International Marketing For BSA Manufacturing Company Case Study

BSA Manufacturing Background

Describe about the International Marketing for BSA Manufacturing Company Case Study.

Advanced technology has made it easy for the companies to penetrate the global markets. However, high expenses of entering the foreign markets makes it difficult for the small companies.  Similarly, multinational corporations may find themselves unable to make it in the international markets if they do not have the suitable international market strategies (Monica, 2013, p. 65). Therefore, entry of the global markets is not all about how the company is financially endowed but coming with the right market entry strategy. The establishment of the international market entry strategy is not a one-off task but a continuous process depending on the market trends in the target market (Cui, et al., 2011, p. 32). Alternatively, the company needs to study and scan the global market to come up with the most entry strategy that will ensure successful entry in the new market (Dunning, 2009, p. 8). For elaborative and comprehensive analysis of the international marketing, this paper uses the case study of the BSA Manufacturing Sdn Bhd a company based in Malaysia. The paper addresses factors that may encounter the company has it strives to expand its market operations Indonesia.

BSA Manufacturing was founded in 1995. The company core activities include the manufacturing of the motor vehicles parts and other accessories. First, the company was incorporated as a private company in and later into a public limited company, and it has been listed on the Kuala Lumpur Stock Exchange market since 2002. The company name BSA stands for Bold, Stylish, and Successful Automotive. The name BSA is associated with the company vision whereby the founder advocated for the stylish and successful manufacturer of aluminum alloy motor vehicle spare parts all over the world. The company corporate colors are yellow and green. The yellow color denotes elegance, royal, prestigious, creative and exotic whereas the green color represents the environmental friendliness.

Despite the nature or type of the product or service being marketing internationally there are possibilities of the marketer to come across various challenges and obstacles (Bakås & Bolstad, 2010, p. 21). For example, there is an aspect of cultural diversity, legal structure, and economic factors among many other factors that the international marketer must put into consideration (Freeman, et al., 2006, p. 38).  International marketing requires the marketer to get rid of these factors which may have maintained the company in the comfort zone while in the home country (Khan, 2015, p. 8). Even though the robust and extensive technology has turned the world into the global village, there still exist a difference between countries, human behaviors, economies, and markets. International marketing introduces to the marketer new and unique challenges and therefore the company should be the prepared face to handle the same (Dunning, 2009, p. 11). Similarly, the entry of the BSA Manufacturing Company in the Indonesian market it is likely to meet various challenges. This report discusses some of the drawbacks that the BSA Company may encounter in its new international market plan.

Difficulties and Complexities Factors in Entering the Indonesia Market

Tariff barriers involve duties and other taxes imposed on imports. Many countries impose high tariffs rates to discourage importation and encourage the consumption of the locally produced goods. This makes it difficult for the international marketers to enter the host country market. This is because the products and services become expensive compared to other substitutes which are domestically manufactured. Eventually, the international company profit margin ends up reducing. The tariffs on imports in Indonesia range between 0% and 40% (Global Business Guide Indonesia, 2015). The calculation of the amount payable on imports is arrived at by summing the cost of the imports, freight and insurance charges. However, there are goods which are imported for free.  The average tariff rate on imports ranges between 10% and 12% (Global Trade Solutions, 2015). This will increase the price of the BSA Manufacturing Company products. However, the company can still make it in the Indonesian market by opening a new plant in the country. This will classify BSA Company products as the local products and thus the company will be able to enjoy higher profit margins.

International marketers it is sometimes very difficult to overcome administrative policies of some countries unless a bribe is offered. Freeman, et al. (2006, p. 35) argued that bureaucracy in administrative procedures in the target market country makes it harder for the international marketers. This is because some countries have more complicated administrative formalities that the importer or the exporter has to clear. Even though it is unethical, sometimes this obstacle forces the marketers to engage in unjust dealings to have their entry permitted (Johanson & Vahlne, 2009, p. 1412). For the BSA Manufacturing entry in Indonesia, it may be easy as the administrative procedures for entry into the Indonesian market are not such complicated. In case the company experiences administrative policies difficulties it can look for partners who will be selling the company products in the Indonesian market on behalf of BSA Manufacturing.

