Global Marketing Strategy Is A Part Of Company Management Essay

Global Marketing Strategy Is A Part Of Company Management Essay Global marketing strategy is a part of companys whole corporate strategy and includes such issues as product positioning, branding policies, selection of target markets and modes for entering to, which media to use for promotional campaigns, and so on. A global marketing plan is a way for guiding the overall route of global campaigns. It requires to include choices regarding media combinations, whether to use a marketing agency and, if so, for which purposes and to what degree, and whether to challenge or sidestep from competitors when operating in overseas markets. Corporate and global marketing strategies are closely intertwined (Bennett Blythe 2002, p.15). Wal-Mart Stores, Inc. is an American  international  retail company that has number of department stores and warehouse stores in USA and worldwide. It is the worlds largest retailor and third largest multination company. It has more than 8,500 stores in 15 different of the world. It works in different countries with different names.   LuLu Hypermarkets, is Gulf based retail stores and considers as a trend setter of the retail industry in  GCC including Qatar. Nowadays, LuLu represents excellence retailing with number stores and has been an immediate success with the perceptive shoppers across the country. Multinational corporations including Wal-Mart want to quickly access the international market and exploit the opportunities in the rapidly growing economies such as Qatar (Cullen Parboteeah 1999, pp.133-135). Takeover the Lulu will give the quick and complete access to the Qatars growing economy. By acquisition of Lulu, Wal-Mart can expend its international operations. Wal-Mart Stores, Inc. Wal-Mart Stores, Inc. (Wal-Mart), started on October 31, 1969, is an American multinational company, runs retail stores in various layouts around the world. Companys pricing philosophy is to provide products to customer at lowest possible price. The Companys works in three corporate divisions: the Wal-Mart U.S. segment, the Wal-Mart International segment, and the Sams Club segment. In fiscal year 2012, Wal-Mart U.S. segment generated approximately 60% of its net sales from number of its stores in all 50 states in USA and Puerto Rico, as well as Wal-Marts online selling activities. Wal-Mart International division involves in retail activities in 26 different countries. During fiscal 2012, this overseas division produced about 28% of its net sales. The Wal-Mart Worldwide segment comprises a variety of layouts of retail stores, restaurants and online selling, which function outside the USA (Wal-Mart  n.d. online) The Corporation is involved in the retail activities located all over the United States; its entirely retained firms in Argentina, Brazil, Canada, China, Japan and the United Kingdom; its majority retained holdings in Chile, Mexico, 12 countries in Africa, and five countries in Central America. The retail giant has joint ventures in India and the China and some fully owned subsidiaries. The Wal-Mart U.S. division contains the Firms mass mercantile idea under the Wal-Mart or Wal-Mart brand. The Wal-Mart Global segment involves of the Businesss operations outside of the USA. The primarily listed on the NYSE, but it is also traded on 13 other exchanges in 6 different countries. From many years Wal-Mart Stores Inc. revenue is growing. Last year it grew at 4.97% from 446.95bn to 469.16bn while net income improved 8.28% from 15.70bn to 17.00bn. LuLu Hypermarket LuLu Hypermarket, the retail division of the multidimensional EMKE Group has always been recognised as a trend setter of the retail industry in Arab region. LuLu shopping centres are modern and adding all possible requirements of the customers under one roof. LuLu Hypermarkets have widely arranged out counters, extensive parking spaces, play zones for kids, food places, money conversation and bank counters as well a display of global and local products appropriately justifying details. It is the most preferable shopping place in Qatar. SWOT Analysis: An overview: SWOT analysis is a scan of internal and external environment of an organization and a vital part of the strategic planning process and decision making. Environmental factors internally touches to the firm usually classified as strengths (S) or weaknesses (W) whereas those externally affects to the firm can be said as opportunities (O) or threats (T) . An organizations strengths are its means and competences that can be used to develop a competitive benefit whereas lack of these capabilities may be looked as weaknesses. The external environmental analysis tells us about the availability of new opportunities for income and progression in to new and existing market. All the external factors which can affect organisation performance are regarded as threats (Johnson et al. 2011, p74). SWOT Analysis of Wal-Mart: Strength Wal-Mart Stores, Inc is the world largest    global retail corporation. It runs hundreds of discount department stores, hypermarkets, supermarket, grocery stores and warehouse in different region of the world. According to the  Fortune Global 