Assignment:
Topic: Consider an international firm you are familiar with, and consider what the firm needs to be concerned about when entering a foreign marketplace. Specifically, in terms of the chapters we covered, what do you consider to be the 3 most important "uncontrollable environmental variables" that the firm should consider to gain a better understanding of buyers and markets (Global Perspective included)
Include the following:
1. A paragraph for each of the three variables where you will define, in your own words, what the uncontrollable force involves (three paragraphs total).
2. Cite the page number(s) from the textbook where the definitions can be found.
3. Two to three comprehensive paragraphs on how the chosen international company will benefit from understanding buyers and markets in a foreign land after considering these global environmental concepts.
Kerin, R.A., Hartley, S.W., & Rudelius, W. (2013). Marketing: the core. (5th ed.) New York, NY: McGraw-Hill/Irwin.
Replies to following:
1.In researching companies, I stumbled upon some interesting articles on various issues Disney has encountered while expanding globally. The three uncontrollable environmental variables I feel are most important when considering locating a company globally are cultural differences, language barriers, and consumer income and spending power.
Cultural differences (page 134-136) can include a country's customs, values and symbols. Cross-cultural analysis should be considered in advance of extending a business operation into another country. The country should be fully researched to learn and understand their cultural preferences. When developing Euro Disney, the company did not consider the French's love for breakfast and developed their marketing views based on the American's habits. The company assumed the French would skip breakfast and go straight to the entertainment. Eventually, Disney adjusted the park food to accommodate this particular habit. This was a costly mistake which created a large amount of money and time wasted. Certain countries maintain different beliefs in vacation time and vacations, such as the French are not as willing to pull their children out of school to take a vacation as Americans are. A cross-cultural analysis could have brought such cultural differences to the attention of Disney.
Language (page 132) is a variable which must be considered by any business planning to move into a global market. In a country such as China, Chinese workers are needed to bridge the language gap and to also teach the American workers the grammatical meanings of the language. Words or sayings are sometimes interpreted to mean something totally different in some countries from what we feel they mean here in America. Disney must research and understand those language differences before proceeding into that market. Not understanding each other's language can lead to communication problems and mistrust on both sides.
Consumer income and purchasing power (page 138-139) is another important variable to be considered. Visiting Disney is a not a necessity and is not something essential for existence. Disposable income available to the consumers in that country to devote to such luxuries or wants must be known prior to moving into the country. Disney discovered Euro Disney visitors purchased souvenirs less frequently than Americans causing their projected revenues to be less than expected. By developing a marketing strategy based on spending habits in that country, Disney may have been able to better project their revenue.
2. Starbucks is an international firm which has built a worldwide reputation for offering much more than just a cup of coffee. The Starbucks brand serves as an identity which encapsulates not only unique variations of coffee but more importantly a lifestyle.
The first "uncontrollable environment variable" is economic. The love of coffee seems to penetrate most cultural and environmental obstacles...the key is finding areas where people are willing to spend $4 plus for a cup of coffee. Along with with analyzing the consumer's lifestyles it's important to evaluate the local disposable and discretionary income which will affect the "buying value" for their purchase decision. (Kerin, Hartley, Rudelius, 2012. p.62,82) The brilliance of Starbucks is their efforts to maintain predictability and consistencty with their product. My close friend works in the "lean" department at the Starbucks headquarters and his entire job is to find ways to reduce waste through movement in any particular branch. His whole purpose is automation. The fact that a department like this exists is a clear indicator of the status Starbucks has reached regarding it's research and development.
Secondly it's important to find the consumer lifestyle. "How people spend their time, and resources, what they consider important in their environment." (Kerin, Hartley, Rudelius, 2012. p. 92) Starbucks' target audience is teenagers (13-17), young adults and adults. The fact that caffeine is a highly addictive drug helps sales but Starbucks has also been able to tap into other niches with Frappuccino and Tazo tea. I live in Seattle and 9 out of 10 times I will go out of my way to find a local coffee shop to help support...and then I remember that Starbucks is local! I prefer more distinct, unique and unpredictable flavors from my coffee. In other words: character. The key to Starbucks is, "You know what you're going to get each time you order a product" and they have attained a staggering level of "brand loyalty" (Kerin, Hartley, Rudelius, 2012. p. 90) because of this quality.
Thirdly Starbucks has been excellent at recognizing the importance of "Going Green" which ties into not only "Corporate Culture and Expectations" but "Ethics" as well. Starbucks recently built a store which was made from reclaimed shipping containers. A greater awareness and sensitivity toward conservation and recycling permeates culture and environment as well because we all share this world. Starbucks has taken a multitude of steps in establishing themselves at the forefront of "Green" companies. ("Recycling & Reducing Wast." Starbucks Coffee Company. N.p., n.d. Web.) "Socially responsible efforts on behalf of the general public are becoming more common." (Kerin, Hartley, Rudelius, 2012. p. 73) This is cause marketing, which displays Starbucks effort in not just making profit, but helping the environment as well.
Starbucks has and will benefit from understanding the marketplace throughout the world because the market is changing. Knowledge of the consumer is key to establishing what they want and need and finding a way to fill both categories. Because of the success in the United States Starbucks has gained a reputation which has helped thrust it's brand to new regions.