International marketing develop project plan

1. INTRODUCTIONHashiley, a middle-sized pharmaceutical company based in Shanghai, develops well these years. However, recent changes in the competitive environment of the retail sector are expected to force down prices in the major market area. It is obviously that the profit will be reduced in the short medium term (up to five years).In order to compensate lost part of profit, I, the manager of new Business Development Department, decided to enter into a foreign market, which is also an inevitable tren d for company’s further growth.After a preliminary screen of Asian countries, five nations —India, Indonesia, Pakistan, Singapore, Thailand, were left for further study (The maps are drawn in Appendix 1). This paper shows not only the process of analyzing the macro environment of these five nations and final choice but also the entry method and distribution channel to the selected country.2. ENVIRONMENTAL ANALYSIS2.1 Social-Culture EnvironmentTerpstra and Sarathy stress that since our understanding of marketing is culture bound, we must acquire knowledge of diverse cultural environments in order to achieve successful international marketing. Thus, we start from social-culture.IndiaIt occupies 15% of world's population (Table 1), larger than other four countries. Through calculation, we know 24,880,658 will be born each year.Thus, demand for postnatal and prenatal medicines is high. However, 6.147% of children, 1,529,415, will be died, which figure is pretty high since not willing to use prenatal and postnatal products. Thus, they should be informed and educated by us intensively. Age structure rate of old people is not high, but number is large, 49,154,726 persons. However, their life expectancy is not long which means they are less aware of health conscience and spend less money on keeping health.Table 1 People in IndiaRANKING VALUE POSITION Population 1,045,845,226 2Age structure: 0-14 years 32.70 % 92Age structure: 15-64 years 62.60 % 113Age structure: 65 years and over 4.70 % 114Population growth rate 1.51 % 97Birth rate 23.79 births/1,000 population 87Sex ratio - total population 1.07 male(s)/female 15Infant mortality rate 61.47 deaths/1,000 live births 150Life expectancy at birth - total population 63.23 years 147Life expectancy at birth - male 63.93 years 153Life expectancy at birth - female 63.93 years 154Total fertility rate 2.98 children born/woman 91Literacy - total population 52.00 % 169Sources: Religion, caste, and language are major determinants of social and politicalorganization in India.Caste is a social class to which a person belongs bybirth. Within a caste, most people share the same culture or occupation,belong to the same religious sect (group), or enjoy the same level of wealth.There are as many as 3,000 castes in India. To maintain ritual purity,members of each caste neither marry nor dine with members of other castes.Although Hindi and English (the language of politics and commerce) areused officially, more than 1,500 dialects are spoken. The Indian constitutionrecognizes 15 regional languages such as Assamese, Bengali, Gujarati, Hindi,and Kannada. Ten of the major states of India are generally organized alonglinguistic lines.So, it is a little difficult to manage Indian employees.IndonesiaIts people belong to about 300 different ethnic groups and speak more than 250 languages. Bahasa Indonesia, language of Indonesia, became a force for national unity. Another unifying force is Islam. Most of Indonesia's people are Muslims, and they make up the Muslim population. Thus, five pillars of Islam should be kept in mind when we manage the local employees.Table 2 People in IndonesiaRANKING VALUE POSITION Population 231,328,092 4Population growth rate 1.54 % 94Birth rate 21.87 births/1,000 population 95Infant mortality rate 39.40 deaths/1,000 live births 129Life expectancy at birth - total population 68.63 years 119Life expectancy at birth - male 71.13 years 121Life expectancy at birth - female 71.13 years 121Total fertility rate 2.54 children born/woman 102Literacy - total population 83.80 % 115Sources: Indonesia has the fourth largest population in the world (Table 2). Each year,there are 5,059,144 persons born in Indonesia but 199,331 of them died. Thisinfant mortality rate is only half of Indian. However, it is still not low so thatthere must be demand of prenatal and postnatal products.In effect, the demand should be mainly in city due to economic and educationbackground. About two-thirds of people of Indonesia are farmers oragricultural workers who live in small, rural villages. Life