International managers should be ready to face totally different political system from one of the home countries. The studies indicate that political structures in several countries may pose challenges or offer opportunities for the marketers (Cui, et al., 2011, p. 60).  Additionally, it is crucial to note that different nations have their approaches, philosophies, and priorities on international trades. These factors change with different government regimes. For example, the election Donald Trump as the new president of the America is likely to change trade policies provided his views on the US trading partners. The BSA Manufacturing entry in the Indonesian market will be easy. The country political situation is favorable despite the continuous political noise for the government to adopt protectionism policy (Katz, 2015). Alternatively, the corruption is quite evident in Indonesia which may affect how the company will market its products. The political menace can be overcome by adhering to the country’s international trade policies.

Tariff Barriers

Ethical standards that govern how business undertake their activities and operations vary from one country to another (Nakata & Huang, 2005, p. 612). These norms and ethics are deeply rooted in the country’s formal regulations and formal laws. Additionally, there are international business codes of ethics that the international marketer has to adhere to. Ethics in Indonesia are a bit challenging for the international marketers. The vice of corruption within the country may affect how BSA Manufacturing Company will market its products. However, BSA can bypass this challenge strictly to the home country ethical standards.

Different nations have diverse cultures of doing business. For the international marketer to be successful needs to understand the host country culture and be able to accommodate the same in the company marketing activities. According to Murphy, et al. (2005, p. 12) mostly consumers are influenced to switch to a particular product as per the message they obtained via media and other product promotional tools. A sense of humor is usually used by marketers to capture the customer attention. However. What is perceived to be humor in the marketers country may be the insulting in the host country. This calls for deep scrutiny of the foreign culture before the commencement of the marketing activities. For BSA Company, it can overcome this problem by understanding the religious views, moral, customs and culture that is dominant in Indonesia.

From the perspective of the multinational companies, Marketing Information System has been an area of challenges for a significant number of years (Hosami, et al., 2013, p. 725). Its importance and expense in the international marketing management it is still a problem to many. Marketing information system is a computerized program that helps the multinational companies in solving the problems related to international marketing (Gilani, 2010, p. 210). Apart from international marketing Information System can be used in internal marketing, benchmarking and customer evaluation, sales management and in inbound and outbound logistics of supply chain management. This system has proved to be effective in creating new ideas as well solving demand items (Jamshidian & Josie, 2007, p. 13). BSA can use this tool to determine the problems that might hamper the marketing process of the company. Additionally, it helps the company in coming up with the new ideas on how the can enter and penetrate the Indonesian marketing smoothly.

Marketing Intelligence System:

The term marketing intelligent system refers to some the ethical activities that are utilized to obtain the necessary information about the competitors (Gilani, 2011, p. 56). BSA Company will use this system to obtain information about competitors such as Indomobil Bhupala and Road Racing Parts Company.

Administrative Polices

Formal Marketing Research System:

It used to gather about prospects and the customers of the multinational company. It aims at obtaining both primary and secondary data.

Management Science System:

This component provides information about the pricing subsystems, place and the company products (Mohammadsaid’ & Freihat , 2012, p. 328). BSA can use this component to define the company products to be sold in Indonesia and the price at which they will be sold at.

Integrated-Mix Subsystems:

The components put into consideration various aspects of the international marketing. It integrates the variables of formal marketing research, intelligent marketing system and management science system.

The core objective of any marketing is to identify customers for the company’s products and services (Sunday & Felix, 2013, p. 155). The process of identification entails ascertaining what the customers’ needs. This is followed by production of products services that will address their needs satisfactory. The next stage ensures the customers have information about the company products. This task is accomplished through promotion and advertising of the firm products. Marketing information system addresses all the above issues. Considering that BSA Manufacturing Company has already developed its products and are already in the market, the most importance part of the Multinational Marketing information system will be at promotion and advertising activities. This report outlines the specific areas that MMIS should be used to address. 

Market Analysis:

BSA Manufacturing Company should obtain data about Indonesian market trends, consumer behavior and demographic through the usage of the MMIS.

Pricing Analysis:

At the User Management Level of the system the company will determine the prices of the products to be sold in the Indonesian market. 

