ESC Electronica Market Performance - Essay Example

ESC ELECTRONICA Jan need to develop his business internationally in North Belgium as a base but with other smaller branches in Germany and England. Of the three countries, Belgium England and Germany, you (Jan) have to weigh the business prospects that may be achieved in the company. Considering that the firm has managed to maintain its customers not only in Holland but also in Belgium and other countries, it is possible to do the same if the business is developed in a new location. Belgium, like all other business destinations is in Europe is strategically positioned in terms of shipping, transportation (rail and air) and other advances in the country not mentioning the stable economic condition for the country. In addition, Frank (with a large commercial law firm In Brussels) has helped negotiate a suitable site on the edge of the industrial area, just in a strategic position- industrial park of the town-which could most likely be a suitable location for the business. This will make it possible for the commissioning and construction of new factories for the company. It is possible to built friendships and customer base in Belgium as it has been the case in Holland. Business experts say that every business must grow slowly and it should be given enough time to do so. A good customer relationship is developed when the company (ESC Electronica) provides better services for the people in the new country. In doing so, the company will be able to form a strong customer base just as it has been the case in the native country. In addition, Jan is not leaving his business entirely but it will be possible for him to conquer other international markets for the betterment of the company. As for the case of family matters, it will be prudent for Marguereet to combine her family life and the business which will keep the whole family financially stable. The best approach you (Jan) can use is to call family meeting and discuss the broad aspects of the business starting with the business plan, goals and objectives, family issues (togetherness, retirement and other external factors that need to be addressed affecting the family) and more pressing challenges and opportunities for the businesses in context of increased competition. The strategy of bringing the whole family on board is considered a best option in a case where the family is undergoing any kind of turmoil. Failure to convince the children for example Frank need to put his priorities right for further future prospects. Marguereet is already a graduate with enough knowledge on business transactions, marketing and management. With such qualifications, she can perform most of the work needed by the company. This is a plus for ESC Electronica as it weighs options of international marketing. This will take care of the retirement factor where Jan is expected to retire after 10 years. Although Geert has completely no interest in the business but most likely will in future realize that the business is meant for the children to sustain their future needs. Frank on the other hand although not very interested in the business will be able to assist the family while in Belgium through the provision of legal assistance, contracts and procurement service. Entering an international Doing a customer survey to obtain a clear perspective of the current and potential customer information through the use of available research techniques will be the best starting point for you. Most businesses use one or more of the five basic methods-surveys, focus groups, personal interviews, field trials and observations. There are many pressing issues that need to be addressed while trying to start a company abroad. The major consideration is the need for a study guide that will incorporate customer preferences, number of competitors, growth in the ICT sector, skilled personnel that can serve the company better and other relevant factors. Specific countries also demand Surface Mounting Technologies (SMT) which has been found to be very expensive to undertake for ESC Electronica given the current investment capability for the company. Other systems that can be adopted by the company are what are called ‘Flexible manufacturing systems (FMS)”. In a country like Belgium, FMS has done well for small companies, which is good for ESC Electronica as it is a new developing company. The market mechanics which need to be addressed by Jan can be graphically summarised as follows; Figure 1: Market mechanics Source: JRC&A, (2006): Introduction to the JRC&A new product volume projection model retrieved from, http://jrcanda.com/newprod2.html#NP%20Step-2, accessed on 4th June, 2007 Marketing strategies available for Jan Marketing strategies are a pattern of activities and solutions that are designed to meet certain objectives of the organization’s policies, ranging from its scope, resources and operations to environmental changes. A strategy distinguishes a course of action by its hypothesis that a certain future position offers an advantage of acquiring a gain. The following kinds of strategies can be applied by ESC to market its products and services in Belgium. i. Market entry strategy After deciding to enter oversees market such as the Belgian market, a variety of options are open to you. These options vary with cost, risk and the degree of control which can be exercised over them in terms of security. First, it is possible that direct method of business is applied in the case of England and Germany. In this kind of business there is expansion of operations in markets where competition is less but currency based exchange is not possible. In this method, you may agree to build a plant in Belgium and then operate it as a full entity in the country. Direct methods have the following limitations; it is difficult to set price and service quality and also there are a bit of inconsistency in specifications and delivery of products. One can also use indirect methods where ESC Electronica designs the PMC systems which are only supplied directly to the customers in other countries such as England and Germany. ii. Price strategies Five price strategies that you can apply while developing the business in Belgium would be; Low price strategy- a penetration price is necessary to allow more products to sell at first but when it catches up, other pricing strategies are adopted. This will mean that Product adoption strategy- making modifications to existing product Availability and security strategy- countering perceived risks by overcoming transport risks and other. Technical strategy- demonstration of superior products. In this case, issues such as shortening life cycles for manufacturing equipment will be considered and technical advice given to the customers