there increasinglycombines modern practices with older ways. Some villagers still build atraditional type of Indonesian house that stands on stilts. Families use thespace underneath for cattle stalls or chicken coops, or to store tools andfirewood. It is difficult for those persons to accept our products. City people(one-third, about 77,109,364 persons) live in American-and European-stylehouses and apartment buildings. They are accustomed to western life—comfortable and caring health, certainly they must be the main users of ourprenatal, postnatal and geriatric medicines.PakistanAbout 97 per cent of its people practice Islam, the Muslim religion. Thus, everything should be done following the custom of Islam. So far, cultural differences remain a problem in Pakistan. The population consists of a number of cultural groups, each with its own language. Such language barriers, plus other divisions among its people, have made us a lot of difficulty to develop business. Maybe we can only focus on a small space if finally selecting this country.However, Pakistan has one of the world'smost rapidly growing populations (highestbirthrate in five countries). Even death ratehas been reduced by improved healthstandards; sickness and malnutrition arestill prevalent. A widespread effort toeducate the population has raised theliteracy rate to about 38%. However, mostPakistanis are still farmer or herders withlittle or no education. They live much astheir ancestors did (Like Left Picture).Traditional attitudes and customs do nothave so great an influence over everydaylife among Pakistan's educated people.Most of these people live in the cities.Table 3 People in PakistanRANKING VALUE POSITION Population 147,663,429 6Age structure: 0-14 years 39.90 % 60Age structure: 15-64 years 56.00 % 152Age structure: 65 years and over 4.10 % 129 Population growth rate 2.06 % 63Birth rate 30.40 births/1,000 population 60Sex ratio - total population 1.05 male(s)/female 23Infant mortality rate 78.52 deaths/1,000 live births 174Life expectancy at birth - total population 61.82 years 152Life expectancy at birth - male 62.73 years 157Life expectancy at birth - female 62.73 years 158Total fertility rate 4.25 children born/woman 54Literacy - total population 42.70 % 180Sources: Pakistan has highest infant mortality rate among five countries. If they realizethis problem, many pregnant families will buy our products. However,literacy rate and economic level limit users. Thus, same to Indonesia, mostconsumption appears in a few big cities. Similarly, a small portion of6,054,201 old persons is willing to buy our products without informing andeducating.SingaporeThe population contains over 75% Chinese; Malays and Indians constitute large minorities. Buddhism, Christianity and so on are the religions of Singapore. The country has four official languages—Mandarin, Malay, Tamil, and English—and one of the world's highest literacy rates. In addition, Singaporeans are quite conscience of their health since they spend much money on health. So, it has lowest infant mortality rate, longest life expectancy, and relatively higher portion of old person in five countries.However, the market competition is quite intensively. Hardly can a new, foreign, middle-size company enter into.Table 4 People in SingaporeRANKING VALUE POSITION Population 4,452,732 117Age structure: 0-14 years 17.60 % 184Age structure: 15-64 years 75.30 % 1Age structure: 65 years and over 7.10 % 74Population growth rate 3.46 % 4Birth rate 12.78 births/1,000 population 163Sex ratio - total population 0.95 male(s)/female 155Infant mortality rate 3.60 deaths/1,000 live births 3Life expectancy at birth - total population 80.29 years 5Life expectancy at birth - male 83.47 years 5Life expectancy at birth - female 83.47 years 5Total fertility rate 1.23 children born/woman 203Literacy - total population 93.50 % 83Sources: ThailandThailand has a large Chinese minority, almost 15% of the population. Local trade is chiefly in the hands of the Chinese and certainly there is substantial tension between Thais and Chinese. While the ethnic minorities generally speak their own languages, Thai (linguistically related to Chinese) is the official tongue; English predominates among the Western languages.Theravada Buddhism is the state religion; about 95% of the people are Buddhists. Obviously, there are many similarities between China and Thailand. Thus, it seems easy for our company to merge into Thailand’s culture.Generally, Thai are quite open so that they can easily accept new things. Also, they are quite tolerable that people are likely to work with