500  list in 2012 this multinational giant was ranked as third largest corporation in the world. The company is also leading private employer  in the international market having more than two million employees. The operations of the corporation are wide spread and there is no international competitor of this size (Wal-Mart Stores, online) One of the core competences of the Wal-Mart is to use the information technology and software to maintain its international logistics system. For instance, it can be seen how distinct goods execute in different countries, within one country and store-by-store at one look. In addition to the retail market controller, it has the ability of repeating its greatest activities frequently around the  globe. Wal-Mart has a very good standing for worth for money, accessibility and a wide-ranging range product portfolio all in at one place. This competitive advantage has created its constructive financial success and market share globally. Moreover, its leading position and the diversity of products permits it to rapidly differentiate the products, which allows it to encounter the demand and give benefits from increased trades. This kind of elasticity and impact enables it to uphold its dominant market position (Farhoomand Wang, 2006). Weaknesses Wal-Mart is a huge  vendor and runs hypermarkets which need large space for existing and every new stock. This restricts its growth in inner-city areas where limited space is available. It has been seen its sales in USA have reduced for eight constant quarters because of availability of less space. Therefore, it has become more essential for Wal-Mart to originate new set up which helps to increase its revenue and which is more appropriate to the city areas. Its competitors such as Tesco are planning to come up with such new strategy of market place to cater more and more segments of customer. If they accomplish to be successful in the market then Wal-Mart will likely to have a competitive disadvantage. Wal-Mart sells many low price products but customers often concerned about the quality of products. Many times it involved in non-compliance to environmental dispute which cost the company huge sums of money (Mujtaba Maxwell, 2011) Opportunities Wal-Mart has been growing its presence in emerging economies such as India, china and Brazil. It is estimated that due to rapid economic growth, consumers in these countries developing would have double by 2015. Therefore, this will create a great opportunity for  Wal-Mart for its international growing trend. Growth of ecommerce and buying through the internet is a big opportunity in future because this way of shopping will increase in future. Bad economic period is not over in many countries and people are still looking for cheap products (Kumar, 2008). Threats: The cost of making many consumer goods has fallen due to lower manufacturing costs. Production cost has dropped due to contracting out these products to low-cost regions of the World. This has led to price war, resulting in decreasing the price to very low level. Strong price competition in the global market a great threat to companys profitability. Local vendors do not welcome the arrival of Wal-Mart and it can face strong opposition. Rivalry from local stores is likely to increase as travel costs to Wal-Mart stores have been increased due to increase in fuel prices (Mujtaba Maxwell, 2011). Concept of Internationalisation: Internationalisation can be well-defined as the process and resources that businesses take part themselves into the foreign environments particularly overseas countries, cultures, beliefs or international structure of manufacture and marketing. According to Welch Luostarinen (1988) internationalisation is the procedure of external incremental drive in global operations. They propose seven extents for determining firms internationalisation: foreign operation methods, organizational structure, personnel, sales objectives, target markets, organizational capacity and finance. In the opinion of Penrose (1995), internationalisation is the direction of international business communication to encourage customers and clients to have chance and multiple choices of products that fulfil their requirements all around the globe. Through the business contact of these products or intangible services, firms sell goods all around the world. Those business actions that include more than two nations or stride more than two state boundaries can be called internationalised business no matter they are worked by the private company or the governmental firm. Internationalisation or globalization is the progression that organisations change business into international dimensions because of the global rivalry, the market growth and multination operation (Chetty Campbell 2004) Internationalisation Drivers: Generally globalization, technology advances and increased competition are the factors motivating firms to go into foreign markets. Thus, many multinational companies are motivated to operate worldwide and overlooking the national boundaries. It is acceptable to argue that drives to in to foreign markets differ from business to business. They may also depend on organisations