International Marketing Strategy Report
Introduction
In the book “International Marketing Strategy: Analysis, development and implementation” by Isobel Doole and Robin Lowe, it is stated that the Chartered Institute of Marketing describes marketing as a management process that deals with the identification, targeting, segmentation and positioning of its products with in the market for the sole purpose of satisfying the customers. In return the company enjoys profits thus marketing entails focusing on the specific needs of the consumers, identification of methods to satisfy the needs and orienting the company towards gaining production efficiency. International marketing further entails the marketing manager identifying the various levels in which marketing can be approached and furthermore, ascertaining the uncontrollable elements underplaying the international environments. Thus international marketing requires strategies so as to deliver and satisfy the specific needs of the consumers (Zhang, 2010). In analyzing these strategies, Huawei provides the appropriate case scenario representing an international company operating in Eastern Europe. The main country in focus is Russia.
Description of Huawei Technologies Company
Huawei Technologies Company Limited is an international corporation whose parent production processes are conducted in China. The company specializes in designing, production and distribution of telecommunication equipment, services as well as networking. Huawei has its headquarters at the Shenzhen area of Guangdong. Huawei overtook Ericsson and became the best producer of telecommunication equipment and facilities around the world in the year 2012. Reflecting back on the history of the company, it was founded in the 1987 by Ren Zhengfei with the aim of developing telecommunication networks. Among the other roles for which the company was formed include the provision of consultancy services, providing operational equipment’s which satisfy the FCC electronic requirements. The scope of its operations were to be initiated in China but later on move into the global sphere. Currently the company boasts of 140,000 employees. Of these number, 46% work for its research and development departments abbreviated as R&D. By so doing the company has managed to diversify its international market share which has led to an increase profitability. These strategies have seen the company operate in 140 countries across the world. Additionally, the company has been contracted by more than 50 leading telecom companies (Doole & Lowe 2013).
Question One: SWOT Analysis
The macro, micro and external environment influences on the marketing strategies selected by Huawei in Russia can then be analyzed using the SWOT analysis. After gaining ground in the Chinese market through the Hutchison Technologies, Huawei decided to venture into the international markets in 1996, Huawei contracted the Beto Corporation to produce switches for the Russian market (Marilyn & Judy, 2010). The experimental stage was marked with a lot of success that the company experienced a 12% increase in its profitability index. The management thus identified the hidden potential of the market after which it strategized on how to take-over the market. SWOT analysis represents an integrative matrix which analyses Strengths, Weaknesses, Opportunities and Threats. Strengths are made up of internal factors that determine the efficacy of a firm’s performance. One of the strength in Huawei products is their innovativeness. In terms of functionality, the hardware systems embedded in the networking equipment are powerful making it to have high transmission speeds.
The incorporation of new production processes through the implementation of total quality management was a boost to the value chain which has helped in the institutionalization of quality production techniques in the Russian market. Additionally, Huawei has been loyal to the research and development department which has led to the innovative redesigning of their networking equipment. Weaknesses refer to limitations that work against a business making it vulnerable to adverse competition. Weaknesses originate from internal factors and can be very harmful to a business if not taken care of. On the part of Huawei, even though the telecommunication and networking equipment have admirable features and potential for growth in the Russian market, their gadgets are sold at a much higher price than its competitors. The high pricing might have originated from the value chain process but affordability is the first thing often considered by customers because consumers may be willing to own these devices but if the prices are high then sales are lost. Besides, the Huawei’s supply chain in Russia has not been perfect, insufficient supply is a very big problem especially when demand exceeds supply (Ireland, 2010).
The introduction of the Huawei Value Growth Solution has translated into numerous competitive advantages which has accrued towards internal efficiencies and strength. The Huawei Value Growth Solution abbreviated as VGS was developed as a monetization engine whose end result has been increased profitability and efficiency for the company (Wang, 2010). This new product feature complements the terminal and network infrastructure set up by Huawei Company to facilitate the dissemination of mobile broadband in Russia. This is because the VGS incorporates a stand-alone DPI which has been associated with bandwidth management, policy control and optimization of content delivery. This added to the efficiency of the company by topping up their main servers to a total of 30 including MTS, Megafon, Telefonica, Cell C, Etisalat, MTN, STC and CMCC. The instalment of the Huawei VGS system therefore translates to efficiency which makes it a strength.