them. The government provides free public education, but only a small percentage of Thai students continue schooling beyond the required years from age 7 to 14.Table 5 People in ThailandRANKING VALUE POSITION Population 62,354,402 19Age structure: 0-14 years 23.30 % 145Age structure: 15-64 years 69.90 % 16Age structure: 65 years and over 6.80 % 76Population growth rate 0.88 % 136Birth rate 16.39 births/1,000 population 136Sex ratio - total population 0.97 male(s)/female 126Infant mortality rate 29.50 deaths/1,000 live births 116Life expectancy at birth - total population 69.18 years 114Life expectancy at birth - male 72.51 years 111Life expectancy at birth - female 72.51 years 111Total fertility rate 1.86 children born/woman 150Literacy - total population 93.80 % 80Sources: 2.2 Political-Legal EnvironmentIndiaAccording to its constitution, India is a 'sovereign, socialist, secular,democratic republic'. Despite of the war between Pakistan and India, India is still a stable country. Although India's 1950 Constitution outlaws untouchability and grants equal status to all peoples, laws and modern urban life have weakened the system only somewhat. Caste prejudice remains an important factor interfering with India's social integration and economic progress.The intellectual property protection system is becoming perfect since the fast growth of software design in India. Many acts are amended and introduced recently.IndonesiaIndonesia is a republic based on the 1945 constitution providing for a limited separation of executive, legislative, and judicial power. In 1999, the MPR elected Wahid Indonesia's fourth president. Wahid proved unable to govern effectively, and the MPR impeached him in 2001, immediately appointing Megawati as the fifth and current president. Although Megawati's PDI-P party is the largest in Parliament, she does not have a majority. She has formed a coalition government; her vice president, Hamzah Haz, for instance, represents an Islamist party. Thus, the political environment in Indonesia is unstable. Furthermore, the anti-government army battles with government’s army from time to time. In addition, its registration time for trademark is quite long, about 2-3 years.PakistanComparatively, Pakistan is the most unstable country among five countries. It suffers changes in its nature of country in 1999. Further, it has many problems with India.The court system of Pakistan was made up of civil, criminal, and appeals courts. However, the laws and rules concerning business and intellectual are not completed. They are the potential problems we should consider. SingaporeSingapore seems best in government stability, court system and relevant laws & regulations. However, it has higher tariff plus 3% consumption tax. Thus, these policies bring problems for us to control price. Comparatively, other four developing countries have an acceptable tax policy.ThailandThe government never suffers any dramatic change. It also will not happen in recent future. Thailand's legal system blends principles of traditional Thai and Western laws; Koranic law is applied in the far south, where Muslims constitute the majority of the population. The entire court meets only forspecial cases. The Court of Appeals, the second highest court, reviews decisions made by lower courts. A panel called the Judicial Commission chooses all Thai judges. The judges are approved by the prime minister and formally appointed by the king. Despite of its complexity, it seems relatively completed.2.3 Economic EnvironmentAlthough more than 35% live below the poverty line, Indian GDP is very high and it has the world's 13th-largest GNP. Recently, a large and growing middle class (about 150-200 million) has a high income which pulling demand for consumer goods. A significantly increase in trade occurs since the benefits from tariff reductions and elimination of non-tariff barriers.Indonesia is a market-based-economy country however the government also playsa significant role. Indonesia's economy consists of both privately owned firms(about 80 percent of total national output) and state-owned enterprises. Once Indon esia’s economy grew from a per capita GDP of $70 to more than $1,000 by 1996. However, the economy bottomed out in mid-1999 due to economic crisis, and real GDP growth for the year was only 0.3%.So far, Pakistan burdens a large foreign debt, which, to some extent, kill the possibility of rapid growth in economic. With a per capita GDP of about $441, Pakistan receives about $2.5 billion per year in loan assistant from international financial institutions and bilateral donors. Thus, average buying power is very low there.Singapore has highest average buying power among five countries. Its total trade in 2000 amounted to $273 billion, an increase of 21% from 1999. However, its life level has decrease from high to normal due to the economic crisis in 1997.The Thai economy returned to modest growth in 1999, chalking up a 4.2% gain in real GDP. To attract additional foreign investment, the RTG has modified its investment regulations. However, people seem to lose confidence of its currency because the dramatic fluctuation in exchange rate.