accordingly. Total adaptation and management strategies which guide the company’s organizational and technical portfolios especially the development of new printed circuit boards, soft wares etc. Conformity strategy- strategizing on how legal matters, tariffs and legislation for the business will be handled without hitches. These strategies are useful when determining how the company will balance the prices and quality of their products with reference to the revenue to be achieved. Any business strives to achieve a profit and the marketing strategies it tries to implement must take into considerations the opportunity cost of its adoption. The following diagrammatic representation summarises the overall international marketing tasks and how they can be handled. Figure 2: International marketing strategies and determining factors Maxwell (2007): Marketing strategies, Retrieved from http://www.perso.orange.fr/pgreenfinch/mkting4/mkting accessed on June 3, 2007 Managing changing demands on suppliers With increased sophistication and competition from the manufacturers and suppliers respectively in the whole of Europe, ESC Electronica can possibly learn more about anything that these companies use to meet the demands of their companies most probably from the companies in Europe and particularly in the three countries (England, Belgium and Germany). In these countries, you will most probably get the core skills and people with expertise in installation and design of their specific equipments that are used in their companies. Companies such as Bosch, Volkswagen, and Philips etc. are manufacturers that allow ‘in house’ installations, repairs and other technical specifications that are necessary for the company. Developing your company in countries which base these companies in will mean that expenses incurred due to ‘in house’ operations will be reduced. Technological advances Nowadays, it is possible to use e-business through the internet for distribution purposes especially when dealing with international businesses. Digital strategies are changing the way distribution channels for companies are established and therefore ESC Electronica is able to use the hi-tech communication channels to monitor progresses fro the companies both in Holland and other branches. Although it will be difficult to transport ready made PMCs, to customers in far areas, it will be possible to set up more independent branches to minimize this. Jan is also able to position his company in Belgium in order that it will occupy the minds of the customers and appreciate them. This is usually referred to as positioning and it can be achieved through advertising. It sometimes costs a lot of money but necessary for a new company. Finally, ESC Electronica through its established five year plan must formulate and implement policies that will guide its international marketing strategies, recruitment of expert employees, management, planning, control and organization of its internal and external strategies outlined in the plan. INTERNATIONAL MARKETING FOR NIKE Nike (trade mark) is an international company dealing with a range of sports equipment such as shoes, shirts, t-shirts and Jerseys for various sporting activities including, football, athletics, basketball, cricket, tennis, skateboarding and golf. Nike is a premium company that sells well branded and expensive products that are known for their superior quality. Nike is well known for the trademark ‘Just do it’ and it relates to the sporting spirit. This company has more than 500 factories in over 45 countries that are contracted to manufacture these products. The company has adopted a marketing strategy With this extended production capacity, there is need for an elaborate management and leadership within the organization whereby, it sponsors well known players in various sporting fields such as Ronaldinho in soccer, Tiger Woods in golf, and Lance Armstrong in bicycle riding. 1 Analysis of China 2 Being the fastest growing country in the Middle East, China currently is considered a good investment country, with a good growing economy, millions of people, diverse culture etc which is ideal for business development. A sports gear manufacturing company (Nike) has developed its factory in Beijing to help meet the demands of its huge customer base in China. Issues that make marketing in china difficult however, are; transport and transportation issues, border disputes such as history of invasions and other tensions that may make international marketing problematic especially for American and European companies diverging for emerging markets in the middle east. Opportunity analysis An opportunity analysis is an invaluable client tool for identifying and prioritizing opportunities to minimize unwarranted variation and inefficiencies. A powerful resource for employers it is that helps them to understand opportunities and act upon them in a professional manner (John, 2000). By providing key statistics and other issues one will be able to utilize workable opportunities available. Businesses worldwide feel the pressure to improve their workforce productivity significantly and expand to reach new markets with complex products. To meet these ends, technology adoption and advances is necessary. Nike offers richer and quality services that other sporting companies cannot offer in the last few years they have in the competitive business, making its products superior in any country they market them. Marketing through the internet In earlier days companies used power full computers to computerize millions of transactions carried out every day. Through internet, branches of the Nike can develop networks, through which they could keep up to date with business progress and could improve service provision to customers. Most companies are switching from traditional to online marketing especially in this era of globalize markets. The reason being quite obvious, the convenience and flexibility it provides cannot be ignored. Flexibility of time, place, human resources and constraint handling involved is clearly noticed. As internet globalizes this world and in the same rate online marketing is becoming global. Challenges and opportunities Tariff barriers, quotas, voluntary export restrains, subsides to domestic products, non- tariff barriers etc. are challenges the Nike is facing in trying to market its products in China. Emergence of other companies eyeing the Chinese market like Adidas, which is the strongest competitor for Nike Other challenges are; advancement in technology whereby most sports personalities are demanding for better sports gears that conform to changing field and track demands. Increasing number of competitors in the Middle East region such as India, Japan and within China itself make