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Exploring the European International Market: Opportunities and Advantages

1.1 Selection of International Market

The chosen international market of in this study is the European international market. This is an international market that has been praised for its remarkable aim that looks forward at guaranteeing the free movement of various goods, and services, as well as people within the European Union (EU). This is an aim that has been granted the slogan of the "four freedoms," (Barnard, 2010). The market is said to encompass the 28 member states of the EU, and has been extended to areas such as Switzerland through bilateral treaties. It’s a market that provides conducive environment to massive competition, larger economies of scale, increased specialisation, allowing goods and services as well as the different factors of production to operate in the area where they are most valued, hence making the allocation of various resources more efficient which hence makes it a good place to conduct and set up shop in it.

1.2 Selection of Market/Sector

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The market under proposal in this study is the automotive sector. The automotive sector can be retail as well as wholesale. It involves manufacturing, assembling and selling motors to end users, not necessarily for resale, but for use by the consumer or can involve a sale of motors to other retailers for them to sell to the end-users, (commission, 2015). The automotive industry has for a long-time been critical to the prosperity of Europe. It provides jobs for over 12 million people and it as well accounts for about 4% of the EU’s GDP.

1.3 National Culture Dimensions

As the globalization of the world’s economy has continued to deepen, there has been a corresponding growing interest on the parts of management researchers, practitioners as well as governments in understanding the diverse characteristics of countries, including their different cultural dimensions (similarities and differences), (Hofstede, 2016). Professor Geert Hofstede conducted a comprehensive study regarding of how different cultures influence the economic nature of a country and how they influence new entries to a countries international market, workplace values are influenced by culture. His particular model consists of six different dimensions that all evaluate the society's cultural effect of a on the values of its people, and how these values correspond to behaviour, using a factor analysis derived structure. The European nation being one of the most advanced and quite wealthy nations has grown to adopt a more technological culture where the automotive industry has quite prospered over the years. With a high economic standard, people see no hardship in purchasing motors and hence will provide a good environment for the above-proposed market.

  1. Power distance index (PDI): is necessarily the extent to which the weak members of organizations tend to accept the fact that power is unequally distributed. Just like every other country, in Europe, there is a hierarchy when it comes to power. Europe has an average PDI of 65 out of 100.
  2. Individualism vs. collectivism (IDV): This index necessarily explores the degree to which a society’s members are close, whether their ties are loose or tight. Europe is seen to have its society not to loose as its IDV score stands at 70 which indicated integrated people.
  3. Uncertainty avoidance index (UAI): index determines a society's ambiguity tolerance, whereby people tend to embrace or run from unexpected events, unknown thing, or away from the status quo. Europe has a UAI score of 85 which indicates that its society opts for strict behaviour codes, laws, guidelines, and basically rely on measures of absolute Truth.
  4. Masculinity vs. femininity (MAS): this dimension, it is a tag of war between a preference for achievement, heroic measures, assertiveness and material rewards for success (masculinity) against the share of modest and caring views (femininity). Europe stands at an average score of 66 which implies that there lies a gap between male and female values, (Hofstede, 2016).

1.4 Core benefit to operating in Europe.

Europe is a nation regarded for its wealth and sustainable nature with the population growing vastly each year and with a taxation which hence implies that industries such as the automotive sector tend to seize such chance to enjoy such low taxes for their products. Europe's population growth accelerates gradually which in turn increases the nation's popularity and it's this populace that enhance more people to migrate to Europe hence enlarging the amount of automotive demand in the country, (Barnard, 2010).

