China - BUSS 4 AQA

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KFC - Example of Localisation

  • New range of products to suit the needs of Chinese Market
    • Including Pork (main meat source) and fish and noodle dishes instead of just chicken.
    • Menu varied by region of China
  • Hired local staff who knew the market
    • Reduces cultural and language barriers when trading and establishing brand.
  • Entered the market early. 
    • Identified 16 key cities and expanded rapidly
  • Created its own distributtion system to ensure it could rely on supplies to support exapnding number of stores.
  • Emphasis on staff trainging and management training.
  • KFC owned the outlets rather than franchising them (different to models used in US).
    • Gave them greater control of outlets which became a source of information about local/regional customer needs.
  • Deliver locally, helpful for office workers who don't have time to go out for lunch etc. 

Numbers:

Average of one new outlet a day, objectives to open 15,000

Has a 2:1 ratio more stores than McDonalds (who were less successful)

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Marks and Spencer's - Risks of Trading in China

  • Opened in Shanghia in 2008
  • Failed to take into account the needs and tastes of customers
  • Customers were put off by prices
  • M & S made their products "too chinese" and aimed more towards the "older generation of china who don't spend money on clothes".
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Primark - CSR

HERProject - used to appear socially responsible.

  • Aimed to educate female employees on hygiene etc. to avoid sickness
    • results in less absenteeism
    • Improved welfare and living standards for employees

However...

  • Primark doesn't own their sweatshops (like many other companies) so they aren't technically responsible if some goes wrong.
  • Banglesdesh Fire - workers were locked into factory and couldn't escape (health and safety faults and management faults)
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Walmart - Risks of trading with China

  • Heavily reliant on Chinese imports
    • fluctuating exchange rates could affect profits
  • Imports from China subject to import tariffs, which increase cost
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Ebay and Guangxi

Guangxi - the chinese model of "relationships" which influences how business is conducted

Ebay and Guangxi:

  • Ebay's business model didn't allow for buyers and sellers to communicate and build a relationship, meaning that the Chinese didn't trust using the website in order to make purchase.
  • Ebay didn't understand the market which led to failure in China
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McDonalds - Bad Localisation

  • Used same Western Branding
  • Used Same product which had proved successful in Western Markets.
  • Beef Burgers didn't appeal to Chinse considering beef is rarely eaten and pork is the main source of protein. 
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Kodak - Bad Market Research

  • Failed to see the digital camera evolve and missed out on the market, are still catching up, especially due to fast moving technological market and being behind. 
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Tesco - Failure in China

  • Lacked Scale and underestimated chinese consumers. 
  • Chinese customers prefer to use "guangxi" and know the person they are trading with. 
    • meaning that customer would shop at local shops rather than stores. 
  • Had 9 years of losses and struggled to build scale due to competition.
  • Eventually went into a joint venture for chinese knowledge and expertise of market. 
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Nike - Failure

  • Sales fell for 5 years consecutively
  • Cultural differences and strong competition led to failure
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Nestle - CSR

  • Accused of price fising in Chinese baby milk market
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Coca Cola - Successful in China

  • Translated brand name to Chinese so it was easily understandable to market.
  • Luxury Western Brand
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One Water - Socially Responsible

  • Gives any profits to giving countrys without clean water clean water. 
  • Different to other water bottle companies who exploit local communities
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Apple - Environmental and Ethical Issues

  • Accused of using child labour and working them long hours.
  • Three chinese factories run by Pegatron Group violated standards set by Apple.
  • Overtime was mandatory during busy periods.
  • Dormitory rooms housing up to 12 people, insufficient fire escape routes and fines for behaviour such as "failing to tuck ones chair after eating" and "absense in unpaid meetings".
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Pampers and Huggies

  • Diaper brands with a CSR interest
  • Give vacinations to children in poor countries for every packet sold
  • Good brand advertisment and promotion
  • Creates brand loyalty
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Jaguar Landrover

  • Formed a joint venture with a Chinese Automobile company
  • Enabled the designing and building of cars specifically designed for the chinese market.
    • Help maximise sales
  • Government would allow them to sell their cars in the chinese market rather than companies who want to sell in china but don't operate a factory in china. 
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Louis Vuitton - Luxury Brand Example

  • Growing middle class and higher class can afford more luxury items. 
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Dyson - IP theft

  • Hit hard by IP infringements due to laws not heavily preventing this. 
  • Patent application from foreign firms in china are "blocked" whilst chinese firms are approved in as little as 9 months. 
  • Cost Dyson £10m a year in legal costs
    • dysons pre - tax profits of £40m could have been double if not for copies of their hoovers. 
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GlaxoSmithKline - Bribery and curruption

  • Accused of condoning payment by local staff of bribes to secure contracts
  • But, GSK was investigated by police and it found that executives weere funelling money to travel agencies to facilitate bribes to doctors and officials to boost the sale of its medicine. 
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