(Some other statistic are listed in Appendix 2)2.4 Technology EnvironmentObviously, India and Singapore devote more human resources and investment on R&D. Thus, they must control relative higher levels of technology. The completed university education systems contribute to this achievement. Thus, these two countries can manufacture our products in their countries because of skillful engineers and infrastructure.India and Singapore export many chemical products each years, which means they have control some techniques in chemical synthesis. Thus, they may help company to improve or invent new product in long-term.3. SELECT COUNTRYAfter knowing the detailed environment information, a country was selected by using weighted score method. The country wins highest score will be selected. The weighting criteria are those factors that considered and listed in previous analyses. Finally, India was selected.Table 6 Weighted Scores TableScoresCriteria Importance Weighting CountryIndia Indonesia Pakistan Singapore Thailand Social-Culture FactorsPopulation 4 50 40 30 10 20 Birth Rate 4 40 30 50 10 20 Infant Mortality Rate 4 40 30 50 10 20 Old Person Percentage 4 30 25 10 45 40 Life Expectancy 3 20 30 10 45 40 Total Fertility Rate 1 30 35 50 10 25 Number of Ethnic Groups 3 30 10 25 35 35 Number of used Language 2 30 10 20 35 30 Religion Impact 2 35 30 30 40 40Political & Legal FactorsGovernment Stability 4 35 20 20 45 40 Risk of Military Invasion 4 35 25 20 45 40 Intellectual Property Protection 4 45 35 25 45 35 Taxation and Tariffs 5 40 40 40 20 40 Employment Law 3 35 30 25 45 35 Laws of Protecting Contracts 5 40 30 25 45 35Economic FactorsGDP 4 50 35 25 20 30 GDP Growth Rate 5 50 40 40 10 30 Per Capita Income 6 28 30 25 45 35 Competition 3 40 40 35 25 40 Inflation Rate 3 30 10 35 50 45 Population Below Poverty Line 4 32 35 25 45 38 Total Scores of "E" 25 926 720 760 880 902Technique FactorsInvestment in R&D 8 45 20 15 50 20 People Involved in R&D 8 35 30 30 50 32 Current Obtained Technique 9 35 25 20 40 30Note:* Total Scores of “S” is the sum of all scores multiplying their weights.4. MARKET ENTRY STRATEGYAs is shown in the picture, there are three methods to enter into foreign market—Indirect Export, Direct Export and Foreign Production Sources.Indirect export means products will be sold in foreign markets but no special activity for this purpose will be carried on within the firm. Our products can be carried abroad by others, and its distribution problems are similar to those in domestic sales. Usually, trading company, and export management company, or using piggyback method can bring products abroad. The previous two companies are the experts in selling products to everywhere. If we let them sell our product abroad, we can get instant foreign-market knowledge and contracts through the operations and experience of the EMC. Another major advantage is we are spared the burden of developing in-house expertise in exporting, a significant cost saving since such compa nies’ cost are spread over the sales of several manufacturers. Piggyback exporting means one company uses its overseas distribution to sell other company’s product along with its own, which usually happens between two big companies. However, main disadvantage of these methods is that those companies will not concentrate all their energies on our products. Further, we have limited control.Direct Export means the manufacturer performs the export task rather than delegating it to others. Company will do market contact, market research, physical distribution, export documentation, pricing and so on. The advantages of directness are not only increased sales but also increased control, better market information, and development of expertise in international marketing. There are three main methods to do direct export. Foreign distributors and agent mean that company transport products to target countries, and then let firm’s distributors or an agent to distribute the products in that market. However, export managers should obtain the cooperation of distributors