functioning in diverse industries, from different national background and under dissimilar trade and industry systems. In addition to this, inspiration to go for internationalisation may also varies for firms because of their size, time period and strategy (Morrison,2006. P136). According to Slater Narver (1994) motivations of nay firm can be examined by considering the three key elements: internal and external environment, product and market situation. Luo (2000) argue that Capability possession is essentially important to gain competitive benefits and define firm-level approaches to exploit these advantages. He further says that to get the competitive rewards in the host country which cannot be attained at home is the major inspiration for the organisation to go overseas. International is essential to exploit the opportunities in emerging markets. Capability advancement is vital to the evolutionary growth of viable advantages and generating different packs of resources. Competent advantage is a needed for continued success in todays world economy categorised by growing technological advancement and business globalization. C:UsersDELLDocumentsInternational BusinessISMMy Assignment1-s2.0-S1090951600000432-gr1.jpg Figure 1.  Dynamic Capabilities in International Expansion: An Integrated Model. Source: Luo, Yadong (2000) Internationalisation is an attempt by an organization to make variations in its product and market approach. An internationalised company gather experience and knowledge through the globalised process. Many corporations prefer to go in other countries when there is an economic crisis in at home, whereas overseas market is emerging fast. When local clienteles are rushing overseas, firms follow to join in the global struggle in order that they do not lose these customers. Some companies also react to the penetration of external firms into the home market. Many firms take experimental decision towards the intercontinental market (Evers Menkhoff 2004). Firms may go into other countries to seek opportunities in foreign market. For instance, the globalisation of many Japanese companies was driven by the growth of domestic market. Many western and USA businesses are inspired by Chinas potentially vast market, less labour expenses and advancement of technology (Buckley et al., 2002). Why Invest in Qatar: Qatar is flourished from many years with constant high real GDP growth rate. It has worlds highest per-capital income in the world with the lowest unemployment rate. The country economy relies on its massive Oil and gas reserves. Now Qatar is taking advantage of its revenues from oil and gas in other economic sectors in order to expand its economic base and develop a strong private sector. Qatar is an active member of the World Trade organisation, Qatar has opened other segments of the economy to overseas investors and has flexible  investing policy.  Qatars successful 2022 world cup bid will also speed up the economic growth in the country (Qatar, 2013, online). For international companies, Qatar has much attraction such as: Modern network of roads and ports, as well as a state of the art airport Developed telecommunication network Peace and security with very low rate of crimes Political stable environment No discrimination for foreign investor and legal protection Land can be leased on nominal price Qatar exchange provides liquidity and numerous investment instruments through implementing world best practices Other incentives for international companies include sponsored or minimal rates for gas and electricity, no import duty on equipment, machine and spare parts for manufacturing schemes, tax exemptions on business and no export duty among others. Other benefits for employees include tax free wages, brilliant medical and educational facilities and highly advance telecommunication facilities (Qatars Investment Environment, n.d. online). Mode of Entry: Decisions regarding the means of an organizations entry to specific foreign markets are amongst the utmost important that its management will ever have to take. When an entrance mode in to host market has been selected, its execution has important inferences for a wide range of global marketing concerns. Certainly, a companys whole international marketing package might be significantly determined by how it selects to enter into foreign states. Thus, time and effort necessarily be dedicated to the decision-taking procedure, and widespread market investigation may be involve. In most of the circumstances the choice to enter a new market is a long-standing strategic choice. Thus it is a very vital and key step for corporations. The success of a companys global tasks depends greatly on the choice of entrance mode into a new market (Doole, 2008, p231) The OLI or eclectic approach to the study of foreign direct investment (FDI) developed by John Dunning is a particularly useful way of thinking about multinational enterprises (MNEs) and has motivated a great deal of useful work in economics and international business. According to this model a corporation must own three benefits while taking into account entry in a foreign market. These include ownership, location and internalization (Dunning, 