Opportunities are chances that if utilized not only improve performance but also increases a business profits. They are external factors hence the strategic manager has no control over them. These factors are generally classified as the macro environment. In the case of Huawei, opportunities have continuously availed themselves given the strategic marketing campaigns that have been made against competitors such as the Spanish telecommunication Telefonica, German Telecommunication DT, Vodafone, French Telecommunication and the Italian Telecommunication TI (Ariel, 2011). The second opportunity relates to a bid by the company to diversify and expand its portfolio or operations into the sale of smartphones to its customers in Russia. This is actually a globalization opportunity that will help Huawei to increase their customer base thus increasing the profitability while at the same time maximizing customer value. The third instance of opportunity has been achieved by contracting and sub-contracting companies like Cricket which is a company dealing with the carriage of networking facilities at a low cost. Furthermore Google has partnered with Huawei to produce not only phones that are branded with the Huawei logo but also, the company uses the android O.S to power the Huawei smartphones.
The focus on threats will be limited to the analysis of Huawei’s macro environment in terms of possibilities. These are the potential risks that a firm is likely to be exposed to in the external environment and cannot be influenced by the firm. At Huawei, it is acknowledged that the risk assessment and containment process is greatly dependent on the manager’s decision making skills. Though these elements are external, a business could use them to their advantage. The biggest threat facing Huawei is competition from seasoned rivals. Huawei’s main competitors in the Russian market are Spanish telecommunication Telefonica, German Telecommunication DT, Vodafone, French Telecommunication and the Italian Telecommunication TI. The second threat is the risk of exposure to foreign exchange discrepancies. There exists foreign exchange risks which have to be addressed especially for companies involved in international trade with customers outside of the free trade zone. Huawei therefore needs to be vigilant on the changes in exchange rates or alternatively leverage the company against any potential risks.
Question Two: Evaluation of the company’s product, price, promotion and distribution strategies in the Russian market. The organizations approach to positioning in the marketplace
The factors identified in the macro environment are legal, political, technologies, cultural, economic and social factors. The micro environment is consistent of stakeholders, customers, competitors, suppliers and intermediaries. Internal environment consists of finance, employees and functional responsibilities (Manton, Donald & Courtny, 2012). Designing a marketing plan based on the type of business environment in which a business operates is the best way of penetrating international markets. After knowing the environmental factors it is easier to create a clear picture of Huawei’s rivals in the Russian market, their strengths and weaknesses which were identified by analyzing the marketing mix consistent of the 4 P’s. Most of these needs of the marketing plan were addressed by stakeholders and a board of directors without forgetting the regional marketers from Huawei branches and contractors in Russia. The aspects of pricing, product, promotion and distribution or place are summative termed as the 4P’s of the marketing mix.
The main components in the 4Ps include product, place, promotion and the price. In pricing networking equipment produced by Huawei in Russia the company’s sales and marketing department considered customers’ willingness and potential to purchase. Identification of the customer’s potential is pertinent in determining their purchasing power. The prerequisite factors considered in this context are the lifestyles of the Russians, their level of income and their willingness or propensity to spend on technologies (Steve, 2013). As a result, Huawei’s products in the Russian market are priced depending on the ability of the consumers to purchase while at the same time using a marketing model whereby customers are offered with a variety of products whose features equate to the value added. For instance most of the products are priced cheaply as compared to the competitors. As a result most of their electronic products range from $50 to $1000. Moreover, since Huawei operates as an international venture in Russia, South Africa, German, United Kingdoms among other countries, international prices are considerate of the exchange rates in these countries, the taxation policies as well as the legal political factors. Economic factors such as recession come into play during the low financial times.