1.5 PESTEL

Political factors

This includes different government laws and regulations as well as security measures applied to the industry. Some of this political factors that tend to affect the European automobile industry include:

  • Government subsidies
  • Duty and taxes, (contributor, 2014)

Economic factors

These are mainly factors that tend to be closely related to economic growth, rates of exchange, and the business setting. In the European market, these factors include some such as:

  • Excess car Production which increases marketing revenue and new products design.
  • Strategic mergers and alliances
  • Diversification
  • Pricing pressure due to proliferation of new products and excess capacity
  • Economies of scale

Social factors

  • This involves the various changes in culture and demographics globally. Some of the common social factors include:
  • Changes in preference of taste and fashion
  • Change in the pattern of buying for consumers due to mature markets recession
  • Customer predilection changes especially from the automobile mostly been a status symbol to the need of motors that tend to guarantee efficiency of fuel and low emission
  • Harmful emissions awareness caused by automobiles and increase of environmental issues, (contributor, 2014).

Technological factors

  • Restriction or modification of technology that causes pollution
  • E-commerce
  • Increasing the manufacturing plant’s efficiency of
  • Safety boosting
  • Use of sophisticated new technology to acquire competitive advantage

Environment

  • Strict application of EURO norms in fighting pollution in countries
  • Increased global warming burnout, and greenhouse effects awareness
  • Shift in the tastes of consumers and preferences towards cars that are either fuel cells, hybrid cars and eco-friendly

Legal factors

  • Strict laws of pollution and restrictions set in the European markets, (contributor, 2014)

2.1 Selection of Organisation.

Cherry Automobile Co., Ltd is a Chinese company that was founded by the Chinese Government in 1997 and is a corporation owned by the state with its headquarters in Wuhu, Anhui Province, China. It trades as Chery and at times known by the pinyin transcription of its Chinese name Qirui. The company specializes in the sale of a wide variety of Chinese-inspired products including; minivans, passenger cars, and SUVs. It is the tenth-largest automaker based in China, measured by 2012 output of around 590,000 units and is extending vastly around the world, (Hirschler, 2012)

2.2 Background of the Organisation

The Chery Automobile Co. Ltd was founded in the year 1997 as an enterprise owned by the state by a group of officials that originated from Anhui province and it began its automobile production in the year 1999. They used a chassis that was licensed from Volkswagen's SEAT Toledo known as the Fengyun. Their first car was said to have sold nearly 30,000 units. In 2010, the Chery Company became the 7th most-productive vehicle manufacturer in China by selling approximately 700,000 units. The company operates car-making joint ventures with other companies such Israel Corporation and Jaguar Land Rover, among other joint ventures automotive component manufacturing with Johnson Controls, Arvin Meritor, and PPG Industries, (Hirschler, 2012). The company is developing and already spread into countries such as; Egypt, Indonesia, Russia, Iran, Ukraine, Malaysia, the Middle-East, Thailand, Venezuela, North Africa, Pakistan, Uruguay, Taiwan, and Vietnam.

2.3 Product Type & Industry

The Chery automobile company mostly offers three main products and services which mainly include;

  • Vehicles
  • Engines
  • After-sales service

2.4 Customer Type

The Chery Automobile Company targets mainly the customers from youth going up from maybe an age of 25 years and above. This is necessary because, it is at this age that most people begin working after completing their education and hence due to the affordable prices offered by the Chery automobile company, a person of age 25 can hence easily afford their products with ease, (commission, 2015).

2.5 Prospective Competitors

Most automobile companies tend to have their demographic target ranging from 25years and above. This hence helps to identify Chery’s main competitors. Nevertheless, they are not really in direct competition with for some automobile companies such as Audi, Mercedes-Benz, Lamborghini among others whose range tends to be quite higher due to differences in quality and pricing, (Hirschler, 2012). Such automobile companies have quite expensive products and services of equal quality with their prices. This hence implies that their customers are of a higher age of approximately 30years and above who have more steady jobs and lifestyles. This hence puts cherry out of competition with such companies. This hence leaves cherry's competition to local companies such Shanghai Automotive Industry Corporation (Group), China FAW Group Corporation, Dongfeng Motor Corporation, Beijing Automotive Industry Group Corporation of China and other international automobile industries such as Volkswagen, Daimler, Honda, Volvo and Infiniti (Nissan) among others, (K Monteverde, 2011)

2.6 Organisational Culture

Means-oriented vs. Goal-oriented

The Chery automobile company can be identified to have a goal-oriented than mean oriented culture. This is because, its employees are basically out to get certain set internal goals or results, despite the substantial risks involved.