also Nike Company worried of the investment capability it has to make to compete favourably. Strategies Customers in a foreign market are normally sensitive on currency, quality and quantitative figures of countries which the products originate from. Therefore in building a market entry strategy3, various issues need to be taken care of; the infrastructure, information and other resources are needed for a start. First, is the development of buildings and other networks that are crucial to the company? Secondly, are the government issues such as licensing, taxing, policies and duty remittances In addition, massive start up campaigns are necessary to reach all the target within a very short time. Transactional costs are crucial to international marketing because there are language barriers, logistic costs; physical distance and other bargaining costs make initial costs very high. Enforcement of contracts and weak legal integration between countries are also issues of concern for Nike. Marketing strategies Pricing strategies i. Premium pricing- use of high price which indicates uniqueness about Nike products. This approach is applicable where a substantial competitive advantage is in existence such as for luxuries. ii. Penetration pricing- the price for the sport garment can be set to be lower than what it is in other countries so as to gain a market share. iii. Economy pricing- cost of marketing and manufacture are kept at a minimum hence becomes a no frills low price for a product such as the Nike iv. Other pricing methods are; price skimming, psychological pricing, product line pricing, optional product price, captive product pricing etc. The following diagram summarises the price mix strategy as it incorporates penetration, economy and skimming as factors to be considered in the market Figure 3: marketing price mix Source: Marketing teacher ltd, (2001-2007) retrieved from, http://marketingteacher.com/Lessons/lesson_pricing.htm, accessed on June 5, 2007 Product and branding Product branding is a key factor in determining the selling trends in that country. In China for example Nike Company can adjust its branch name and rename it after a populous Chinese personality to increase perceived value of the customer towards the product. A good brand name should be4; legally protect-able, easy to pronounce, easy to remember, easy to recognize and to attract attention. There are different kinds of brands that can be applied by Nike Inc. these are; Premium brands Economy brands Fighting brand Licensing brand Functional strategies5 These strategies are developed within every department of the company to increase its international sales margins and production. The Nike marketing department can for example prepare an individual strategy that will meet the overall Nike objectives. Other strategies under this include; new product development strategies, legal strategies, financial strategies etc which can also be set up as autonomous strategic business units is responsible for all of its operations but answerable to the company. Operational strategy This is a very narrow strategy that targets the day to day operations of Nike. It can be the branding department that makes sure that a specific number of products are produced within a specified period of time. The section is at liberty to utilize the resources available to it but they are not allowed to overuse the same without the corporation’s permission. (Hill, 2005) Supply chain and distribution The supply chain and distribution channels can be spread in all the provinces in the country. This will however depend on the demand and product penetration rate. China is a very big country with very many provinces hence the need to contract companies to manufacture and distribute the products to all the parts where customers demand them. Sales force The sales force of Nike Company includes all the staff who will take part in the marketing and selling process. The sales force includes the sales staff, professional marketers and the sales management team who include technical design and sales engineers. As part of international commitment to conduct business with integrity and comply all applicable laws, the company may strive to maintain a strict code of conduct that will see its social responsibility in China increase through the following; fund raising, community assistance, project funding etc. ethical behaviour is an individual responsibility regardless of position or location, it will reflect the highest ethical standard expected of employees, directors and all people bound by it. Offering free attire to schools during tournament will increase their market recognition and appreciation Organizational planning The planned organization will comprise of a structure that will provide a management team, sales force, technical team and the company directors. The use of a scorecard to control and monitor the company’s performance is very important scorecard concept is very simple, all factors that influence the organization’s overall performance are taken into account and analysed mathematically. Typically, a scorecard measures across four key areas; i. Financial perspective- how shareholders perceive the company ii. Customer perspective-customer’s view towards the company iii. Internal process perspective- the efficiency and effectiveness the processes in the company iv. Learning and growth perspective-the company’s agility level. Maintaining competitive advantage i. To maintain a competitive advantage in the Chinese sport gear manufacturing market, the following need to be taken into account; ii. Frequent monitoring of other competitors iii. Product quality improvement as long as the market demands iv. Social support and community projects such as providing scholarships to poor students v. Proper management vi. Employing mostly Chinese nationals to market products without compromising on skills and knowledge Expected outcome for the company in China Figure 4: Nike’s expected sales, demand and financial expenditure rate for the year 2008 Nike through its international marketing approaches has been able to meet its objectives. Nike have had an obligation to further propel the company forward thus able to create and maintain a healthy international marketing culture within itself if they stick to the above mentioned roles and strategies and also extend its production levels. References De George, Richard T. (1995): Corporate business management: Competing with Integrity in International Business. New York: Oxford University Press De Monte & Lafayette B. (1994): Chinese Etiquette & Ethics in Business, Illinois: NTC Business Books Foster, C & Harris, L (2005). Easy to say, difficult to do: Diversity management in retail. 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