1988). These benefits are the key source of inspiration and define the FDI firms entry strategy into new market. OLI stands for Ownership, Location, and Internalization, three potential sources of benefit that may motivate a firms choice to enter into international market. Ownership advantages discuss of why some companies but not others go overseas and propose that a successful international organisation has some firm-specific benefits which allow it to overcome the operational costs in a foreign country. Location advantages stress on the examination of where a firm chooses to locate. Finally, Internalisation states to the best interest of the businesses having ownership benefits to transfer them across national boundaries inside the company, rather than selling them or the right to use them to foreign firms (Buckley, 2011). Internet: The Internet is a new and innovative way to access the markets all around the globe for many organisations. There are many companies that have emerged as the Internet has advanced, as well as many old companies have adopted this new approach. For some corporations the Internet is an additional channel that improves or replaces their old-style networks. In any case internet has provided many new ways of business in the whole world (Palmer, 2012). Exporting: There are  two ways of exporting: direct  and  indirect. Direct exporting is straightforward. The firm creates an obligation to market in host country on its own behalf. I this way company can have better grip over its product and tasks in the foreign market. Other way of exporting is to employ agency at home which will handle all the exporting activities on the behalf of manufacture to get its product into and this way of exporting is called indirect export (Zahra et al 2000) Franchising: A overseas company take on the parents companys whole business setup in the local market and its name, logos, business approaches, premises, etc The franchisor also offers in return for a royalty and fee, a range of additional management facilities including training, practical advice and even financial assistance (Bennet 1999, p.312). Licensing In licensing, businesses signs an agreements with external businesses, which is also called license that permit the overseas firms to officially produce and sell the  companys goods and services. The foreign corporations will either buy the license and pay regular licensing fee or pay a part of their income over which is also called royalty. A lot manufacturing firms use this way to enter into foreign markets. It provides quick and inexpensive way of market entry, but provides them less control in market (Bennett Blythe 2002, p203) Joint Venture Joint Venture has become most popular mode of entry in past couple of decades. In this mode of entry two  businesses combine resources to sell products or services. Though joint ventures provide foreign companies with a partner knowledgeable in the foreign market, these partnerships can be problematic to manage and need a distribution of incomes (Cateora et al, 1999, ) Overseas Manufacturing or Foreign Direct Investment (FDI) A company may choose that none of the other choices are as feasible as completely possessing a  foreign business. The firm can invests directly into the overseas market. This is also identified as Foreign Direct Investment (FDI). The companies establish new business or might buy a current business that is suitable for his mission and strategic objective in the overseas market. The key advantage of this approach is that company becomes local and company can meet the demand and choice of the customer by gaining local market knowledge. The major drawback of this mode of entry is that it requires huge investment and investment risk involved in it (Shankar Luo 2007, p.297). Assessment of Modes of Entry in Qatar: Wal-Mart Stores, Inc. is an American  multinational  retail corporation that has number of department stores and warehouse stores. The company is worlds largest retailor and third largest multination organisation. It has more than 8,500 stores in 15 different of the world. It works in different countries with different names.   It runs in Mexico as  Walmex, in the UK as  Asda, in Japan as  Seiyu. It has recently started his business in India as Best Price. It has entirely owned subsidiaries in Argentina, Brazil, and Canada. LuLu Hypermarkets, is Gulf based retail stores and consider as a trend setter of the retail industry in  GCC including Qatar. Nowadays, LuLu represents excellence retailing with number stores and has been an immediate success with the perceptive shoppers across the country. In case of franchising a companys name, logos, business approaches and premises is compulsory to produce and market products or services. Where as in licensing, businesses sign contracts with external firm that permit the foreign firms to officially produce and sell the  companys goods and services. But these modes of entry are not feasible for Wal-Mart and LuLu. One corporation is global giant where as other has excellent position in the local market and they does not need to share the resources of each other. The purpose of the Wal-Mart is international expansion and gets