Discuss about the Marketing in an International Environment.
International marketing is planning and carrying out of transactions internationally to meet organizational goals and objectives. BHP Billiton uses marketing application between domestic markets that is Australia and foreign markets that are outside the country. It has a wide coverage of both mineral and oil markets. BHP Billiton is an Australian company that deals with mineral and oil exploration. The company wants to introduce their products in China. It covers domestic and international markets and is a major player in the export of minerals and oil globally. The purpose and scope of international marketing in BHP is to increase its revenue through export and expose its products and brands. Marketing increases the scope of publicity and product visibility and especially in the new market..
BHP Billiton is an Australian conglomerate involved in mineral operations. It has also invested in other countries like Brazil, Peru and Colombia and wants to venture in the Chinese market that has a lot of potential. BHP Billiton is an energy exporter and operates seven segments in mineral resources mainly, base metals, diamonds, stainless steel, liquefied natural gas, energy coal and oil (Cadogan, 2009). BHP Billiton is in a process of splitting of its core assets in order to concentrate on products such as iron ore, copper, coal, oil and potash. As of March 1, 2016, came into effect a new operating model that will bring together the operations of the firm in three new areas: Oil, Minerals in the Americas and Australia. Key success in the domestic market is that it has been able to be the market leader in the mineral and oil industry ahead of its competitors like Alcoa Inc and Rio Tinto Limited. This strategy can be applied in the new Chinese market.
Exporting can be a cost effective way to expand their business, spread their risks and reduce their degree of dependence on the local market. Conducted research indicates that export companies are profitable than non-export companies. The Chinese market has a very huge potential.
The export exposes you to have new ideas, new practices of management, marketing and strategies to compete that are not experienced before in a domestic market. All this greatly improves their ability to also compete domestically and internationally(Conley and Friedenwald-Fishman, 2006).
While abroad, it can be more productivity and increases efficiency.
Exporting companies have better growth prospects, workforce that is highly productive and tend to adapt faster technology and techniques.Even if you have a limited domestic market, you should think about exports, about a quarter of new exporters born global.Global brands can be built from small businesses domestically.
BHP Billiton is a major player in domestic and international mineral exploration. It is very capable of handling large exploration site like those in Australia. The technological resources is valued at more than A$ 5 Billion with other resources still unmentioned due to exploration in other countries. The profit for the last financial year ended 30 June 2015 is $44.6billion down from $56.76 billion the previous year. This decline is attributable to a sluggish economic uptake of minerals and depreciation of the Australian dollars. There is also an aspect of increased competition from major competitors like Torino(Czinkota, Ronkainen and Ortiz-Buonafina, 2004). Profits from operations declined from $22.6 billion the previous year to $ 8.4 billion this financial year. It has employed more than 1000 employees comprising of experts and casuals.
Strengths:
Strengths are comprised of clear and measurable objectives, adequate organizational culture, good communication system and efficient internal control systems in BHP Billiton. In marketing, it gives an organization a good image and promotion of a clear marketing strategy. Thus it can easily get into the Chinese market.
Weaknesses:
Lack of planning adequate, description of unclear functions in the organization, lack of effective control measures. Marketing weaknesses leads to inability to innovate, inadequate distribution channels and lack of investment research may be a hindrance to effectively penetrate the market.
At this point, for better goal setting and a better formulation of strategies, it is advisable to make a list in order of importance with the strengths and weaknesses identified, locating the strength and / or more important at the top of the list weakness.
Pestle analysis
For BHP Billiton, the constant global economic recession coupled with plummeting mineral prices has caused a dent on the macroeconomic environment. The recession has lowered the purchasing power of the customers while some have cut down on the purchases. Therefore, the company has taken steps to find more markets for their products in Asia( China) and Europe.
Consumers around the globe have become more and more conscious of ethics therefore, it means that the company has to comply with social and environmental norms during mining and production process. The company however, makes treaties and agreements to collaborate with the communities living in the targeted markets through CSRs as part of their international marketing strategies.
The main factor in politics is about raw materials sourcing. Reason for this is due to the fact that politicians in the target markets and also in foreign countries where BHP Billiton is operating in have taken a key interest on companies especially in the mining industry due to environmental and social impact. It’s important to give fair trade practice.
It is also important for the company to follow regulations and laws in the countries that it exports its products which include minerals and oil products (Ferber, n.d.). These laws may include quotas and set prices for selling their products. In developing countries, this practice is more prevalent. Multinational countries are subjected to greater scrutiny in their way of doing business. Tax policies are included here.
The target consumers include contractors in the construction industry in Europe, South America and USA. This markets need products such as copper and oil for various industries.. Also, Economic factors such as exchange rate and depreciation of currency affect the marketability and bottom line of BHP Billiton. The impact of social cultural factors which includes consumer preferences and changing patterns in foreign markets in Europe and USA has led to change in the company’s policy in marketing. The changes of marketing policy will help when entering the new market.
On the other hand, BHP Billiton is in a position to enjoy the immense benefits of technological improvements, as it can use various social media platforms such as websites and other digital sources of advertising to increase the market awareness in foreign countries. Improvement of technology also enables the company to know the long term view of the fundamentals of international markets in the long term to create awareness (Lange, 2010). The pestle analysis proves that BHP Billiton has a stable external environment, and this is the key to their market domination both internally and externally.
