Marketing Environment in India and Russia - Huawei - Case Study Example

International Marketing By Student Name Course: Tutor: Date: Introduction The world is continuously becoming smaller and smaller due to creation of leaps in financial flows, transportation and communication by advancement of technology. As such it is probable for companies like Huawei to do business in any state across the globe; this also owes gratitude to the international trade. According to Isoherranen and Kess, (2011, pg.135-138.) the volume of international goods trade from 1951 and 2010 improved 33 times. Implication being that goods that are produced in one state are accepted enthusiastically in other countries. For example the telecommunication products such as Huawei phones and other products have footholds in the international market. On the contrary, globalisation has made as many challenges as opportunities for companies and their products that venture into international markets. Due to the fact that customers have many more options for similar products; the firms ought to make sure that their products are affordable and of high quality (Tokuoka 2013 pg. 302). Similarly, such products cannot be marketed identically across different markets. Hence international marketing takes into account many aspects such as language, market saturation, culture and consumer behaviours, consumer tastes and demographics (Mayrhofer 2012 pg. 79).Thus the reason why companies must research on the international markets they intend to venture into prior to settling into the market. With this knowledge Huawei would be able to enter the Indian and Russian market because they are not only emerging markets but also due to the diversification of these factors. Any foreign person is a potential consumer subject to your brand. However, the nature by which the marketing team outlines how to venture into an international market is critical (Mayrhofer 2012 pg. 89). This is because consumers who live in different states have varying purchasing habits, priorities and preferences compared to the consumers they are familiar with. Through tracking of these foreign consumers via cultural surveys and market research, the marketing team can disclose the most suitable procedures of entering such markets. This report thus seeks to present possible opportunities that Huawei will likely encounter in entering the Indian and Russian markets. Marketing Environment in India and Russia (PESTEL analysis) Political Factors Since India is one of the largest democratic in the globe, it political situation is not bad and interference is at minimal. The policies of the government, interest of politicians, political parties ideologies greatly impact the political environment. Hence the multivariate factors of politics affect the India’s business environment. Huawei will encounter a comprehensive system of taxation that is well- developed, hence the imposition of several taxes for example service tax, income tax plus sales tax through the Union Government (Isoherranen and Kess, 2011 pg. 139). In the case of Russia, the political climate as well as the business environment is conducive for multinational and thus Huawei would not face any hurdles in regards to the political situations in Russia. Russia has favourable VAT policies and encourages technologies through tax breaks hence a favourable climate for Huawei to conducts its mobile phones business. Russia has also signed inter- governmental protocols with other countries such as the US, Ukraine among other for the supply of industrial products. A clear indication of its desire to grow and advance exponentially and Huawei will benefit from this immensely. Economic Factors India has enjoyed a significantly stable economy from 1991 when industrial reform policies were introduced. According to the policy, industrial licensing reduction, foreign capital liberalisation, FBIP formation among others has caused the economic environment of India to improve (Zabaluev 2015, pg.5). Through its economy, Indian citizens have the ability to buy and a survey from eBay and amazon show India as a major global technological consumer from mobile phones to laptops (Tokuoka 2013 pg. 292).Even though Russia manages to maintain a constant growth, her economy is still wavering for example in 2008 it maintained a 6% growth however in 2009 the growth contracted by 8% (Kozyreva and Ledyaeva 2014, pg. 216). Through this prevalent deterioration in economic policies the Russian government seeks reduce the budget deficits thus property right protection is still weak and the private sectors are still prevalent to state interference but Huawei can prevail having that other companies have succeeded there. However, Since 2009 Russia has minimised unemployment and as well make strides in minimising inflation thus leading a stable economy (Zabaluev 2015, pg.5). Social Factors The surge in the ageing populace in India results into a substantial upsurge in costs of pension and rise in the older workers employment. Approximately, 70% of Indians are from age 15 to 65 . This age structures contain changing flexibility in work attitude, in education, distribution of income among others which impact the buying behaviour of consumers with older people being considered laggards in technological adoption, Huawei will need extensive