the strategic advantage by getting into of worlds fastest growing economy. Product quality levels and lower revenues are major problems of licensing and franchising (Bennet 1999, pp.311-312).In Joint ventures organisation cannot take any particular choice independently. However, fast decisions are needed in ever changing international market. Conflicts are quite common in joint ventures and this monde of entry w ould also be not acceptable by Wal-Mart to enter into Qatar. Wal-Mart Strategic Takeover of Lulu Hypermarket (Assumption): Assumption: Wal-Mart will completely take over the lulu-Hypermarket after buying its 100% stake. Wal-Mart management will take over the full control and make independent decision. The Lulu-Hypermarket will work under the same name in the market only adding a part of Wal-Mart family. Now it will work under the management of worlds largest retailer with plenty of experience and skills in retailing. http://www.jeddahpoint.com/wp-content/uploads/2012/11/lulu_hypermarket_jeddah.jpg A Part of Wal-Mart Family As a worlds leading retailer and having plenty of resources, Wal-Mart has the ability to buy the 100% stake of Lulu hypermarket and can make it its wholly owned subsidiary as it did about 13 years ago to enter into UK market by acquiring the ASDA. The Wal-Mart can enter into Qatar by using the same approach. This mode of entry is considered to be best when demand for the product seems to be certain. This market entry mode shows that the company has long term strategic plan. By owning LULU hypermarket, Wal-Mart can have following advantages (Bennett Blythe, 2002, p212): lower cost of production Local technical expertise and market knowledge Grants from Government Trained Staff Competitive Advantage Retailing have long-standing market potential in a comparatively politically stable state such as Qatar then having full possession will offer the level of control which is necessary to fully meet the companys strategic marketing intentions. This strategy is a tool to build a build an influential and strong presence in the global markets over a long period of time. In future the Wal-Mart can have huge market share and large profits in Qatari market, but this will not realised overnight. The Wal-Mart has to wait to become the market leader in the country. Sometimes it takes many years gaining an understanding of the local markets, customers and competition before making a major success in the market (Hitt et al 1995). Many multinational companies like Wal-Mart considering for speedy access to market and generate short term by exploiting the opportunity in the growing economy (Cullen Parboteeah 1999, pp.133-135). Takeover to Lulu Hypermarket will give the quick and complete access to the Qatars growing economy. Acquisition of Lulu will provide instant access to a skilled work force, existing customer and established supplier links, recognised brands to the customer, an established distribution network and a direct source of revenue. International Marketing: According to Griffith Hoppner (2013) marketing managers from all over the world are be aware of the growing requirement for their companies to improve the expertise, abilities and familiarity to enter effectively in global markets. The rise of a more open global market, the globalisation of buyer choices and the rapid growth of Internet, all has increased the interdependency and interconnections of countrys economies around the world. The Chartered Institute of Marketing defines marketing as the Management process responsible for identifying, anticipating and satisfying customer requirements profitably (Dann, 2010). Thus, marketing includes (Doole Lowe 2008, p.5): concentrating on the customer demands recognising the best way of customer satisfaction companys motivation to the process of providing that satisfaction Meeting organisational goals In international marketing the strategic components of this structure still apply and the conceptual structure is not going to alter to any noticeable degree when a firm moves into a foreign market. However, there are two key differences. First, there are different planes through which global marketing can be approached and, second, the uncontrollable circumstances of the international marketing environment. Therefore, international marketing is more complex, multidimensional and challenging (Doole Lowe 2008, pp.5-7). The Marketing Environment in Qatar: There are many environmental analysis models available to analysis the marketing environment of specific country. SLEPT approach is one of these and commonly used international marketing environment analysis through the social/cultural, legal, economic, political and technological dimension. http://cdn.grin.com/images/preview-object/document.114088/cadd82efe20d90c01ea65576b8a5c001_LARGE.png (Doole Lowe 2008, p.7) Social/cultural environment The social and cultural impacts on global marketing are vast. Changes in social circumstances, religion and way of living all have emotional impact on customers observations and purchases behaviour. These differences tell us that consumers across the globe either similar or different and defines the possible universal branding and standardisation. Cultural variances and particularly language changes and religious differences have a major effect on the way a product may be used in a market, such as product name and the advertising campaign (De Mooij, 2010,pp.31-37).  