Changzhou industrial company of China seeks to penetrate India market through an ambitious sale of Energy saving bulbs. The global talks on environmental degradation have taken the centre stage in world policy formulation. Environmental friendly Products such as energy saving bulbs are increasingly becoming a must for every industry and home. During the production of electricity, green house gases that harm our environment are released into the atmosphere. The use of energy saving bulbs reduces the harmful emissions and therefore mitigates their effects. India is one of the fastest growing economies in the world and the need to use energy saving products is growing among the industries and homes. However the local industries can not satisfy the rising demand of the energy saving bulbs.
Changzhou industrial company of China founded in 1995 is a world leading producer of high-quality energy saving bulbs and lanterns. The company is well fitted with scientific techniques such as assembly lines and detection equipments operated by highly trained employees that guarantee high quality products.
The process of acquiring, maintaining and developing new international markets such as India is increasingly becoming more difficult as competition brought about by globalization stiffens. Many companies are realizing the need to acquire knowledge, skills and aptitudes to enable them compete more favorably in international markets. The internet provides a new business platform where sellers can easily exhibit their product and interconnects them to interested buyers across the globe. Changzhou industrial company has therefore chosen to use this method to penetrate India for most of the other methods are turning obsolete (Jeannet, 2004).
To understand the threats and opportunities well this analysis of the Changzhou industrial company will examine national and global influences so as to effectively achieve a competitive advantage in India. A SWOT analysis of the company shows the following strengths and weaknesses.
Strong cash flow position
Strong balance sheet
Low cost brand growth
Lack of enough knowledge of India business culture
The McKinsey 7-S models scan of Changzhou industrial company demonstrates clearly her superior satisfaction of the stakeholders in China. The company has modeled all her systems in shared values, strategy, structure, systems, staff, and cultural style in India to match the China standards. In addition a review of the Company’s competitive advantage as reviewed through the Porter’s Five Forces shows that rivalry based on the buyer and supplier power as well as threat of substitute and barriers to entry are in its favor more in the villages than it is in the big cities. This was again confirmed by the Network/stakeholder analysis. The PESTEL analysis detailed the following situation;
The political relationship between India and China plays a pivotal role fore effective in international marketing between the two countries. The two countries have in the past fought over boarder disputes, and differed sharply over Tibet’s spiritual leader Dalai Lama visit to India. The China India trade gap has also recently sparked political heat between the two countries. For example, out of their trade for the financial year 2008 – 2009 which totaled USD 41.6 Billion, India’s contribution was a mere USD 9.3 Billion. There is a feeling by India that Chinese goods rejected by the west were inappropriately dumped in their market, an allegation denied by China (Harns, 2004).
Despite all these disagreement and occasional mistrust, converging trade and other economic interests between India and China is encouraging them to cooperate. For example China’s investment in India’s infrastructure has tremendously increased while India has grown to a significant investment market for Chinese companies. In 1994 a trade agreement to avoid double taxation was signed between the two governments. More significantly, China and India have agreed to pursue further negotiations for a free trade agreement during the recently held East Asia summit in Thailand. The two countries have already signed an agreement to reduce their green house emissions. It is these opportunities that Changzhou industrial company will focus on and promote its energy saving bulbs in the growing Indian market (Doole, 2005).
India is the fourth largest economy in the world based on her purchasing power parity (PPP) although it is placed twelfth in the basis of Market exchange rates. India has undergone continued economic liberalization since 1991 that has set a perfect platform as an international market. The year 2000 show major reforms in India’s economic policy that accelerated her economic growth rate to become the second fastest by the year 2008. However there has been a down turn in 2009 with GDP growth rate standing at 6.1% with the one of the highest projected fiscal deficit in the world standing at 10.3% of GDP.
India accounts for 1.5 % of the total world trade with a per capita income of $1016 which is 142nd best in the world. The legal tender acceptable in India is the Indian rupee that exchanges approximately at 49 rupees to one US dollar.
Significant steps have been taken to reduce corruption and other economic crimes since the 1991 Economic reviews that work favorably for Changzhou industrial company. With the economic environment favorable and almost the same with that in China, prices fixation of the bulbs will not be a big challenge especially now that there is no double taxation between the two countries (Keegan, 2003).
India is a country of diverse cultures, languages and religion. The social and cultural structure gives India its national identity. The Indians are generally entrepreneurial and innovative a culture that is very conducive for the growth of a business. Religion is a way of life in India, and it can influence business practices, it is therefore advisable to respect it so as to maintain good business relationships and satisfy customer requirements profitably. Fatalism concept, notion of Karma and the belief that everything that happens in universe does so for a define reason are deep rooted traits in Indian culture. These traits significantly affects the Indians process of decision making and may influence time consciousness and affect business relationships. Indians have no value to privacy and retain a strong sense to community defined orientation with generations living under one roof. As a strict business practice it is important therefore to maintain interpersonal contacts, avoid conflicts and develop a more indirect approach to the way you communicate (Czinkota,1995).
India Information Technology is growing at a rate of between 25% and 40%, with more of its citizen getting access to internet at their homes and offices. This gives Changzhou industrial company an excellent platform on reaching great numbers of the prospective buyers of the energy saving bulbs.