marketing strategies to appeal to this class of consumers (Mayrhofer 2012, pg. 63). India also enjoy low labour cost thus Huawei may consider setting some production plants there to help minimise its operating costs and increase its profits On the other hand, Russia has a widened income inequality, according to Kozyreva and Ledyaeva, (2014, pg.227) the variance between the wealthiest and the poorest among the populace in 2008 was more than 42 times in contrast to 38.6 in 2005. The country has a social spending of about 27%, implying that the country has a rich business environment for social products such as phones. Furthermore, the country has a very large population, this couple with the social spending makes the Russia business environment an emergent one to venture into and increase Huawei’s revenues. Technological Factors The factors considerably impact development of product as well as introducing new cost- cutting procedures. There are several technological developments in India which are mainly facilitated by 3G plus 4G technologies. In addition due to the strong IT sector in India, there is continuous development in IT, upgrades of software in addition to other advancements in technology (Tokuoka 2013, pg. 290-297). Therefore, some of Huawei’s products like the p9 will likely have a greater consumption rate due to its 4G capabilities. Additionally, Russia has a good history of advancement in technology. The IT market of Russia is one that is growing rapidly in central and east European region. This offers a great potential for spending in IT by the traditional industries in Russia hence making the IT business environment a huge investment for Huawei to explore (Isoherranen and Kess 2011, pg. 140 Legal and Environmental Factors The recent past implementation of legal changes in India for instance disability discrimination, recycling and increase in minimum wage, has directly impacted the business environment thus, companies like Huawei will have to realign their employments act to cater for all these groups if they are to succeed in this market (Isoherranen and Kess 2011, pg.137). Additionally, waste disposal and control regulations are some of the factors that affect the technology industry in India having that it causes a lot of radiation. The Russian government has put in place legal reforms that are intended to cause improvements to the judicial system of the country. In addition, the country has accepted to different programs for legal aid from several countries in solving both internal and international legal matters, thus setting favourable business grounds for companies like Huawei (Zabaluev 2015, pg.7) Porter’s 5 forces model Porters’ five force analysis Markets India Russia Supplier power Relatively high Fewer technological suppliers Fewer suppliers experienced in the country High Fewer technological suppliers Suppliers are lukewarm when dealing with multination Underdeveloped supply channels in the country Threat of new entrant High There few economies of scale Cost and time of entering market is low Need for effective strategies High High penetration costs Cost and time of entering market is low Strict government regulations on new businesses Being an emerging markets, emphasis is given to domestic companies hence, high levies and fees on new entrants like Huawei Buyer power Low Low income which reduce ability of consumers to purchase Provides opportunity for Huawei to set prices Moderate Wide income gaps which reduce ability of consumers to purchase as well as willingness to purchase. The Russian economy though stable the per capita income means, the ability to buy is low. Sceptical with foreign products. Lack faith in sophisticated products that they consider a luxury. Industry rivalry (Competition) High Competition from Apple and Samsung Compels Huawei to seek differentiation strategy so as to gain competitive advantage High Competition from Interskol, elar, htc and Samsung Rigorous marketing campaign to gain a share in an already infiltrated industry. Coming up with a strong international strategy to conquer the market. Threat of substitute products Very high Needs continuous innovation to ensure survival Advancement in IT key for continuous improvement Continuous monitoring of the pricing strategy Very high Needs continuous innovation to ensure survival Lobbying for strong regulations to deter cheaper counterfeits. Continuous monitoring of the pricing strategy Outsourcing some functions to low labour countries like India and china. References Isoherranen, V. and Kess, P. (2011). Analysis of Strategy Focus vs. Market Share in the Mobile Phone Case Business. TI, 02(02), pp.134-141. Kozyreva, G. and Ledyaeva, S. (2014). Enterprises' Business Practices and the Regional Institutional Environment in the Republic of Karelia in Russia. Journal of Enterprising Culture, 22(02), pp.209-231. Mayrhofer, U. (2012). Marketing international. Paris: Économica. Tokuoka, K. (2013). Does a better business environment stimulate corporate investment in India?. Indian Growth and Development Review, 6(2), pp.289-305. Zabaluev, Y. (2015). The formation of anti-crisis strategy of the industrial complex of Russia in conditions of the unstable business environment. Business strategies, (10), p.5. Read More

 

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