business growth. Franchising is a particular form of licensing strategy. There are various types of franchising. The Bentley Motors Limited will use the manufactured sponsored wholesalers franchise system. In the system of franchising, the retailers in the local market sell the completed cars. Licensing proved the most suitable mode of entry by the Bentley Motors Limited into the Kenyan market. The licensing strategy ensures ongoing competitive advantages like low-risk manufacturing relationships, export market opportunities and diffusion of new products (Shankar, and Carpenter, 2012). The other mode of entry that proved useful to the Kenyan market by the Bentley Motors Limited is exporting. 1. The Bentley Motors Limited has a massive world appeal. The image of the product is with extreme romanticizing, and that is an image genuinely taken to heart by many people In Kenya. The picture of Bentley Motors Limited is in hats, T-shirts, and collective memorabilia. The extremely recognizable branding is one of the company’s biggest strength (Sheth, and Parvatiyar, 1998). 2. Also, the exporting system of Bentley Motors Limited is one of the company’s greatest strengths. It enables them to conduct business on a global scale while at the same time doing business at the local level. The Kenyan assembling companies will be owned locally. An independent team authorized to sell the Bentley Motors Limited products will run it. Other Bentley Motors Limited brands also have a very high image. The company’s system of operation enables it to take advantage of the infinite opportunities of growth around the world (StaublE, 2000). The exporting strategy gives the Bentley Motors Limited an opportunity to serve a significant, diverse, geographic area. The company will employ the hub and spoke model successfully in multiple rural emerging markets in Kenya. In Kenya, local entrepreneurs will sell the cars through all possible means of transport. They will use trucks to carry the Bentley Motors Limited products from the nearest hub. As the Bentley Motors Limited has demonstrated, the hub and spoke model for its products will work well. The success will be achieved because the company has a prudent way of handling inventory cost and infrastructure transportation issues. In addition, the company has the ability of making goods readily available at a small village level (StaublE, 2000). Many of the early entrants in Kenya have set up successful, profitable businesses. The competitive advantage of the company will be achieved by influencing the preferences of consumers. Also shaping the industry structure and building a brand loyalty before the competitors have a chance to establish themselves. In Kenya, most of the people live in rural areas, therefore, delivering the company’s products, and services reveal both enormous opportunities and unique challenges for the enterprise (StaublE, 2000). The nature of rural emerging markets in Kenya makes establishing a successful marketing channel testing for the industry. Transportation infrastructure is inadequate or non-existent, the population in rural areas is, the incomes of the households are sporadic or slight. Therefore, traditional methods of creating trust to the brand are very difficult to work (StaublE, 2000). In an effort to enter the Kenyan market, the Bentley Motors Limited should design channels of marketing that will deliver products to customers successfully. The company should also offer in a way that is capital efficient, and that will unlock the latent desire that Kenyan customers have to receive and purchase the products. The company should also come up with a program of educating the customers about the services and outputs that they may not be aware. They need to educate them on financial programs that assist customers finance their purchases (StaublE, 2000). The key following are the essential aspects that the Bentley Motors Limited need to emphasize when coming up with networks for distribution in Kenya: 1. The Company should select a model of distribution system that is appropriate for the services or products it is selling (Tang, 2010). 2. When a corporation continues to meet the needs of the customers, it should put in place the demands of the consumer into a central location as much as possible. Putting the user requirements in a central location will help reduce transportation and inventory costs (Tang, 2010). 3. The company should also take advantage of the Kenyan rural entrepreneurs to enhance sales and last-mile delivery of the product. Such entrepreneurs of the rural area include the retailers (Tang, 2010). Despite the fact that consumers in the countryside of Kenyan emerging markets have sporadic and very low incomes. The company should not assume that the customers only need to purchase the cheap products. In addition, consumers are very conscious of the company’s brands and are motivated to buy quality products. More so by necessity the consumers are very aware of the value of the products. Here the challenge for the Bentley Motors Limited entering the market is to provide the customer with high-quality products that are also of high value (Tang, 2010). When the advocates of HIV/AIDS noticed, the products of Bentley Motors Limited would be available in the remote areas of Kenya. It brought about the idea that maybe the supply chain experts of the company could assist them. They could help in delivering the life-saving drugs to the AIDS victims. The drugs are very difficult to reach the poor people in the remote areas of Kenya. In 2009, the Global fund to malaria, tuberculosis, and AIDS approached the Bentley Motors Limited to assist them improve their supply chain. The company agreed to help them with the project (Tang, 2010). Advantages of foreign market entry method Exporting minimizes risk and investment. It also maximizes the scale and uses existing facilities. Licensing also minimizes risk and investment. It is also an easy mode of entry .Direct investment minimizes knowledge spill over and it can be as an insider (Wind, and Mahajan, 2001). Disadvantages of foreign market entry method In exporting there many transportation costs. In addition, the trade barriers and tariffs add to costs (Tang, 2010).In licensing, there is a lack of control over the use of assets, and there will be knowledge spill over (Tang, 2010). Indirect investment, there may be a higher risk than other models, and it may be difficult to manage the local resources (Tang, 2010). Conclusion The Bentley Motors Limited is a British luxury automaker. The company is a branch that is wholly owned by German Volkswagen. The company specializes in the design, manufacturing, engineering, and distributing the luxury automobiles which are under the Bentley marquee. The Company is based in Crewe, England. It was founded on 18th January 1919 by W.O. Bentley in Cricklewood in London and was later acquired in 1931 by Rolls-Royce. The Bentley Motors Limited will enter the Kenyan market using various modes of entry. The most common methods are franchising, exporting and licensing. The entry strategies to be used to entre Kenyan market will be used in total compliance to the Kenyan Laws. In an effort to enter the Kenyan market, the Bentley Motors Limited should design channels of marketing that will deliver products to customers successfully (Wind, and Mahajan, 2001). Reference List Bentley, (2014).Bentley opens New Dealership in Vietnam. [15.12.2014]. < http://www.bentleymotors.com/en/world-of-bentley/our-story/news/2014/bentley-opens- new-dealership-in-vietnam.html > Brookes, R., and Palmer, R. (2004). The new global marketing reality. Houndmills, Basingstoke, Hampshire, Palgrave Macmillan. http://www.myilibrary.com?id=43860. Chee, H., and Harris, R. (1998). Global marketing strategy. London, Financial Times Pitman Pub. Czinkota, M. R., Donath, B., and ronkainen, I. A. (2003). 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