Sales and Forecasting System:

Help in the creation of the sales forecast for five years. Through the usage of the User Strategic Management Level BSA Manufacturing will prepare a sales forecast for five years to determine whether it will be viable entering the Indonesian market.

From the information provided above it evidently, comes out that MMIS is very useful in sales and marketing. Therefore, BSA manufacturing sales and marketing department can use it some ways:

Strategic Level: To monitor changes that might affect sales opportunities, products, planning of the new products as well as monitoring the performance of the business rival companies.

Management Level: It is used to support market research, pricing decisions, promotional campaigns and advertising. Additionally, the carry out the both sales and salesperson performance analysis.

Political Environment

Knowledge Level: This component supports marketing analysis at the target market. The tracing and contracting of the prospective consumers are achieved at the operational level of the system. Besides, it assists in offering customer service support, processing orders as well as tracking sales.

Cost:

If the company aims to recover all the costs it has incurred to bring the products into the saleable condition and include a profit margin above the cost, then it can adopt the cost based pricing. Given that BSA Manufacturing Company is a new player in the Indonesian Market it can apply this strategy before it has fully positioned itself in the market.

Currency Exchange Rates:

The fluctuating of the currency exchange rates or the comparison of the host country currency with that of the home may favor or disfavor and international marketer. According to McDonald, et al. (2010, p. 24) fluctuation of the currency hampers the company from making long-term decisions. Therefore, as BSA Company enters the Indonesian market, this is one core factor that it should put into consideration.

The corporate goals and objectives:

Some multinational companies such Starbucks may operate at a loss in some regions to counter influence their competitors’ activities or maintain the reputation of being a global company. BSA Company objective is to increase its sales as well as profit. Therefore, the international marketer clearly understands what have anticipated goals for the company for entering a new market.

Business Environment:

This entails taxation and other government regulations. If the taxation on the taxable income is high, then the company should consider charging a higher price to realize fair net income.

Competitor Prices:

The competition in the business can be founded at the various basis. One of the most common known competition is a pricing strategy. Given that BSA is a new market participant in Indonesia it should raise its prices relatively lower than those of the customers before its market share grows. 

Regulations:

In some countries, there are regulations the sets up both the maximum and the minimum price that can be charged for a given product. Again, other countries that in the computation of the product price Valued Added Tax Must be added. Note that the Value Added Tax is borne by the consumer and not seller hence making the product expensive. If the VAT being charged to the customers is too high, then the company can lower the price charged to make the product affordable for the consumers.

Ethics and Norms Challenges

National Market Size:

Most of the times, companies’ uses the volume of the sales to come into conclusion the price at the product will break even. For countries with more sales, the price will be lower than the country where the company will make a few sales.

Integrated marketing helps in bringing together various components of marketing such promotion through the suitable media, public relation, and advertisement to help the capture of the end consumers of the company products and services (Naeem, et al., 2013, p. 126). The helps in improving the visibility of the product among the target market and also make sure the potential consumer are appealed to purchase company products. When international companies are entering the new markets, they find some differences and complexities in the integrated marketing communication. Chang & Thorson  (2004, p. 78), argued that provided that foreign markets are totally different from that of the home country, international marketers are likely to overcome difficulties in promoting their new products if the marketing is not well planned. Therefore, for the new players to make it in the foreign market have to a well-laid plan on how to overcome challenges which may across. Similarly, BSA Manufacturing Company is likely to face various complexities in its marketing activities in the new market of Indonesia.

Kitchen & Schultz (2000, p. 12) noted that international marketing is very crucial and the marketers should be aware that they are entering a new country with totally different culture from the home country. In support Jones (2008, p. 19) advocated that also new markets should be done with a lot of care to avoid offending the target market. Therefore, this calls the international market to understand both the internal and external environment of the new market to address the issues which might derail their marketing activities. The report discusses the differences and the complexities in the integrated marketing communication strategy below.

Limited information on How the Market Operates:

One of the greatest challenges of the BSA Manufacturing might be understanding how the Indonesian motor vehicle markets work. For example, the e-commerce business in Indonesia is not well embraced. If the BSA is not aware of this aspect, it might find itself using internet marketing strategy and hence fails to reach the target audience. Therefore, BSA Manufacturing Company should carry out extensive research to have a broad understanding of all the essential components of the integrated marketing communication in Indonesia.