andthe independent agent in the foreign marketing effort. Overseas marketing subsidiary needs company to hire local employees. They handle all tasks as orders come through. If export business expand, company may then decide to set a separate international division to handle the increased volume of export business. It requires little capital, personnel and resources, also provides opportunity to test foreign markets.Foreign production sources mean company produce broad. It can avoid high transportation cost, quotas and high tariffs. However, it needs more investment at the beginning, which increases risk. Normally, 5 approaches are used for foreign manufacturing. One is foreign assembly. Company produces domestically all or most of components or ingredients of its products and ships them to foreign markets for assembly. Another is contract manufacturing, which means product is produced in foreign market by another producer under contract with firm. However, profit goes to local firm and quality control is the problem. But, we may create our own competitors when teaching others to produce our products. Whole owner the factory costs too much to build a new plant though it avoids transportation and tariffs. Joint ventures are welcome by many MNCs. However, as a middle-size company, we may lose control if partner is a big company. However, it seems meaningless to cooperate with a small or middle-size foreign company.After analyzing each method, foreign assemble is preferred. It is because:AdvantagesCheap:Some of our products are tinned when sell to customers. So, the transportation cost is very high if using direct export. If we just transport products in term of powder and liquid, then package them in foreign plant. The convenience and economization are obvious.Avoid tariff:Since the transported product belongs to work-in-process. The tariff of it is lower than a tinned finished product. Thus, the tariff rate is low and we can avoid quotas. Increase local employment:Since we hire some local employees, local governors, especially India employment rate is not high, will offer other some privileges as the return of reducing unemployment rate.Well control:Company-owned assembly operations usually are combined with a company marketing subsidiary in the same market. Given a licensee, they can handle local distribution as well.Disadvantage and Way to OvercomeStill needs money.Though it needs money, it is very less when compared with whole manufacturing or some joint venture method. Our company can afford it by cash on hand or only borrow a little money.Difficult Employee Control:Since too many religions and languages are mixed in Indian culture, we will face a little difficulty to manage them. So, we should select suitable persons such as persons should be able to say English and give managers well training to avoid culture conflicts.5. DISTRIBUTION CHANNELIndia is a huge market, containing hundreds of millions of people. In reality, however, this market is much smaller than the population number suggests. In order to prevent company’s distribution channel from scattered and inefficient, or altogether lacking, company only starts from a small portion of population located in several big and most affluent cities, such as Delhi, Calcutta and Mangalore. Since willing to facilitate the control of distribution, we only set a retailer between factory and final customers. Though intensive distribution can cover a large area, it is hard to build a good image and control the channel well by using it. In addition, exclusive distribution can build good image and gain good control but it seems costly and brings trouble for customers to buy products conveniently. Thus, we will use selective distribution that means not all of the intermediaries who are willing to carry a company’s product can have the right to sell. The manager of assemble plant can directly select some famous supermarkets as our retailers. Since the number is small, we can develop good working relationships with selected channel members and expect a better-than-average selling effort. This method offers good market coverage with more control and less cost.6. CONCLUSIONIn order to compensate the loss made by competition, our company decided to expand foreign market. After comparing the factors of environment by ‘SELPT’ method, we finally selected India as target. Considering the capacity of company and some constrains of India, foreign assemble methods is used as entry model. Then, selective distribution way is decided to push our products to customers. We believe it can bring a certain amount of profits later.REFERENCES1.Terpstra and Sarathy, (2000) ‘International Marketing’ (8th Edition), HarcourtCollege Publishers.2.Kotler and Armstrong, (1996) ‘Principles of Marketing (7th Edition),Prentice-Hall International, Inc.3.2002-2003 , (online) (cited 2 June 2003). Available from<URL:>., (online) (cited 2 June 2003). Available from<URL:>.5.