Wal-Mart is going to enter into a country where native language is Arabic. It would have to make sure that all the information about products also be given in Arabic. So that customer can have full facts about product. Another important aspect is that all the products must be halal and fulfil the requirement of Islamic law. These products particularly include meat and dairy or those in which these are used as ingredients. When any company transfers into another nation, it deals with people from different social environments and background. Social values that are important to one community may mean little to another. Existence of all these substantial differences must be kept in mind while making marketing strategy in new country. As the economy of Qatar is growing rapidly people love to go outside for shopping. For Wal-Mart, this social trend of shopping would definitely be helpful to get competitive advantage in the economy. People in Doha are always looking for those places where they can find everything at same place. Legal Environment: The host Countrys legal environment affects the international marketing operations of firms in many ways. A good manager will analyse the legal environment of the country in which the firm is going to operate (Jain, 1989). Good news for Wal-Mart is that is that Qatar has NO taxes. The country is tax free and very attractive place to invest. It can sell thousands of products on very cheap prices. Government of Qatar has made very flexible rule to invest in the country for international companies. Political Environment: Multinational companies such as Wal-Mart usually prefer to invest in a country with a stable and friendly government (Williams, 2006). But such ideal business environment is not easy to find particular in Arab region. But in Qatar the situation is entirely different. Qatari Government is stable and very strong. There is no political dispute or protest reported in recent years as it is happened in other countries of the same region. Economic Environment: The macro as well as micro components of economy has a significant impact on international marketing strategy. Qatar is growing from several years with continuous high real GDP growth rate which has made it a country with highest per capital income. Qatars economy depends on its enormous resources of oil and gas. Peoples living standard and purchasing power are very high. In such economic circumstances Wal-Mart has plenty of business opportunities in Qatar. Basically, the microeconomic environment concerns more with competition in the open market of a country (Jain, 1996, p.189-195). After taking over LULU-Hypermarket, Wal-Mart would not have any significant competitor in the market. Its purpose is international expansion in this way it can quickly expand its business in the region. Technological Environment: The influence of technological developments can be seen in all areas marketing. The capability to collect information on marketplaces, organisation control abilities and the feasibilities of carrying out the business globally have been modernised in recent years with the advances IT and telecommunication (Wilson Gilligan, 2012, pp.145-147). Qatar is a significant joining link in the world telecommunications system. In recent years, it has made outstanding development in the fields of communications, broadcasting, delivery services, roads airports and sea ports which make Qatar an excellent place to invest. Marketing mix: Wal-Mart pricing Strategy: Pricing is a most critical and composite variable in foreign marketing plans. Pricing strategy finally decides a companys capability to remain in an overseas market. The uncertainties in market or economy which are very difficult to predict such as production costs, demand, competition and many other factors fluctuate international price (Ferrell Hartline, 2010, pp.230). International pricing has several processes and complications. In case of Wal-Mart, its corporate headquarter in USA will make all the pricing decisions. Different price-setting tactics are open to them. But before making any decision they would need complete market research and a number of factors effect pricing policies including competitor approach in the market, dumping, and leasing. Marketing managers would work with their abilities through all these composite variables (Jain, 1996, pp.482) Why should people Buy in Qatar from Wal-Mart: A proposed Model Different Low Cost Focus on Niche Market Source: Made by student himself The international objective of Wal-Mart is to have retail prices at lowest possible cost and the corporation has been very successful to get this goal in the international market. A person can at least 15 present by shopping in Wal-Mart. Its excellent corporate culture and availability of advance technical expertise coupled with professionalism make it possible to achieve its ultimate goal of providing the lowest prices possible in the international market. Wal-Mart should ente