Following the creation of, BHP Billiton was left with its greatest assets, also implementing a new organizational model that combines the operations by geographical areas, in the case of America and Europe. The competitors of BHP Billiton are Alcoa Inc, Rio Tinto Ltd and Vale S/A in Australia, some of these companies like Rio Tinto has already entered the China market. However, BHP Billiton has the largest market share in both domestic and international markets. This is attributed by quality products and a strong brand.
The company aims for a simple, agile and lower cost structure. These changes will give the company greater adaptability in the new market, it is notable that during the past two years BHP Billiton has made progress on all the goals that the company had proposed. Among them, mention the reduction of high potential incidents, increased labor productivity, the availability and use of equipment, optimal implementation of projects and savings recorded in the supply area.
The Company has focused on productivity for four or five years which means reduction of costs, and is able to offset through increased efficiency thereby reducing the cost (SWOT analysis, 2008). Cheaper quality products is what the market needs therefore on strategy the company is far ahead of its rivals.
Deteriorating external conditions accelerated some of these decisions indeed. The market situation is now clear justification of the need for all these changes to be done at the same time, an opportunity to build the company’s future and look good standing before the stage to come. The lower copper prices have affected the company’s operations. But the important thing is that we have been able to improve on those aspects that we control and thus have better results. Regarding the decline in prices, the company has created measures that all public and private stakeholders follow to restore the prices. However, the market is still big and there is a very big market that is not tapped, these markets include Africa where there is a lot developing going on and infrastructure development hence the products would be very useful here.
The Chinese market is dominated by companies such as among them are Chinese minerals marketing company which is one of the largest in this market, China Shenhua company is another big company and it will have to compete with these companies. After merger of BHP and Billiton in 2001, the new company gained a bigger market share in the domestic market, strategic positioning and gained resources that enabled it to get a bigger market share in the exploration and mining industry. our competitors are China Shenhua company and Chinese minerals marketing company. BHP Billiton must acquire more resources and expertise unlike its competitors to enter this market. All the companies use digital mode of advertising and the prices of the products are almost the same. Considering that BHP is the largest of the companies, it has enough resources to improve and position itself well in new markets unlike the other firms. However, the company needs to leverage of new information technologies and especially the Internet when it enters this market it should Make the most intelligent and productive use of these tools. BHP Billiton Should Learn, get involved using e-commerce, digital marketing, branding, apps, internet of things .Integrate the real world of business with digital world to stay ahead of business and increase its sales. It covers domestic and international markets and is a major player in the export of minerals and oil globall.
Conclusion
The company plans well in advance, the decisions Of BHP Billiton to enter the Chinese market cannot be guided solely by price cycles. International competition between new players and veterans on world markets, has prompted all companies to increasingly deploy new marketing schemes because there are more competitors in the markets; more demanding customers; new standards and technical requirements; high quality standards; technological advances and new and more aggressive export support (O’Meara, 2003).
In this sense, international marketing is an important and necessary factor that is still getting goods from the producer in a country to consumers located in another country involves activities such as sales, advertising, market information, transport, storage and financing.
Companies with international vision have departments or specialized managers in marketing their products, which are in charge, usually from market research to meet the needs of individuals their consumption habits and possible acceptance of new products. It takes advertising to promote and stimulate sales even for BHP Billiton in the new market.
For BHP Billiton, much of its growth is due to the export sector and in this regard the Foreign Trade is substantive part for the improvement of revenues. The company should have great logistics platform to push its products in the international market. However, apart from logistical s needs, the company needs to employ various strategies that counter what competitors do and set new policies for advertising and new market search.
Evaluation of their potential current international marketing strategy is aimed at improving revenues for the company. They have come together these two points because in a purely fundamental framework, how it is at hand, both concepts must pay attention and plan their actions based on the same aspects of a thorough knowledge of the market. International marketing in BHP will increase the revenue of the company. BHP is required to improve the technology level, expand on the foreign markets and increase the brand visibility of the products. The company board and management should increase financial resources to the marketing department so that it can advertise internationally. Additionally, production of quality products in terms of oil and mineral ores are manufactured (Malhotra, 2008). The purpose and scope of international marketing in BHP is to increase its revenue through export and expose its products and brands. Marketing increases the scope of publicity and product visibility.
References
Balabanis, G., Theodosiou, M. and Katsikea, E. (2004). Developments in export marketing. Bradford, England: Emerald Group Pub.
Cadogan, J. (2009). Marketing strategy. London: SAGE.
Conley, C. and Friedenwald-Fishman, E. (2006). Marketing that matters. San Francisco, CA: Berrett-Koehler Publishers.
Conley, C. and Friedenwald-Fishman, E. (2006). Marketing that matters. San Francisco, CA: Berrett-Koehler Publishers.
Czinkota, M., Ronkainen, I. and Ortiz-Buonafina, M. (2004). The export marketing imperative. Australia: Thomson.
Ferber, R. (n.d.). Market research.
International marketing strategy. (2002). Cookham: CIM Pub.
Lange, J. (2010). Human resource management in Indonesia. Hamburg: Diplomica Verlag.
Malhotra, N. (2008). Review of marketing research. Armonk, N.Y.: M.E. Sharpe.
Marconi, J. (2002). Cause marketing. Chicago: Dearborn Trade Pub.
O’Meara, P. (2003). The Decembrist Pavel Pestel. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan.
Onkvisit, S. and Shaw, J. (2004). International marketing. New York: Routledge.
SWOT analysis. (2008). [Washington, D.C.]: U.S. Dept. of Agriculture, Risk Management Agency.
Yesterdaytodaytomorrow. (2003). Melbourne: BHP Billiton.
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