<URLh ttp:///mgmt/Kotas/Powerpoints/ch09%20(Market%20Entry%20Strategies).ppt>6.<URLh ttp:///classwork/AKHTER/Mark153/08-Exporting.ppt>7.<URL ttp:///asia/country/india/india66.htm>8.<URL h ttp:///country_view/0,4605,1339,00.html>9.<URL h ttp:///ebfg/fg_Indonesia.html>10.<URL h ttp:///index.cfm>11.<URL/reports/global/2002/en/indicator/pdf/hdr_2002_table_11.pdf>12.<URL /~cibconf/conference/DATA/Theme2/India.pdf>13.World Book 2003 Deluxe Edition, (2003) (CD-ROM), Chicago, World Book, Inc.APPENDIX 1India is a country in southern Asia that ranks as the second largest country in the world in population. Only China has more people. India is also one of the most densely populated countries in the world and one of the largest in area. Its capital is New Delhi. Mumbai, formerly called Bombay, is its largest city.Indonesia is a country in Southeast Asia that consists entirely of islands, more than 13,500 of them. The islands of Indonesia stretch across more than 3,200 miles (5,150 kilometers) of tropical ocean along the equator. Indonesia has the fourth largest population in the world. Only China, India, and the United States have more people. Indonesia occupies a strategic position in Southeast Asia, and its political and economic conditions are important to the stability of the region.Pakistan is a Muslim nation in southern Asia. The country's official name is the Islamic Republic of Pakistan. About 97 per cent of its people practice Islam, the Muslim religion. Religion was the chief reason for the establishment of Pakistan as an independent nation.Singapore is a small island country in Southeast Asia. It lies near the southern tip of the Malay Peninsula about where the South China Sea and the Indian Ocean meet. The sea is an arm of the Pacific Ocean. Singapore consists of a large island and more than 50 smaller islands. The large island, which is also called Singapore, covers 221 square miles (572 square kilometers). The other islands have a combined area of about 18 square miles (46 square kilometers). About half are uninhabited.Thailand, pronounced TY land, is a tropical country in Southeast Asia. The people of Thailand are called Thai. Most are farmers and live in small, rural villages. However, Thailand has one of the fastest growing economies in the world, and its urban centers have expanded rapidly. Almost 6 million people live in Bangkok, Thailand's capital and largest city.APPENDIX 2India - Economy (Facts)GDP: purchasing power parity - $2.66 trillion (2002 est.)GDP - real growthrate:4.3% (2002 est.)GDP - per capita: purchasing power parity - $2,540 (2002 est.)GDP - composition by sector: agriculture: 25% industry: 25% services: 50% (2002 est.)Population belowpoverty line:25% (2002 est.)Household income or consumption by percentage share: lowest 10%: 4%highest 10%: 34% (1997) (1997)Inflation rate(consumer prices):5.4% (2002 est.)Indonesia - Economy (Facts)GDP: purchasing power parity - $687 billion (2001 est.) GDP - real growthrate:3.3% (2001 est.)GDP - per capita: purchasing power parity - $3,000 (2001 est.)GDP - composition by sector: agriculture: 17% industry: 41% services: 42% (2001 est.)Population belowpoverty line:27% (1999)Household income or consumption by percentage share: lowest 10%: 4% highest 10%: 27% (1999)Inflation rate(consumer prices):11.5% (2001 est.)Pakistan - Economy (Facts)GDP: purchasing power parity - $299 billion (2001 est.)GDP - real growthrate:3.3% (2001 est.)GDP - per capita: purchasing power parity - $2,100 (2001 est.)GDP - composition by sector: agriculture: 26% industry: 24% services: 50% (2001 est.)Population belowpoverty line:35% (2001 est.)Household income or consumption by percentage share: lowest 10%: 4%highest 10%: 28% (1997) (1997)Inflation rate(consumer prices): 4% (2001 est.)Singapore - Economy (Facts)GDP: purchasing power parity - $106.3 billion (2001 est.)GDP - real growthrate:-2.2% (2001 est.)GDP - per capita: purchasing power parity - $24,700 (2001 est.)GDP - composition by sector: agriculture: NEGL% industry: 33% services: 67% (2001 est.)Population below poverty line:NAHousehold income or consumption by percentage share: lowest 10%: NA highest 10%: NAInflation rate(consumer prices): 1.5% (2001 est.)Thailand - Economy (Facts)GDP: purchasing power parity - $410 billion (2001 est.)。