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Internally driven vs. Externally driven

Chery automobile also operates in an internally driven culture whereby employees tend to perceive their job towards the outside world as totally given. They maintain business ethics and honesty to produce the best possible goods and services for the consumer and the world at large, (Hofstede, 2016).

Easygoing work discipline vs. Strict work discipline

The company in a way portrays an easy going work discipline. Its internal structure culture is somehow loose, it lacks predictability, and little control and discipline which has over time promoted a lot of improvisation and surprises.

Local vs. Professional

Chery is more in a professional dimension. This is because the identity of its employees is mainly determined by their profession and/or the content of the job.

Open system vs. Closed system

Chery is seen to be an open system organization. Newcomers in this organization are made to feel welcome, which makes them fit in the organization quick which has hence promoted the vast growth, (Hofstede, 2016).

Employee-oriented vs. Work-oriented

The company’s management philosophy is quite employee-oriented. This is necessarily based on how personal problems of members of staff are recognized and how the organization takes charge for their welfare, even it means it goes at the expense of the work.

2.7 SWOT Analysis

The following SWOT Analysis briefly explains different aspects of Chery opening a store in Europe:

Strength

  • The vast growing brand of Chery automobile will extend its territories and its popularity beyond China
  • The company will enjoy the low taxation that exists in the European market hence maximizing their profits

Weakness

  • Fierce competition from other world-famous car giants, as Chery still is behind in R&D, quality, product design, and management expertise due to its limited resources and short history hence its brand image and influence is unable to match those world-known car makers like Ford, Toyota, GM, Nissan, among others, (Academy, 2010).

Opportunities

  • The European market has great potential due to its vast growing economy, hence consumer’s purchasing power is high and because Chery products are considerably cheap, they will gain market and soon popularity hence a competitive platform against more famous brands.

Threats

  • The biggest threat is more fierce competition in European auto-market. This is because people can choose from 120 models of automobiles as it stands now.
  • Higher fuels and routine maintenance fees which scares away customers, (Academy, 2010).

3.1 Selection of a Key International Marketing Approach

Having entered Europe already with stores in brazil, china among other places, Chery has the required resources and the culture experience from opening up shops in new regions. The only difference that is there between these other countries and entering Europe is that the European culture is seen to be more than most. This implies the product being presented need to be of good quality. Hence, the approach that Chery automobile will need to adopt is one that has to do with patience as well as strategic placement, where both primary and secondary research will need to be carried out with expatriates to first establish the PESTEL of the European market as stated above and hence determine how best to make their approach, one that will grant them an advantage and a way to fight on a level platform with more recognised competitors, (Schmieder-Ramirez, 2012).

Bibliography

  • Academy, P., 2010. European market SWOT analysis. London, UK: Professional Academy.
  • Barnard, C., 2010. The European international market. 6th ed. Oxford, New York: Oxford University Press.
  • The commission, E., 2015. Automotive industry. [Online] Available at: https://ec.europa.eu/growth/sectors/automotive_en [Accessed 18 02 2017].
  • contributor, P., 2014. PESTEL framework. [Online] Available at: http://pestleanalysis.com/pestel-framework/ [Accessed 10 03 2017].
  • Hirschler, B., 2012. Chery Automobile Co. Ltd. Shanghai: Thompson Reuters.
  • Hofstede, G., 2016. cultural dimensions theory. Thousand Oaks CA: Sage.
  • K Monteverde, D. T., 2011. competition in the automobile industry. Wall Street Journal, p. P. 56.
  • Schmieder-Ramirez, J. a. M. L., 2012. International Marketing Approach. Ney York, NY: Springer Science & Business Media.

Appendix One

Model of National Culture

Model of National Culture


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