India has provided for international companies aspiring to do business in India to do so online. All the legal requirement and fees for business start-up have been made easy and accessible in the relevant government’s websites. There are no restrictions in Importation of energy saving bulbs from China.
India is a developing economy with a population of 1.1 billion people which is the 2nd largest in the world with 180 million households, this forms a great untapped market. Changzhou industrial company will enjoy an almost monopoly in distribution of energy bulbs to the village based industries, India has more than 550,000 such villages. India currently has a median age of 25 years but it is expected to grow order because the fertility rate is declining (Kotabe, 2004).
International Marketing objectives
High standard of Service delivery
Changzhou industrial company shall deliver her services in strict adherence to the national statutes of the people’s republic of China. Every product must pass through quality checks before delivering it to the clients. Field surveys shall be conducted at the end of each year to confirm that the quality of our products exceeds customer expectations (Paliwoda, 1991).
Changzhou industrial company will set a five year plan that shall guide all her activities within that period. The achievement of the company shall be assessed after every two years and shall encompass all aspects of the business like infrastructure, services and resources, preset for the five year plan. The feed back reports shall be used to formulate successive five year plans an year before the expiry of each current plan.
In the first year Changzhou industrial company shall engage the service of a full fledged department of qualified technical team to promote, and facilitate all business growth opportunities in India. The team shall give a detailed report to the management team every three months outlining the possible growth opportunities and threats to the company (Stone, 2004).
Changzhou industrial company is committed to ensure that cost effective and environmental friendly resources, processes and appropriate systems are in place and in excellent working condition to support service delivery.
Changzhou industrial company will engage high skilled labor and conduct on service trainings and workshops as appropriate to ensure sustained excellence in performance, innovation and business improvement. Awards for excellence to workers shall be conducted at the closure of every year.
Changzhou industrial company has set a target of 10% profitability in its initial three years trading period based on the operating margin.
Changzhou industrial company strategy is clear, with growth being mainly pursued in semi-urban and rural villages. The company’s marketing strategy will specifically involve thorough market analysis through marketing tactics to inform on decision on market factors such as the price and distribution patterns. The model of entry for Changzhou industrial company shall include ownership of land and warehouses and joint ventures with energy bulb national retailers and internet providers who shall be useful in product promotion (Whitelock, 1987).
Changzhou industrial company has identified the following four opportunities for corporate growth as guided by Ansoff’s Matrix.
Research has shown that energy saving bulbs sales have mainly been concentrated in urban areas. Changzhou industrial company plans to intensify campaign in rural and semi-urban villages, these will attract major retailers in the areas who will be our clients. Consumers using the normal bulbs will be taught on the importance of the energy saving bulbs.
Changzhou industrial company plans to develop small size energy saving bulbs to capture the urban market that has been using the big type. The variation in size shall attract new customers and this shall give the company a competitive edge especially in the urban areas.
Changzhou industrial company plans to work with the India’s National Environment Management Authority (NEMA), to tweak one of its product and brand it as NEMA energy saving bulbs. This is aimed to increase the market among the professionals.
Changzhou industrial company will develop five more types of energy saving bulbs based on size and wattage. Two products based on size shall be the mini-bulb and micro-bulb that shall be the smaller version of the existing product. Three other products single, double and triple bulbs shall be based on the wattage (Barczak, 2003).
Implementation & Control
Marcom planning and integration
Changzhou industrial company is committed to placing achievable and measurable targets which shall be blue prints for products development and innovations. The management shall plan marketing activities aimed at hitting specific target markets during such activities as client events, workshops/seminars, conferences and environmental campaign trails. The finance arm shall also closely build and monitor the implementation of the budget.
Changzhou industrial company shall sign joint ventures with existing national retailers with established links across India. The company shall also train other new independent marketers that shall be registered as limited companies in India according to the provisions of the law. Other avenues shall be through the National Environmental Management Authority of India whose activities the company shall support as a means of advertisement. The technical team shall plan, design, produce and maintain the ways and means in which the company’s product shall have internet presence. In addition they shall create and maintain a brand identity in all the corporate available exposure channels.
Training and development
Changzhou industrial company shall set a specialized training program for all her technical staff, which shall be conducted every august by trainers from the headquarters in China. The local training team shall compose other training materials and marketing messages for all media. Technical training manuals and other documentation shall be produced by the team every three months. Material development for internal and external training programs shall be done a moth before the scheduled activities. Training of consumers on the importance of the energy saving bulbs shall be done in conjunction with the national retailers and the National Environmental Management Authority at districts level. The consumer training shall be done on rotational basis (Anon, 1979).
Changzhou industrial company will open a marketing research centre in New Delhi where all her research activities shall be conducted. The department of research and innovations shall be based here and comprehensive feedback reports from the centre on recommendations for products development shall be sent to the management every three months.
Changzhou industrial company will have both financial and strategic controls well in place. Financial controls shall reflect profit targets, capital bids as well as performance appraisal. Strategic controls shall be implemented through agreed business plans, profit and loss accounts, and any occurring short term constraints. Staff appraisals shall be conducted at the end of every year and shall be carried by the supervisors of every department. The junior staff shall also in turn appraise their supervisors. The feedback and findings of the appraisals shall be discussed at departmental level at the beginning of every year.