Product defines the physical good that a company deals in. Huawei is a manufacturer of networking and telecommunication equipment. After its inception, Huawei’s product line have been organized around three major product segments. The Russian market enjoys products and services such as the Telecom Carrier Networks which have been strategically done by building networks to provide, transmit and disseminate telecommunication services (Hofstede 2008). The second product segment enjoyed by the Russians is Enterprise Business which entails the provision of equipment, services and software to enterprise customers. The third segment is the manufacture of devices to enhance telecommunication services. Specifically, Huawei announced its introduction of enterprise business in the Russian market in 2011. This enterprise was geared towards providing infrastructure, both wireless and fixed communication, cloud computing and data center for the Russian market. Hence, Huawei’s products include the provision of hardware and software programs for their potential groups of customers.
The partnership between Huawei and Magafon has facilitate the establishment of the Huawei Value Growth Solution (VGS) which is a in the end, the company has benefited from improved product features and services. Among the embedded product features that make Huawei more adoptable is that subscribers can now access various networks through one access point provided by Huawei. Second, is that the product can shield interfaces during networking thus fostering privacy while simultaneously encrypting the access codes. For a long time now, Huawei’s operations in Russia have been associated with smooth system upgrades which augments towards improved services and this boosts the integration of speed with device sharing the same network.
Place relates to positioning of the products to facilitate access by the customers. Positioning of products in the global markets is determined by the volume of customers in the various market segments. Huawei identified huge market opportunities in Russia thus it was the first international company where Huawei contracted its services and products. The positioning of these products was determined by the loyalty of the Russian customers. The issue of nationality among multinational firms has been a factor in the development of MNC’s in the international markets (Perlmutter, 2007). With the increasing concern that the Russian governments are forced to protect their domestic markets and industries from unfair competition. Thus it has to put in place strategies that will hinder internationalization of other firms. In the recent past, Russia has been using market protectionism strategies to prevent excessive invasion of the European market with Chinese and American firms. This has been done through increased tax rates, creation of trading blocs, enactment of embargoes and quota system among other restrictive measures.
Promotion is the process of increasing the visibility of a product. It can be done through advertising, personal selling and offering of after sale services. Given the fact that Huawei’s product line is consistent of industrial products which are issued to suppliers and contractors, the costs incurred along the supply chain are minimized by eliminating middlemen who inflate prices by increasing the costs of delivering the products to the final consumers (Kotabe & Helsen, 2008). The direct distribution system complements promotional strategies that have been facilitated by advertisements on social media as well as soft selling strategies which have been effective in gaining the loyalty of potential customers in the Russian market. By involving themselves in promotion and marketing activities, Huawei have managed to gain sales exceeding $16 billion from the Russian market in 2012.
Question Three: Discuss some of the company’s decisions at the corporate level and identify and discuss the important factors for the company in their international market expansion. Evaluate the entry strategies and market selection.
Huawei has defined its corporate culture by incorporating a mission and objective statement that is proportionate to what the firm desires to achieve in the short term and long term. In the case of Huawei, they have incorporated a culture which values their customers above anything else. With time the corporate structure which has divided the firm into two groups where one is group is concerned with maintaining the culture of offering best services to consumers and their clients in the Russian market. The consultancy department as well as Huawei online customer care is concerned with maintaining the culture of customer service. This has been among the strengths associated with the organizational culture at Huawei.
The Ansoff Matrix presents a medium which elucidates on the four aspects of market expansion, product development, market development and diversification all of which, at one point or the other, have been used by Huawei to enhance their competitive advantage position (Quelch & Deshpande 2009). Selective pricing of telecommunication and networking equipment have been reinforced with the research and development department abbreviated as R&D. Huawei have over time achieved not only product development but also market development in the global sphere. Their provision of excellent services has been enhanced by the company’s prioritization of profitability over the size of the firm. Product development has further been influenced by continuous development of the workforce through rigorous training. Coupled with the establishment of an elaborate reward and appraisal system, the company has managed to innovate differentiate its products from its competitors. The strategy of market expansion and diversification has been aided by the company’s creation of networks which stretch out to cover subsidiary and affiliate companies.