Cultural Diversity

Price War:

According to (Herlambang, 2016) majority of the e-commerce businesses in Indonesia spend a lot of money in educating the target market to gain a market share. This can make it difficult for the BSA as it may spend a lot of money doing promotional campaigns and fail to achieve its objectives of acquiring a relatively good percentage of the market share.

Coming up with the Right Brand Name:

The majority of the multinational companies such as Coca-Cola have found it difficult to sell their brand in the new markets. For example, the promotion of Coca-Cola products in China faced obstacles whereby the interpretation of the brand name into Chinese language sound a bit of insulting (Almarzouki, 2014). This is the factor that the BSA Company should be aware and create a brand name that will not appeal in their production activities but it will also lure the customers to purchase the company products.

Defining the Consumer Behavior:

Different consumers portray different behavior in different buying contexts (Chang & Thorson, 2004, p. 13).  It is the task of the marketer to understand the behavior expressed by the consumers based on gender, geographical region or age. Failure to do it will become difficult for the marketer to understand the true nature of the target market. Similarly, BSA Company should carry out research to determine the behavior exhibited by the target market. However, this may be difficult for BSA due to the expenses and time undertake while carrying out the research. The company can overcome this challenge by studying from the other companies selling the similar products.

Minimizing Cost:

The main objective of every business entity is to operate the lowest cost possible. This is the fact that business entities exist to make profits but not incur losses. Putting into consideration that BSA Manufacturing Company has to carry out the promotional activities and the same time has considered the aspect of cost is a challenging situation. This is because may incur a lot of cost advertising but the results of market fail to match the cost incurred. This has been a serious challenge for the international marketers.

The globalization of the markets has availed new branding challenges for the international marketers (Saxena, 2012, p. 38). For example, markets for the similar products have emerged and thus the marketers has to make company product look unique and different from the other marketers. This will only be achieved appropriately if the company branding process is outstanding. For BSA Manufacturing Company entry in the Indonesia it will not be an easy task, and hence it should be prepared to overcome the following branding challenges.

Right Brand Vision:

According to (Kyung, et al., 2008, p. 78), the company’s brand vision needs to inspire the employees, be associated with the customers and different from other similar products in the market. Alternatively, the brand product should be applicable in different market contexts of Indonesia. For BSA Company overcome this challenge it has to ensure that the product brand is beyond the function benefits, it is for the higher purpose, puts into consideration the organizational values as well as brand personality.

Brand Subcategories:

This is most difficult and the same time the most difficult part for the international marketers (Manoj & Raju, 2009, p. 22). The purpose of the marketer is to ensure the products sells in the new market and at the same gain competitive advantage through increased market share. Therefore, the international marketer has to develop the brand in categories. This help in denying the competitors information on how the new brand has been developed. To achieve BSA Company will need transformational innovation to develop the brand from one category to another.

Brand Conformance to Integrated Marketing Communication:

The communication of the company products entails many methods ranging from social media, digital mobile, sponsorships and advertising. This is mostly common used methods by almost every company. Therefore, BSA Company product should be designed in a manner that it different as well competitive when compared to the rival companies brands.

Maintenance of the Brand Relevance:

As it is expensive to acquire a new customer than to retain the existing ones likewise, it is costly to come up with the new brand than to maintain the relevance of the existing one. According to (Saxena, 2012, p. 40) brands relevance maintenance face the three major challenges, loss of energy; customers coming with the reasons not to purchase and customers purchasing what the brand is providing. Therefore, as much as BSA Company strives to maintain the company brand relevance it should also consider developing the same to keep it in line with the changes in the business environment.

Conclusion

Throughout the report, it has been portrayed clear that entering of the international market is a cumbersome process. The company anticipating to enter the international market should be endowed with the essential resources such as enough funds and qualified personnel. However, findings indicate that international marketing it is not all about a company is resourceful but being able to address the gap in the market. Upon analyzing the Indonesian Market there may not exist a gap, but BSA can enter the market and claim a good market share by offering the quality products.  By consideration, all that has been covered in this report BSA Manufacturing Company will be able to enter the Indonesian market with ease and market its products successfully.

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