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.
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)
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".
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
- 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)
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
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
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.
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.
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.
Nike - Failure
- Sales fell for 5 years consecutively
- Cultural differences and strong competition led to failure
Nestle - CSR
- Accused of price fising in Chinese baby milk market
Coca Cola - Successful in China
- Translated brand name to Chinese so it was easily understandable to market.
- Luxury Western Brand
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
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".
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
- 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.
Louis Vuitton - Luxury Brand Example
- Growing middle class and higher class can afford more luxury items.
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.
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.