The market expansion bid by Huawei have seen it gain access to international markets. The market entry strategies have been seconded by the unpublished journal “Internationalization and entry strategy of enterprises: A case study of Chinese firm: Huawei” by Dawei. According to the author, the decision to disintegrate the Soviet Union marked the formation of a socialist bloc which mean that Russia had to abolish the Berlin Wall so as to integrate Eastern Europe and the Asia Pacific region into the free trade area. With the unification of these regions, the European and Asia markets became integrated and dependent on each other. It is from this initiative that China has grown its relationship with Russia. Market selection and entry strategies implemented by Huawei in identifying and entering the Russian market involved cross border segmentation. This process followed the realization that the Russian market is different from the Chinese market thus the most suitable market entry strategy was the creation of regional segment (Omar, 2012). The market segmentation process was supported by the separation of the market based on market commitment and market knowledge. In this market commitment, is associated with the determination of the consumers propensity and willingness to purchase electronic products supplied by Huawei while the concept of market knowledge denotes the practice of collecting both general and specific concerning the customers for the electronic products produced by Huawei.
The aspect of product development is also seconded by the company’s decision to invest into researching and developing the Huawei VGS servers which have been tailored towards meeting ‘data explosion’. Huawei acknowledges that the 21 century is an information age thus there is a lot of sharing of information and data. As a result, the company has funded R&D initiatives in Russia which augments towards attaining three major market objectives. The first objective is improving revenues by use of differentiated packages which are segmented to suit various market segments. These improvements have been implemented in conjunction with Megafon which is a top operator and carrier of data the Russian Market. The second advantage accrued from product development resonates around the need to improve the experience of the subscribers by offering security features such as anti-virus, comfortable and convenient access to mobile internet and above all facilitate content adaptation. The third advantage of the Huawei VGS is that it improves the efficiency of the network in such a way that it can support large bandwidths. This was facilitated through traffic optimization, caching, and traffic management.
Question Four: Make recommendations for marketing strategies that will contribute to the competitive advantage of your chosen organization.
Based on the fact that Huawei competes in a broad global market, cost leadership strategy has not been factored in. Cost leadership is defined as the ability of a company to control its internal efficiencies in order to provide their products and services at the least possible cost. Huawei Company has improved its value chain and value proposition which assures the customers of services that are relative to their payment. It is also proposed the use of differentiation which is evident by the ability of a company to offer unique product features and characteristics (Kotler 2010). Huawei has managed to differentiate its products in the electronics segment by offering premium services of high quality, good customer care services, advanced technology and rapid innovation. Differentiation has also been associated with the ability for Huawei to sustain its differentiated services and products by creating unique products and service offers that are at per with technology.
The third strategy is the low cost strategy. This strategy can also be referred to as niching which entails the identification, segmenting and positioning of a products in markets that have not been exploited by the competitors (Rugimbana & Nwankwo, 2008). Huawei has been a beneficiary of this strategy which has been aided by its R&D and innovation. The fourth strategy is focused differentiation. This strategy is supported by the identification of market niches after which products and services are provided. This is supported by focusing on a certain segment of potential networking customers and telecommunication markets in the international sphere. To this end, it is prudent to note that the international strategies support the corporate level strategies because by enhancing the internal efficiency of a firm, its efficiency in the global markets is increased as well. For instance, niching has been profitable in the multi-domestic, trans-national and global markets across America, Europe, Asia and Africa.
References
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Ireland, H., 2010, Understanding Business Strategy. South Western, Canada
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Quelch, J. & Deshpande. R. 2009. The global market: developing a strategy to manage across borders .Wiley and Sons. U.S
Rugimbana, R. & Nwankwo, S. 2008. Cross cultural marketing. Thomson Learning. Australia
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